Friday Footnotes: KPMGers Bring Cheating Into the 2020s By Using AI; Deloitte Partner Graciously Slides Under the Bus | 12.05.25

Posted on by Going Concern News Desk
cat in the snow
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AI

Young job seekers most impacted by rising AI use in the workplace [Korea JoongAng Daily]
A partner at one of Korea’s top four accounting firms put it bluntly: “An AI can finish in one hour what would take three junior accountants eight hours to complete. The time saved using AI can be spent on other projects, and labor costs have dropped significantly.”

Partner responsible for Deloitte AI bungle reportedly leaving the firm [Accounting Times]
Eddie Senatore, ex-Deloitte partner and principal of Eddie Senatore Advisory, said high-profile scandals affecting large accounting firms had tipped the playing field towards smaller and mid-tier companies. “The PwC and Deloitte AI scandals have shattered the idea that bigger is better and may have led to questioning service standards,” he said. “Therefore, it is arguable that the barriers to entry for smaller players have lowered. Now boutique players have a compelling argument.”

Australian Lawmakers Question Deloitte and KPMG on AI Misuse [Bloomberg Tax]
Australia’s Department of Finance is asking questions related to Deloitte’s use of AI in government contract work, and about the technology’s role in exam cheating at KPMG, officials told senators during a set of hearings. The department is reviewing Deloitte Australia’s listing as an approved supplier for government contracts after numerous errors generated by AI were uncovered in an A$439,000 ($289,000) report for the Department of Employment and Workplace Relations, Deputy Secretary Tania Rishniw said during a Senate Economics Legislation Committee hearing Wednesday.

KPMG auditors caught using AI to cheat on tests [Financial Review]
It raises a broader question: given that test cheating is widely accepted as rampant at consulting firms (it’s hard to know if KPMG has had the most incidents, or just the misfortune to be publicly caught the most times), where else is this happening?

Advocacy

FICPA backs bills modernizing accountant licensure during ‘CPA Day at the Capitol’ [Florida Politics]
The Florida Institute of Certified Public Accountants drew more than 150 CPAs to Tallahassee this week for its annual CPA Day at the Capitol, marking the largest advocacy event in the organization’s history. FICPA was at the Capitol to support the Institute’s priority legislation for 2026, HB 333 by Rep. Omar Blanco and SB 364 by Sen. Joe Gruters, who is a CPA by trade.

Survey Says

Overall economic view slides, but CPAs feel better about their companies [Journal of Accountancy]
While optimism among business leaders about the U.S. economy continues to lag, confidence in their own companies increased in the fourth-quarter AICPA and CIMA Economic Outlook Survey. Just 28% of 241 CEOs, CFOs, controllers, and other CPA decision-makers surveyed in November said they were optimistic about the U.S. economy for the next 12 months, down from 34% the previous quarter and from 67% at this time a year ago. However, 41% were optimistic about their own companies, a rise from 37% in the third quarter but also lower than the fourth quarter of 2024 (53%).

Press Releases

Gray, Gray & Gray Reaffirms Commitment to Remaining Independent [Gray, Gray & Gray]
Gray, Gray & Gray, LLP, an accounting and business consulting firm based in Canton, MA, has issued a statement reaffirming its intention to remain independent amidst a growing trend of industry consolidation. “While many of our peers across the accounting industry have made the choice to be acquired or merge into a larger firm, we strongly believe that our independence provides enormous value for our clients and the talented professionals who comprise our team,” said James DeLeo, MBA, CPA/MST, the Leading Partner at Gray, Gray & Gray. “We answer directly to our clients, not a corporate board or distant office. We stand alone so our clients don’t have to.”

Audit

PCAOB imposes penalty on TPS Thayer for audit failures [International Accounting Bulletin]
The Public Company Accounting Oversight Board (PCAOB) has issued a penalty against US accounting firm TPS Thayer for lapses during five audits involving two companies with main operations in China. PCAOB found that TPS Thayer did not sufficiently plan the five audits of these two companies or supervise a public accounting firm (Firm A), which is also in China.

Law & Order

Colby accountant sentenced to 4 years in prison for defrauding clients out of more than $400K [KWCH (Kansas)]
In October 2022, after defrauded cleints noticed discrepancies and confronted Quintin Flanigan, the Justice Department said he “took several actions to conceal his crimes, including removing Middle Finger Ranch from his personal account.” “The name of Mr. Flanagin’s fictitious ranch speaks for itself. After stabbing his family in the back, Flanagin lied to their faces. When the victims directly questioned him about accounting inconsistencies, he fabricated convoluted flowcharts and blamed third parties for the fraudulent checks,” said U.S. Attorney Ryan A. Kriegshauser in a U.S. Department of Justice news release announcing the sentencing. “In his hubris, Flanagin thought he could outsmart federal investigators and forensic accountants. He was wrong. My office will continue to use the full force of the federal government to prosecute financial crimes.”

Santander agrees to $26 million settlement in France tax fraud case [Reuters]
Spanish bank Santander has agreed to settle a tax fraud case opened in France in 2011 on with a payment of 22.5 million euros ($26.18 million), the Paris prosecutor said on Friday in a statement.

Authorities offer reward for tips on suspect’s hairstyle in Tulsa fraud investigation [KTUL]
Authorities are curious about the suspect’s hair, questioning whether it is a wig, dyed, or natural.

Related Posts

Accounting News Roundup: 9-9-9 > Optimal Tax; Businesses Hit By Tanning Tax Pales to Projections; PwC’s Lehman Haul | 10.14.11

How the Taxpayer Protection Pledge helps push tax reform [WaPo]
Red rover, red rover, send Grover right over: “The 238 members of the House of Representatives and the 41 senators who have signed the Taxpayer Protection Pledge to their constituents stand ready to vote for pro-growth, revenue-neutral tax reform that simplifies the tax code and brings rates down for all citizens and businesses. The pledge is a barrier to tax increases. And that protection makes real tax reform possible today, just as it did in 1986.”

Cain Plan’s Reagan-Era Roots [WSJ]
Herman Cain’s “9-9-9” plan might have been called the “Optimal Tax.” The Republican presidential candidate’s economic adviser, Rich Lowrie, thought the plan’s broad sweep and ultra-low 9% rates made it an ideal tool to revamp the tax code and encourage growth. Mr. Cain liked the idea, but not the name Mr Lowrie came up with. “We can’t call it that,” Mr. Cain said during a cab ride through Nashville in July, according to Mr. Lowrie. Instead, the former pizza-chain executive, tapping his instinct for marketing, concluded: “We’re just going to call it what it is: 9-9-9.” (“What kind of nerd am I?” Mr. Lowrie says now.)

Can Tax Cuts Pay for Themselves? [NYT]
Can tax cuts “pay for themselves,” inducing so much additional economic growth that government revenue actually increases, rather than decreases? The evidence clearly says no. Nevertheless, a version of this idea, under the guise of “dynamic scoring,” has apparently surfaced in the supercommittee charged with deficit reduction — the joint Congressional committee with 12 members. Dynamic scoring sounds technical or perhaps even scientific, but here the argument means simply that any pro-growth effect of tax cuts should be stressed when assessing potential policy changes (e.g., reforming the tax code). For anyone seriously concerned with fiscal responsibility, this is a dangerous notion.

Bethenny Frankel’s $120 Million Skinnygirl Lie That Wasn’t [Fraud Files]
Tracy Coenen debunks a HuffPo wannabe debunker.

TIGTA: 10,300 Businesses (Not Projected 25,000) Paid 10% ObamaCare Tanning Tax [TaxProf]
New Jersey, rejoice!

Tax Holiday Backers Emphasize Big Picture [Bloomberg]
Faced with criticism that companies didn’t use proceeds of a 2004 tax holiday to create jobs directly, advocates for repeating the policy are emphasizing the indirect economic effects of repatriating more than $1 trillion. Whether the money is used for hiring or stock buybacks, “I would much rather have their foreign earnings here rather than in, say, France,” said Kenneth Kies, a tax lobbyist at the Federal Policy Group in Washington whose clients include Microsoft Corp. (MSFT) and Pfizer Inc. Those companies, along with Apple Inc., Google Inc., and Qualcomm Inc., are part of a coalition urging Congress to temporarily reduce the tax rate on profits held overseas. They want a repeat of a 2004 law that let companies pay 5.25 percent, instead of 35 percent, when they bring that cash to the U.S.


PwC has earned £400m from Lehman Brothers so far [Telegraph]
In total, the accountancy firm has billed Lehman Brothers International (Europe) £403m and still has about 250 staff working on the complex resolution of the bank. This fee does not take into account the cost of continuing to pay 495 former Lehman Brothers staff as well as contractors who are helping with the winding up work. In the six months to the end of June alone the payroll bill came to £33m. Completing the work is expected to take at least 10 years, though the costs are expected to fall as the main parts of the administration are completed and the number of staff required to work on the project falls. An application will be made to the UK High Court next month to extend the administration period for a further five years.

ICAEW: Pass/fail audit report is best [Accountancy Age]
Auditors’ Reporting model should not be extended to disclose company information that is not already in the public domain, the ICAEW has argued. US regulator the PCAOB has proposed extending the audit report template to offer investors more detail on risks and business models, but the ICAEW has warned if management has not disclosed the information, the auditor should not do so.