Friday Footnotes: KPMG’s ‘Scandal-Ridden’ Crisis; PwC Cheats; Give Me a Straight Answer | 2.25.22

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Why KPMG’s Culture Crisis is Symptomatic of a Broken Audit Industry [International Policy Digest] A disciplinary tribunal filed against auditing giant KPMG has unearthed an internal survey conducted between 2016-17, revealing a veritable crisis of culture among the firm’s ranks. Although KPMG may purport to prioritize the ideals of integrity and quality in all their business practices, the findings provide a rare glimpse into the inner workings of the scandal-ridden auditor and suggest that those values are found to be more than wanting.

PwC Wins Arbitration of Employee’s Age, Disability Bias Claims [Bloomberg Law] PricewaterhouseCoopers LLP can require an employee to arbitrate her claims that she was fired because of her age and mental health conditions, a federal judge ruled.

Transition Policy Announced for the 2024 CPA Exam Under the CPA Evolution Initiative [NASBA] If you anticipate continuing your CPA Exam journey into 2024 and beyond, the much-anticipated transition policy is important news. This policy lays out how CPA Exam sections passed under the current CPA Exam map to credit under the 2024 CPA Exam. Transition policies like this have been necessary at other times when significant changes were made to the CPA Exam, such as when it was computerized in April 2004.

The Accounting Profession and the Pandemic [The CPA Journal] When the entire world shut down because of the coronavirus (COVID-19) pandemic, the accounting profession had to adapt quickly. Not only did many CPA firms have to figure out how to provide services remotely, they also had to ensure that they were able to help their clients adapt to the many uncertainties facing them. The time since has been different, unusual, and stressful for many.

PwC fined over exam cheating involving 1,100 of its auditors [Financial Times] PwC Canada has been fined more than $900,000 by Canadian and US accounting regulators over exam cheating involving 1,100 of its auditors. The watchdogs found that the Big Four firm failed to spot that staff were sharing answers in exams between 2016 and 2020 because of shortcomings in its internal standards and test supervision.

Talent Shortages, Technology, And M&A: Accounting Firm Managing Partners And Industry Experts Share Their Thoughts On Key Issues The Industry Is Facing [JD Supra] Firms are handling talent shortages in a variety of ways. Almost all are offering salary raises and bonuses, along with flexible work arrangements, individual check-ins, and stay interviews. Other accounting firms are finding ways to strategically use technology and outsource work to address the talent shortage. And some firms have had to turn clients away due to talent shortages. An industry expert noted that the industry is “desperate for people and turning down work.”

How to Manage Your Firm, Your Staff, and Colleagues Effectively [CPA Practice Advisor] CPA firms have one of the highest turnover rates in the business world. In many cases, burnout is a huge contributor to this. But many former employees, when asked why they left their job, talk a lot about the lack of respect.

#TaxTwitter is just full of bright ideas this week:

IRS offers alternative to facial recognition [Journal of Accountancy] Taxpayers signing up for and using IRS online services are now able to authenticate their identities with a new alternative to uploading a “selfie” photo, and if they do use facial recognition or have done so in the past, their photos will be deleted, the IRS announced Monday.

Gordon Ball LLC Announces Class Action Lawsuit Filed against Deloitte, LLP Regarding Audit Failures of The Southern Company Financial Statements [Business Wire] The case, Formby, et al, v. Deloitte, 1:22-cv-00670-WMR, is pending in the United States District Court of Georgia, Northern District. The class action is brought against Deloitte, LLP and Deloitte & Touche, LLP who have been SOUTHERN and Mississippi Power Company outside auditors since 2002. The complaint alleges that Deloitte violated Section 10(b) of the Securities Exchange Act including SEC rule 10b-5 and Section 17(a)(1)-(3) of the Securities Act regarding SOUTHERN financial condition and/or concealing material adverse omissions from investors about the true status of its investment in the Kemper County Energy Facility Construction Project in Kemper County, Mississippi.

Audit committees rolling with punches of evolving role [Compliance Week] Deloitte’s Center for Board Effectiveness and the Center for Audit Quality (CAQ) last month issued a report on audit committee practices and the major issues audit committees face today. The report is based on a survey of 246 audit committee members from predominantly large (more than $700 million market cap) public companies with primary operations in the United States. Audit quality continues to be a core audit committee responsibility, according to the survey. Despite the pandemic and working remotely, the report noted nearly all respondents thought audit quality remained the same (66 percent) or increased (32 percent) compared to last year.

On Reddit this week we meet a recruiter who hasn’t heard it’s a workers market:

and an idiot colleague who couldn’t audit their way out of a paper bag… oh wait, it’s you:

Op-ed: Connected, yet lacking connections: How we can combat loneliness at work [CNBC] Penned by Karyn Twaronite, EY Global Vice Chair – Diversity, Equity & Inclusiveness: An Ipsos survey confirms loneliness is on the rise – with two in five people globally reporting becoming lonelier over a six month period in 2020-21. What’s more, a study found that loneliness and social isolation makes premature death more likely for people of all ages and linked loneliness to a number of health risks.

Corporate sustainability push a $35 trillion dollar conundrum for auditors [Reuters] Reliable checks on companies’ sustainability credentials will take years to develop, auditors say, meaning investors pouring trillions of dollars into green funds remain at greater risk of being hoodwinked. Given the demand for investments that support environmental, social and governance (ESG) goals, the pressure is on to ensure companies aren’t exaggerating or misrepresenting the benefits of their activities, a phenomenon known as “greenwashing”.

For Straight Answers, You’re Better Off Asking a Female CFO [Bloomberg] Female chief financial officers are more likely to give concise responses, backed by numbers, while their male counterparts tend to be overly optimistic, use more euphemisms and cliches, and are wordier, according to research from Bucknell University, New York University and a Prudential Financial Inc. subsidiary that analyzed roughly 106,000 conference calls from 4,988 U.S. companies from 2009 to 2019. “Women bring something to the table that men might not have,” said Kate Suslava, an assistant professor of accounting at Bucknell University’s Freeman College of Management, and one of the study’s authors. “Women use fewer euphemisms, they use fewer cliches, and they use less complex sentences.”

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