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Friday Footnotes: Look What You Did, PwC; No Lakehouse This Year; India Wants Its Own Big 4 | 5.3.24

Woman in Ahmedabad, GJ, India petting an orange cat on the street
Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you’re here, subscribe to our newsletter to get the week’s top stories in your inbox every Tuesday and Friday.

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That PwC Thing

Senate caravan not moving on from PwC [The Mandarin]
Accounting firm PwC Australia has still a lot of work to do before it can move on from the tax leaks scandal, according to two members of a Senate committee looking into government procurement. Senators Richard Colbeck, the chair of the Senate’s financial and public administration committee, and Barbara Pocock told The Mandarin that PwC cannot move on until a range of matters are concluded, such as the nine cases linked to the tax leaks saga being looked at by the Tax Practitioners Board and the Project Alesia investigation by the Australian Federal Police. Their remarks come after PwC chief executive officer Kevin Burrowes told The Australian Financial Review last week that he wanted to move on from the tax leaks saga. Burrowes’ first major media outing coincided with the firm announcing a new strategic plan to recast the firm’s focus on audit, tax and deals, risk and transformation, and cloud and digital.

Burrowes wants everyone to move on from PwC’s tax scandal [Australian Financial Review]
On that note…
PwC chief executive Kevin Burrowes says it is time to draw a line under the damaging tax leaks scandal that has plagued the big-four firm, while conceding the task of restoring its tattered reputation will take years. After a horror period in which PwC was blackballed from lucrative federal government contracts, forced to hive off its 100-partner public sector consulting business for $1 and lost another 200-odd partners, Mr Burrowes said he was confident “enough progress” had been made to begin rebuilding. “We feel we’re in a good position now to start to turn to a new chapter, look to the future and drive the firm with a new strategy,” he said.

Related:

Consultation commences on regulation of the tax and accounting sectors [The Treasury (Australia)]
The Government is acting to rebuild resilience and confidence in our tax and accounting sectors. Treasury has today released two consultation papers on the adequacy of current settings. The PwC tax leaks matter exposed the fragmented nature of current regulatory settings. The current frameworks provide insufficient governance and transparency to incentivise good corporate behaviour, and insufficient ability for our regulators to identify misconduct. The first paper seeks views on the regulations for accounting, audit and consulting firms that keep our capital markets strong, including: governance and transparency requirements; managing conflicts of interest; whether there is sufficient competition and resilience in the sector; whether enforcement is strong enough. The second paper invites views on stronger information gathering powers for the Australian Taxation Office and the Tax Practitioners Board to support investigations into misconduct against the tax and super systems. It is critical that our tax regulators are equipped to detect, respond to, and deter the type of conduct that occurred in the PwC tax scandal.

Practice

The PCPS CPA Firm Top Issues Survey is open! [AICPA via Twitter]
Link to the survey on Qualtrics
The past few years have brought unprecedented change to accounting firms. Many firms are seeing increased demand for their services and are navigating hybrid/remote teams, rapidly changing technology and are looking to hire more staff. Do your top challenges align with those of your peers? The AICPA’s Private Companies Practice Section (PCPS) invites staff and partners at public accounting firms to share their outlook on key firm practice management issues in this 10-minute survey. Your answers can help guide the development of PCPS practice management resources designed to assist firms in meeting the ever-changing accounting firm landscape.

Reasons for the Acute Talent Shortage in Accounting [Accounting Talent Podcast]
Join host Rob Brown and co-host Jeff Phillips, CEO of Padgett and Co-Founder of Accountingfly, on the Accounting Talent Podcast as they tackle the burning question: Is accounting doomed due to a talent drought? Together, they dive into the nitty-gritty of the talent shortage in accounting firms, offering hope and actionable solutions.

Lakehouse is CANCELED

Advisory Learning @ Lakehouse sessions canceled for the rest of the FY
byu/markmano33 inKPMG
Layoffs imminent?
byu/Affectionate-Try-224 inKPMG

India’s Up to Something

It’s raining jobs at Deloitte for freshers and experienced techies in new office locations [TechGig]
This is basically an ad but let’s keep it in mind if Deloitte starts going hard on layoffs.
Deloitte opened its Bengaluru Office this month, hosting 6,000 people, servicing worldwide customers, and promoting regional development. The new Bengaluru office, launched by Deloitte US Chair Lara Abrash, will focus on AI, data analytics, cybersecurity, and cloud services with an XR Studio and Innovation Labs. Deloitte added Bengaluru, Noida, and Pune to its 14 Indian operations, including Bhubaneswar, Coimbatore, Kochi, and Jamshedpur, in March. Deloitte said in January that its AI Academy will teach over 120,000 people and spend $2 billion in technology learning to improve AI and associated capabilities.

ICAI passes order against three EY affiliates, retired partner for ‘professional misconduct’ [Business Today]
Curious case out of India, the regulator there ordered several EY affiliates to sever their arrangements with the global EY body.
The Institute of Chartered Accountants of India (ICAI) has passed an order against three affiliates of auditing major EY and a retired partner for “professional misconduct”. It has passed an order against another firm and its partner for similar reasons. The ICAI committee stated that joining the international entity and agreeing to its contents provided for referral work and payment of fee, constituted ‘professional misconduct’. “The committee is of the view that visiting cards contain information which signify virtual address relating to Ernst & Young (international entity) and further email id used by the respondent firm depicting its close association and/ or linkage with the international entity. The respondent firm/ respondent have failed to point out as to how they were able to maintain their independence when the domain that was being used belonged to the third party i.e. multinational entity,” as per the order issued in the case of S V Ghatalia & Associates, LLP.

India’s answer to Big Four firms could be in the works: Here are the details [Business Today]
Is India conspiring to merge its 96,000 firms into a handful of mega firms that can compete with Big 4? It looks that way.
Can India have a home-grown mega sized CA firm that can go global and compete with the Big Four firms? It may be in the works. The Institute of Chartered Accountants of India (ICAI) and the Ministry of Corporate Affairs are laying down the ground work for this. “We have made a Committee for Aggregation of CA firms. It is working very effectively on how to frame guidelines for networking, multidisciplinary partnership, international networking, merger and demerger and advertisement. We are working on these five fronts so as to empower Indian firms to become global,” said ICAI President Ranjeet Kumar Agarwal.

Technology

AI and fraud: What CPAs should know [Journal of Accountancy]
With AI, criminals can generate deepfake voicemail or video messages from the CEO — or even live deepfakes of the CEO’s voice or video. That’s a next-level threat, but new types of fraud may not even be the biggest risk for CPA firms and other potential targets. The fear is that AI can help criminals automate old fraud schemes, increasing the speed, efficiency, and persistence of the attacks. In fact, it’s already happening. The FBI, through its Internet Crime Complaint Center, has since at least 2020 alerted the public to the risk of AI-driven scams.

The ABCD+ of technology: AI and automation [ICAEW Insights]
It’s easy to think of artificial intelligence (AI) as new technology, but it’s been around for a long time – and most of us are already using it, whether that’s Alexa, planning a journey with Google Maps or following recommendations on Netflix. With the launch of ChatGPT OpenAI’s free-to-use chatbot, at the end of 2022, however, “AI has become more accessible and a bit more real, because you can interact with it in a slightly more humanlike way,” explains Ian Pay, Head of Data Analytics and Tech at ICAEW.

Who Takes a Risk on New Technology? [Kellogg Insight]
This academic research focuses on Hollywood but the understanding gleaned from it can easily be applied to the next generation of CPAs and firm owners.
The movie “Sky Captain and the World of Tomorrow” was released in 2004. “Me and You and Everyone We Know” came out the following year. There is little that these movies share. The former is a steampunk sci-fi adventure that takes place in a technologically advanced version of 1939; the latter is a rom-com. But they do hold two facts in common: they were directorial debuts, and they were shot with digital cameras. Digital cameras were relatively novel technologies at the time—the overwhelming majority of directors still used film—but they were starting to appear on the scene. For Filippo Mezzanotti, an associate professor of finance at Kellogg who studies technology adoption, this moment presented an uncommon research opportunity, in part because the decision about which camera to use is generally made by a single person: the director.

Deloitte Rolls Out Generative AI Concierge Tool for Public Sector [ExecutiveBiz]
The company said Tuesday it uses Google’s multimodal AI model called Gemini to power the Elevating Digital Government Experiences platform to employ multi-lingual, channel-agnostic and intuitive conversational capabilities.

Aren’t We Already Painfully Aware?

May is mental health awareness month [Deloitte Health Forward blog]
By Deloitte US Chair Lara Abrash
It is unrealistic to expect everyone to have a perfect day, every day. And professionals who are not adequately supported in their mental health might go through periods where they are unable to bring their best self to work. In those circumstances, there are often several factors at play that may require time and care outside the workplace. When such situations arise, it is important that people feel supported in seeking the professional help they need. I have found that leaders and teams can be critical catalysts in creating environments within the workplace where people feel comfortable showing up as their authentic selves. This can make them more willing to share their challenges and embrace psychological health resources. It starts with authentic leadership.

Mergers & Acquisitions

Nuvalence joins EY, expanding digital engineering and generative AI capabilities [PR Newswire]
Ernst & Young LLP (EY US) on April 29 announced Nuvalence, a technology consultancy, has joined EY US to accelerate the delivery of platform engineering, product development and generative AI (GenAI) platform-enabled services to organizations across industries and sectors. Nuvalence brings EY a seasoned team of over 140 engineers, product managers, and architects from across the US, Canada and Colombia.

Ronald Blue & Co. CPAs to join CLA on May 1 [PR Newswire]
CliftonLarsonAllen announced on Wednesday that Ronald Blue & Co. CPAs’s 80 staff and eight partners intend to join CLA on May 1, 2024.

Wipfli acquires assets of Harbour Results, adds associates [Wipfli]
Wipfli had an acquisition of their own to announce on Wednesday, revealing it entered into an agreement to acquire certain assets of manufacturing consultants Harbour Results.
Harbour Results is a trusted advisor in the manufacturing industry, providing benchmarking, assessments, strategic development and operational improvements to more than 60 clients. The Harbour Results team will bring to Wipfli its proprietary benchmarking service, which delivers data that drives strategy and operations for manufacturers. The transaction, effective May 1, adds more than 60 clients to Wipfli’s 60,000.

CPA Exam

Reminder, some CPA license fees are going up in California this summer. Details in the CBA UPDATE newsletter here:

Source: California Board of Accountancy UPDATE newsletter Issue 101 Spring 2024

Talent

Accountingfly has a fresh new batch of top quality accounting professionals for hire! Browse their profiles below and sign-up for Always-On Recruiting to get great candidates like these in your inbox weekly with no obligation to hire.

News

PCAOB Announces Agenda for May 9 Meeting of Its Standards and Emerging Issues Advisory Group [PCAOB]
The Public Company Accounting Oversight Board (PCAOB) will hold a meeting of its Standards and Emerging Issues Advisory Group (SEIAG) on Thursday, May 9, 2024, at 9:00 a.m. ET. The public may view the meeting via a livestream on the PCAOB’s event page, and a recording will be available on that page after the meeting concludes.

Deloitte acquires public health research firm [Washington Technology]
By purchasing Gryphon Scientific, Deloitte is looking to bolster its ability to work with federal and other government agencies on using AI and other data-centric tools to detect and respond to infectious diseases. Terms of the transaction announced Monday were not disclosed. Gryphon employs a team of scientists, programmers, and policy and planning specialists with experience in areas such as data science, scientific communications, modeling and risk assessment.

EY promotes deputy to GC as global legal chief announces retirement [The Global Legal Post]
Big Four accounting firm EY has named David Weintraub as its next global general counsel and vice chair, replacing current GC Michael Solender who is retiring at the end of June. Weintraub has been with EY since 2010 when he joined as US deputy GC before becoming global deputy GC in 2014.

Education