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. See ya.
2023 Accounting Firm Industry Insider Series: Key Takeaways from In-Depth Conversations with Managing Partners (Part 1) [JD Supra]
Russell Shapiro of Levenfeld Pearlstein talks to managing partners about what’s happening in the profession.
The accounting industry is in a state of transition. The influx of private equity, labor shortages, and remote/hybrid work have all impacted accounting firms to varying degrees. To better understand the landscape of the accounting industry – current and the anticipated future – I have been interviewing managing partners and industry insiders regularly for the past three years. Private equity has shaken up the accounting industry and raised several questions. The impact of private equity on the industry goes beyond the number of firms that are acquisition targets. According to a Top 20 firm, the most significant impact of the private equity model is how it has reshaped M&A activity. “The introduction of cash by private equity got a lot of people thinking about selling,” he said. Some industry leaders voiced concerns about private equity in the accounting space. The managing partner at a large firm said he has concerns about whether private equity firms can fully integrate target firms given the speed with which they are acquiring. Additionally, he questions whether private equity sponsors will provide long-term value for partners.
Deloitte’s human-sustainability chief wants to help employees beat burnout. She says the best solutions go beyond vacation and office yoga — and involve undoing 100 years of routine. [Insider]
Jen Fisher used to be the type of boss who’d email her team at 2 a.m. “I wasn’t a person that anybody wanted to work for,” she told Insider. Fisher, the human sustainability leader at Deloitte, said she was a far different type of boss before she realized she was going full tilt, surging in her career, yet feeling burned out. A subsequent cancer diagnosis only underscored the need for change. She ended up beating both cancer and burnout. But between the two, breaking free of her hard-charging approach to work proved more difficult. “I often felt that cancer was easier than burnout. When you’re going through chemo, it’s visible. Burnout isn’t,” she said in a recent talk at TEDxMiami.
US Accounting Board Looks Across the Ocean to Fill Hole in Rules [Bloomberg Tax]
The flood of government aid that helped keep companies afloat during the coronavirus pandemic exposed a hole in US accounting rules: Businesses have no way to record the grants, loans, and tax breaks that bolstered their bottom lines. US accounting standard-setters now wonder if it’s time to look across the Atlantic for guidance. The London-based International Accounting Standards Board issued rules specific to government assistance accounting decades ago. Perhaps US businesses should just follow those well-known rules, the Financial Accounting Standards Board has suggested. As it turns out, it’s not as simple as copying and pasting. But to some accountants, businesses, and taxpayers eager to know how governments help out businesses, something is better than the status quo, in which there are no rules at all. “It gives them, at least, a good base to start with,” said Tracy Grosskreutz, partner at Wipfli LLP, of IAS 20.
Adventist Auditors Gather in Copenhagen for Spiritual and Professional Renewal [ANN]
Maryland legend Tom Hood was there!
The CONNECT event, held every five years since 2003, allows GCAS employees to stay current with the trends and best practices of the accounting and auditing industry, with intentional application to the needs of the Seventh-day Adventist Church. The event also allows networking and team-building opportunities for GCAS professionals. Invited guests included guest speakers from the accounting and business industry as well as Seventh-day Adventist leaders, world church and division treasurers, and representatives from Adventist business schools.
An update on our commitment to a unified profession [CPA Canada]
CPA Canada continues to explore strategies and opportunities for the accounting profession following announcements by CPA Ontario and the Ordre des CPA du Québec that they intend to withdraw from the Collaboration Accord, which has been the backbone of the Canadian CPA profession for the past decade. Consequently, there are numerous processes and operations that need to be re-examined in response to the recent developments.
Nontraditional Candidates Can Solve Accounting Talent Shortage [Bloomberg Tax
Mazars’ Tifphani White-King explains why accounting firms should recruit people with nontraditional educational backgrounds and discusses ways to help such candidates succeed in the industry.
Changing ‘perception’ of accountancy profession key to attracting Gen Z [AccountancyAge]
A recent survey conducted by Grant Thornton highlights that young people hold numerous misconceptions regarding careers in accountancy, hindering them from perceiving it as a viable choice for them. The survey was completed by 2,000 16–25-year-olds, with 66% saying there is currently limited careers advice available to them relating to the accounting industry.
Baker Tilly Names Adam Grinde Illinois Managing Partner [Business Wire]
Grinde succeeds Thomas Walker who transitioned to a regional leadership role as managing partner – Central U.S. effective June 1. “Adam’s dedication to our firm’s mission, vision and global influence will undoubtedly guide our Illinois practice to new heights,” said Walker. “He is poised to fortify our position in the region.” Grinde will provide leadership, management and strategic direction to grow the firm’s Illinois market. In addition, he will foster team member development and engagement, strengthening the firm’s presence in the community.
Grant Thornton appoints two new industry leaders [Consulting.us]
Grant Thornton US has appointed Andrea Schulz as leader of its technology industry practice and Russell Norris as leader of its transportation industry practice. The mid-market accountancy also appointed new leaders for seven metropolitan markets.
Big accounting firm hires former Downtown STL leader [St. Louis Business Journal]
One of the region’s largest accounting firms has named Missy Kelley, the former head of downtown booster organization Downtown STL Inc., to the new position of chief growth officer. Anders CPAs + Advisors said Kelley’s job – which she started Wednesday – is to drive strategic growth, oversee expansion efforts and pursue new opportunities for community leadership.
Dark Horse CPAs Announce Promotion of Megan Leesley to Principal [PRWeb]
Megan entered the Dark Horse Principal Accelerator Program in November 2022 and built a 6-figure practice that is a mixture of tax, accounting, valuation and fractional CFO work. She takes special interest in educating her clients and helping them be as strategic as possible when it comes to their tax situation or business finances. Additionally, she has gone out of her way to foster the learning and development of her colleagues. Because of her outstanding work and embodiment of Dark Horse’s core values, the decision was made to promote her to Principal effective March 2023.
Armanino Promotes Sam Coursey to Pacific Northwest Growth Leader, Welcomes Katrina Perlewitz and Jason Woon as Partners to its Seattle Office [Business Wire]
Armanino LLP announces the appointment of Sam Coursey to serve as Pacific Northwest Growth Leader and adds new partners Katrina Perlewitz, formerly of Ernst & Young and Jason Woon, a former KPMG Managing Director and M&A valuations specialist to the Bellevue, WA office. Coursey’s new role and the addition of Perlewitz and Woon further strengthen Armanino’s Pacific Northwest (PNW) foothold and ability to serve its growing list of clients in the region.
Democrats accuse tax prep firms of undermining new IRS effort on electronic free file tax returns [ABC News]
Congressional Democrats are accusing big tax preparation firms including Intuit and H&R Block of undermining the federal government’s upcoming electronic free file tax return system and are demanding lobbying, hiring and revenue data to determine what’s going on. The lawmakers accuse the companies of lobbying against the new program, hiring former government workers to sway public interest against free file for all, and deliberately sabotaging a government program that had previously offered free tax prep services, according to letters obtained by The Associated Press. On Thursday, Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif., sent letters to the executives of Intuit, H&R Block, the American Coalition for Taxpayer Rights and the Free File Alliance, a group of tax preparation companies that provide free online services through the IRS website.
Companies Need to Consider the Challenges of Tax Transparency [Bloomberg Law]
Chris Morgan of KPMG looks at why companies aren’t all seizing the opportunity for tax transparency, and where there might be ways to resolve some difficulties in the process.
Biden administration unveils new crypto tax reporting rules [Reuters]
Cryptocurrency brokers, including exchanges and payment processors, would have to report new information on users’ sales and exchanges of digital assets to the Internal Revenue Service (IRS) under a proposed U.S. Treasury Department rule published on Friday. The rule is part of a broader push by Congress and regulatory authorities to crack down on crypto users who may be failing to pay their taxes. A proposed new tax reporting form called Form 1099-DA is meant to help taxpayers determine if they owe taxes, and would help crypto users avoid having to make complicated calculations to determine their gains, the Treasury Department said.
What Tax Preparers Want From Clients’ Advisors [Financial Advisor]
Advisors and tax preparers are two pros that clients need to succeed financially, which makes it imperative that they communicate well and act as a team. So how come relationships between the two often go wrong? “All too often, the client and separate advisors don’t take the time to establish a strong working relationship,” said Jenny Kramer, Milwaukee-based tax partner at Sikich.
COBA Student Wins Big Internship! [Alabama State University]
This kid is already on the partner track and hasn’t even started yet, check the quote.
An Alabama State University accounting student has been awarded a multi-year paid internship with the prestigious Big-4 accounting firm KPMG. James Jackson, a native of Columbus, Ga. and a student-athlete (Track and Field), has been named by KPMG to its list of Embark Scholars, a competitive program that focuses on coaching and developing high-performing students like Jackson to become potential KPMG leaders of tomorrow. “When I found out that I won the scholarship from what I feel is the world’s finest accounting and financial services firm, I was elated and felt great because a very small percentage of students win this internship,” Jackson said. “As a KPMG intern, I am allowed to work within and increase my knowledge of such accounting techniques as tax, audit and literally, all brackets of accounting.”
Scyne targets 1500 more PwC staff after nabbing 117 partners [Australian Financial Review]
Ed. note: spruik. / (ˈspruːɪk) / verb. (intr) Australian archaic, slang to speak in public (used esp of a showman or salesman)
The 117 PwC partners who will join spin-off Scyne Advisory will get a similar income as before, but be paid like executives in a corporation via base pay, equity and potential bonuses rather than a share of profits per year. The start-up is also making formal offers to about 1500 PwC staff, as its leaders visit state and federal officials to spruik the organisation’s ASX-level governance model. The partners coming from PwC have passed a vetting process led by former federal court judge Andrew Greenwood to ensure they are not linked to the firm’s tax leaks scandal or any other ethical issues associated with the big four firm.
Powerful firms that put the ‘con’ into consulting [360info]
Daily revelations in the media surrounding the performance and bad behaviour of the consulting industry highlights a growing scandal that threatens more than just the firms involved. Attention so far has focused chiefly on PricewaterhouseCoopers (PwC), which is not only embroiled in an ugly tax scandal, revealing serious conflicts of interest, but has been linked to the notorious Robodebt scheme. PwC failed to provide a 70-page report to the government on a scheme that was later ruled to be illegal, despite being paid nearly AUD$1 million. Instead, it compiled an eight-page PowerPoint presentation. Emerging evidence suggests these transparency failures and issues of conflict of interest at PwC are just the tip of the iceberg for the consulting industry.
Charging big four partners payroll tax is ‘punitive’, unfair: CA ANZ [Australian Financial Review]
EY says a proposal to charge large accounting partnerships payroll tax on partner profits in NSW would be “a fundamental restructuring of the taxation of equity returns and income”, while Chartered Accountants ANZ says it is a “punitive” action that unfairly targets the big four accounting firms. A proposed amendment by the NSW Greens – aimed at the big four accounting firms Deloitte, EY, KPMG and PwC – would be an Australian first and deliver more than $50 million in extra tax to NSW, according to modelling by the party. The amendment to the state Payroll Tax Act 2007 would define as “wages” the “amount paid or payable, as profit distribution, to a partner of any Australian accounting partnership” which is “covered by a professional liability scheme” and has more than 100 partners.
How learning tech is driving retention at EY [UNLEASH]
Over the past six years, professional services giant EY has transformed its HR function. A particular focus of this HR transformation has been learning – with the aim of moving “from a compliance-driven culture to a development culture”, Jon Turner, global learning innovation leader at EY, shares exclusively with UNLEASH. For EY, like many enterprise businesses, there is a requirement for a lot of mandatory learning, particularly in the audit, assurance and accounting sides of the company. “We are heavily regulated,” he said. “So, there’s very minimal opportunity…to develop yourself” in other areas. EY’s learning team is on a mission to change that. “We want to motivate people to learn, provide more opportunities to learn, and more sponsorship and leadership around that.”
Productivity in accounting: Is technology the problem? [Accounting Today Voices]
Writes Dan Hood: Last month, I wrote about the fact that economists are having difficulty finding evidence that the technology advances of the past decade or so have produced any meaningful increase in productivity (see “The productivity problem in accounting”), and from there I pointed out the similar mystery of whether accounting firm staff became more or less productive when they started working remotely en masse due to the COVID pandemic. That sparked a very thoughtful response from Jason Reis, a partner at Reis & Reis CPAs in Wisconsin, that I’m going to quote at some length, because he raises some very interesting points: “Our firm has both remote and flex employees, and it has worked out well,” he wrote. “I have noticed in my 20-plus-year career as a partner that productivity has consistently continued to drop. We used to think it was the employees being less productive, but now we think differently about it.”
AI Deepfakes Are a Threat to Businesses Too—Here’s Why [Decrypt]
As tech giants compete to bring artificial intelligence to the masses and own the burgeoning market, the AI arms race is fueling an increase in “deepfake” videos and audio—content that often looks or sounds convincingly legitimate, but is actually a fraudulent misrepresentation. And they’re impacting businesses too, according to a new report by KPMG.
Deloitte Announces Groundbreaking New Initiative With Google Cloud to Accelerate the Adoption of Sustainability Solutions [PR Newswire]
Deloitte announced a groundbreaking new initiative with Google Cloud that will help clients mitigate climate risks, adopt green solutions and unlock the value of low carbon products and services utilizing revolutionary technologies like generative AI and geospatial data.
Law & Order
Orange County Tax Preparer Sentenced to Nearly 3½ Years in Prison for Participating in Long-Running Fraud Led by Corrupt Social Worker [DoJ]
The owner of a Westminster-based tax preparation business was sentenced today to 41 months in federal prison for participating in a scheme orchestrated by a corrupt social worker who stole his clients’ identities to fraudulently obtain tax refunds, welfare benefits and credit cards. Anton Nguyen, 54, of Fountain Valley, was sentenced by United States District Judge James V. Selna, who also ordered him to pay $3,773,282 in restitution. Nguyen conspired with John Tran, who is believed to be either 57 or 61, of Fountain Valley, an Orange County Social Services Agency case worker from July 1994 to October 2018. Tran stole the Social Security numbers and other personal identifying information (PII) from his clients – many of them recent immigrants.
Former Auditor at Newport Beach Commercial Real Estate Agency Pleads Guilty to Embezzling More Than $2.7 Million from Employer [DoJ]
A former executive at an Orange County commercial real estate agency pleaded guilty today to embezzling more than $2.7 million from his employer by submitting fictitious invoices for companies controlled by his family and friends, whose services never were performed. Varun Aggarwal, 41, of Irvine, pleaded guilty to one count of wire fraud. As a member of the company’s internal auditing group, Aggarwal was familiar with KBS’s policies and procedures for payments to vendors. Aggarwal used his knowledge of KBS’s policies and procedures to have his friends and family serve as approved vendors to do contracting work for KBS.
Moving Forward on Non-CPA Ownership in New York [The CPA Journal]
This year, after a push that has gone on for more than a decade, the New York State Legislature has overwhelmingly approved a bill that would permit non-CPA ownership of CPA firms (A.4189/S.2473A). The bill passed unanimously in the Assembly (Y: 144/N: 0) and overwhelmingly in the Senate (Y: 59/N: 2).
CPA-turned playwright brings Irena Sendler’s WWII heroism to life [Bucks County Herald]
A certified professional accountant and financial planner, and decades-long Bucks County resident (before moving to Lansdale two years ago), Tim Caso is making a down payment on a piece of history that he hopes will pay dividends in its education of the public about Sendler’s sympathetic, bittersweet story. “I’ve been a student of World War II for many years,” says the 64-year-old former resident of Warrington, Chalfont, Buckingham and Bedminster, “and, while reading about the larger operations, such as D-Day and Iwo Jima, I have been intrigued about the more anecdotal, lesser-known events of that time.”