October 2, 2022

Friday Footnotes: More Accounting Probes; IRS Gets Out of Your Face; KPMG’s Acquires Krypto | 2.11.22

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Deloitte’s $5M Data Security Deal OK Is Sought by Plaintiffs [Bloomberg Law] A $4.95 million settlement with Deloitte Consulting LLP to resolve claims it created websites with poor security should receive final approval, the plaintiffs are arguing in New York federal court.

German financial regulator probes Adler over its accounting [Financial Times] Shares in Adler have tumbled almost 40 per cent since short seller Viceroy Research last October published a report questioning the valuation of its assets and outlining its ties to Cevdet Caner, an Austrian entrepreneur who previously presided over one of Germany’s largest-ever real estate insolvencies. Adler subsequently instructed KPMG, the group’s auditor, to conduct “a comprehensive [forensic] review” into Viceroy’s allegations. Adler has denied all Viceroy’s allegations. Last month, Adler said the review by KPMG was “ongoing and expected to be finalised not before Q2 2022.” The results are required to complete an audit of the group’s 2021 results.

IRS backs away from facial recognition [Journal of Accountancy] In a news release, the IRS announced it will “transition away from using a third-party service for facial recognition to help authenticate people creating new online accounts.” The authentication method is already in use for some interactions and optionally for taxpayers creating or using online accounts and other services. In November, the IRS announced that a new account and sign-in process would be mandatory starting sometime in summer 2022.

EY’s top earner paid £4.1m last year [Financial News] EY UK’s top earning partner took home £4.1m last year, the Big Four audit firm’s annual accounts reveal. Pay for the firm’s top earner jumped nearly 14%, up from £3.6m the previous year, financial statements for the year to 2 July 2021 showed.

Meanwhile on Twitter, this person thinks if you’re unhappy with your job you should just… do something else.

California CEO Sentenced to Prison for Employment Tax Crimes [Department of Justice] According to court documents and statements made in court, Michael Todd Lucas controlled TradeMotion Inc. (TradeMotion), a company that sold software to automotive dealerships. Lucas controlled TradeMotion’s business and financial affairs, and therefore had a legal duty to withhold employment taxes on behalf of the company’s employees and pay those funds to the IRS. From the fourth quarter of 2011 through the third quarter of 2015, Lucas collected more than $2.1 million in withholdings from TradeMotion employees and issued them W-2 forms. However, he paid only $760,017 of these funds to the IRS. Lucas also did not pay to the IRS employment taxes withheld on behalf of the employees of other companies he controlled, causing an additional tax loss of more than $3.5 million.

Accounting Giant KPMG Invests in Bitcoin and Ethereum [Investopedia] Accounting firm KPMG is getting into cryptocurrencies. The firm announced in a press release on Feb. 7, 2021, that its Canada office had purchased Ethereum (ETHUSD) and Bitcoin (BTCUSD) for its corporate treasury. KPMG did not divulge the amount or figures related to its investment in cryptocurrencies. “This investment reflects our belief that institutional adoption of cryptoassets and blockchain technology will continue to grow and become a regular part of the asset mix,” stated Benjie Thomas, managing partner at KPMG’s Canada office.

PwC to create another 1700 jobs in Adelaide for tech push [iTnews] PwC is planning to hire an additional 1700 staff for its new onshore delivery centre in Adelaide over the next five years in a bid to meet rising demand for cyber security, cloud and audit services. Last year, the consultancy said it was setting up a new onshore delivery centre in Adelaide, creating 300 jobs within 18 months in the process. At the opening of the hub on Thursday, PwC said it now plans to increase this figure to 2000 over the next five years.

Let’s check in and see what’s going on at Reddit:

Ex-Redcentric directors convicted over accounting scandal [Financial Times] In 2019, Redcentric’s auditors PwC were fined £4.6mn by the Financial Reporting Council for botched audits of the company.

Burnout-busting strategies for busy season [Accounting Today] Accountants need to think outside the box and dig deeper into their workflow to ease pressure during busy season. Here are a few unique strategies that those in our industry should consider to avoid burnout.

Teach students to address accounting questions using data analytics [AICPA Extra Credit newsletter] Traditionally, accounting curricula focused on compiling, formatting, and auditing data, but not on data analytics. Data analytics allows us to enrich the curriculum by answering traditional accounting questions with data. Then, based on those answers, users can refine the questions and utilize new and better data and techniques to provide answers to those new questions. This process reflects the iterative nature of data analytics.

CAQ issues highlights of June 2021 SEC Regulations Committee meeting [Grant Thornton] The Center for Audit Quality (CAQ) recently issued highlights of the June 23, 2021 virtual joint meeting between its SEC Regulations Committee and the SEC staff. The SEC Regulations Committee meets periodically with the SEC staff to discuss emerging financial reporting issues relating to SEC rules and regulations. Key topics discussed at the meeting are summarized here.

Audit: IRS lost more than $400 million because of broken mail machines [The Washington Times] The IRS cost the government more than $400 million over the last three years because it didn’t bother to fix broken mail machines, the agency’s inspector general said in a new report Thursday. The machines are supposed to automatically identify which envelopes contain payments to Uncle Sam, so they can be quickly processed and deposited. But the 20-year-old machines are in such disrepair that they kept missing envelopes with remitted payments. Employees shut them off and resorted to looking for payments by hand — a much slower process.

Taylor Sappington is 30 years old, gay and Appalachian. He wants to be Ohio’s state auditor [WVXU] He is not a lawyer or an accountant, but he is clearly good with numbers and knows his way about a balance sheet.

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