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. Bye.
Technology
AI threat will motivate workers to return to the office, says PwC chair [The Telegraph]
Kevin Ellis, chairman of PwC, said the popularity of AI software will drive employees to abandon working from home as they want to “differentiate themselves from a robot”. During a livestream event on AI technology for 25,000 of his staff last week, Mr Ellis told workers: “For professional services, where researching and summarising data is a key part of junior roles, AI has the potential to fast-track year one trainees to year three. You’re freeing people up to do more. He added: “The latest wave of AI will likely bring people back to the office. People are going to want to learn from others face to face, and the best way a human can differentiate themselves from a robot is in person.”
ChatGPT Offers CPAs ‘Superpowers’ Deloitte’s Ucuzoglu Says [Bloomberg Tax]
“The use cases are breathtaking: They will fundamentally alter the profession,” said Deloitte Global CEO Joe Ucuzoglu, addressing a University of Southern California financial reporting conference on Thursday. “They will make people more effective,” Deloitte’s head added. “And I am a believer that this will be a significant net positive in terms of the types of work that we do and the value that we as a profession will be able to deliver.”
Investors turn to AI-guided dealmaking to gain edge over rivals [Financial Times]
Big Four accountant KPMG, hedge fund Coatue and venture capital firm Headline are among those using the latest AI tools to advise clients and help guide their dealmaking. “If you can train or use a model that gets a lot of efficiency first, you will get an advantage in that particular area of the business that is harder for a second mover to do,” said Pär Edin, who leads innovation in KPMG’s US deal advisory and strategy business. “It is about getting there first for each and every particular use case.”
A Scandal So Big It Needs Its Own Category
RBA Says PwC Barred From All New Contracts Until Scandal Clears [Bloomberg]
Reserve Bank of Australia Governor Philip Lowe said he’s “appalled” by the tax scandal that’s engulfed PricewaterhouseCoopers and the central bank won’t enter into any new contracts with the consultancy giant until a satisfactory resolution is reached. “We are appalled as you are,” Lowe told lawmakers in a Senate committee hearing in Canberra Wednesday. “The use of private information sought for commercial gains is wrong. It destroys trust and, as you know, it is unacceptable.”
Health puts PwC contracts back under the microscope [AAP]
The federal health department is taking a fresh look at contracts worth $25 million with PwC to check on any conflicts of interest. A Senate estimates committee heard on Friday the department had 12 contracts with the major consultancy firm. “We are actively engaging with PwC at the moment to identify any of those potential areas (of conflicts),” department secretary Brendan Murphy said. “They assure us that they have processes to manage these things, but we are going through every one of our contracts.”
Australia’s largest pension fund freezes work with auditor PwC [Reuters]
Australia’s largest pension fund will pause use of the domestic unit of auditor PricewaterhouseCoopers (PwC) as the “big four” firm reels from a national scandal over its use of confidential government tax plans to drum up work with global clients. The roughly A$290 billion ($196.71 billion) fund, AustralianSuper, has frozen new contracts with PwC and expressed concerns about the scandal “at the highest level”, according to a spokesperson. An audit contract worth A$1.6 million in 2022, will be reviewed this year, the spokesperson added. The fund spent A$700,000 on non-audit services last year, according to filings.
PwC narrowly dodged criminal probe five years earlier [AAP]
The federal police and the tax office jointly decided there was not enough evidence to launch a criminal investigation into the PwC tax avoidance leak back in 2018. The Australian Taxation Office first caught wind of the confidentiality breach as early as 2016 when it noticed companies shifting their affairs around to avoid incoming multinational anti-avoidance laws. Its investigation of the suspicious activity uncovered the potential breach of confidentiality by former PwC partner Peter Collins. Mr Collins, who has since been referred to the Australian Federal Police as part of a criminal investigation, allegedly circulated Treasury information about new tax laws to drum up new business from clients interested in ducking the regulation.
‘Existential’ threat facing PwC: Malcolm Turnbull [ABC]
The fallout from the PWC scandal continues, with big questions over the secrecy provisions that prevented the breach being made public years ago. Malcolm Turnbull was Prime Minister when the laws at the centre of PWC’s scheme to sell government secrets took effect, he says breach and abuse of confidence are absolutely “shocking”. Listen here.
M&A
National Accounting Firm Weaver Announces Acquisition of Pasadena-based HKG [Pasadena Now]
Weaver, a national accounting and advisory firm, said it has acquired Pasadena-based HKG, LLP, effective June 1. Founded in 1995, HKG provides audit, tax and accounting services to clients across many industries including private equity, health care / life sciences, manufacturing and distribution, real estate, media, professional services, early stage and emerging growth companies, and not-for-profit. “The partners at HKG look forward to the opportunities this transaction provides for each of our team members to grow and develop their careers as part of Weaver,” said Eric (Tony) A. Gronroos, HKG’s Managing Partner. “We also believe the expanded services Weaver offers, especially from a transaction advisory services perspective, will add value to our existing client relationships.” This transaction adds 65 professionals, including seven partners to the firm, significantly expanding Weaver’s West Coast presence to six offices and 150 total team members, including 18 partners.
Chicago Area Accounting Firms Porte Brown and RVG Partners Announce Merger [PR Newswire]
Porte Brown LLC is pleased to announce its merger with RVG Partners, LLC effective June 1, 2023. The Oak Brook-based public accounting firm is widely recognized as one of the most reputable firms in the area, delivering exceptional and personalized accounting and tax services. The professionals from RVG, now operating under the Porte Brown name, will continue to service clients from their Oak Brook location. “We are thrilled to announce our merger with RVG Partners and welcome their talented team into our organization,” said Joseph A. Gleba, CEO/Managing Partner of Porte Brown. “Their expertise and experience in the profession complements our service offerings and will provide additional value to our clients.”
Top regional accounting firm Abdo welcomes HG&K in strategic merger [Abdo]
Abdo LLP, a leading full-service accounting and advisory firm based in Minnesota, announced June 1 that HG&K, Ltd. has merged with the firm. In this transaction, HG&K’s three partners and 16 staff members have joined Abdo effective June 1, 2023. The newly combined firm will continue to operate under the Abdo name, with shared values, brand, and vision. Allan D. Koltin, CEO of Koltin Consulting Group, who advised both firms on the merger commented, “Abdo might be 60 years old, but they have the culture of a ‘day-one startup’ which resonates extremely well with young, entrepreneurial talent.
PHB CPAs merge with UHY to serve growing community [Williamson Herald (TN)]
On Wednesday, UHY LLP celebrated its new merger with PHB CPAs in Franklin. UHY is a nationwide professional service firm that will now provide Nashville and Williamson County’s middle market with audit, tax, consulting and advisory services. “We are so excited to be a part of this community and we really enjoy the support we receive from Williamson, Inc.,” Sarah Hardee, managing partner, said at the ceremony. “We are very proud to be re-branding under UHY; [this is] such an exciting time for our firm.”
Promotions
It has been brought to our attention that we neglected to give the May 15 FORVIS partner promotion announcement the attention it deserves. Thank you to the tipster who held us to task on that. Allow us to remedy that egregious oversight immediately.
FORVIS advances 65 new partners, principals, and managing directors [FORVIS]
FORVIS is pleased to announce the election of 40 new partners and principals, as well as the promotion of 25 new managing directors, effective June 1. This is the first class of partners and managing directors elected by the firm, which was formed by the merger of equals of BKD and DHG effective June 1, 2022. “Just as our first anniversary as FORVIS is an important milestone on the way to even greater success, so too, are these promotions a milestone for our leaders,” said CEO Tom Watson. “I know this group stands ready to make a further impact on the firm for years to come, and their best successes are ahead of them. They will lead by example, mentor others, and continue to dedicate the energy and passion necessary to grow our firm so we maintain our forward vision and incredible momentum.”
Deloitte grows leadership team in the Middle East with its largest-ever annual partner admissions [Zawya]
Deloitte, the largest professional services network in the world, grows its leadership team with 60 partner admissions in the Middle East, enhancing its capabilities across a range of offerings including Artificial Intelligence, Analytics, ESG, e-commerce, cybersecurity, M&A and more. This milestone marks the highest number of partner admissions in a single year in Deloitte’s history in the Middle East.
DEI
Majority of UK business executives see the metaverse as an opportunity to ‘move the needle’ on DE&I [EY]
Wut?
The metaverse is predicted to have the potential to help UK executives ‘move the needle’ on DE&I initiatives, according to research released today by EY. As adoption increases and business use cases solidify, bedding in DE&I best practices early on will help UK businesses seize this opportunity. According to EY’s 2023 Metaverse Readiness Survey, adoption of the technology is growing. Nearly half (47%) of business leaders are already investing in or using the technology in some, with 61% believing they cannot afford to be absent from it. When asked how they intend to apply it in a business setting, responses revealed that they’re to be predominantly people-based and focused on areas such as customer service.
NACD and Deloitte Release New Playbook to Drive Inclusion in Boardrooms across America, Turning the Lens Inward and Focusing on Culture of Inclusion [PR Newswire]
“This publication is a testament to the Center for Inclusive Governance’s ongoing journey toward creating an inclusive culture where every director feels valued, respected, and empowered to bring their authentic selves to the boardroom,” said Tracy Gee, chief people officer, NACD. “It is an opportunity to promote dialogue, understanding, and empathy—and to foster an environment where everyone can contribute their unique perspectives and thrive.”
