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November 30, 2022

Friday Footnotes: Opinions!; EY’s Blockchain Aspirations; KPMG Junior Reprimanded | 9.30.22

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Big 4

Average income of Deloitte’s partners in UK and Switzerland tops £1m [The Guardian]
Partners at Deloitte in the UK and Switzerland will receive an average income of more than £1m each for the second year in a row, after the accountancy firm enjoyed another successful year. Each partner will receive an average distributable profit of £1,058,000 in the year to the end of May, about 33 times the UK’s average annual pay. This is the first time the sum has exceeded £1m and is an increase of about 24% compared with the same period the year before. Equity partners do not receive a salary but instead receive a share of profits as income, with 672 of them sharing £711m in profits in the 2022 financial year.

Ernst & Young Wants to Be ‘The Best on Earth at Ethereum’ Says Firm’s Blockchain Lead [Decrypt]
“Unlike anybody else, we’re actually building tools and applications in this space, so we built, for example, our own blockchain audit platform, where we can do on-chain and off-chain transaction reconciliation,” said Paul Brody,blockchain lead at EY.

KPMG junior in Carillion forgery case should have questioned orders, tribunal says [Financial News]
Former KPMG accountant Pratik Paw should have questioned the “highly unusual” instructions he received from his superiors to create meeting minutes that were used to mislead inspectors probing the firm’s 2016 Carillion audit, a tribunal found. KPMG was fined £14m in May for the wrongdoing of its former staff in the case after a tribunal found that its accountants conspired to mislead a 2017 inspection team looking into audit work it conducted for the troubled engineering company, which collapsed in 2018.

Firm Watch

Years-long trend of consolidation reaches city’s largest accounting firms [Crain’s New York Business — subscription]
Cited in the article: client needs and the talent shortage:The consolidation trend, which started among small firms following the 2008 financial crash, has been accelerated by increasingly complex client needs and firms’ need for capital, according to Jeffrey Weiner, chairman and CEO of Marcum (No. 5), which merged with Friedman in September. “Our clients need a team with a deeper bench to service them,” Weiner said. On the talent shortage:“This trend is likely to continue for the foreseeable future,” said Alan Wolfson, Northeast regional managing partner at CohnReznick (No. 14). Retaining talent is both an industry challenge and a factor in firms merging. Larger companies tend to have more flexibility for better pay, benefits and career growth, Wolfson said.

Baker Tilly acquires True Partners Consulting [Business Wire]
Known for their high-end tax services, TPC is especially strong in corporate tax, serving public and private enterprises. This complements Baker Tilly’s strong corporate tax talent. The combination will also bring Baker Tilly a new capability in unclaimed property. “TPC has incredible talent and a market reputation for excellence,” said Craig Weaver, Baker Tilly Managing Partner – Tax. “Together, we have a shared drive to enhance the client experience through technology.”

Rehmann merges in Vestal & Wiler [Accounting Today]
Rehmann, a Top 40 Firm based in Troy, Michigan, is continuing to expand its footprint in Florida by adding Vestal & Wiler, a firm based in Orlando, effective Nov. 1, 2022.

 

Audit

PCAOB seeks comments on interim attestation standards [Journal of Accountancy]
The PCAOB issued Monday a request for information and comment on the application and use of its interim attestation standards. The request is expected to help inform potential recommendation that the staff may make to the board regarding updates to the interim attestation standards, which were adopted in 2003. Modernizing standards is one of the PCAOB’s four key goals, according to its strategic plan released last month. Earlier this year, it announced “one of the most ambitious standard-setting agendas in PCAOB history,” including plans to modernize standards that have not been updated since they were adopted.

At trial, Vatican auditor says he was shocked by misuse of funds [Catholic News Service]
The Vatican auditor general said he was surprised by the lack of ethical standards demonstrated by officials considering investment opportunities, including a failed London property development deal. During the Vatican trial of 10 defendants accused of various charges related to financial malfeasance, Alessandro Cassinis Righini, auditor general of the Holy See and Vatican City State, criticized the mismanagement of funds as well as the Vatican’s association with people “with clear conflicts of interest,” which resulted in the loss of millions of euros.

Seven things you (probably) don’t know about internal auditing [Accountants Daily]
Number 1: It does not mean accounting (No really, that’s #1 on the list)

Accountant Life

Burned out on public accounting or burned out on your firm? They’re not the same thing [Accounting Today Opinion]
Brian J. Kelleher writes:Burnout is real. And in the wake of the pandemic, in one way or another, most of us have felt it. Even before the pandemic, I saw young accountants make a common mistake: assuming they are burned out with public accounting as a profession, when the truth is their current firm just isn’t the right fit. What is important to remember is that all public accounting firms are not the same. There are many great regional and local CPA firms that can provide excellent career opportunities in an environment that is more conducive to long-term happiness and success. In many cases, a lateral move to a smaller public accounting firm (which could still be quite large) can be the answer.

Hahaha it got the blue button-up and everything:

Opinion

EY’s Auditing and Consulting Split Is an Investor Protection Win [Bloomberg Tax Opinion]
We buyin’ this? While details are still being hammered out, accounting insiders speculate that the move to separate the two operations will, in effect, stop newer EY recruits from pursuing cross-practice advancement of audit, tax, and advisory work as their more experienced colleagues have. Nevertheless, from an investor protection perspective, the move should be a big win. Over the years, serious conflicts of interests have arisen due to accounting firms conducting both audit and consulting work for the same or related companies. Such conflicts frequently lead to corporate misstatements, breaches of fiduciary duties, and in some cases, fraud—which inevitably erodes investor confidence and results in securities class actions and regulatory actions.

Why Lawyers Reject Non-Attorney Firm Ownership [Bloomberg Law]
Not that long ago, we published a letter to the editor about the “watering down” of the accounting profession, which included a mention of the rule change that made it possible for non-CPAs to become partners in accounting firms. This Bloomberg Law post explains why lawyers don’t want the same.

News

Canada Can Demand Audit Details From Accountants, Court Affirms [Bloomberg Tax]
Canada’s tax authority has the power to compel information on a wealthy family known for building megamalls from the family’s accounting firm, a Canadian court ruled.

SEC committee calls for FASB reform [CFO Dive]
The Securities and Exchange Commission (SEC)’s Investor Advisory Committee (IAC) issued a draft report criticizing the Financial Accounting Standards Board (FASB)’s rule-making process for falling short of providing the new or updated guidance needed by investors to analyze company value in today’s fast-changing markets. There “is a significant backlog of high-priority accounting topics that need to be addressed (e.g.intangibles and key performance indicators). The nature of public companies has changed dramatically over recent decades, and the FASB has yet to promulgate standards to account for these changes,” the Sept. 14 draft posted on the SEC website states.

 

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