Comments are closed on Friday Footnotes and the Monday Morning Accounting News Brief by default. If you have something to say about any stories linked here you are welcome to email the editor, text us at 202-505-8885, or hit us up on Twitter @going_concern. See ya.
Private Equity
Before and after one CPA firm’s PE ‘flip’ [CFO Brew]
Top 100 CPA firm Schellman was an early adopter of private equity, striking a deal with Lightyear Capital in October 2021. In March 2026, it became one of the first CPA firms to “flip” from one majority private equity owner to another, accepting an investment from Goldman Sachs Alternatives. (Lightyear Capital stayed on as a minority investor.) Schellman’s CEO, Avani Desai, spoke with CFO Brew about how PE has transformed the firm, and what her plans are post-flip.
Big 4
PwC fined $166mn by Hong Kong regulators over Evergrande audit [Financial Times]
The Securities and Futures Commission said on Thursday that the Big Four accounting firm committed “serious breaches of auditors’ professional duties” during its audits of Evergrande in 2019 and 2020. Hong Kong’s accounting regulator said in a separate announcement that it had banned PwC from working for new clients for six months, calling the accounting failures “egregious”.
KPMG and EY demote partners in end of job-for-life model [Financial Times]
Winning promotion to the partnership of a Big Four firm was once a golden ticket to a lucrative job for life. But accountancy firms have begun quietly demoting partners in the UK as they move to concentrate profits among top performers. KPMG and EY have removed members of their equity partnership — the senior practitioners who own the firm and share its profits — and instead offered them “salaried partner” roles, several people with knowledge of the matter told the FT.
Rhode Island finalizes multimillion-dollar settlement with Deloitte after data breach [WJAR]
Rhode Island Gov. Dan McKee announced that the state has finalized a multimillion-dollar settlement with Deloitte after the RIBridges data breach in 2024. “This agreement reflects a deliberate effort to protect Rhode Island taxpayers while ensuring the State has the resources needed to move forward,” McKee said. “During the cybersecurity incident, my administration worked diligently to ensure Rhode Islanders maintained access to their benefits. Our focus remains on supporting Rhode Islanders who rely on these critical benefits.”
Big Four accounting faces a talent reckoning — they’re choosing AI over humans, cutting benefits and hiring [The Street]
“AI.” Wait until the guy who wrote this finds out about offshoring.
The number of junior positions has been drying up as firms push into AI, a trend which is observable across white collar fields. In accounting specifically, new grad hiring fell by up to 29% in recent years.
Tax
Feds Announce Marijuana Industry Tax Guidance Is Coming As Rescheduling Takes Effect [Marijuana Moment]
Federal officials said they plan to issue new tax guidance for the marijuana industry following a move by the Trump administration to reclassify cannabis that was announced on Thursday. The U.S. Department of the Treasury and Internal Revenue Service (IRS) said they “expect DOJ’s action to have significant positive tax consequences for businesses in the medical marijuana industry, and Treasury and the IRS plan to issue guidance to address the principal federal tax issues stemming from” the move.
People
Rethinking skills-based talent models: 4 paths to business value [Deloitte]
Organizations are increasingly focusing on what people can do—their skills—rather than relying on traditional proxies such as job titles. More than half (55%) of 2,300 business leaders in a 2024 Workday survey said they had already begun the transition to a skills-based talent model, with an additional 23% planning to start within the next 12 months. And 81% believe that adopting a skills-based approach increases an organization’s potential for economic growth. But recent Deloitte research shows that many organizations are struggling to realize tangible value from their skills-based approaches.
AI
Facing cost pressures, CFOs turn to AI and automation [Journal of Accountancy]
Savings could be around the corner for CFOs who invest more of their budgets in technology upgrades, the results of a new survey suggest. Deloitte’s Q1 2026 North American CFO Signals survey identified cost management as the top internal risk facing 200 CFOs polled from organizations with at least $1 billion in annual revenues. The CFOs voted for “automation or technology upgrades” as the lever that has proved to be most effective for controlling costs.
The best AI model still fails 1 in 5 accounting tasks [CFO.com]
Writes Woosung Chun, CFO at DualEntry:
We ran 19 leading AI models through 101 real accounting workflows. Not trivia. Not a “what is accounts payable” multiple choice. Actual accounting scenarios: Classify this transaction, create a journal entry for this scenario, reconcile this bank statement and close the month. The kind of work that sits in every finance team’s queue every single day. The best model we tested scored 79.2% accuracy. That was Claude Opus 4.7. Second place was OpenAI GPT-5.4 at 77.3%. GPT-4 scored 39.8% on the same tasks. Whatever you think about AI, that trajectory is hard to ignore.
Majority of US business leaders not confident they could pass AI audit – study [Global Legal Post]
Almost eight in 10 business leaders in the US are unsure whether they could pass an independent AI governance audit if it were imposed within the next 90 days, according to a Grant Thornton report. The 2026 AI Impact Survey found that 78% of executives lack strong confidence that they could pass such an audit, with as many as 48% of organisations’ boards failing to set any AI governance expectations despite the significant investment going into AI tools (three-quarters of boards have approved major AI investments).
Research shows AI can catch financial errors before they cost millions [Phys.org]
What if auditors could predict when errors are more likely to occur in financial reporting? Instead of simply improving techniques for detecting errors, they could focus on how to stop them from happening. This is the focus of work by Chanyuan (Abigail) Zhang Parker, assistant professor of accounting in the UT San Antonio Carlos Alvarez College of Business. Parker’s paper, “Predicting Material Misstatements Using Machine Learning,” was published in The Accounting Review.
Audit
What Is Audit Quality? [CPA Journal]
What is audit quality? This is not meant as a philosophical question, but rather as one that can be answered through definitions and evidence drawn from practice, audit committees, regulators, and academics. Because each stakeholder has different incentives and priorities, agreeing on a definition has been difficult. Regulators focus on compliance and consistency, audit firms emphasize efficiency and reputation, investors value reliability and transparency, and academics seek measurable constructs. Understanding and measuring audit quality requires connecting these diverse perspectives into conceptual ideals and observable behaviors that can be evaluated, compared, and improved.
HKICPA: High-quality auditing vital for capital market integrity [China Daily]
The Hong Kong Institute of Certified Public Accountants (HKICPA) has said high-quality auditing is the cornerstone that can maintain market confidence and integrity of the city’s capital market. The accounting profession’s statutory body was responding to the Securities and Futures Commission’s (SFC) Thursday announcement that it has reached an agreement with PricewaterhouseCoopers Hong Kong (PwC HK) for the auditor to set aside HK$1 billion ($128 million) to compensate independent minority shareholders of Chinese mainland developer China Evergrande Group.
