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Friday Footnotes: PwC Does Some Things; Bad Client Dumps EY; ‘Going From Balloon Animals to Accountancy’ | 11.4.22

Cute cat with autumn squash and pumpkin

Footnotes is a weekly wrap-up of all the news in and around the accounting profession, published every Friday at 5 p.m. Eastern. To get more headlines delivered on the regular, subscribe to our newsletter.

Big 4

PwC Retirees Get Early Approval for $267 Million Pension Deal [Bloomberg Tax]
PricewaterhouseCoopers LLP’s $267 million settlement with retirees seeking higher pension benefits received early approval from a New York federal judge, paving the way for resolution of a 16-year-old class action challenging various aspects of the company’s pension plan. The deal, which is expected to pay an average of about $11,000 to each of 16,000 former participants in the PwC plan, represents a recovery of “virtually 100%” of the benefits class members would be owed if they won their case in court, according to the settlement motion.

KPMG LLP and former audit principal withdraw request for review of DFSA fines [The National]
KPMG LLP and its former audit principal Milind Navalkar have withdrawn their request for a review by the Financial Markets Tribunal against the Dubai Financial Services Authority’s decision to impose financial penalties on them. Both Mr Navalkar and KPMG had referred the DFSA’s decision to the independent appeal tribunal after they were fined $500,000 and $1.5 million respectively for failing to follow international standards during audits of Abraaj Capital Limited, an Abraaj Group entity, for a number of years up to October 2017. The rulings were issued in June 2021 but only published on October 3 as KPMG and Mr Navalkar sought an order from the FMT to prevent publication. The tribunal subsequently refused both KPMG’s and Mr Navalkar’s requests for privacy and both then appealed to the DIFC Court against the FMT’s decision. However, the two parties have withdrawn their FMT references and “will not contest the DFSA’s findings in its decisions”, the DFSA said on Thursday.

My first boss: Lucy Stapleton, PwC head of deals [Yahoo! News]
I guess it was a big leap going from balloon animals into accountancy, said 51-year-old Stapleton. She has been a partner since 2006.

Hungary picks PwC partner to lead new anti-graft body overseeing EU funds [Reuters]
Hungary’s State Audit Office has picked PricewaterhouseCoopers forensic partner Ferenc Biro to lead a new anti-graft body to be launched by mid-November as part of efforts to regain access to European Union funds locked up over corruption risks.

Firm Watch

Grant Thornton Malaysia defends MD charged with money laundering [The Edge Markets]
Tax and accountancy firm Grant Thornton Malaysia PLT has come out to defend its managing director Datuk Narendrakumar Chunilai (NK Jasani), who was slapped with money laundering charges involving RM115 million belonging to Sabah Forest Industries Sdn Bhd (SFI).

BDO prepares for expansion with new Glasgow office [The Herald]
Accountancy firm BDO has moved into a new 8,000sq ft office in Glasgow as part of ongoing plans to expand its team. The firm has signed a 10-year lease at 2 Atlantic Square where more than 130 staff will be based. BDO said the move is a key part of plans to invest in the future of its operations in Scotland, delivering a base for its growing team which has added more than 20 trainees in recent months. “We’ve achieved significant growth over the past 12 months because of the resilience and ingenuity of the ambitious clients we work with,” said Martin Gill, head of BDO.


US Audit Inspectors Finish On-Site China Work Ahead of Plan [Bloomberg]
US audit officials completed their first on-site inspection round of Chinese companies ahead of schedule, according to people familiar with the matter, a sign of progress in the closely watched process to prevent the delisting of hundreds of stocks from Alibaba Group Holding Ltd. to Yum China Holdings Inc.

Core Scientific drops EY as external auditor amid bankruptcy fears [Proactive]
It is becoming increasingly likely that Core Scientific, one of the world’s largest bitcoin miners, is facing the threat of insolvency. SEC filings released today show that Core Scientific has “approved the dismissal” of auditing firm EY. EY (which alongside KPMG, Delloite and PwC comprises the global “Big Four”) has been replaced with domestic firm Marcum LLP. Per reporting requirements, Core Scientific conceded that EY cited numerous internal reporting deficiencies including “a lack of appropriate communication and recordkeeping” related to equity transactions and “design deficiencies in internal controls necessary to enforce appropriate segregation of duties for our digital asset wallets”.

PCAOB May Face Long Odds Completing Audit Quality Indicators Project [Thomson Reuters]
In response to investor advocates’ demand, the Public Company Accounting Oversight Board (PCAOB) added “firm and engagement performance metrics” to its research agenda, which is a resumption of a long-stalled project to develop a set of measurements to assess the quality of an auditor’s work. It was originally called the audit quality indicators (AQIs) project. However, the PCAOB’s decision fell short of expectations to at least one adviser to the board because the project was not put on its standard-setting agenda, given that prior board had issued a preliminary rulemaking release in 2015 following a couple of years of research. The PCAOB soon after had set it aside because of strong resistance by audit firms. “This is nothing short of a delaying tactic,” former SEC chief accountant Lynn Turner said in an interview. “This is a slap in the face of investors.”

Firm M&A

Arizona Accounting Firm Henry+Horne to Join Baker Tilly [CPA Practice Advisor]
The advisory CPA firm Baker Tilly US, LLP (Baker Tilly) and full-service accounting and advisory firm Henry+Horne, LLP (Henry+Horne) have announced their intent to combine effective Dec. 1, 2022.

Accounting firm Wipfli acquires the Oliver Group [Milwaukee Business Journal — subscription]
Wipfli says the acquisition adds to its organizational performance offerings.

Rockville accounting firm Aronson merging with Atlanta’s Aprio [Washington Business Journal — also subscription]
The Atlanta company has already made four acquisitions in 2022.

r/accounting once again asking the important questions:

And then there’s this from Tax Twitter. Clients amirite?

Think Grant Thornton was seething when they saw their star former economist on CBNC this afternoon with that big KPMG logo behind her? Anyway, the economy sucks.