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Friday Footnotes: Still Working on Diversity; What’s the Watchdog Up To; Record Fine for Deloitte? | 7.10.20

Strategies for CPAs to encourage positive changes in diversity [Journal of Accountancy] The racial injustice taking place throughout the United States has hit home hard for members of the AICPA National Commission on Diversity and Inclusion, who spend much of their time developing strategies and resources for improving the diversity of the accounting profession. Commission member Elena Richards, minority initiatives and talent management leader in the Office of Diversity at PwC, has a 12-year-old daughter who’s fiercely optimistic that she will be able to accomplish anything she wants if she puts her mind to it. “That’s what keeps me going,” Richards said, “trying to make this a better space or world for her so she can live on any block that she wants, run down the street in her sweatshirt, and her mom will not have to tell her not to put her hood on. It’s awful, but I do have to tell her that.”

Top U.S. Market’s Audit Watchdog Gives Gloomy Forecast for Quality Bookkeeping at U.S.-Listed Chinese Firms [NY Times] An official with the U.S. Securities and Exchange Commission’s (SEC) accounting oversight arm on Thursday said it sees “no prospects” of being able to properly do its job overseeing disclosures and preventing accounting fraud in China, amid ongoing consideration by the Trump administration of how to stave off the possible investor risk.

U.S. Audit Regulator Still at Impasse With China on Inspections [Bloomberg Tax] Negotiations with the Chinese government over audit inspection and enforcement access haven’t produced anything meaningful despite Chinese authorities’ statements of willingness to chart a path forward, the chair of the U.S. audit regulator said Thursday. China and Hong Kong are the only countries where the U.S. Public Company Accounting Oversight Board has been “meaningfully blocked from performing inspections,” board Chairman William Duhnke said.

AICPA Urgently Asks IRS for Tax and Penalty Relief [CPA Practice Advisor] In the letter, the AICPA urges the IRS to “act immediately to automatically waive failure to file and failure to pay penalties to the millions of taxpayers affected and working through the challenges created by the coronavirus.”

UK watchdog seeks record fine for Deloitte audit of Autonomy [Reuters] In a draft report, the tribunal – which will decide on any sanctions – found instances of recklessness, lack of objectivity, and a failure to discharge its public interest duty by Deloitte.

The Importance of Accounting Comparability [CFO] The existing standards provide accounting chiefs with alternative choices (e.g., inventory cost-flow assumptions, depreciation methods, accounting for derivatives) and a great deal of discretion in their estimations. In addition to the variation in accounting policies observed across industry peers, there is also considerable variation in firms’ accounting consistency over time.

Critics Say UK’s Proposed Big 4 Auditing Reforms are Toothless [OCCRP] U.K. regulators said on Monday that the four of the world’s largest accounting firms, known as the Big Four, will have to separate their audit departments from the rest of their operations. Critics, however, say the move will not meaningfully deter the Big Four from continually conducting faulty audits that aid and legitimize corporate misconduct.

Audit watchdog holds break-up talks with top accountants [Sky News] Directors from Britain’s leading audit firms have been summoned for talks with the industry regulator amid mounting boardroom concerns about the break-up plan it confirmed this week.