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. See ya.
Yeah, That PwC Thing Is Still Going On
Australian state bans PwC from new tax contracts for three months [Reuters]
An Australian state on Thursday imposed a three-month ban on PricewaterhouseCoopers’ (PwC) local unit from receiving new tax-related contracts – the latest repercussion to hit the firm after its misuse of confidential federal government tax plans. The action by New South Wales, home to Sydney and Australia’s most populous state, is a “proportionate response to the current investigations involving PwC,” Courtney Houssos, the state’s finance minister, said. PwC will also be required to remove staff with links to the leak from all contract works for the state government – a move that the federal government has also demanded and PwC has agreed to. Last week, PwC named at least 67 current and former staff involved in the leak of government tax plans.
The Big Four consultants have captured universities [The Saturday Paper]
Written by Tim Moore, a retired associate professor of linguistics. He worked for 30 years at two Victorian universities. That’s the Australian state not the prudish era full of laudanum and cool home architecture.
One of the many revelations to emerge from the current PwC tax scandal is just how deeply the tentacles of private consultancy companies have penetrated our national institutions. One such institution is our universities. In Victoria – where I worked in the university sector for 30 years – a survey of university annual reports shows about $70 million was outlaid on consultancies in 2019 alone. There is evidence this spending fell a little during the pandemic – when universities experienced some loss of revenue – but this has now ramped up again. The figure last year was a new high – $86 million. To put these recent numbers into perspective, 10 years ago the spending was estimated at $17 million. Ten years before that, it was virtually nothing. Victoria is home to about a quarter of the country’s universities. Given that consultancy hiring is known to be endemic throughout the sector, it’s possible to extrapolate from the Victorian numbers a spend of about $350 million nationally for the year 2022 alone. So what are these precious public resources being devoted to – and is there any sense of institutions getting value for what they pay?
Pipeline
Showcasing Change Is the Way to Boost Accounting Talent Pipeline [Bloomberg Tax]
Accountants can address the shortage of young talent in the field by embracing new technology, committing to diversity, and investing in mentorship, says Jeremy Sulzmann of the QuickBooks partners segment at Intuit. Accountants love their jobs. Sixty-nine percent say they experience job satisfaction, and 82% would recommend their career to young professionals, according to recent QuickBooks data from a survey of 2,000 US accountants. Yet there’s a dearth of young talent entering the field.
Big 4
Next EY CEO’s Tall Order: Heal Rifts, Fix Consulting Conflicts [Bloomberg Law]
EY faces a pivotal moment as partners prepare to choose a new leader who will steer the $50 billion global accounting firm and begin to repair the rift caused by its now defunct separation strategy. Ernst & Young this summer will begin choosing a successor to global chairman and CEO Carmine Di Sibio, who is retiring in June 2024. The firm’s next leader will face a long list of challenges familiar to the executives of other large multinational businesses—inflation, economic uncertainty, and political divisions over issues such as diversity and climate change. But internal angst over the failed split—with the US and some international operations sharply divided over strategy—makes the role even more challenging.
ICYMI: Suddenly Cognizant of Mandatory Retirement Age, EY Global CEO Carmine Di Sibio Is Stepping Down
EY CEO’s retirement sounds new leadership alarm [CFO Dive]
“It is more than just the amount of time and money they’ve put into this,” said Shapiro. “There were also underlying business reasons as for why they were trying to split up to begin with, like conflicts of interest, that’s why ultimately, we’re going to have to get back to this in some way, shape or form.” With Di Sibio’s exit, and the abandonment of Everest, the accounting giant may be plotting for a new era of leadership, as well as a new plan to successfully follow through with the split, according to attorney Mathieu Shapiro, a Philadelphia-based managing partner at law firm Obermayer who specializes in commercial split transactions. “What I assume is going on right now behind the scenes, is extensive conversation about what they’re doing instead of Everest, and I assume that we will see a new leadership that is committed to and trusted to handle and figure out whatever the replacement is,” he said.
New Data From Deloitte and the Alliance for Board Diversity (ABD) Reveals Continued Focus is Necessary for Fortune 500 Boards to be More Representative of the US Population [PR Newswire]
More than ever before, the corporate directors of America’s largest and most prominent public companies are likely to reflect an array of gender, racial and ethnic diversity. But while the boardroom is starting to reflect a broader range of lived experiences, the rate of change has room for improvement. Today, in collaboration with Deloitte, the Alliance for Board Diversity (ABD) released the seventh edition of “Missing Pieces.” This comprehensive biennial report examines and chronicles the representation of women and individuals from underrepresented racial and ethnic groups on the boards of Fortune 500 companies. The report’s latest edition analyzed data from 2020 – 2022 and highlights trends around some aspects of board diversity across Fortune-ranked companies, the disparities between these boards and the U.S. demographic population and variations in boardroom diversity across industries.
Technology
KPMG: “Legislation will help us support organizations in doing the right thing with AI” [CTech]
“AI has been around for quite a long time. It is now at the tip of our fingers and it is not going to go away. For sure we as people, humanity, need to think about how to protect ourselves from letting machines make all of the decisions for us, that is why judgment should be applied and this is why we have regulators.” Roni Michael, Head of KPMG Israel’s technology arm KPMG Edge, made the remarks at its Work After Work event in Tel Aviv. With more people using generative AI and as businesses and educators learn to integrate it more, it is inevitable that law will have to be introduced to help curb or control its uses.
Senior leaders often show reluctance to adopt emerging technologies and communicate poorly with others, an EY survey shows. [EY]
The EY Emerging Tech at Work 2023 survey, a new study of workers from across industries and generations, reveals that 89% of respondents believe adopting emerging technologies is beneficial for their company, and 79% of respondents consider themselves familiar with emerging technologies shaping digital transformation today.
“Knowledge-based” jobs could be most at risk from AI boom [CBS News]
Integrating generative AI tools into the workplace could theoretically automate as much as 70% of the time an employee spends completing tasks on the job, the consulting firm estimated. That could help many workers save time on routine tasks, which in turn will boost profitability for businesses, McKinsey said in a recent report. For the U.S. economy as a whole, meanwhile, the gains could be considerable, adding $4.4 trillion annually to the nation’s GDP. But such productivity gains could come with a downside, as some companies may decide to cut jobs since workers won’t need as many hours to complete their tasks. Most at risk from advanced forms of AI are knowledge-based workers, who tend to be employed in jobs that traditionally have had higher wages and more job security than blue-collar workers. As a result, most knowledge workers will be changing what they do over time, McKinsey Global Partner Michael Chui told CBS MoneyWatch.
AI, ChatGPT, and the professional services firm – an enterprise risk? [Lexology]
Marsh supports a significant number of professional services firms. Recently, these clients have started raising enquiries with them about ChatGPT as well as AI tools in general. This article considers the risk from this new technology from various perspectives, and offers some thinking about how to adapt.
TaxGPT: Advancing AI And The Tax Profession [Forbes]
Robert Goulder of Tax Notes and Benjamin Alarie and Susan Massey, both of Blue J Legal, discuss the benefits and drawbacks of using generative AI models to assist with complicated tax questions and research.
Firm Watch
Inside Public Accounting interviewed Marcum’s Chief Human Resources Officer, Molly Crane, on the firm’s hybrid work strategy [Marcum]
An informal poll of 19 New York firms discovered that many firms want their staff to come in more often, even if these firms recognize workplaces won’t go back to the way they were in the past. At LMC, for example, staff will be required to come in three days rather than two starting in July in a new office with double the space. Meanwhile, Marcum, another IPA 100 firm based in the city, has made the three-day request since 2020, although it’s not mandated.
Grant Thornton reorganizes regional divisions, appoints new leaders [Consulting.us]
Grant Thornton US on Wednesday announced a newly designed regional structure and an array of new leadership appointments. The reorganization and appointments aim to advance the firm’s business strategy and ongoing growth momentum. The Chicago-based firm grew revenues 16% in FY22 to reach $2.3 billion. “The challenges confronting our clients require us to continuously deliver high-quality, integrated offerings that are personalized to meet their unique needs,” said Seth Siegel, CEO of Grant Thornton. “Our new leaders will do this by bringing us closer to our clients, delivering the right solutions and drawing our highly-skilled professionals together to act as one.”
Other Stuff
Art of Accounting: Relationships mostly never end well [Accounting Today Voices]
Withum partner Edward Mendlowitz offers a list of ways you can be a better person.
Dear Annie: My work as an accountant is so boring that I dread getting out of bed every morning [Dear Annie]
DEAR ANNIE: I’m feeling torn between pursuing my dream and maintaining my financial stability. I have a job as an accountant making six figures, but it’s boring work — so boring that I dread getting out of bed every morning. The days go by slowly, and I find myself living for the weekend.
Gen Z and millennial workers feel confused, irritated, and left out by endless ‘workplace jargon’ in the office, LinkedIn research shows [Insider]
New research released by LinkedIn and Duolingo surveyed 1,016 respondents in the UK between the ages of 18 and 76 and found that 48% of Gen Z and Millennials are feeling left out at work because of the use of workplace jargon like “blue sky thinking,” and “low-hanging fruit,” according to a press release viewed by Insider. A little more than two-thirds of young people said that their colleagues were going overboard with jargon at work, but 54% of young workers said that they changed how they spoke to fit in. Some 60% of Gen Z and Millennials said the jargon was like a different language, and, as a result, almost half said that they had made a mistake at work because they didn’t understand a phrase. More than half of young professionals said that they had looked up a word in a meeting to understand the conversation, while 83% said that they had used a word they didn’t really understand in a professional situation to keep up appearances.
