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.
Thoughts and prayers to everyone on the grind to October 16, you’ve got this. Take a break and take in some news.
Must Reads
An oration against polo shirts [Notre Dame’s The Observer]
The illness lies in its deceitful promises of being acceptable in too many contexts. Those who wear the shirt, to their folly, believe that they can unite superlative looks and optimal comfort in every instance of social interaction.
9:25 a.m. lecture in DeBart? Polo Shirt!
Trader Joe’s run? Polo Shirt!
Tailgating? Polo Shirt!
Sleep? Polo Shirt!
Going out to The‘Cade? Polo Shirt!
Interview with Deloitte? Deloitte Polo Shirt!
The fact of the matter is, when this garment promises you everything, it ends up doing nothing for you. What other clothing item affords this much liberty in application? The only ones that come to mind are underwear and socks. If the polo shirt was reserved for only business casual contexts, we would not be having this conversation. The issue is that Mr. Consultant networks 9 to 5 in his Deloitte polo shirt and “networks” 5 to 9 in his Deloitte polo shirt. Moreover, the pairing of polo shirts with other supporting garments is where even more offenses occur. Styling a polo with khaki shorts is the most common application. Oftentimes, there is no regard for harmony with respect to color combination, texture of the cloth or style of either garment.
Return to Office
KPMG Requiring In Office 3 Days A Week??
byu/WolverineAsleep1765 inBig4
KPMG CPO: The genie won’t go back in the bottle on the office [UNLEASH]
“I know there’s been that sentiment circulating that the best way to get productivity up is to have people in in the office,” said KPMG’s global chief people officer Nhlamu Dlomu. “There are really good reasons why you would want people in the office” – but why does that translate to embracing fully in-office work for the majority of CEOs? Why can’t hybrid be the solution? The fact is that so much has changed since 2019 – CEOs might want to turn back time, “but the reality is, once certain things change in society, it is very difficult to put the genie back in the bottle”. Although Dlomu does empathize with CEOs – they want their business to perform, and they need to report back to their shareholders – she is clear that they need to accept that the world has changed. Life has moved on; it is time for CEOs to get with the program and get rid of one-size-fits-all approaches at work.
I Quit!
PwC’s US boss to quit as race to lead Big Four firm accelerates [Financial Times]
PwC’s US head Tim Ryan has told partners he will leave the Big Four firm in June, following resistance from some colleagues to his candidacy to succeed Bob Moritz as global chair. Ryan, who has chaired the US firm for eight years, had been hotly tipped inside and outside PwC to replace Moritz, whose second four-year term is also due to expire next year. But partners were told on Friday that the US boss would leave upon the expiry of his current term, according to four people with knowledge of the matter.
The end of his US leadership term was “a natural inflection point for me”, Ryan told PwC US partners in an email. “Having seen so many of the challenges our clients and our society face, I have a strong desire to explore leadership opportunities outside the firm and help in a different way.”
Employers underestimate employee desire to quit, finds EY survey [EY Canada]
A quarter of Canadian employees are likely to quit their job in the next 12 months, with Gen Z and millennials the most likely to leave, according to the EY 2023 Work Reimagined Survey. While attracting and recruiting talent remain top priorities for Canadian companies, the survey reveals a disconnect between employee and employer expectations and motivations. A majority (57%) of employers believe that slowing economic growth is reducing employees’ likelihood to quit, while less than half of employees agree. At the same time, pay remains a top concern for 40% of Canadian employees, but falls to third place on the list of employer concerns.
Big 4
PwC accused of misleading Senate over plan to sell consultancy business while publicly criticizing idea at auditing inquiry in 2019 [ABC News Australia]
Consulting giant PwC has been accused of misleading the Senate for planning to sell its consultancy business at the same time it told a 2019 inquiry that separating its auditing and consulting divisions would make it impossible to operate. On Thursday, PwC’s current and former CEOs appeared in front of a Senate inquiry examining the management and integrity of consulting firms in Australia, established in the wake of PwC’s tax leak scandal. As the end of former PwC CEO Luke Sayers’ lengthy questioning approached, Senator O’Neill reproduced a submission from PwC Australia in 2019 to a Senate inquiry at the time that was examining audits and consulting firms. In the document, PwC pushed back on the idea of “structurally separating” auditing and consulting businesses because it would negatively impact their operations — but the Senate heard on Thursday that PwC was actively planning to separate its auditing and consulting businesses when it made that submission. “Mr Sayers, that makes me very much question the interactions of PwC with the Senate under your leadership, that this was going on in one part of the business, and the public documentation to the Senate was a denial that such a thing should ever occur, because it would make the business unable to basically operate,” Senator O’Neill said.
Audit regulator says accounting firms still falling short [The Globe and Mail]
One of Canada’s Big Four auditing firms has a significant number of problems in its work for the second consecutive year, the national industry regulator has found. In its mid-year report released Thursday, the Canadian Public Accountability Board, which oversees firms that audit publicly traded companies, says the unnamed Big Four firm had “significant findings” in four of the seven company audit files CPAB has inspected so far. It will not meet CPAB’s target for an audit firm to have significant findings in less than 10 per cent of its 2023 examined audits. The same firm also failed to meet the target in 2022.
Deloitte launches think tank to shape future governments [edge ME]
Deloitte Middle East has officially unveiled the “Future of Government” think-tank. The initiative seeks to bring together top experts in government affairs and digital transformation to chart a course for the future in key areas such as finance, human resources, procurement, technology, and decision-making. Muhannad Tayem, who leads the Government & Public Services division at Deloitte Middle East, said, “This think-tank aims to support governments in the region to channel their vision into practical pathways and solutions to improve the lives of their citizens. This, in turn, requires developing new ways of working, to re-imagine how processes and policies need to evolve with the accelerating rate of technological advancement, which will have a far-reaching impact on society, the economy, and the planet.”
India is a promising destination for global investors, says EY CEO Carmine Di Sibio [CNBC-TV18]
Why they always gotta bring up Everest? 😂
Practice
Art of Accounting: Leaving your job to start your own practice [Accounting Today Voices]
Profession OG Ed Mendlowitz drops some wisdom on starting your own practice whether you’ve got five to eight years’ experience, 15 to 20 years of experience, or are someone over age 50 who lost their job for one reason or another.
Being an entrepreneur means developing a business mindset. Your work as an accountant is basically a 9 to 5 job. Your work as an entrepreneur is a 24/7 job. You need to become aware of everything that needs to (or ought to) be done. You need to become systems and processes oriented, and you need to be well organized.
CPA firm profits and revenues jumped last year [Accounting Today]
Accounting firms experienced a median growth rate of 9.1% in net revenue in fiscal year 2022, according to a new survey, over double the 4.2% growth rate of fiscal year 2020. The 2023 National Management of an Accounting Practice (MAP) Survey, conducted every two years by the AICPA & CIMA’s Private Companies Practice Section and CPA.com, the AICPA’s business and technology arm, asked about profits on a per-partner basis, or “net remaining per partner/owner” — in other words, net client fees minus expenses and before partner compensation is taken out. That amount jumped nearly 9% from $207,506 in fiscal year 2020 to $225,725 in fiscal year 2022.
News
Washington Wizards Partner With Learn Fresh To Bring NBA Math Hoops To Washington, D.C. Students [NBA.com]
The Washington Wizards announced today that they have partnered with non-profit organization Learn Fresh to launch “Wizards Math Hoops” presented by KPMG LLP. This engaging educational program aims to help students across the District excel in mathematics. Wizards Math Hoops is free of charge to educators for the 2023-24 school year. “KPMG, in collaboration with The Washington Wizards and Monumental Sports and Entertainment, is proud to support the NBA’s commitment to teaching fundamental math and social-emotional learning through the game of basketball,” said Tim Gillis, KPMG Washington Metro Area Office. “As a leading professional services firm, we are committed to empowering young minds and fostering a passion for learning. Through its sponsorship with Math Hoops, KPMG is dedicated to creating educational opportunities that inspire students to excel in mathematics and beyond, paving the way for a brighter future.”
KPMG extends with Women’s PGA through ’28 [Sports Business Journal]
PMG has made another major investment in women’s golf, extending its deal to title sponsor the KPMG Women’s PGA Championship through 2028. KPMG has been the title sponsor of the women’s major since the 2015 tournament. The deal was previously extended in 2017 and ran through this past summer’s event. Financial terms of the deal were not disclosed.
Technology
Deloitte: Businesses should brace for worker-led AI disruption [Consultancy.com.au]
A new study from professional services firm Deloitte has determined that more than one quarter of the Australian economy faces imminent and significant disruption due to generative AI – calculated to be equivalent to almost $600 billion worth of upended economic activity. Yet, so far, only 1.4 percent of all Australian businesses and less than 10 percent of the country’s larger employers have officially adopted the rapidly emerging technology.
How big companies from EY to Johnson & Johnson are learning to master AI prompts [Fortune]
“These large language models are very generically trained,” Beatriz Sanz Sáiz, Global Consulting Data and AI Leader at Ernst & Young, told Fortune. “What we are trying to achieve is really bring in the best, let’s say tax professionals, to really fine tune, retain, and retrain.” Ernst & Young has specialized its system further by creating a library of embeddings. “Think of [embeddings] as additional datasets that you put into the model,” Sáiz said. “We can connect all the dots by bringing together the tax knowledge, the country regulation, maybe also the sector knowledge.” By plugging-in these additional datasets, the model becomes hyper-specific to its purpose. Companies are finding the best AI recipe entails building on a controlled dataset, injecting it with a library of embeddings, and querying with customized prompts. “Typically now what we’ll be able to do is assess clients, not on the expertise of an individual tax team but on the collective knowledge that EY has created for years,” Sáiz explained. “And not just in one jurisdiction, but globally across multiple jurisdictions.”
Many companies far from ready for fast-approaching SEC cybersecurity deadline [BenefitsPRO]
With companies having just four business days after determining a cyber breach is material to report it in an 8-K, many respondents are concerned about the ability to comply with the expedited reporting timeline when a third party is involved. Only 11% of executives surveyed by Deloitte on Aug. 24 said they have controls and protocols in place with third parties. Another 23% said they are still working on it. A larger percentage, 27.4%, said they have not completed evaluating communications with third-party suppliers but are in the process.
Hey CIT team, sorry to hear about the tardy filing. But you know what? Considering all that’s happened in the past year, filing a couple weeks late isn’t that bad. And besides, now that John Thain is running the show, all signs are pointing to a turnaround of epic proportions.