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ICYMI here are the five most-read stories on Going Concern this week
- Here’s How Mid-Tier Accounting Firms Are Feeling About the Talent Crisis and Remote Work
- Deloitte’s Growing Its Disease Business
- Forvis and Mazars Consummate Their Union with a Postnuptial Jerk Off
- Yo, Where Are the Rainbows?
- Forbes Launches Westminster Dog Show But for CPAs
Drama Down Under
‘EY have modelled it’: Emails reveal advice that cost client $50m [Financial Review]
In 2014, Billabong founder Gordon Merchant wanted to sell his bioplastics business. He also wanted to make sure he didn’t pay much tax. Now the advice he took from EY has led to a $50m tax bill.
PwC to face scrutiny over advice to clients that might allegedly ‘mislead or subvert’ foreign investment review board [The Guardian]
The Greens senator Barbara Pocock has warned consultancy PwC Australia faces fresh scrutiny after the Australian Taxation Office revealed it had queried advice given to clients that might “mislead or subvert” foreign investment review board processes. The details were revealed in answers to questions Pocock put to the ATO about a meeting between the office commissioner Jeremy Hirschhorn and the then PwC chief executive, Luke Sayers, in August 2019. At that meeting, Hirschhorn “advised” Sayers about concerns with PwC’s tax practice. These had followed a 2015 tax scandal that prompted regulators to bar PwC’s Peter Collins from advising for eight years after he was accused of sharing confidential government information about multinational tax avoidance with his colleagues.
Anyone seen $6 million lying around?
— Barbara Pocock (@BarbaraPocock) June 6, 2024
It’d be easier to read a novel that’s been passed through a shredder than access info on what some private consultants do with taxpayer money.#auspol #senate pic.twitter.com/KpYRmI3lIu
Audit
How to build a team of ‘appropriately skeptical’ financial statement auditors [Phys.org]
A new study identifies the characteristics that make auditing professionals more likely to reward skepticism in the people they supervise, which is associated with an increased likelihood of identifying potential fraud during the auditing process. One key takeaway is that encouraging appropriate skepticism in auditors is closely tied to the culture of the workplace, offering valuable insights to firms that want to encourage rigorous audits. “Auditors need to be skeptical of the financial statements being provided by their clients, because skepticism is essential for detecting fraud and protecting the investing public,” says Joe Brazel, corresponding author of a paper on the study and the Jenkins Distinguished Professor of Accounting in North Carolina State University’s Poole College of Management. “However, recent research suggests audit supervisors often punish staff for exercising skepticism that does not identify a misstatement—or fraud,” Brazel says. “This presents auditors with an ethical conflict between acting in their own self-interest and acting in a way that improves audit quality and protects the public.
At June 12 Open Meeting, PCAOB To Consider Proposal for New Standard, Adoption of Amendments to Auditing Standards and PCAOB Rule [PCAOB]
At the meeting, the Board will consider the following:
- A proposal to replace the PCAOB’s existing auditing standard related to an auditor’s use of substantive analytical procedures with a new standard: AS 2305, Designing and Performing Substantive Analytical Procedures.
- Adoption of amendments to two PCAOB auditing standards, AS 1105, Audit Evidence, and AS 2301, The Auditor’s Responses to the Risks of Material Misstatement, to address aspects of audit procedures that involve technology-assisted analysis of information in electronic form.
- Adoption of an amendment to PCAOB Rule 3502, Responsibility Not to Knowingly or Recklessly Contribute to Violations.
Talent
Pipeline Pledge: How small commitments can make a big difference [Journal of Accountancy]
For Sue Coffey, questions about the talent pipeline for the accounting and finance profession have become as common as 100-degree days in Las Vegas. “I don’t think a day goes by where I don’t hear from someone that is challenged with their ability to find, attract, and retain professionals,” said Coffey, CPA, CGMA, AICPA & CIMA’s CEO–Public Accounting. On Tuesday — when thousands of 2024 AICPA & CIMA ENGAGE attendees heard from Coffey and other representatives of the National Pipeline Advisory Group (NPAG) — those talent questions continued. Coffey and the session panelists answered the questions with a question of their own: How can you help?
Young Climate Warriors Could Be the Key to Accounting’s Future [Bloomberg Law]
There seems to be a disconnect between a younger population that wants to be at the forefront of fighting climate change and the desirability to pursue a degree in the accounting profession that is on the frontlines of advising businesses to take action to decarbonize the American economy.
If you’re looking for talent, look no further than Accountingfly’s Always-On Recruiting. Get great candidates in audit, tax, and accounting in your inbox every week–FREE!
Accountants Behaving Badly
Two partners of Scarsdale accounting firm plead guilty to tax fraud [Mid Hudson News]
“As they admitted in court, the defendants, both certified public accountants, conspired to fraudulently reduce the tax liability of clients of their accounting firm,” U.S. Attorney Damian Williams said. “This case serves as a reminder to all Americans that they are required to truthfully report their earnings and that criminal penalties could await those who fraudulently deceive the IRS, as George Sanossian and Jack Sardis have learned. My Office will continue to hold to account those who scheme to impede the lawful functions of the IRS.”
Lawsuit: ‘Grandfatherly tax accountant’ Joseph Pezzano scammed Peco retirees out of $18.5 million [Philadelphia Inquirer]
Joseph Pezzano had pitched his investment plan to potential clients as a conservative, low-risk option, the perfect choice for retirees looking to safely invest their life savings. “You’re not going to make a killing on it, but you’ll be consistently getting money,” Pezzano told a former Peco employee in 2021, according to a recent court filing. That man decided to roll his 401(k) and a lump-sum cash distribution in lieu of a Peco pension into what he believed to be a self-directed IRA. Those former clients are now questioning whether Pezzano had invested their money at all, or whether it was simply stolen. And, if it’s gone, how will they pay their bills?
Cheating in the Profession [CPA Journal]
CPAs are respected for their subject matter expertise and high ethical standards. In the past several years, however, the unethical behavior of some CPA firm employees has led to increased public scrutiny. Cheating scandals involving the ethics portion of the CPA exam and other training courses by members of several CPA firms have thrown ethics into the spotlight and resulted in the largest SEC fines of accounting firms in history. It is important for CPAs to recognize the threat posed by cheating and to develop an understanding of why it happens.
Does this also count as an accountant behaving badly or is it just behaving badly?
Unlicensed Detroit CPA, real estate agent enters plea [FOX 2 Detroit]
A Detroit woman accused of acting as an unlicensed real state agent and certified public accountant (CPA) entered a no contest plea this week. Krystal Davis, 37, was the subject of a Hall of Shame investigation in 2020. She pleaded no contest to one count of accounting violations-unlicensed CPA and two counts of occupational code-unlicensed real estate agent.
Standards
Financial Accounting Foundation Issues 2023 Annual Report—GASB 40th Anniversary Edition [FAF] The report is available as a printable PDF file and as an enhanced digital version. The annual report, “Standards That Work from Main Street to Wall Street,” commemorates the 40th anniversary of the creation of the Governmental Accounting Standards Board (GASB). The report provides a snapshot of the major milestones over the last 40 years of its Board and staff as they have worked to earn the responsibility entrusted to them: to develop and issue accounting standards through a transparent and inclusive process intended to promote financials reporting that provides useful information to taxpayers, public officials, investors, and others who use financial reports.
Good Deeds
Deloitte workers clean up Louisville neighborhood [WAVE]
Jordan Harris, one of the volunteers said it was good for everybody. “When you’re used to kind of being in front of a computer screen, used to being in an office all day, it’s really good to just take it outside, go pick up trash, puck up litter and see a community be improved,” he said.
More on how Deloitters across the country spent Impact Day here.
Technology
Friendly reminder to talk to your staff about scams and how to spot them.
Scammer impersonating me trying to scam my employee on her personal cell phone 🤦♂️ pic.twitter.com/xPrsGIyta5
— Logan Allec, CPA (@loganallec) June 6, 2024
How do different accounting firms use AI? [Thomson Reuters]
The 2024 Generative AI in Professional Services Report from the Thomson Reuters Institute found that 30% of tax and accounting firms are in the consideration phase of whether to use GenAI tools, while 49% have no current plans to use. According to survey respondents, 8% of tax firms identified as using GenAI technology, with 13% of firms planning to use the tech soon.
Career Advice
6 signs you’re good at your job, according to an HR exec with over 35 years of experience [Business Insider]
*neurodivergents sweating nervously while reading this*
The ease at which you can do your job — how challenging or awkward it might be — is a good indication of how you’re performing. You might find that your emails are going down or you’ve got time at the end of the day, week, or month because you’ve overachieved. Conversely, if you keep more paper in the bottom left-hand drawer because you haven’t gotten to it, it may signal that you’re underperforming.
People
Baker Tilly admits 41 new principals [Baker Tilly]
“Our new principals embody the spirit of leadership and innovation that is at the core of Baker Tilly,” said Baker Tilly CEO Jeffery Ferro. “Their commitment to excellence and growth is key to continuing to drive our firm forward.”
KPMG names D.C. area managing partner [Virginia Business]
Patrick Ryan has been named managing partner of Big Four accounting firm KPMG’s Washington, D.C.-area office, the company announced Thursday. In the role, Ryan will oversee more than 3,000 employees and also will be the firm’s U.S. federal business leader and sector leader. He succeeds Tim Gillis, who is retiring Sept. 30 after 26 years at KPMG. He will split his time between the KPMG Tyson’s Corner and Washington, D.C., offices, a spokesperson for the company said.
Deloitte Global CEO Joseph Ucuzoglu named to USC Board of Trustees [University of Southern California]
USC alumnus Joseph Ucuzoglu, Deloitte Global CEO, has been named one of the newest members of the USC Board of Trustees. Ucuzoglu, a Los Angeles native, graduated from USC in 1997 with a bachelor’s degree in accounting. He currently serves as chair of the USC Marshall School of Business Board of Councilors and is a member of the USC Leventhal School of Accounting’s Securities and Exchange Commission and Financial Reporting Institute Advisory Council.
Citi CEO Jane Fraser posted this on LinkedIn:
Consulting, Or Something Like Consulting
How Top N.Y. Officials Helped a Lobbyist Cash in on State Government [New York Times]
In the midst of the pandemic in early 2021, New York state officials were hashing out how to build a mobile app to display users’ vaccination status when an unfamiliar face suddenly started joining the conference calls. The new participant, Michael Balboni, was a former state lawmaker and appointee of three previous governors, and more recently had been working as a lobbyist in Albany for Google, Oracle and other prominent clients. He was also a close friend of a top official in the budget office, the agency overseeing the app’s rollout. Soon after, one of the contractors overseeing the app’s development, Deloitte Consulting, signed Mr. Balboni up as a consultant, then as a lobbyist, paying him more than $300,000 over the next two years.