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Friday Footnotes: Why Private Equity Loves the Profession; A Very Naughty KPMG Employee; WTF PwC Guy | 4.5.24

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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.

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Private Equity

Why private-equity investors see a target-rich environment in Chicago’s accounting biz [Crain’s Chicago Business]
Isn’t “target-rich environment” what Overwatch’s Soldier 76 says when he pops his ult and proceeds to melt the entire enemy team? Foreshadowing maybe.
Private equity investors are circling accounting firms as the industry, long-tied to a partnership business model, braces for an uncertain future. “It’s definitely a new trend,” said Michael Minnis, an accounting professor at the University of Chicago Booth School of Business. “There’s certainly been a lot of interest and activity in the accounting space by private equity.” But the trend has also piqued concerns over how private equity’s history of selling off assets, gutting companies and laying off workers to service substantial debt will unfold in the accounting business, a sector that’s dominated by several giants while also being highly fragmented at the lower end of the scale — conditions that can attract private-equity investors keen to consolidate balkanized industries and wring out profits. “This gutting to fuel profits is always the concern when private equity gets involved in an industry,” said Jim Baker, executive director of Private Equity Stakeholder Project, a Chicago-based nonprofit that’s critical of private-equity activity in essential industries.


School of Accounting will honor alums at Wilton T. Anderson Hall of Fame Banquet [Oklahoma State University]
Oklahoma State University’s School of Accounting will honor three outstanding alumni during the 2024 Wilton T. Anderson Hall of Fame and Awards Banquet on April 21 at the ConocoPhillips OSU Alumni Center. This year’s distinguished alumni being honored with induction into the Wilton T. Anderson Hall of Fame are: Randy Mecklenburg, who earned his bachelor’s degree in accounting from OSU in 1973, is co-founder of the law firm of Harrison & Mecklenburg, which has offices in Kingfisher, Stillwater and Watonga; Jack Murray, who earned his bachelor’s degree in accounting from OSU in 1985, is a partner at HoganTaylor and serves as the leader for the company’s nonprofit practice. The Early Career Rising Star honoree is Vivian Newton, who received both her bachelor’s (2016) and master’s (2017) degrees in accounting, along with an Honors College Degree. She is serving a two-year rotation as a manager in Grant Thornton’s SEC Regulatory Matter Group in Washington, D.C.

CPA licensure program off to ‘promising’ start [Journal of Accountancy]
38 people huh?
The Experience, Learn & Earn (ELE) program, a pilot program designed to help accounting graduates earn required academic credits for CPA licensure, has received early positive reviews. Thirty-eight students are enrolled in the program, which was developed by the AICPA and the National Association of State Boards of Accountancy (NASBA). The program is intended to offer a flexible and affordable way for accounting graduates to complete the CPA licensure requirement of an extra 30 academic credits beyond a typical bachelor’s program. Online classes, offered through Tulane University’s School of Professional Advancement (SoPA), began in January. “No single initiative will solve the profession’s talent shortage,” Sue Coffey, CPA, CGMA, AICPA & CIMA’s CEO–Public Accounting, said in a news release. “But the ELE program demonstrates the kind of creativity, collaboration, and follow-through we need to remove barriers to a successful and rewarding career in accounting.”

Just in Case You Need This

I Survived a Layoff by Making These 4 Money Moves [Yahoo! Finance]
Aitzarelys Negrón, certified public accountant (CPA) and founder of Strategies and T.E.A., said, “I had been working at a [major] accounting firm since 2015 before being laid off in the fall of 2020. At that firm, I was an external auditor for almost five years, and in the final year, I was working in our Financial Accounting Advisory Services group.” She survived her layoff by making these four money moves: Building a Financial Cushion, Reducing Spending, Creating a Job Search Strategy, Finding Additional Income Sources.

Law & Order

KPMG staffer’s lavish lifestyle revealed after R16.5m fraud arrest [The Citizen]
Meanwhile, in South Africa…
Social media platform X was abuzz on Thursday as users revisited the lavish lifestyle of KPMG employee, Fidelis Moema, after he was charged by the Hawks for allegedly diverting more than R16 million [$882,466 USD] in bursary funds to his own pockets. Moema, employed as a bursary specialist at auditing firm KPMG, appeared in the Commercial Crimes Court at Palm Ridge on Tuesday. Users on X dug out posts by Moema’s purported girlfriend and influencer Sthe Bhengu depicting the lavish overseas holidays and extravagant gifts the two enjoyed.


Artificial intelligence in companies: A key success factor, not just a trend [Deloitte]
“AI is not a passing fad.” Marc Beierschoder, Head of AI & Data at Deloitte Switzerland, is quite clear about the importance of artificial intelligence in day-to-day business. What was once a shiny toy that briefly boosted a company’s reputation for innovation has long since become an essential tool for successful business operations. In particular, generative AI tools such as ChatGPT and DALL-E, which are designed to produce new content in the form of text, images, audio files or videos, are already an established part of employees’ routines.

EY Blood Donation Blockchain Pilot ‘Healthcare Breakthrough’ [Healthcare Digital Magazine]
An estimated one in 10 people attending hospital every day will require some kind of blood transfusion. Whether as part of treatments for cancers or other blood diseases, in response to serious accidents or as part of major surgery, transfusions are a cornerstone of medicine. Which is why blood donation programmes are so important, and yet, as an EY Canada case study report points out, blood donation, processing, testing, distribution and transfusion is a complex, highly regulated process. EY Canada has been working with Canadian Blood Services (CBS) on a proposal to put blood records on the blockchain. The aim is to provide real-time visibility and traceability of blood products throughout the healthcare system.

KPMG Envisions AI as Part of Every Job in Its Global Workforce [Bloomberg Tax]
KPMG partners who lead the firm’s global AI strategy are pursuing a quest to weave generative AI into all aspects of the organization’s work and touch every corner of its global network. Armed with a $2 billion war chest, they’re trying to transform KPMG so its 270,000 workers are trained to use generative artificial intelligence from drafting meeting minutes to analyzing tax documents, from writing spreadsheet formulas to letting their staffers experiment with novel uses in a safe, digital sandbox. “We’re attempting to put AI into everything we do,” said Steve Chase, vice chair of AI and digital innovation for KPMG US. “That is our mission statement.”

Deloitte Invests $2 Billion to Accelerate IndustryAdvantage™ for its Clients [PR Newswire]
Gibberish, pure gibberish.
As technology rapidly evolves, businesses across industries are increasingly reimagining and building products and services to better serve their customers and grow their businesses. To help with this transformation, Deloitte today announced a strategic $2 billion investment in IndustryAdvantage™. This strategic investment creates new approaches to rapidly building industry-focused solutions by leveraging domain experience, coupled with the principles of modern engineering, AI and cybersecurity. This is designed to help accelerate industry-proficiency programs for Deloitte professionals with a focus on applied technology. In addition, the commitment includes co-investment with Deloitte’s eligible clients and alliances to target new industry and sector-specific problems, leveraging Deloitte’s industry-specific assets, including more than 100 Generative AI (GenAI) enabled accelerators and new business offerings.


Trump Media auditor warns that losses ‘raise substantial doubt’ about company’s ability to continue [NBC News]
Trump Media and Technology Group, which operates the Truth Social platform, reported it lost $58.2 million in 2023 while generating total revenues of $4.1 million, according to the Monday filing with the Securities and Exchange Commission. Trump Media listed its largest expense for the year as interest payments totaling more than $39 million. The filing includes a note from an independent accounting firm, Colorado-based BF Borgers CPA PC, warning that Trump Media’s “operating losses raise substantial doubt about its ability to continue as a going concern.” In a separate filing Monday, Trump Media cited the auditor’s analysis in describing the risks facing the business. Borgers has worked with Trump Media since 2022.

KPMG to Close Hong Kong Law Firm Amid Tensions [Bloomberg Law]
KPMG reportedly is closing its law firm in Hong Kong, joining the list of those scaling back operations in the city and across China amid the region’s authoritarian shift. SF Lawyers is expected to wind down Hong Kong operations as soon as this month, according to a report from, citing three unnamed sources. SF Lawyers is an independent firm of five lawyers associated with KPMG, according to its website. EY, another Big Four consultancy, closed its Hong Kong affiliate LC Lawyers in January.

Police investigated sexual assault allegation against PwC employee [Financial Review]
Police have investigated allegations that a PwC employee in Sydney followed a colleague home after a night out and sexually assaulted her. The woman, who AFR Weekend has chosen not to name, is suing PwC under workplace laws, including for damages. Both parties agreed on Friday to attend mediation. On August 25, 2023, there was a team gathering at PwC’s Sydney offices, and afterwards employees attended bars in the city, including Ryan’s Bar and PJ O’Briens. It is alleged the woman and the accused man attended separate drinks after the office function but ran into each other as groups moved through different city venues. The man allegedly “pursued the applicant, followed her home before engaging in non-consensual intercourse”, according to the woman’s legal filings against PwC in the Federal Court, read out by Justice Tom Thawley. The court heard the accused man has chosen to remain silent.

Treasury, IRS issue guidance on the tax treatment of amounts paid as rebates for energy efficient property and improvements [IRS]
The Department of Treasury and the Internal Revenue Service today issued Announcement 2024-19 [PDF] that addresses the federal income tax treatment of amounts paid for the purchase of energy efficient property and improvements. Generally, taxpayers who receive rebates for the purchase of energy efficient homes will not include the value of those rebates as income on their tax returns, however they will need to reduce the basis of the property when they sell it by the amount of the rebate. The Inflation Reduction Act (IRA) statutory language describes performance-based incentives and electrification product subsidies as “rebates.”

Folwell expresses doubts about EC’s long overdue audit [The Daily Advance (North Carolina)]
Another late city audit. Watch this space.
State Treasurer Dale Folwell has doubts that Elizabeth City’s financials for the city’s late fiscal year 2021-22 audit have been in the hands of the city’s outside auditor for months as city leaders have claimed. The 2021-22 audit was due to the state on Oct. 31, 2022, and the city’s outside auditor PB Mares must complete its work before it can be submitted to the state’s Local Government Commission. City Manager Montre Freeman told City Council last April that the city’s financials would be ready to be submitted to PB Mares in the coming weeks. But last October it was disclosed that the city’s financials had been in PB Mares’ hands for just several weeks and that the audit was expected to be submitted to the LGC by the end of 2023.


Scandal over tax leaks threatens to engulf PwC as chairman prepares to stand down after 40 years at the firm [This is Money]
PwC’s global chairman has seen his fair share of controversy during a four-decade career at the firm. From a record fine over the collapse of BHS to the infamous Oscar ‘envelopgate’ mix-up, when one of his executives presented the Academy Award for Best Picture to the wrong film, Bob Moritz has had to navigate a number of storms. But as the accountancy giant’s New York-based chairman prepares to retire, there is one scandal which arguably poses an even bigger risk to the British brand’s reputation and is threatening to blow up again. Moritz, 61, has spent the twilight phase of his accounting career overseeing efforts by PwC International’s top executives in London and New York to contain the Australian tax leak scandal, a blot on the firm’s copy book big enough to have its own Wikipedia page. These efforts may well be in vain, with Australian senators determined to prove that partners around the world were complicit.

KPMG U.S. Chair and CEO Paul Knopp to Helm CAQ’s Governing Board [Center for Audit Quality]
Paul Knopp, KPMG U.S. Chair and CEO, has been elected Chair of the CAQ’s Governing Board, effective April 1, 2024. The CAQ’s Governing Board is comprised of a variety of leaders representing the financial reporting ecosystem, including chief executive officers from some of the largest public company audit firms, the American Institute of CPAs, as well as independent board members from investor, board member and issuer communities. The Governing Board oversees the CAQ’s strategic agenda and activities.