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ICYMI
Top 5 most-read stories on Going Concern this week:
Is PwC Cooking Up Another Big Rebranding?
The Old Guys Want to Cash Out
Project Everest Burned a Bigger Hole in EY’s Pocket Than We Thought
PwC UK Partners Teach Young Hires an Important Lesson: “We Don’t Care About You”
Deloitte Has Out-Cringed Itself
Turnover
Illinois CPA Society Survey Explores Turnover and How to Lower It [INSIDE Public Accounting]
A new survey has revealed the six top reasons accounting and finance employees leave their jobs (in priority order): salary, too many hours/burnout, lack of work-life balance, workplace culture, lack of advancement opportunities and work is uninteresting/mundane. This is according to the Illinois CPA Society (ICPAS), which surveyed 449 employers and 433 accounting and finance employees last summer and released its results last month. “The leading reasons talent cited for leaving their organizations shouldn’t surprise anyone familiar with the challenges facing the profession, but it’s our hope that the candid feedback from both employees and their employers will spur renewed action to rein in turnover,” said ICPAS president and CEO Geoffrey Brown.
The Conflict Surrounding Work-Life Balance in Public Accounting Firms [CPA Journal]
For years, the public accounting sector has been characterized by high employee turnover. In the past few decades, public accounting firms have implemented work-life balance practices as part of their attempts to curb excessive turnover. Previous research shows that the use of such practices in other industries served to significantly decrease employee turnover and increase job satisfaction. Despite the implementation of these practices in U.S. public accounting firms, however, turnover has continued to increase. The author’s research found that conflict surrounding work-life balance practices, and perceptions of unfair treatment with regard to their application within a CPA firm, were directly correlated to employee turnover intentions.
Definitely check out the research:
Talent
Big Four Accounting Firms Cut UK Job Postings by 62% in 2023 [Bloomberg Tax]
The Big Four accounting firms slashed UK recruitment by more than 60% last year as demand for both audit and consulting staff collapsed, according to figures released Monday. The total number of vacancies posted by Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers, fell to 764 in 2023 from 1,996 the year before, marking a 62% drop, according to Vacancysoft, which tracks the number of jobs advertised by firms. Vacancies fell across all accounting firms in the UK in 2023, but the decrease was less dramatic, at 23%.
Bill would let private CPAs, not state auditor’s office, audit state agencies [Radio Iowa]
Senator Mike Bousselot, a Republican from Ankeny, IA seems to think letting CPA firms audit government books instead of the state auditor will fix the accountant shortage somehow?
According to a lobbyist for the Iowa Society of Certified Public Accountants, fewer CPA firms are willing to audit government agencies. Bousselot said letting state agencies hire private CPA firms for audits might address the shortage of CPAs in Iowa and encourage more to enter the profession. “The flexibility to hire ethical but private CPAs that are answerable to the same standards as a public CPA,…is something that we could leverage here at the state to get more CPAs and greater expertise in delivering audits for state government,” Bousselot said.
Accountant Shortage, International Edition
Give your accountant a hug — you may not find another one [Financial Post (Canada)]
There’s a shortage of accountants. That’s not news if you’re an accountant like me. I’ve been recruiting and hiring accountants for almost 30 years and there’s been many ups and downs throughout that time. However, we’re now in a tough part of a challenging cycle. In my view, the system is very close to a tipping point of massive non-compliance in a number of areas of tax law. Put simply, if taxpayers and their advisers (and even tax specialists) have a hard time understanding new legislation, it can and will lead to non-compliance. The system then breaks down.
Belgian accounting sector is overworked and turning away new clients [The Brussels Times]
A significant portion of accounting firms across Belgium are contemplating downsizing as their workload continues to surge, raising alarms within the sector about potential implications for small businesses and startups, L’Echo reports. The challenges facing chartered accountants are multifaceted, with a confluence of factors contributing to their dilemma. An influx of new clients coupled with the escalating complexity of regulatory frameworks has resulted in an intensified workload per client. Independent accountants, in particular, are grappling with the difficulty of sourcing new employees, with over half of them expressing a preference for downsizing. The scarcity of skilled professionals is exacerbating the strain caused by burgeoning client demands.
Degree Requirements: A Hiring Hurdle Amidst Finance Talent Shortage? [BNN Breaking (Hong Kong)]
A recent study by Harvard Business School and the Burning Glass Institute sheds light on an intriguing paradox in the finance industry. While organizations are grappling with a severe talent shortage, they seem reluctant to drop degree requirements for new hires, a potential solution to this pressing issue.
Accountants and Non-Accountants Behaving Badly
Accountant Sentenced to Prison Time [WHIZ]
Frazeysburg accountant was sentenced to time in prison and ordered to pay restitution for stealing from a Zanesville business over the last few years. Between January 2020 and June 2023, Jeffrey T. Keith spent over $193,000 of the business’ money for his personal use, including credit card payments, dinners, groceries, cell phone bills and other expenditures.
Detroit woman accused of being unlicensed real estate agent, CPA charged [The Detroit News]
A Detroit woman accused of working as an unlicensed accountant and an unlicensed real estate agent has been charged, the Michigan Attorney General’s Office said. Krystal Davis, 37, was arraigned Friday in 36th District Court with one count of accounting violations-being an unlicensed certified public accountant and two counts of violating the state occupational code-being an unlicensed real estate agent, the office said Monday.
Apparently the local news has had this amateur CPA on their radar since at least 2020:
Krystal clear – customer says shady businesswoman an “expert at frauding people” [FOX 2 Detroit]
Krystal friended Chrissy on Facebook and said her company “Card Virtual Tax Service” could get her a big refund and take a percentage. Here’s a text from Krystal to Chrissy: “I told you I would hook you up. I’m a professional tax preparer.” Chrissy responds with questions regarding paperwork needed, but she didn’t need the paperwork. She says Krystal had already filed her taxes for her. “That’s when my eyebrows started to raise because how could you file my taxes without my permission?” she said. Chrissy did get a big refund but the bank froze the account because the IRS started an investigation.
Firm Watch
Mazars’ record global revenues confirm strength of its international, integrated, multidisciplinary strategy [Mazars]
Mazars, the international audit, tax and advisory firm, today releases its global financial results for the 2021/2022 financial year, highlighting double-digit year-on-year growth of 16.4%, reaching €2.45bn in fee income. The increase in revenue comprises strong growth across all regions and services, both audit and non-audit (full details below). Year-on-year growth of 16.4%, including 13.3% organic growth, demonstrates the strength of Mazars’ integrated partnership model.
HHM CPAs Adds 3 Senior Tax Managers [Chattanoogan.com]
HHM Certified Public Accountants has added Steven Ramsey, EA, and Susan Jeffery, CPA, CGMA, to the Chattanooga office, and Mark Grochau, CPA, to the Memphis office. All three professionals join the firm as senior tax managers.
Tax
7 warning signs that an ERC claim is questionable, from the IRS [Journal of Accountancy]
The IRS alerted small businesses to seven warning signs that could indicate that their employee retention credit (ERC) claim is questionable and to help them resolve issues before a March deadline for a special disclosure program. The deadline for the ERC voluntary disclosure program for anyone who filed a claim in error and received a payment is March 22. This program allows a business to repay 80% of the claim, with the IRS forgiving the remaining 20%, which the employer may have paid to an ERC promoter. “Many businesses were wildly misled about the qualifications, and the IRS is taking a special step to highlight common problems being seen about these claims,” IRS Commissioner Danny Werfel said in the release. “The IRS urges ERC claimants to get with a trusted tax professional and review their qualifications before time runs out on IRS disclosure and withdrawal programs.”
IRS to Start Auditing Sports Owners [Front Office Sports]
Tax losses that owners claim from their sports properties are heading for higher scrutiny by the Internal Revenue Service. The agency announced last month that sports industry losses will be added to the list of items the Large Business and International department addresses. The announcement comes when the IRS is armed with a $25 billion budget to increase enforcement, giving it the financial firepower to perform such audits. The extra oversight also comes when the Department of Treasury calls for more of them on wealthy taxpayers. Doing so would also help sort out some of the complex partnerships that come as a side effect of sports ownership that involve multiple parties.
Presidents Day period marks peak time for IRS phone lines; first try IRS online tools and resources for help [IRS]
With the 2024 filing season in full swing, the Internal Revenue Service encourages taxpayers to visit IRS.gov and use online tools to get answers quickly and avoid phone delays during the anticipated peak demand for IRS phone lines around the Presidents Day holiday. New this year, people can easily find step-by-step help to file their personal federal income tax return. The IRS also has a variety of information available on IRS.gov to help taxpayers, including a special free help page.
PwC launches AI assistant tool for tax services [Accountancy Age]
PwC UK, alongside alliance partners Harvey and OpenAI, announced the launch of its UK tax trained AI model on February 13. The AI tax assistant is a UK tax-trained model that leverages generative AI to produce content. It has been trained on case law, legislation, and PwC’s intellectual property, ensuring the highest level of accuracy and relevance.
Practice
Multi-factor authentication: What accounting firms need to know [CPA Australia’s INTHEBLACK]
In the digital world, where transactions happen at the speed of a click, accounting firms need comprehensive security controls to protect their systems. Unauthorized access can trigger a cascade of threats, risking data and financial loss, regulatory penalties and reputational damage. With sophisticated attacks on the rise, it is important to understand best practices for implementing multi-factor authentication (MFA) and the different levels of security protection it can offer.
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News
Hong Kong audit regulator reaches landmark agreement over mainland audit papers [JD Supra]
Hong Kong’s audit regulator, the Accounting and Financial Reporting Council (AFRC) says it has reached a landmark agreement to help it obtain audit working papers of Public Interest Entity (PIE) auditors located on the PRC mainland for inspection in Hong Kong. The AFRC says this “marks a major milestone” in the regulatory collaboration between the AFRC and its mainland counterpart.
No ‘gotcha’ enforcement of BOI regulations, FinCEN chief vows [Journal of Accountancy]
The Financial Crimes Enforcement Network (FinCEN) will not use “gotcha enforcement actions” against small businesses when it finds errors in reports of beneficial ownership information (BOI), the network’s director told a congressional committee on Wednesday. “The statute is very clear that we can only take enforcement action against willful violations,” FinCEN Director Andrea Gacki told the House Committee on Financial Services. “This is not about punishing small businesses but looking for those actors that are willfully evading the requirements.” As of Jan. 1, most companies created in or registered to do business in the United States must report information about their beneficial owners to FinCEN as part of an anti-money-laundering initiative enacted through the Corporate Transparency Act (CTA), P.L. 116-283, in 2021. The requirement applies to an estimated 32.6 million companies, FinCEN officials have said, with about 5 million initial reports filed annually after that. The law allows FinCEN to compel information from “those shell companies that are acting as fronts for the movement of illicit money,” Gacki said.
America’s Most Recommended Tax and Accounting Firms 2024 [USA Today]
Ummmm…this was published in February, it’s actually way past time but OK.
As the 2024 tax season shifts into higher gear, it’s time to choose a tax or accounting firm that fits your business’s needs, whether for tax or other financial reasons.
Trade groups back lawsuit challenging SEC’s consolidated audit trail [Pensions & Investments]
“The SEC’s approval of a blank check funding model will continue to encourage mismanagement of the program by passing the enormous and unchecked costs onto broker-dealers who lack a vote on the CAT’s operating committee,” MFA President and CEO Bryan Corbett said in a statement. “The SEC failed to consider alternative funding models and did not adequately address the serious issues raised by stakeholders. Unless this rule is vacated, costs will continue to rise for investors, harming US capital markets. MFA is joining with other industry groups in calling on the court to vacate the SEC’s arbitrary and capricious approval of an unlawful funding model.”
