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.
Practice
How one small firm drastically cut its busy-season hours [Journal of Accountancy podcast]
Johanna Sweaney Salt, CPA, CGMA, used to work 100 hours a week during busy season. As the founder and managing partner of Gray, Salt & Associates LLP, she believed it was her responsibility to put in the time needed to make her small firm a success. Today, Johanna remains a full-time partner at the firm, and her son, Dalton Sweaney, CPA, is now the managing partner. His desire a few years ago to spend more time with his young children prompted him to ask his mother if they could make changes to make busy season less crazy.
Less than 1% of firms can find enough staff [Accounting Today]
Relatively few CPA firms are able to find enough employees to fill their ranks and are resorting to strategies like hiring workers abroad, raising starting salaries, offering fully remote jobs, and hiring staff who haven’t graduated college, according to a new survey. The survey, from alliantTalent, an affiliate of the tax advisory firm alliantgroup, used research firm CensusWide to poll 250 top CPA firm leaders in the country. Less than 1% of the respondents indicated they are able to find the staff they need in the U.S and are forced to turn to these other strategies to fill the talent gap. The survey found that 27% of the CPA firm leaders polled report that former staff moved outside the industry for higher pay. A 56% majority of CPA firm leaders expect to have to increase starting salaries by 11% or more, with an average increase of 14% reported. At the far end of the scale, 18% of CPA firms anticipate increasing starting salaries by 21 to 40%.
Technology
With generative AI, start with the basics, EY tells CFOs [CFO Dive]
The best thing for CFOs today is just “take a look at their operations,” Michael Kelly, partner and management consulting consultant at Big Four accounting firm Ernst & Young said. When developing a game plan for generative AI and next-gen AI solutions, CFOs can “start with the key basics,” Kelly told CFO Dive in an interview. “You look through your order cash, procure to pay, or even the hire to retire type format,” he said. “And you start thinking about, ‘okay, where are the touch points? Where are the manual efforts that are happening in this?’ Because really, what you want to do is move the needle to be a touchless process.”
More hiring, AI work on tap for PwC, new Austin leader says [Austin Business Journal]
PricewaterhouseCoopers LLP is the largest accounting firm in Austin but its new local head aims to also amplify its reputation for the professional consulting services that have lifted the company to global prominence. John Cummins became managing partner of PwC’s Austin office in June, succeeding Larry Westall. Cummins has been with the firm for about 20 years and has deep local ties as a Texas native and graduate of the University of Texas at Austin. Early this year, PwC had more certified public accountants in Austin than anyone else, with 135. Its total headcount was around 600, up more than 40% from the year prior. Cummins sat down with Austin Business Journal to talk about his new role and the state of the economy in the Silicon Hills.
Audit
Fireside Chat with PCAOB Chair Erica Y. Williams [The CPA Journal]
Williams was sworn in as the chair of the PCAOB in January 2022, coming from Kirkland & Ellis, where she was a litigation partner. Previously she was a special advisor and associate counsel to President Obama, advising the President as his senior advisor on legal and constitutional issues. Before that, Williams spent 11 years at the SEC serving as deputy chief of staff. The following is an edited transcript of Chair Williams’s conversation with Paquita Davis–Friday, senior associate dean and professor in the Zicklin School of Business at Baruch College.
KPMG warned Brazil’s Americanas about lack of financial controls in 2019, partner says [Reuters]
Brazilian retailer Americanas’ management received several notices of accounting deficiencies and inadequate internal controls, a partner at accounting firm KPMG said on Tuesday, issues at the heart of a fraud that became public this year. Americanas, which filed for bankruptcy protection in January and has accounting irregularities of more than $5 billion, was aware of the deficiencies and canceled its contract with KPMG after the accounting firm sent it an internal control letter in 2019, KPMG partner in Brazil Carla Bellangero said. Bellangero testified before Brazilian lawmakers on Tuesday as part of a federal investigation into the scandal, which has rocked one of the South American nation’s top retailers.
Trump-Tied SPAC Hits Another Snag as Auditor Abruptly Resigns [Bloomberg]
Special-purpose acquisition company Digital World Acquisition Corp. said in a filing Tuesday that its auditor Marcum LLP — which has been riddled with regulatory problems of its own — abruptly resigned. The departure puts its merger with Trump Media & Technology Group in peril. While the US Securities and Exchange Commission doesn’t technically approve SPAC deals, it requires audited, accurate financial statements to declare such tie-ups effective. So the SPAC must find a new audit firm — fast — to close a deal that has been plagued since its inception nearly two years ago. Shares of Digital World slumped as much as 10% Wednesday. “It is still a question about whether the deal will ever make it to the finish line,” said Jay Ritter, a finance professor at the University of Florida. “This deal has one of the biggest potential upsides of any SPAC merger, but it has been snakebit from the start.”
Firm Watch
Weaver promoted at accounting firm [The Courier]
Jaimee Weaver has been named managing principal for CliftonLarsonAllen (CLA) accounting firm in Western Ohio, which includes Findlay, Maumee and Toledo offices. Weaver received both her undergraduate degree and master’s degree in accountancy at Bowling Green State University. She began her career as a tax associate with PricewaterhouseCoopers in the early 2000s, eventually joining Gilmore Jasion Mahler (GJM) in Maumee. She quickly moved up in the firm, became a tax partner before GJM joined the CLA family in January of 2023. “Jaimee has forged deep relationships with our clients and understands the changing business climate,” said Melissa Yoder, regional managing principal, Eastern Midwest for CLA. “She is adept at not only helping our clients navigate their wealth and business enhancement needs, but she is a great mentor and leader to the next generation of CLA professionals. This is a well-earned advancement to help us lead our efforts in the Ohio region.”
RSM International announces change to Hong Kong Member Firm status [RSM]
RSM International Limited has today announced the departure of RSM Hong Kong as a member firm of the RSM network of member firms, following a decision by the Hong Kong firm to restructure its business. With respect to common clients, RSM International Limited will continue close collaboration with the firm in Hong Kong while also considering any new formal association. A transition period will take place to ensure there is no disruption to clients. RSM International CEO, Jean Stephens, commented: “Hong Kong continues to be an important market for RSM and we are committed to providing a full service offering to our global and local clients. We will share further updates in due course.”
Hail Corporate
Americans could live an extra 19 years—if they pick the right employer [Fortune]
If they care so much why don’t they pay people better?
Andrew Davis, an actuary at global financial services firm Deloitte, makes a comfortable living. But he might not have thought of outfitting his 62-acre plot of land near Clear Lake, Minn., with a solar generator—or planting a fruit orchard there—without the company’s well-being subsidy. The benefit allows employees up to $1,000 annually for items that can improve their health and wellness. It covers the obvious, like gym memberships. But it can also be used for purchases that improve mental health, like musical instruments, and items that nurture the earth, like solar panels. For Davis, Deloitte has chipped in on a family karaoke setup, green fees for golf with his dad, and books to inform his next project: establishing a chicken farm. The subsidy has opened his eyes to opportunities for “emotional health” and made them a reality without requiring him to sacrifice in other areas. His sustainable acreage—with company-funded improvements—has become a place that makes Davis feel “like a great human being” in his off time, he tells Fortune. He says tending to the land with his wife and children is “an amazing feeling.”
Big 4
Big consulting firms lose $500m in taxpayer work [AFR]
Government spending on Australia’s top consulting firms was slashed by more than $500 million in 2022-23, and contracts with embattled big four firm PwC slowed to a trickle as the tax scandal heated up. The big four firms – KPMG, PwC, EY and Deloitte – plus Accenture inked just under $1.2 billion in contracts with federal government departments, well below the almost $1.7 billion secured the previous financial year.
Accenture took the biggest hit, booking $283 million worth of new work, down from a high watermark $500 million last year. Deloitte followed with $226 million in new contracts, down almost $120 million.
Ask the Intern: Sofia Elhusseini at EY [NYU]
Within days of starting her internship at Ernst & Young this summer, Sofia Elhusseini (Stern ’24) found her way to a meeting of the company’s Latinx Professional Network—just one of many forums for finding support and making professional connections on the job, even outside of the many events the Big Four accounting firm organized specifically for interns. “There are so many ways to network at EY if you put in the effort,” Sofia says, citing another example. “Staying in contact and fostering a great relationship with your recruiter can go a long way. My recruiter nominated me to attend a live audience taping of a global webcast with the CEO, and I was fortunate enough to meet him and introduce myself.”
Deloitte & Touche LLP in vicious fight with partner, Amaha Admassie, over expulsion bid [Business Daily]
An attempt by the local arm of British audit firm Deloitte & Touche LLP to part ways with one of its eight partners, Amaha Bekele Admassie, has triggered a vicious court battle in which the two warring sides have traded multiple allegations against each other. This is after Mr Admassie sued Nairobi-based Deloitte & Touche seeking to block attempts to terminate his partnership and challenging three clauses of the firm’s Africa Partner Manual – the consultancy’s rule book. High Court judge Nixon Sifuna in May issued orders stopping Deloitte & Touche, one of the “Big Four” accounting firms in the world, from expelling Mr Admassie pending a hearing and determination of the suit.
Inside the race to lead EY after bungled break-up plan [Financial Times]
Shoulda thrown ’em under the bus for the Project Everest debacle when they had the chance.
EY boss Carmine Di Sibio’s right-hand man has emerged as a frontrunner to take over as global head of the Big Four firm in a leadership race triggered by the collapse of its attempted break-up this year. British executive Andy Baldwin, one of the architects of the aborted plan to spin off EY’s consulting operations, is running to be the first non-US executive to become global chair and CEO, according to multiple people inside or close to the firm. Baldwin had argued along with Di Sibio that EY needed to radically rethink its structure, but some of the people said his involvement in the failed talks over exactly how to divide the business has raised doubts about whether he could unite EY’s warring factions. Another leading contender is Jad Shimaly, the head of EY’s business in Canada, insiders say, and at least four other executives have put their names forward or have considered doing so. “Andy is the favourite by a large margin, but things can get weird in a hurry,” said one person familiar with the candidates. “Like a UK Conservative party leadership contest.”
50/50 Women on Boards and EY US to expand board diversity and development efforts [PR Newswire]
50/50 Women on Boards™ (50/50WOB), the leading nonprofit education and advocacy campaign driving the movement toward gender balance and diversity on corporate boards, and Ernst & Young LLP (EY US) are joining forces to expand their board diversity and development efforts. EY US, a long-standing sponsor of 50/50WOB, reaffirms its commitment to empowering female board candidates and driving the success of board directors through its EY Center for Board Matters. Through its support of 50/50WOB, EY US exemplifies its dedication to supporting gender diversity and inclusion. Additionally, EY US is a proud sponsor of 50/50WOB’s inaugural 50 Women to Watch for Boards list, which highlights a group of exceptionally qualified women leaders with diverse backgrounds across various sectors in North America.
That PwC Thing
SMS exchanges between AFP commissioner and PwC ‘mate’ revealed, as top cop faces questions over conflict of interest [ABC News Australia]
Text exchanges between Australian Federal Police (AFP) Commissioner Reece Kershaw and PwC partner Mick Fuller have revealed more extensive conversations between the pair than the commissioner previously suggested to parliament. Commissioner Kershaw has been challenged on whether he failed to declare a conflict of interest over his friendship with the former New South Wales police commissioner-turned PwC partner, after it was revealed the pair had met several times in relation to a $794,000 contract awarded to the accounting firm without a public tender. In May, under questioning in Senate estimates, an AFP official said Commissioner Kershaw did not declare a conflict of interest over his friendship with Mr Fuller because despite commissioning the review, he did not do the procurement. Asked what communication Commissioner Kershaw had with Mr Fuller “since the PwC scandal broke”, the commissioner responded he had received “one SMS from Mick”.
Australia hires consultant to advise government on its consultants [Washington Post]
The Australian government has hired a consultant to consult with on how best to deal with other consultants. Sound convoluted? That’s the criticism that some Australians are making against the federal Finance Department after it hired an ethics consultant for advice about handling ties with PwC Australia and Scyne, an entity focused on government services that the consulting giant spun off after a tax-information leak scandal.
Tax
The IRS Wants You to Go Paperless Next Tax Season [Gizmodo]
In 2025, the IRS will begin a more aggressive digital push, with 150 more non-tax forms going digital in both desktop and mobile formats. The service also says that they will digitally process all returns that tax returns are filed by paper and mailed in, while half of the paper-submitted correspondence, non-tax forms, and notice responses will be handled digitally. The IRS says it receives 76 million paper tax returns and related forms annually, while also handling 125 million pieces of correspondence and non-tax forms. “Digitization has far-reaching implications for improving IRS service. Digitizing paper returns will eliminate errors that result from manually inputting data from paper returns, which will speed up processing, reduce storage costs, and allow IRS to focus more resources on customer service,” the IRS wrote in the release.
