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Friday Footnotes: XOXO, Accountants; PwC Wants Tax Cuts; KPMG Stacks Partners | 7.1.22

Accountants are voted the best kissers in Britain ahead of doctors and nurses while civil servants, bankers and lawyers are rated as the worst [Daily Mail] Often ridiculed as boring beancounters, accountants have surprisingly been voted the best kissers – ahead of doctors, nurses and engineers. And the worst are civil servants, bankers and lawyers, according to a poll of 2,000 Britons by dating site Plenty of Fish.

Marking a Half-Century of Capital Markets Integrity [Barron’s] Former chair of the Financial Industry Regulatory Authority and trustee and chair of the Financial Accounting Foundation John J. Brennan writes: The bedrock of that reporting regime is U.S. GAAP, or generally accepted accounting principles. While far from perfect, they are universally acknowledged as the gold standard of both inputs and outcomes with respect to financial reporting. Over the decades, the rest of the world has sought to emulate it and to create processes that reflect its best practices. I can tell you that this broad recognition of the importance of integrity in financial reporting is a truly great thing. But none of us should ever take the integrity of the financial reports we see for granted. The integrity of our financial reporting system must be protected, preserved, and continuously evaluated.

Historic EY fine latest by-product of KPMG cheating scandal [Compliance Week] It is impossible to ignore the Securities and Exchange Commission’s (SEC) record $100 million fine against EY for employee exam cheating is exactly double the amount the regulator penalized fellow Big Four firm KPMG in 2019 for its infamous cheating scandal. Especially since the latter served as a catalyst for the former.

Ernst & Young IPO Will Create a Lot of Sour Grapes [Washington Post] Big Four auditor Ernst & Young LLP’s potential IPO of its consulting activities could trigger stock windfalls of as much as $8 million each for the consulting partners, according to the Financial Times. Even the partners in the audit firm left behind could get payouts too — averaging about $2 million each, the Wall Street Journal reported.
These numbers reflect the fact that the consulting practice is in large part being handed to its current partners but the audit partners need to approve the deal. Assuming the split goes ahead, most of the consulting activities (including strategy, deal and tax advice) would cease to belong to distinct national partnerships and become a company whose equity was divided among newly established shareholders, most of whom would be the current partners on the consultancy side. In time, they could cash in their stock.

NABA honors Deloitte audit CEO for DEI efforts [Accounting Today] As the accounting profession struggles to recruit, retain and advance Black accountants, recognizing and eliminating barriers to entry is a crucial initial step, said Guylaine Saint Juste, CEO of the National Association of Black Accountants, during NABA’s national convention last week in Hollywood, Florida.

Metaverse can’t be built on the corporate business model, says EY Nordic innovation lead [Cointelpro] Magnus Jones, Nordic innovation lead at big four accounting firm Ernst & Young (EY), believes that the Metaverse would be led by the younger generation and cannot be built on the same principles of the corporate business model.

Enjoy the holiday weekend maybe?

Bank CEO: Careers are built in the office, jobs happen at home [eFinancialCareers] “If you want a job, stay remote all the time and be efficient in a very limited way,” said Jefferies’ CEO Rich Handler. “If you want a career, engage with the rest of us in the office and use WFH only when smart…” There’s nothing wrong with working from home, added Gorman, but if you’re an exponent of remote work you need to acknowledge the potential results of your choice. “It is your decision whether you want a job or a career,” he added. “No judgement on which you pick, but don’t be surprised or disappointed by certain outcomes.”

KPMG adds record-breaking 121 new partners to leadership team [] A record number of professionals have been added to KPMG’s Australian partnership team over the past twelve months, including 34 promotions and recruits within management consulting.

PwC lobbies for longer VAT holiday and reductions to inheritance taxes [] Influential accounting firm PwC is pushing for yet another extension of the hospitality VAT holiday until the end of 2024, alongside an overall cut in VAT to 21pc. In its pre-budget submission, co-authored by the Family Business Network (FBN), PwC is calling for a range of tax cuts, including measures to make inheritance more lucrative, which they say will help make indigenous businesses more competitive.

‘I’m Alive’: IRS Denies Woman Tax Refund Because They Say She’s Dead [Newsweek] New Jersey resident and government worker Jeanette Carpenter told New York City television station WPIX that when she filed her taxes in 2020, her Social Security number came back as belonging to someone who is dead. “My Social Security number belongs to a deceased person,” Carpenter said, noting that she received the same response even after her accountant refiled two more times. “I asked them if they were getting me confused with my husband who passed away in 2009 and they said no. What baffles me is I work for the government.”

EY wins share of BNP audit amid break-up planning [Financial Times] Senior partners at rivals had privately questioned whether EY would be able to win new audit mandates before its future was resolved because of the lack of clarity over which expertise would be retained by the audit business following a proposed spin-off and public listing of its consulting arm. From 2024 EY will work alongside fellow Big Four accountant Deloitte, which has been one of BNP’s auditors since 2006. PwC and Mazars, which have been auditors to BNP since 1994 and 2000 respectively, will step down under mandatory rotation rules.

Crypto Fraudster Now Among the FBI’s 10 Most Wanted [CPA Practice Advisor] The FBI on June 30 added Ruja Ignatova to its top 10 most-wanted fugitives list, alleging that the so-called Cryptoqueen and convicted fraudster was the mastermind of a scheme that defrauded investors out of more than $4 billion worldwide. The agency is offering a $100,000 reward for information leading to her arrest.

Passaic County Accountant Admits Subscribing to False Returns and Conspiring to Defraud United States [Department of Justice] In 2015, William Kawam and a conspirator undertook a scheme to conceal certain money from the IRS. The conspirator compensated Kawam for a portion of his accounting services by providing him with a credit card belonging to one of the conspirator’s businesses that Kawam could use for personal expenses. Kawam failed to report the charges as income, and the conspirator failed to report the charges as business expenses.