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Monday Afternoon Accounting News Brief: Stop Calling It an Audit; Deloitters Clean Up Some Trash | 8.21.23

Shibu in yellow glasses

Good morning afternoon and happy Monday to you. This week I’ll be covering the Illinois CPA Society SUMMIT23 so if you want to keep up with all that from the comfort of your home or office go on Twitter. If you’re attending live come find me, I have stickers. Apologies that airport wifi held up today’s news brief, I know you all are devastated.

Anyway, the news.

Someone who isn’t an auditor complains on Blockworks about using the word audit for things that aren’t audits and then explains in graphic detail the various audit-like things that one can engage in (that aren’t audits).

One of the things you learn when you join a professional services firm like EY — which has its history rooted in financial statement audits and is still very much present in this business — is that everyone seems to use the word audit without actually understanding what it is or the rules that go around it.

I’m not an auditor, either by training or current profession, and I’m not here to write about how audits work. I’ll leave this to my audit colleagues. What I do want to do is take a moment to share all the many things in the world of blockchain and crypto that are not audits — even though they get called that all the time.

For blockchain and crypto to thrive, we need a whole range of verification tools that go far beyond a traditional financial statement audit. Equally important, we need to be more specific in the language we use to describe them.

Instead of calling everything an audit (and implying there’s some kind of magical guarantee that comes with that word), let’s start looking at the full arsenal of tools with names that aren’t so misleading.

He might have a point.

The last thing you want as a PwC intern is getting an entire Daily Mail article written about you.

How Nathan Albanese secured an internship at consulting giant PwC ‘after his dad’s conversation with executive’

Anthony Albanese’s son took on an internship at beleaguered consultancy giant PwC after his father reportedly spoke to one of the firm’s top executives.

Nathan Albanese – the only son of the Prime Minister and his ex-wife Carmel Tebbutt – took on a two-week unpaid internship with the firm back in June 2021, according to the Australian Financial Review’s Joe Aston.

The publication claimed Nathan, now aged 22, worked in the firm’s Economics Policy Unit under chief economist, Jeremy Thorpe.

Mr Albanese, the then Opposition Leader, reportedly spoke with former PwC government relations boss, Sean Gregory, about an internship for Nathan in the first half of 2021.

Mr Albanese thanked PwC CEO Tom Seymour at a function months after his son completed his placement.

Weaver is upgrading its Houston metro digs.

Weaver, a Houston-based national accounting and advisory firm, plans to open a new office The Woodlands later this year.
The firm leased 11,000 square feet of space in the One Hughes Landing building at 1800 Hughes Landing Blvd., the company said. The new office will replace the company’s current 8,500-square-foot office in Conroe at 1406 Wilson Road. The new office will undergo renovations, and Weaver is expected to move in Dec. 1.

I’m glad to know that if this Going Concern thing doesn’t work out I can always go steal Reddit posts for Bored Panda:

Accountant Maliciously Complies With Boss’s Rule, Watches The Place Turn Into Chaos

One accountant who loves his laid back boss recently shared on Reddit how drama ensued in his office after his firm merged with another whose boss kept them on a tight leash. Below, you’ll find the full story, as well as some of the replies amused readers left.

This is the post they linked to from r/MaliciousCompliance, a haven of thathappened stories written mostly by aspiring creative writing majors, trolls, and bored Redditors.

Want me to cover the front desk while working on Payroll? Enjoy your angry employees!
by u/StaffAccountantDude in MaliciousCompliance

I’m finally reading The Big Con, this is sorta relevant. The TL;DR is that governments rely too heavily on outside consultants according to non-consultants, this might be a fix.

Universities can help fix governments hooked on consultants

Consultants have little incentive to offer genuinely impartial and frank advice, given the commercial incentive to maintain their client relationships. As a result, we get bad policy making, the hollowing out of state capacity and the public good loses out.

Whether or not the consultancy industry is mainly to blame for this hollowing out, there is no question that we need now, more than ever, a more active, creative, and capable public service, given the scale and urgency of the challenges Australia and the world face.

It’s no wonder that people are increasingly exasperated by government inertia and partisan bickering while — quite literally— the world burns.

One way to address this is to think more boldly about the way we harness expertise across the public and private sector to address the challenges we face.

Right now, one in four people now working for the public service are employed externally rather than directly by government through a combination of consultants, contractors, labour hire and outsourced service providers.

Kimberly (Chapman) Massanova has joined Freed Maxick CPAs and the firm seems exceedingly pleased. I bet it’s nice to feel appreciated.

Based in Tampa Bay, Massanova will support Freed Maxick’s healthcare industry clients with services in revenue cycle management (RCM) and claims analytics.

“Cultivating excellence is at the heart of our mission, and we are thrilled to have Kimberly join our team. Her extensive expertise will be instrumental in elevating our capabilities and delivering even greater value to our clients. Her proven track record of driving operational improvements and optimizing revenue performance aligns perfectly with our commitment to empowering healthcare providers nationwide,” said Henry Koziol, managing partner at Freed Maxick.

TIL: Ground score meteorites are taxable.

Consider this a public service announcement for all treasure hunters: Uncle Sam wants a piece of your loot.

Someone who makes a valuable discovery — whether gold coins, meteorites or even cash — generally owes tax on that haul, which is known as “found” property.

The tax is twofold: a levy upon acquisition and, if eventually sold, on the profit.

Its taxability is due to a basic premise of tax law: Income is taxable unless the Internal Revenue Code excludes it from taxation or allows for a tax deferral, said Troy Lewis, an associate professor of accounting and tax at Brigham Young University.

Nasdaq-listed weed company Agrify keeps getting in trouble for late reports. The latest:

Agrify Corporation (Nasdaq: AGFY) (“Agrify” or the “Company”), a leading provider of innovative cultivation and extraction solutions for the cannabis industry, today announced that on August 16, 2023, it received a letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying Agrify that it was not in compliance with requirements of Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023, with the Securities and Exchange Commission (“SEC”).

As disclosed in the Current Report on Form 8-K filed by the Company on April 17, 2023, Agrify’s audit committee concluded that, as a result of errors in the accounting for warrants previously issued by Agrify, it is appropriate to restate Agrify’s previously issued unaudited condensed consolidated financial statements as of and for the fiscal periods ended March 31, 2022, June 30, 2022 and September 30, 2022 in amended quarterly reports for the affected periods. Given the scope of the process for preparing the amended quarterly reports, Agrify was unable to complete and file the Form 10-K for the fiscal year ended December 31, 2022 and the Form 10-Q for the fiscal quarter ended March 31, 2023 by their respective due dates.

Nasdaq has previously granted the Company an exception until September 30, 2023, to file its Form 10-K for the fiscal year ended December 31, 2022 and Form 10-Q for the fiscal quarter ended March 31, 2023.

The sucky economy is probably going to get suckier according to smart people polled by Wipfli:

A dual survey of U.S. wealth management and asset management professionals shows a strong expectation of recession in the coming months.

Asset managers have a higher level of certainty of recession (72%) than wealth managers (62%) but both groups expect industry growth to be weakened to a conservative 5-8% over the next 12 months (again asset managers more so than wealth managers) compared to a more typical 8-10%.

But economic and industry growth is not the only concern among these financial services professionals, with the ongoing battle for the best talent also providing challenges for firms according to around two thirds of those polled by advisory and accounting firm Wipfli LLP, which sold its financial advisors business a year ago.

Deloitte consultants cleaned up garbage. Literally.

Sydney Morning Herald rubs some salt in KPMG’s wounds. The other three get it too.

When Treasurer Jim Chalmers lifted penalties for advisers and firms who promote tax exploitation schemes from $7.8 million to more than $780 million, he effectively drew a big target on the tax practices of our embattled consulting giants.

To give an idea of the financial chaos this could create for PwC, KPMG, Deloitte and EY, it would have been enough to completely wipe out partner earnings for each firm last year and leave a financial black hole to boot.

At KPMG, where average partner earnings reached $700,000 last year, each partner would be on the hook for more than $1.1 million to cover a fine of that size. But KPMG boss Andrew Yates says the firm is not contemplating any drastic moves despite the risk profile for its lucrative tax practice soaring into the stratosphere.

“We are very careful with the risk profile of our tax practice … we are not contemplating spinning off our tax practice,” he says.

The proposed fine, which would severely curtail any appetite for advising multinationals such as Google and Facebook on any tax dodges, is just the latest curveball in what has been a tough year for KPMG, and almost certainly for the rest of the industry.

OK that’s enough for now. We’ll be running a few guest posts this week and comments may take a bit longer to be approved than usual as I will be deeply engrossed in conference-y things. Have a good week and give me a shout if there’s something good going down.