The big story over the weekend, and one I’ll probably be writing a biased editorial article on later because I unapologetically hold the opinion that the PCAOB is 99% tedious paper-pushing, comes from Financial Times:
Republican lawmakers are planning to shut down the US audit regulator, which was founded in the wake of the Enron scandal more than two decades ago, as part of a reform package designed to deliver Donald Trump’s deregulatory agenda.
The proposal to eliminate the independent Public Company Accounting Oversight Board was published late on Friday by the leadership of the House Committee on Financial Services, for inclusion in the giant tax and spending bill being considered by Congress.
Oh. There’s a whole bill. Well I better read it before I say more. We don’t base whole-ass opinions on a headline and a few lines of text over here.
I stand by what I said about the PCAOB.
A CPA Journal article asks “Did the CPA Evolution Leave Educators Behind?” Authors Walied Keshk, PhD, CPA and Edward J. Lynch, PhD, CPA did a little research on the ground to answer the question:
During the 2024 spring semester, the authors surveyed 97 accounting faculty members from 45 different universities across 21 states. Among other things, the survey inquired about respondents’ readiness to adapt their courses and teaching methods to the new CPA exam requirements. Surprisingly, roughly one-third of the faculty members responded that they do not feel fully prepared. Faculty members who believe they are not prepared (as well as some who do believe they are prepared) responded that they need additional resources to help them prepare their students for the new CPA exam and careers in public accounting. In addition to the survey results, this article reports the additional resources suggested by faculty to fully adapt their courses and teaching methods to the new CPA exam, including how they believe CPA firms can assist.
An interesting bit that by no means reflects the majority view of respondents:
Fourteen faculty members (including 0 adjuncts) suggested that public accounting firms share training materials and ideas for class activities and assignments. Specifically, faculty members would like firms to share materials related to the topics that are now emphasized in the new CPA exam, such as SOC reports, data analytics, and technology; as well as the skills being tested, such as critical thinking, analytical, and evaluation skills. Again, numerous accounting firms have already been sharing materials with educators for many years, but this survey indicates that faculty would like to see materials focused on topics now emphasized on the new CPA exam.
In addition, 13 faculty members (including 1 adjunct) suggested that accounting and auditing professionals work more closely with faculty members to update the accounting curriculum. This could be implemented in numerous ways. For example, many accounting departments have local accounting firm partners on their advisory boards and they meet regularly to discuss curriculum changes, scholarships, and student recruitment. Furthermore, accounting and auditing professionals can participate with faculty members in designing relevant class projects, attending student presentations, and evaluating students’ written work.
Reminder to academics: you all hold the keys to firms’ precious pipelines. Make ’em work for it!
Deloitte surveyed 200 CFOs across five sectors who work at organizations with at least $1 billion in revenue and found employee engagement (50%) and lack of skilled talent (45%) are among their biggest workforce challenges.
The situation could intensify as increasing numbers of experienced finance employees reach retirement age and the number of college graduates with accounting degrees continues to decline. When we asked CFOs to name their biggest worries related to pipeline concerns about accountants (figure 1), increased workload for existing employees was the top response (44%). Loss of credibility with institutional and private investors was the second most cited concern (42%) about pipeline issues for accountants. Erosion of board confidence in finance (41%) was third on the list.
An employee stole more than $100,000 from a Salt Lake County liquor store over a 3½-year period, according to a report from the state auditor that the Utah liquor commission’s chair described as “scathing.”
The audit’s findings included the revelation that a liquor store employee stole $112,809 from an unidentified liquor store in Salt Lake County between January 2021 and June 2024.
At the New York Stock Exchange, Diasio outlined how EY teams are leading the charge in artificial intelligence (AI) transformation. “Before we advise our clients, we needed to introspect and transform our own business practices,” he stated. This client-first approach has led to the creation of a comprehensive playbook designed to guide organizations through their AI initiatives, so they are equipped to navigate the evolving landscape.
One of the standout revelations from this journey was the essential role of executive engagement. Diasio noted, “It took significant involvement from our executives to not only understand AI but to be prepared to implement it effectively.” This proactive engagement is vital for organizations aiming to leverage AI’s potential while addressing its inherent challenges.
He says 2025 is the year “we will see AI systems that can take actions on behalf of users.”
About a week after Jackson city leaders said it could be time to bring on a new CPA firm, the city’s current CPA says the problem is not with him, but this time with JXN Water.
On Thursday, the City Council’s Finance Committee heard from Scott Hodges, a partner with Tann, Brown & Russ, to discuss the 2023 Comprehensive Annual Financial Report.
He told members that he still has not gotten the data from JXN Water to complete the audit.
A key US banking regulator unveiled settlements with two former Wells Fargo & Co. auditors who were alleged to have ties to the bank’s systemic sales-practice misconduct, according to a statement Friday.
The orders resolve actions the Office of the Comptroller of the Currency initiated against David Julian, former chief auditor, and Paul McLinko, former executive audit director. The regulator assessed a $100,000 civil money penalty against Julian and a $50,000 civil money penalty against McLinko.
In 2020, Wells Fargo agreed to pay a $3 billion fine related to its 2002-2016 scheme to artificially inflate sales numbers by opening millions of accounts without customers’ knowledge or consent.
OK I think we’re done here. As always, please email or text if you have a tip, see an interesting story, have a topic you think we urgently need to discuss, or just want to complain. Anonymity is assured.
Be well, go out and touch some grass, and have a great week!
Alabama Governor Fails to Prevent County’s Record $4 Billion Bankruptcy Filing [NYT]
Last-ditch efforts by the governor of Alabama to prevent a record-breaking municipal bankruptcy in his state broke down on Wednesday, as the Jefferson County Commission voted 4 to 1 to declare bankruptcy on roughly $4 billion of debt.
Ex-IRS agent pleads guilty to prostitution charge [AP]
A retired IRS agent who once investigated a fugitive Nevada brothel boss and was partners in a failed rural Nevada bordello venture pleaded guilty Wednesday to transporting a California woman across state lines to commit prostitution.
Tokyo Police Investigate Olympus Accounting [WSJ]
The Tokyo Stock Exchange on Thursday placed shares of Olympus Corp. on its watch list for possible delisting, as the Japanese police launched an investigation into the company’s decades-long cover-up of investment losses.
Are Rising Inventories at Green Mountain a Bad Omen? [The Street]
On Wednesday’s conference call, Green Mountain said it’s “confident” that no accounting fraud has occurred. The questions from analysts about growing inventories seem to signal unease about both sales projections and the merit of capital spending increases.
L.A. councilman says business tax report had editorial spin [LA Times]
The drive to dismantle -– and possibly scrap –- the business tax in Los Angeles moved forward Wednesday as a City Council committee called for an independent economic analysis of several proposals to cut it, including one that would phase it out over four years.
MF Global Commodity-Account Transfers to Brokers ‘Substantially’ Complete [Bloomberg]
The transfer of MF Global Inc. commodities accounts to other brokers is “substantially” complete, a spokesman for the liquidator of the bankrupt broker- dealer said. Many of the firm’s 150,000 customer accounts are “out of date, inactive, or very small,” leaving a much smaller number to deal with, said Kent Jarrell, a spokesman for trustee James W. Giddens.
Goldman, Morgan Stanley mull reducing mark-to-market accounting [Reuters]
Market not so great, eh?
‘Dismissed’ partner accuses Ernst & Young of corruption [Telegraph]
Accountant Ernst & Young is facing an allegation of corruption at one of its global headquarters as part of a whistleblowing case brought by one of its ex-managing partners.
Cuomo Pushes New Tax Rates for Big Earners [NYT]
While Mr. Cuomo did not provide specifics on his tax proposals, he and legislative leaders were negotiating a deal, the officials briefed on the plan said, that would allow the state’s so-called millionaires’ tax — a surcharge on incomes over $200,000 for individuals — to lapse as scheduled on Dec. 31. But one or more new tax brackets for high-income earners would have those individuals paying less than they did under the surcharge — allowing officials to say that the millionaires’ tax had lapsed — but paying at a higher rate than they would have been under existing tax brackets.
Zynga Eyes $1B in Biggest Web IPO Since Google [Bloomberg, S-1]
Zynga Inc., the biggest maker of games on Facebook, is seeking as much as $1 billion in the biggest initial public offering by a U.S. Internet company since Google Inc. (GOOG)’s debut. The company is offering 100 million shares for $8.50 to $10 apiece, according to a regulatory filing today. The high end of the range would value San Francisco-based Zynga at $7 billion.
Enron’s Tenth Anniversary: Conclusion—Or Is It? [GOA]
The Grumpies are thankful for Enron because it gives them a lot of blogging fodder.
Senate Democrats to Offer New US Tax Cut Plan [Reuters]
U.S. Senate Democrats plan to offer a new proposal on Monday to extend a popular payroll tax cut amid signals that Republican leaders would accept a compromise that covers the cost to the federal Treasury. Senate Budget Committee Chairman Kent Conrad, a Democrat, said that the offer would be a “serious attempt to move this ball forward,” and avoid a Dec. 31 expiration of the popular tax cut.
