Monday Morning Accounting News Brief: Cool It on the Scandals, Students Are Watching; Quarterly Reporting Proposal Overwhelmingly Opposed | 7.6.26

Was It Wise to Give EY Veterans This Much Power?

Stephen Foley, who writes up dang good accounting happenings and dirt for Financial Times, wrote an opinion piece about what we should expect from the current PCAOB. If you don’t want to read the whole thing or even the blurb below, all you need is this sentence to get the gist: “EY veterans now hold unprecedented sway over audit regulation.”

The US audit regulator is “reclaiming the voice of the profession”, according to its new chair. That makes some investors nervous.

The Public Company Accounting Oversight Board has historically been chaired by lawyers or career regulators. Congress designed it so that auditors were in a minority on the five-person board to ensure independence from a profession blamed for the Enron scandal and other accounting failures.

The appointment of Jim Logothetis in January therefore signalled a sharp change from the Biden-era PCAOB, which took accounting firms to task for a spike in the number of flaws its inspectors found in audit work.

Logothetis spent 40 years at EY, auditing companies such as Whirlpool and Coca-Cola. “I understand the pressures, the judgment calls, the complexity, and the stakes” involved in an audit, he told an audience at the University of Southern California in June. He says the PCAOB must keep pace with changes in the profession to maintain investor confidence.

We picked an image of a fox for the article on his appointment for a reason. That said, personally I feel like throwing massive fines at audit firms for sharing answers on tedious internal training isn’t the best use of the PCAOB’s time and power so I wouldn’t exactly say the last bunch got a bunch done either, audit quality was in the toilet for years while they were busy fining firms that aren’t even in the United States.

Will Jim give us exasperated remarks and scathing op-eds directed at naughty audit firms like his predecessor did? Unlikely. But hey, you never know. Optimistically, maybe he’ll have the power to speak auditor-to-auditor to firms behind the scenes and tell them to get their shit together if quality (as measured by PCAOB inspections) starts circling the drain.

FICPA Picks a Big 4 Chair

The Florida Institute of Certified Public Accountants (FICPA) has a new Chair, Amy Kistka, CPA. She has the distinction of being their 99th and those of you who work out of Deloitte’s Jacksonville office likely already know her:

Kistka is the Managing Director and Marketplace Leader of Deloitte in Jacksonville. A graduate of the University of North Florida with bachelor’s and master’s degrees in accounting, she has spent her entire career in Deloitte’s Jacksonville office, beginning as an audit assistant in 1998. Steadily ascending through the ranks over a span of two decades, she was ultimately named Managing Director in 2016 and Marketplace Leader in 2018. She is the FICPA’s first Chair from a Big 4 public accounting firm in more than 20 years.

“The support of the Big 4, and from Deloitte in specific, has played an invaluable role in the FICPA’s advocacy work these past 18 months,” FICPA President & CEO Shelly Weir said. “As we continue to protect the license and secure the future of the profession, Amy serves as the ideal example of a Florida CPA. She truly embodies what it means to be an Auditor of Truth and a Steward of Trust.’”

If you don’t know what’s been going on in Florida lately give this old article a read: Florida May Find Out What Happens If We Replace CPAs With Fantastic From Fallout New Vegas. If you know New Vegas lore, you know that Fantastic-like people having CPA-like powers is a very bad idea. FICPA scored a win in their battle to defend the license as recently as this past March.

Won’t Someone Think of the Well-Behaved Small Firms!

As you may have read last week (see: KPMG May Have Gotten Big 4 Into Big, Big Trouble in Australia), the Australian government is pissed off at Big 4 firms because they just can’t seem to behave. CPA Australia, a national accounting body, wants to make sure well-behaved, non-Big 4 firms don’t suffer if a regulatory hammer comes down:

Speaking to Accounting Times, CPA Australia audit and assurance lead Tiffany Tan said that reforms must acknowledge the differences between the Big Four, mid-tier and small accounting businesses servicing the non-corporate sector.

“Any reforms should be targeted and proportionate, focused on addressing key regulatory gaps and improving outcomes rather than imposing unnecessary burden,” Tan told the masthead.

“Stronger, more prescriptive regulation should be directed towards areas with the greatest public‑interest impact, such as audit of public interest entities, while lower-risk services and smaller practices servicing SMEs should be subject to more proportionate, principle-based oversight.”

“While all audit firms must meet high standards, regulatory obligations should reflect differences in firm size, complexity, client base and public-interest impact…Getting the balance right is critical. Reform should enhance confidence and audit quality without creating costs and complexity that ultimately reduce competition and choice in the audit market,” she added.

We’ve seen how this plays out in the US. If they make it too annoying to do the job, even the not-so-little-little-guys will nope out of the market altogether. See: CONFIRMED: Mid-Tier Firms Are Getting Out of the Public Company Audit Game.

Tell Us How You Really Feel

While we’re on the topic of Big 4 firms in Australia, give a read to this long-ish post from FT: ‘The brakes failed and they’ve crashed the car’: how the Big Four’s wheels fell off Down Under

A senator who did the books for her family’s earthmoving business as a teenager has become the bête noire of the Big Four auditing and consulting firms in Australia. 

Deborah O’Neill has led the charge against KPMG in Australia over a client confidentiality scandal that prompted the departure of the firm’s chair, chief executive, chief operating officer, audit leader and a senior partner over the past month.

In the same way that Australia punches above its weight in other fields, the country has become a frequent source of embarrassment for the Big Four, exposing weaknesses in the structure of the industry.

The unravelling of KPMG Australia comes on the heels of a similar implosion at PwC. The rival Big Four firm came unstuck when a data leak led to the exit of senior management.

“We have seen the degradation of the integrity that is essential if you are in the trust business,” O’Neill said of the firms that have transformed themselves from auditors into “guns for hire” chasing profits.

It’s extra funny because audit isn’t that profitable. If they’re gonna be shady, at least be shady for some big consulting profits ya know?

Scandals Are Bad For Recruiting…Maybe?

Somewhat related to this but applicable everywhere, Sydney Morning Herald spoke to three students to find out if KPMG’s recent, uh, stuff would deter them from pursuing a career there. This one made me LOL:

Damon Kim, a first year student studying commerce and economics at UNSW, first heard about the scandal through a friend at his church group who previously worked at KPMG.

“They sent me an article and said, ‘look at what KPMG is doing, Damon, maybe you should try thinking of some other industries you could be going for as well’,” he said.

The scandal has somewhat shaded Kim’s perspective on consulting. But he said his experience working with university club 180 Degrees Consulting had reinforced the positive social impact a career in the industry could have and that he was eager to continue working towards it.

To be fair, the friend may have tried to dissuade young Damon from going to KPMG either way. Many of you former (and current) Big 4 people tend not to be the best advertising for an exciting, fulfilling Big 4 career what with how often you talk about the long hours and office politics.

KPMG Makes an AI Investment

KPMG invested in some software:

KPMG US has acquired a minority stake in Incentify, a Los Angeles-based provider of AI-powered tax credits and incentives (C&I) software.

Founded in 2019, Incentify provides a software platform that helps accountancies and their clients optimize C&I discovery and management with centralized reporting and customizable workflows.

Incentify’s US incentives warehouse, AI discovery and qualification engine, and client collaboration tools are already part of KPMG’s Incentive Credit Opportunity Navigator (ICON) solution – which also features KPMG’s global incentives dataset.

Fire Up the Comment Letter Pen

Fans of writing comment letters may be interested to hear that FASB is seeking comments on a fair value proposal:

FASB published a proposed Accounting Standards Update (ASU) intended to improve investment company financial reporting by amending how investment companies measure the fair value of an equity security that is subject to a contractual sale restriction.

The deadline for comments is July 17.

For investment companies, the proposed amendments would require them to consider a contractual sale restriction when measuring the fair value of an equity security, according to a news release. Investment companies also would be required to disclose the amount of the discount attributable to contractual sale restrictions.

Amazing That 8,200 People Are Even Interested in This

Speaking of comment letters HOO BOY are there a mess of them on the SEC quarterly reporting proposal:

The @SECGov just did a massive pre-holiday dump of comment letters on its proposal to eliminate quarterly earnings. This morning, there were about 2,300 letters from individuals or companies. After markets closed, that number jumped to nearly 8,200 letters!

— footnoted (@footnoted) July 2, 2026

It’s thanks to @footnoted we also learned about this amazing little project by Professor Tzachi Zach at The Ohio State University Fisher College of Business that is analyzing sentiment on those thousands of comment letters. The tool has, as of publication time, analyzed 8011 letters and found that 7925 of them (99% of total) oppose S7-2026-15.

I still plan to flip through some of them to find the funny stuff, as is tradition.