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Monday Morning Accounting News Brief: Deloitte Refutes a Demand Shift; Firm Data Breach; KPMG’s New AI Partner | 4.24.23

dog in bed with a book and glasses

Good morning and welcome to another Monday. Here are a few stories to whet your appetite for what promises to be a thrilling week in accounting ahead (obligatory /s).

Study Finds Negative Impact on Audit Partners who Give Adverse Internal Control Opinions:

As regulators review audit independence requirements to figure out whether the rules should be changed in order to promote auditor objectivity and skepticism, a recent academic study points to a negative incentive system that may impair independence and bring down audit quality.

The study found that audit firms “are significantly more likely to remove” a partner from a continuing engagement when the partner issued an adverse internal control opinion in the previous year. Such problem is tied to the client-pay audit model, which critics say produces inherent conflicts of interest.

In particular, researchers found that partners that issued adverse internal control opinions experienced unfavorable changes in their client portfolios with lower fees and less prestigious assignments.

KPMG and MindBridge announce alliance to power KPMG audits with AI technology:

KPMG and MindBridge have today announced a strategic alliance to help bring advanced artificial intelligence (AI) into KPMG member firms’ digital audits around the world. KPMG’s smart audit platform, KPMG Clara, will now use MindBridge’s technology to help unleash the power of AI into audits, further enabling the identification of unexpected or high-risk transactions and helping to provide enhanced audit quality.

Discussion item:

Related article from July 2022:

Blind Item: California Firms Are Paying California Salaries to Poach Midwestern Public Accountants (UPDATE)

‘Carbon Accountant’ will be the future’s most important and in-demand job, writes Paul Ford for Bloomberg:

I think the one, true job—the job that will matter more than any—will be, essentially, carbon accountant. The greatest job security will be for people who know the tax rebates and every aspect of green law, then study PDFs—God, there will still be PDFs in 2050, won’t there?—then study every aspect of the large, open climate standards from places like Gold Standard, Verra, IFRS and others, and get really, really good at using mitigation disclosure software to fill out report after report so their employers don’t get fined or shut down by the government.

We’re going to need hundreds of thousands of people like that. They’re going to take pictures, install sensors, write things down, look inside of vats of chemicals, create PowerPoints. And they’ll be able to bill a ton, because once we realize that no magical unicorn is going to show up in the garden dragging a cart full of large denominations—that’s the moment of profound and painful realization when people will understand they need to give up and call a consultant. And that’s when the real money starts to flow. Trust me on that. I was a consultant.

WaPo discusses recent layoffs:

Consulting firm Deloitte said in a statement that its “U.S. businesses continue to experience strong client demand. As growth in select practices moderates, we are taking modest personnel actions where necessary.”

The Financial Times and other outlets reported that 1,200 workers would be laid off at Deloitte, but the company declined to confirm the number.

Economists say the latest wave doesn’t signal a labor market in free fall, or even one that’s grinding to a halt. Rather, the layoffs are a marker of an economy trying to find its way to a new normal.

The changing nature of workforce mobility:

According to the recent EY 2023 Mobility Reimagined Survey, which shares insights from more than 1,000 global mobility professionals and employees recently posted on international assignments, workforce mobility has failed to reach its full potential. While lucrative workforce mobility programs are imperative for the global talent race, with respondents voicing that these programs facilitate growth for individuals and their organizations, the survey showed a discrepancy between mobility programs offered by organizations and talent demand.

Among those surveyed, 92% believe that workforce mobility opportunities help organizations drive growth by supporting organizational goals while investing in top talent. However, most respondents were unsure as to whether organizations can handle the potential tax, immigration, and regulatory risks.

Some other stuff:

The accountant shortage is so real that dozens of cities have no credit score because they didn’t file financial paperwork in time [Fortune]
Oklahoma loosens CPA requirements [AT]
Ava Labs CEO Calls for Crypto Regulators Who Can Read and Audit Code [CoinDesk]
Accounting Firm Rubino & Company Files Official Notice of Data Breach [JD Supra]

That’s all I have for now. Log off and go get some sun, you need it.