Hey. Here we are, another Monday. What fresh horrors await us this week? I’ll start. Due to a technical issue on the website over the weekend, our weekend discussion on private equity in the profession was deleted — along with a few earlier posts that we were thankfully able to recover. SO, I’ll repost the topic and some of the comments we received on it (which thankfully exist in my disaster of an email inbox) to ensure the discussion rolls on. Nothing like a good technical disaster to get the ol’ blood flowing on a Monday.
It is dead out here, really going to have to scrape the bottom of the barrel for some news. So just another week for us.
Deloitte is reorganizing globally according to the little birdies who speak to Financial Times. Ruh-oh:
Deloitte has launched the biggest overhaul of its global operations in a decade as the Big Four firm seeks to cut costs and reduce the organisation’s complexity in the face of an expected market slowdown.
Under the plan, Deloitte’s main business units will be cut to four — audit and assurance; strategy, risk and transactions; technology and transformation; and tax and legal — from the five the firm has had since 2014.
The reorganization will reduce costs across the firm, said one person familiar with the plan, but added that a figure had not yet been put on the savings.
…
In an email sent to Deloitte’s partners on Monday, Ucuzoglu said the plan would reduce the firm’s “complexity” and “free up” more of them to work with clients rather than manage staff internally. Deloitte employs about 455,000 people globally.
Their sub discusses here:
Organizational update?
byu/Cadel_Fistro indeloitte
Speaking of r/deloitte, there was a not great WSJ article about the state of consulting firms that dropped over the weekend and it’s pretty dark. r/deloitte discussion here. This is a direct quote from the article:
Comment
byu/pizzatoppings88 from discussion
indeloitte
WSJ article: Consultants Are Paid to Fix Businesses. Why Can’t They Fix Their Own?
Lots of comments on that article. Didn’t realize WSJ still had a comment section.
Moving on. Over the weekend we heard from a Grant Thornton retiree who has some things to say about the recent private equity deal. Choice quote: “It all has a stench to it, and you see how they are spinning it (“transformational” is standard GT-speak). Bottom line, the private equity folks are pumping in capital provided GT cuts expenses — and the easiest target is the old folks home [retirees]. Bad, bad, bad.” We’ll run a full story later in the week.
GTers old and new are welcome to throw their 2 cents in via email or text me at 202-505-8885 and we’ll chat. Tipsters are always anonymous. I might send reaction gifs though.
Did you hear? The ‘KPMG 5’ cheating scandal was bungled in court. Bloomberg Tax:
One of the worst ethics breaches in the modern era of auditing ended with a fizzle recently as the last criminal conviction tied to a scheme to falsely inflate KPMG’s inspections results was tossed out.
The federal criminal case may have crumbled but that doesn’t negate the legacy of the inspections cheating scheme that tarnished the reputation of one of the largest firms in the US and undermined a process that is meant to protect investors.
KPMG paid a $50 million penalty. CPAs lost their licenses and livelihoods. Reforms were adopted. And the lessons for a profession that bills itself for being trusted, independent arbiters remain intact.
“The profession demands, expects integrity and this is just blatant defiance of all the professional standards,” said Bob Conway, an author and former inspector with the US audit regulator.
Earlier:
From Financial News, Deloitte’s neurodiversity network co-lead Rebecca Sanders penned I have autism, ADHD and dropped out of university – here’s how I thrived at Deloitte:
When I first entered the workforce, it felt like I had been dropped into a body of cold water, watching everyone around me gracefully float, whilst I slipped under and struggled to breathe.
Nearly seven years ago, I had dropped out of university, despite good academic results, due to poor mental health and spent the last of my savings self-funding my first AAT course – an internationally recognised accounting qualification. It would be a few more years before I was diagnosed with both autism and ADHD at 23 and 24 respectively.
When you’ve spent so long struggling to keep your head above water, you learn how to make it look so effortless that to the untrained eye it doesn’t seem as though you’re drowning at all. As a result of this ability to effectively mask — twinned with the stereotype that autism and ADHD are predominantly male conditions — I, like many other people assigned female at birth, flew under the radar.
Relatable. Except the thriving at Deloitte part, I am not cut out for that life.
The Times spoke to return-to-office’s biggest cheerleader, PwC UK’s Kevin Ellis. WE GET IT, KEVIN. YOU LIKE THE OFFICE.
Here’s a little blurb:
Under Ellis’s watch, PwC has also seen its share of scandals, and has been investigated for audit failures at logistics giant Eddie Stobart, BT and the engineer Babcock, which alone cost PwC £5.6 million in fines last year from the Financial Reporting Council. In 2022 it was even fined twice in one day for audit failures at the construction companies Kier and Galliford Try.
Despite that, Ellis insists that audit quality has improved over his years of leadership. “Auditing is an art, not a science … you will sign thousands of audits a year. If something goes wrong with one of them, that will be headline news. ‘Plane lands safely’ is never news.”
His tenure has also seen a debate raging across the Big Four about spinning off the firms’ once-lucrative consulting arms to liberate them from conflicts of interest that prevented them from serving auditing clients. EY tried, and failed, with its abandoned Everest project. Ellis reveals that PwC also looked at this option early in his tenure in 2017 and decided against it.
What’s going on at EY New Zealand? Stuff is trying to find out:
Former staff of EY have described “horrific conduct” at the firm, in the wake of the departure of its New Zealand chair, but also say there is “tension between partners” because of differing views over what is or isn’t inappropriate workplace behaviour.
Stuff broke the news on Friday that departed chair Braden Dickson, who was also an EY Oceania partner and business development leader, left the company in February after an investigation into “an historical behavioural matter”.
Concerns about the matter were raised in December 2023.
An EY Oceania spokesperson said: “We are aware there has been some discussion about the circumstances but we are not in a position to comment on those.”
Their earlier story: NZ chair of EY leaves after ‘historical behavioural matter’ raised
PKF O’Connor Davies added a partner:
New York-based IPA top 100 firm PKF O’Connor Davies (FY22 net revenue of $335 million) announces the admission of Gina Citrola as partner. She will primarily focus on advancing the firm’s outsourced controller and CFO services from the New York office. With over two decades of experience in public accounting, specializing in attest and assurance, Citrola joins the organization’s business solutions group.
Houston-based IPA top 100 firm Weaver (FY23 net revenue of $255 million) announces that Solomon Dado has been admitted as partner, specializing in tax services. Dado will be based at Weaver’s New York – Bryant Park office providing tax planning and compliance services to closely held businesses, large corporations, partnerships, S-corporations and high-net-worth individuals.
Prior to joining Weaver, Solomon held progressive tax leadership positions at national and Big 4 public accounting firms. His responsibilities included preparing and reviewing federal and state income tax returns for large corporate entities, with a focus on tax advisory services such as ASC-740 income tax provision calculations and deferred tax calculations for private corporate clients.
I have an update to this story to get up later. The SEC quietly corrected its math and we strive for accurate reporting even in the most harsh of making-fun-ofs. Believe it or not.
That’s it for this news brief. As always, let me know if you see anything interesting you think we should be talking about. I have a third eye tattooed on the back of my neck but can’t always see everything that’s going on.
