Good morning! It’s Monday again. And also October 16. Ugh. Well let’s do this I guess.
Deloitte Netherlands Chief People and Quality Officer Rob Bergmans has quit. Last we checked in on the Dutch, it was KPMG that had gotten busted for cheating (See: Dutch KPMG Cheaters Might Get a Call From the PCAOB), an event that claimed a couple of directors over there. Now Deloitte is down a director too.
Dutch financial markets watchdog AFM said it was “shocked” by the outcome of Deloitte’s investigation and urged the company to reveal all the facts.
“Twice in a row, exam fraud is shown at the top of major accountancy firms, where exemplary behaviour should be expected. That makes it all the more painful,” AFM director Hanzo van Beusekom said.
Deloitte said Bergmans’ conclusion was based on intermediary results of an investigation into all learning activities of around 14,000 employees in the past five years, which will be finalised towards the end of the year.
ABC News Australia said former PwC CEO Luke Sayers “has the confidence of a man who would stride into traffic without looking.”
He’s used it, rising to win a vote of partners and become the CEO of consulting firm PwC Australia, reaping tens of millions in salary before leaving to start a firm that bears his name.
But now a Liberal senator is likening his words to that of disgraced businessman Alan Bond, a Labor senator is accusing him of calling the likely next boss of the tax office a liar and a Greens senator states he was either “wilfully blind” or misleading the Senate in his evidence.
The explosion of that scandal – currently under criminal investigation by the Australian Federal Police and the subject of a committee report titled, PwC: A calculated breach of trust – made it clear for a long time that Mr Sayers would find himself at a table in the Senate committee room answering questions.
When he did, Mr Sayers made several things very clear:
- He’d built a strong set of values for PwC Australia and exported that model to PwC offices overseas
- Except there was that time when he’d been enmeshed in a conflict of interest so substantial he was fined for it – while in and remaining in the CEO role
- He can’t recall the penalty, but would get back to the Senate about it
- Dr Ziggy Switkowski is a “high integrity gentleman” and former client, but Mr Sayers doesn’t agree with the bits in his report that suggest the company’s “mindset was said to have been ‘growth at all costs’ with a spotlight on ‘revenue, revenue, revenue’.”
- He was accountable and apologetic for what had happened under his watch
- But also he didn’t know anything about the conflict of interest scandal until media reports earlier this year, almost a decade after it occurred
- If he had known about the issue he would have investigated
- But testimony from one of the nation’s most senior tax bureaucrats that he told Mr Sayers to “read the emails” relating to the scandal wasn’t something he recalled.
KPMG’s record FRC fine is dominating the headlines, let’s find something more positive:
KPMG taps new vice chair of tax
Long-time KPMG alum Rema Serafi will take on the role of vice chair, tax for the Big Four accounting firm effective November 15, the company told CFO Dive.
The first woman to serve in the role at the firm, Serafi’s appointment is the latest in a series of leadership hires at the firm in recent months, including appointments to its newly-formed AI group and the hiring of former Uber CFO — and previous KPMG alum — Francois Chadwick to lead its emerging giants group, CFO Dive previously reported.
She will succeed Greg Engel in the position of vice chair, tax, where she will oversee a team of more than 10,000 partners and professionals. Engel is set to retire by the end of the calendar year, KPMG said.
Respondents to PwC annual lawyers’ survey say costs are growing faster than fee income:
Cost pressures from high inflation and an inability to pass the burden on through pricing to clients are among the biggest concerns of the top 100 law firms in the UK, according to a survey, as billable hours fall across the board.
Staff and support function costs are growing at a faster rate than fee income, according to the annual PwC law firm survey, which polls the top firms by global revenue. The issue is one of the industry’s main concerns, along with macroeconomic volatility and cyber threats.
The AICPA’s Sue Coffey wrote an opinion piece for Accounting Today. In the immortal words of Don Draper: “If you don’t like what’s being said, change the conversation.”
Accounting has been taking a beating in the public square recently, with a steady drumbeat of news about the decline of people either entering or exiting the profession. Our talent challenges are real, but perspective about the opportunities and appeal of an accounting career has been lacking.
What’s missing from the narrative? The optimism and passion I hear daily from practitioners and firm leaders about new services and the transforming role of technology in the way we work, and the pride we collectively have in upholding trust in our business communities and capital markets. There is a great story to tell about the trajectory of the accounting profession — and it points up, not down.
The city of Stamford, CT is having a hard time getting its annual audit report done:
The 2022 annual audit report the city owes the state is woefully overdue.
It’s so delinquent that it’s almost time to file the 2023 audit report.
CliftonLarsonAllen was contracted in the past to prepare the annual audit, and also was late, though to a lesser extent.
The firm now under contract the prepare the audit, RSM, has said city departments do not regularly reconcile accounts and complete other functions that would allow them to close the books in time to complete the current audit by June 30, and would allow them to tackle the next audit soon after the new fiscal year begins July 1.
Board of Finance Audit Committee member Mary Lou Rinaldi said she spoke with RSM auditors and learned that when most cities present their information for review, they are missing maybe five or 10 data entries.
“Stamford had 125 entries that had to be created or corrected,” Rinaldi said. “It indicates that city departments are not audit-ready when they should be. For years in Stamford we’ve talked about a lack of internal controls. The city always says, ‘We’re working on it.’ But it’s a redundant comment year after year. To say we will do better next year is no longer enough.”
It’s not every day we have occasion to link to Small Wars Journal:
The $6 billion Accounting Error that Helped Save Ukraine
Accounting seldom plays a role in the outcomes of wars, but in this instance, an accounting error became an unexpected boon for Ukraine during a tumultuous Congressional period. With the removal of the Speaker of the House in October, there was potential for a temporary gridlock of Congressional budget approval. This raised concerns among Ukraine supporters that military aid might be interrupted.
However, an unforeseen Department of Defense accounting discrepancy, which reconciled aid for the war’s first year, emerged as a significant asset for the President of the United States at a critical juncture in this Congressional chaos.
Now that the DOD employs “book value” over “replacement cost”, there’s a business case for supplying Ukraine with the nation’s older, albeit operational, weapons and ammo, rather than the newest equipment. This encompasses tanks, fighting vehicles, anti-aircraft weapons, anti-tank weapons, artillery, small arms, ammunition, radars, and the like.
New MBAs aren’t having a great time these days. Wall Street Journal:
M.B.A. Job-Offers in Short Supply as Tech, Finance, Consulting Dial Back Recruiting
Companies are dialing back or delaying hiring of M.B.A.s this fall, a sharp turn from the supercharged recruiting seasons of years past.
Career officers and students at Yale University, Columbia University and Northwestern University say businesses are spending less time on campus than in recent years to hire second-year M.B.A. candidates, or holding off on job offers. That has students thinking about their Plan B if top-tier companies aren’t making offers. EY, Amazon and Boston Consulting Group are rethinking hiring strategy, or saying they will make moves when next year’s business picture becomes clearer, the companies and campus officials say.
Any drop-off in corporate demand for M.B.A.s is startling for students who applied to graduate school in 2021 and 2022 during a white-collar hiring spree with swelling salaries to match. Since then, the three main sectors that hire M.B.A.s at top schools have hit turbulence. Tech giants made big job cuts, consulting firms put start dates on hold, and deal making slowed in finance.
As you may have seen mentioned in Footnotes on Friday, a lone mystery Big 4 firm is still having trouble meeting the standards of Canadian audit regulators. Who is it?? Canadian Accountant:
The latest inspection report from Canada’s audit regulator shows little audit inspection progress as a group among the Big Four. The Canadian Public Accountability Board released its 2023 Interim Inspections Results report [PDF] this past week. It revealed that one of Canada’s largest public accounting firms will fail to meet its audit quality targets for the second year in a row.
While significant findings are down slightly (seven instead of eight), according to the interim report, CPAB has yet to complete as many inspections as it had last year (53 instead of 67). CPAB sets a target of no more than 10 per cent of files with significant findings, which is defined as a deficiency in the application of generally accepted auditing standards. The unnamed firm had four of the seven files with significant findings so far.
Also from the Great White North, the immediate past chair of the CPA Ontario Council Jean Desgagné, CPA, CA has written a little something for The Globe and Mail about the provincial group breaking off from the national body of CPA Canada (earlier: As CPA Canada’s Collaboration Accord Fails to Collaborate, Who Gets the Profession’s Credibility in the Divorce?). Here are a few examples he gives for why CPA Ontario wanted out of the national org:
In 2019, CPA Canada’s technological failures let down an entire cohort of our students who had diligently prepared for their Common Final Examination. We found its response and its review to be unsatisfactory and this led to CPA Ontario and CPA Quebec commissioning an independent third-party review of the event so that the core issues could actually be identified and addressed.
Another issue: While our profession prizes transparency as one of its core tenets, we continue to have concerns regarding CPA Canada’s financial transparency surrounding the provision of education programs for the CPA designation. We have tried continuously to get more comprehensive financial information – including trying to use our contractual audit rights – but were unsuccessful.
Additionally, CPA Canada challenged our legislative role as the regulator and voice of the profession in Ontario. Without consulting us or any of the provinces, it registered a trademark for a designation that could affect the CPA designation – the Global CPA or GCPA. Only after months of pressure from us did CPA Canada finally agree to withdraw that registration. It is still not clear to us what they intended to do with that designation, particularly given all the effort to unify the three legacy designations in those preceding years.
And lastly, it being Monday and all, here’s a petty RTO idea for anyone who needs it:
Coffee badging involves employees going into the office building briefly, usually to grab a coffee or socialize with co-workers, before leaving again. According to a recent Owl Labs survey, nearly 60% of hybrid workers admit to coffee badging.https://t.co/EMuhT4nLfc
— Going Concern (@going_concern) October 15, 2023
That’s enough news for now.