Monday Morning Accounting News Brief: NYT Puts Big 4 Tax Strategy Out There; You Mean to Say KPMG Fudged the Truth!? | 8.10.26

Posted on by Adrienne Gonzalez
cat at the table swatting food

Good morning, party people. Found a little bit of news for you so you have something to talk about if anyone you don’t like corners you in the break room later.

In this news brief

KPMG May Have Been Less Than Forthcoming

Financial Review started their week putting KPMG on blast, as one does: KPMG’s half-hearted disclosures skewed Ashurst review of misconduct.

KPMG withheld crucial information from Ashurst as the law firm conducted a review related to allegations of misconduct in the accounting firm’s audit division, leading the lawyers to dismiss the whistleblower’s right to claim legal protection.

A report authored by Ashurst in May last year said KPMG had told the law firm that the whistleblower had only provided “high-level information” about the allegations. This prompted Ashurst to find that he had not provided sufficient detail for his claims to qualify as protected disclosures.

And:

The reports show that KPMG provided such limited information to Ashurst that the law firm concluded that the firm could not investigate the whistleblower’s claims due to a lack of detail, and accepted that the auditing giant had reviewed the allegations and found them to be false.

Earlier coverage that goes over Ashurst findings: Ashurst warned KPMG of Lendlease breach ‘risk’ last August

NYT on B4’s Hottest Tax Strategy

New York Times wrote about Crocs. Well, they wrote about Crocs’ tax strategy and how Big 4 firms are the reason the NYT’s reporter struggled to find actual corporate offices when he visited the country for this story:

Take the stairs to the second floor of an old brewery on the Mediterranean archipelago of Malta and buzz yourself in to a tiny office hidden behind a heavy metal door.

The air smells of hops, but this place isn’t just brewing beer: It’s the headquarters for a convoluted strategy that the world’s biggest corporations use to dodge billions of dollars in U.S. income taxes.

Consider Crocs. One of the world’s most profitable shoemakers sells its signature chunky clogs to 150 million customers across 100 countries annually. Yet, come tax season, the Broomfield, Colo., company has claimed that all its global profits were actually earned in this two-person office.

Welcome to Malta. The tiniest country in the European Union, with roughly the population of Milwaukee, it is home to turquoise water beaches and a raging nightclub scene. It is also the world’s hot new corporate tax haven.

Here comes the meat:

The accounting firms KPMG, PwC, Deloitte and EY are aggressively marketing the strategies that Crocs and other companies are using to push profits to Maltese units with ghost offices and no employees. A KPMG presentation reviewed by The New York Times laid out a byzantine arrangement for prospective clients to slash their tax bills by arbitraging U.S. and Maltese rules.

“The choreographers are the Big Four,” said Michael Hamersley, a former tax lawyer at KPMG and EY. “They seek out the opportunity to exploit the tax system.”

Well yeah? That’s what clients pay them the big bucks for.

I’m curious if this story takes off or if it gets buried under a mountain of news slop.

Who Need Consultants Anyway?

Financial Times opinion pages asking the serious questions: Who needs consultants in the age of AI?

Writes Robert Armstrong:

In the age of artificial intelligence, what happens to people who sell the human variety? It’s a pressing question for a lot of professions (not least opinion writers), but is especially acute for strategic consultants, who not only sell ideas but charge a lot for them. In other professional services industries such as law and accounting, the provider is paid in part for taking on legal responsibility. Someone has to sign off on accounts or legal opinions, whether they were drafted by an AI model or not. Strategy advice lacks this virtue. It’s simply good or bad, useful or pointless. If a large language model can do it better, faster or cheaper, we should use the model and fire the consultant.

The piece goes on to talk about how consulting isn’t just about ideas, it’s about being able to push the client past the point of transformation.

Still, lots of clients are asking that very question these days.

CPAB Gets Around to Punishing EY For Cheating

In Canada, the Canadian Public Accountability Board is bringing up old shit. Rather, they’re wrapping up some aged cheating allegations. Reports Canadian Accountant:

Four years after saying it would investigate whether employees at Ernst & Young LLP cheated on exams and training courses, the Canadian Public Accountability Board has announced a settlement with EY Canada. This past week, CPAB published an enforcement order against the Big Four firm, one that includes an undisclosed monetary assessment to be paid by EY Canada to CPAB to cover the cost of monitoring the accounting firm’s compliance.

The important bit:

According to the 17-page enforcement order, accountants at EY Canada cheated on EY Learning Courses from at least 2017 until the second half of 2020, a period of at least three years (incidents of answer sharing also occurred in 2014-2016, however, the Investigation did not focus on that time period).

You may remember a headline from four years ago that took precedence over any happenings in Canada: EY Auditors Cheated on Ethics Exams and Tried to Cover It Up, Will Pay a Record Fine for Naughtiness. And a follow up we did: How Exactly Did EY Auditors Cheat on CPE Exams? Details From the SEC Order

Speaking of cheating, is the PCAOB done fining big firms in foreign countries for sharing answers? It’s looking like it. Sharing answers is out, AI cheating is in!

Tax and Finance Leaders Are Sweating Tax Complexity

You internationally-minded tax nerds out there will like this one from Deloitte, it’s their 2026 Global Tax Policy Survey. They surveyed 1,010 tax and finance leaders across 28 jurisdictions and found that tax complexity is the top issue affecting global tax and finance leaders in 2026.

There’s Levels to This

Aprio made a new commercial, the spot is called Levels and they’re running it in the Washington, DC market to start.

And before you spend all afternoon AI-vestigating, yes AI was used to make this in some capacity:

Did the set make anyone else think of this?

That’s it for this news brief. As always, I invite you to email or text the tipline if you have a tip or story for us. Don’t worry if you think we may have seen it already, we’re not like Flock with eyeballs everywhere and appreciate all scoop even if it’s not fresh.

Alright, go out there and have a good week or else.

Related Posts

Accounting News Roundup: Dems Discuss a More Palatable Millionaire Tax; IRS Gives Oakland Dispensary a Buzzkill; Again with the Tax Shelters, KPMG? | 10.05.11

U.S. and New York Sue BNY Mellon [WSJ]
Bank of New York Mellon Corp. was hit by a one-two legal punch that escalates a currency-trading crisis for one of the nation’s largest banks. The Justice Department and New York’s attorney general filed separate civil lawsuits alleging that the bank fraudulently charged clients for currency transactions. Filed within hours of each other late Tuesday, the suits allege that BNY Mellon defrauded or misled state and public pension funds, private companies, universities and banks in a decade-long scheme of overcharging for foreign exchange.

Democrats discuss tax on US millionair=”http://www.ft.com/intl/cms/s/0/dc930870-eed7-11e0-959a-00144feab49a.html#axzz1ZuZb93Gd” target=”_blank”>FT]
Democrats in the Senate have discussed a new tax on US millionaires to pay for at least part of $447bn in fresh economic stimulus measures pushed by the White House. According to a Democratic congressional aide, no final decisions were made on Tuesday on whether to present a new tax on the wealthiest citizens, and there were no estimates on how much money it was intended to raise.

Robbers Invade CEO’s Midtown Home [WSJ]
The armed thieves took more than $260,000 worth of cash, jewelry and other valuables in the Monday robbery at the home of George Bardwil, the CEO of Bardwil Industries, police said. Mr. Bardwil, 59 years old, was meeting with a business consultant and an accountant in his East 51st Street apartment when there was a knock on the door about 2:30 p.m. As Mr. Bardwil answered, two gunmen shoved their way inside and ordered the men to get to the ground. The attackers tied up the men and ordered them to keep their eyes closed and not look at them, according to a police official with knowledge of the matter. They then went into Mr. Bardwil’s bedroom, where they removed cash and jewelry from a safe.

For some of the rich, budget and tax battles bring worries — of paying too little [WaPo]
“It is going to be really bad for rich people,” said Charlie Fink, 51, a former AOL executive, imagining an American financial collapse that could wipe out his wealth. “It’s going to be [bad] for everybody. But most people are living close to the bone anyway. So they have less to lose.”

Oakland medical cannabis club owes IRS millions in back taxes [SVMN]
“They’re attempting to tax us out of business,” Harborside owner Steve DeAngelo said Tuesday by telephone. Ironically on the same day he received the IRS letter, DeAngelo was photographed handing the city treasury a check for $360,000. The payment was the third installment of $1 million in city-owed taxes generated by the dispensary in 2010. Oakland’s four dispensaries pay a 5 percent tax to Oakland on top of regular sales taxes that contributed about $2 million to California’s budget.


U.S. wins three tax cases involving big banks, KPMG [Reuters]
United States prosecutors said on Tuesday they had won three major cases against American clients of questionable tax shelters including ones used by a Dallas billionaire and Wells Fargo Co. and others designed by Citibank and accounting firm KPMG LLP. The separate cases, the verdicts of which were rendered last Friday, represent a significant victory for the US Justice Department, which was sued by each of the three clients when the Internal Revenue Service denied as improper their claimed deductions that totaled hundreds of millions of dollars.

Accounting News Roundup: PwC Has an Iceland Problem; Chief Audit Execs as the Bad News Messengers; Would IFRS Result in More Shareholder Litigation? | 05.13.10

How Dangerous is the Two-Billion Dollar Suit Against PwC Over Iceland’s Glitnir Bank? The Answer is Blowin’ in the Wind [Re: Balance]
In terms of a European financial laughingstock, prior to Greece, there was Iceland. Glitnir Bank (or what’s left of it) is suing its former chairman, CEO, other directors, and PricewaterhouseCoopers for their implosion last year.

For PwC’s part, one might think that since the lawsuit is in a country no one really pays much attention to, that it’s a bit of a joke. Well, that would not be so:

PwC faces a real lawsuit (for the complaint, here), in a real court – Manhattan’s New York Supreme – brought on behalf of the bank’s creditors and advised by Steptoe & Johnson and Slaughter & May – real lawyers who know their billions from their millions. Nor, any more than any of the other Big Four accounting firms, does PwC have the resources to absorb a ten-figure litigation blow (here).

Prosecutors Ask if 8 Banks Duped Rating Agencies [NYT]
Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch come on down!

When the CAE is the bearer of bad news – and gets shot in the process [Marks on Governance]
What’s that saying about messengers? Chief Audit Executives (“CAE”) are often bad news messengers and talk about a thankless job. As Norman Marks tells us about one person that shared with three tricky situations with past employers:

In each of these situations I firmly believed that something that the organization was doing was highly unethical and/or not in the best interest of the organization, placing it at risk. Two of the organizations actually admitted that what was being done was in direct violation of the organization’s policies and in one situation state employment laws. In one situation I had my exit meeting with HR, and in the other two organizations only with the CAE.

In case you’ve misremembered, whistleblowers usually have a rough go of it, as Norman states, “All CAEs recognize that this is a risk, and in my experience they all accept it with full knowledge that their career at their company may effectively end with the delivery of the bad news.”

GAAP’s Lawsuit Buffer [CFO]
Some might argue that U.S. GAAP has a very distinct advantage over a more principles-based accounting system – lower litigation risk.

Of course companies could document the hell out of their “principles-based” conclusions to mitigate this risk but shareholders would likely still question their cockamamie reasoning. Now a recent study entitled “Rules-Based Accounting Standards and Litigation” is suggesting “that companies that violate rules-based standards have a lower likelihood of getting sued than those that are accused of violating more-principles-based standards,” giving the pro-U.S. GAAP contingent more to stand on.

The authors did admit that it’s difficult to conclude that principles-based would absolutely, 100% lead to more litigation due to our “unique litigation system” and the fact that we live in a sue-happy paradise.