September 25, 2022

Monday Morning Accounting News Brief: PwC Gets Fined; Big 4: What’s the Scam?; The IRS Straps Up | 8.8.22

Across the pond, PwC has been fined $2.12 million after the firm failed to properly challenge UK telecom group BT once a half-a-billion pound fraud was discovered in BT’s Italian operations: “The sanctions imposed in this case, where certain elements of the adjustments following a fraud were not subject to the required level of professional scepticism, underscore this message and will serve as a timely reminder to the profession,” Claudia Mortimore, deputy executive counsel at the FRC, said in a statement. NASA needs a qualified professional services contractor to assess its internal financial reporting and management controls as upcoming inspector general audits loom and cost overruns continue to dog the agency. National Taxpayer Advocate Erin Collins escalated her push for the IRS to adopt barcode scanning of paper tax returns, which she had directed the Service to implement by 2023, by appealing its response, which she called disappointing. The IRS has been buying more guns and ammo in recent years, snapping up nearly $700,000 in ammo in early 2022. Deloitte is looking for a new CEO in India. EY Australia announces revenue growth of 19 percent to $2.75 billion, for the 12 months to June 30, 2022. KPMG gave $1 million to an Orlando nonprofit that works with residents, business leaders, and community partners on neighborhood revitalization projects.

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Here’s a longread for you as we head into revenue and compensation season: KPMG, EY revenues surge. What’s the Scam?

There’s money in influence peddling and paper shuffling. KPMG just announced a 16% jump in revenue to $2bn in the wake of EY’s recent 18% jump. Top brass at both Big 4 advisory houses are swimming in bonuses. What’s the scam?

The scam is the Big 4 are secretive partnerships, not companies, and they don’t have to disclose where their money is coming from, even though they are the most powerful private institutions in the world. Most of the income growth comes from governments. It’s our money, public money, and the Big 4 have shown a lot of flair in recent years getting their hands on it.

Further to the scam, the other two big divisions, besides consulting, are helping multinationals wipe out their tax and the ‘gatekeeper’ role which is auditing the same big companies. There are serious problems with audit in Australia including KPMG’s recent cheating scandal.

EY Australia doubled its revenue growth to 18 per cent over the last financial year, to $2.75 billion, and handed out 70 million in “record bonuses”.

That compares with a 2021 revenue increase of 9 per cent to $2.31 billion and comes despite “ongoing disruptions caused by the COVID pandemic”. The $2.75 billion result puts EY ahead of Deloitte’s $2.5 billion revenue.

Anyone know what this is?

The NJCPA panel discussion The CPA Pipeline: Challenges and Opportunities for the Profession is going down this Thursday, members can sign up here.

Buzzfeed wrote an article about cult-like workplaces, no Big 4 firms appear on it though a certain IRS raid is mentioned.

A few things we’re working on this week:

  • We talked to a guy who came up with a genius idea to make getting 150 units actually worth it
  • The Germans made a scathing documentary about Big 4 firms
  • Ancient audit regulation speeches uncovered by archaeologists (jk) show little has changed in 40 years
  • FASB is about to get really, really powerful
  • Are we sending too much work to India?
  • Some worst-case scenarios if we start running out of CPAs
  • Checking in with mid-tier firms to see how the talent exodus is treating them

Lastly, a little relaxing background noise. Enjoy. And have a great week out there, everyone!

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