Good morning, party people. Got a couple things for you.
In this news brief
Layoffs Start at KPMG
The Sydney Morning Herald talks about how layoffs went down at KPMG Australia this morning. First, the intro:
When a scandal hits an accounting firm, there’s usually a significant lag between the event and its impact. Monday’s KPMG staff purge will probably be just the start of a multi-year fallout for the business’ earnings, salaries and the tenure of those that remain.
It’s impossible to measure the anger that must be felt by staff who will bear the burden of the failings of a group of senior people whose professional greed or ambition led them to misuse private client documents from Lendlease and Optus to secure lucrative audit contracts with other companies.
We’d argue it’s actually fairly easy to measure that anger on a simple enough scale. Then again, we’ve been unofficially measuring Big 4 staff anger levels for 17 years.
On Monday, the firm’s entire staff was invited to attend an internal town hall at 10.30am. Within 15 minutes of the meeting’s close, the first of the circa 350 staff slated to line up for the plank were being contacted for bad news delivery. By Tuesday, all will know their fate and whether their career will be upended by the “tap and go”.
It could be said that those who lost their jobs this week got a reprieve. They won’t have to work for months or years in a state of impending fearful anticipation as their organisation reacts to the slow-motion decline that will be the result of the audit leak scandal that has smothered the firm this year.
It’s true. No one wants to get the axe, especially in this market, but sometimes it’s a relief when you’re dismissed from a firm in crisis. Or any firm for that matter.
Guess We Need to Read Up on the History of Tires
In an opinion piece for Bloomberg Tax, Andrew Belna, assistant professor of accounting at the McCombs School of Business at the University of Texas at Austin, compares the current day private equity rush in public accounting and the pressure of AI to…the tire industry of the early 20th century?
In the early 1900s, the industry was thriving. Tire sales grew about 29% per year from 1909 to 1919 and another 8% per year during the 1920s. Yet despite surging demand from the automobile boom, the number of producers fell by more than 80% between 1922 and 1936. So what happened?
A technological transformation helps explain the shakeout. A 1933 Bureau of Labor Statistics report found that output per man-hour nearly quadrupled between 1914 and 1927. Among the major innovations was the Banbury mixer, which revolutionized raw material processing.
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Price competition, rising output, and longer-lasting tires all contributed to a collapse in the number of producers in the industry. Survival depended on keeping pace with a rapid succession of innovations. The surviving firms were early entrants and large incumbents that maintained their position at the technological frontier. Their size allowed them to spread research and development costs over larger output, compounding their technological lead.
How AI Is Changing Consulting, Or Something
Elsewhere in the “AI is changing how the work gets done” space, Business Insider ran this: The CEO of the unicorn AI accounting startup, Rillet, says AI is changing who consulting firms hire
“It’s no fun being a consultant implementing your third instance of Oracle Fusion and having three years of your life basically go by in a blink of an eye because you’re transforming Excel spreadsheets and trying to wrangle a very old system,” Nicolas Kopp, CEO of AI-native accounting startup Rillet, told Business Insider.
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If AI changes how enterprise software is used, then it also changes the kinds of workers consulting firms need to deploy and manage it.
In April, Rillet announced a “corporate development alliance” with EY. It now also works with several consulting firms, including RSM and KPMG, Kopp said.
In the near term, he believes the biggest opportunity for consulting firms is in “change management and implementation.” The longer-term opportunity is to turn their decades of accumulated accounting expertise into “skill files, repositories, agents” that can be layered onto AI systems like Rillet.
Well of course he’d say that.
Deloitte Launches a Role in Tax
In people news, Deloitte announced a guy got a new job in a newly made role:
Deloitte Tax LLP (“Deloitte Tax”) today announced the appointment of Chris Puglia as chief products officer (CPO), a newly established role which underscores Deloitte Tax’s ongoing commitment to marketplace innovation and client-centric value delivery through advanced technology.
Deloitte Tax established the CPO role to advance its commitment to providing innovative, technology-enabled solutions amid rapid industry change, including the growing impact of AI. Puglia will guide the end-to-end vision, commercialization and continuous advancement of Deloitte Tax’s technology offerings. The role draws on Puglia’s deep leadership experience, industry acumen and strong understanding of the organization’s strategy, clients, and the evolving role of technology in the tax marketplace.
NTEU Objects to CEO
The IRS employee union filed a lawsuit:
Frank Bisignano’s actions as the IRS’ CEO for the past 10 months are invalid because he hasn’t been confirmed by the Senate, a federal employee union said in a new lawsuit against the agency.
The National Treasury Employees Union is asking a federal court to find that Bisignano was improperly appointed to the job, and to specifically throw out his decision to stop granting advance sick and annual leave requests for IRS employees.
The union filed suit Thursday against the IRS in US District Court for the District of Columbia. It said the hiring of Bisignano to be CEO, “a position that had not existed previously,” violates the Constitution’s appointments clause, which requires the President to nominate and the Senate to confirm principal officers. Even though Bisignano isn’t officially the Commissioner of the IRS, the agency’s own website says the IRS is “led by the Commissioner and the Chief Executive Officer” and its organizational chart places Bisignano at the top, the complaint said.
Gonna wrap this here, not a ton going on. Email or text if you have a tip or story for us and have a good one!