Happy Monday, here we are again. Let’s dispense with the pleasantries and get to it. ICYMI: There’s more fresh news crammed into last Friday’s Footnotes. It’s a miracle we have so much going on this time of year.
Financial Times writes about Big 4 firms dumping staff in the UK, “they’ve overhired”:
When Deloitte cautioned staff earlier this month that it planned to cut about 800 jobs in the UK, it blamed slowing growth and economic uncertainty.
But cuts at the Big Four — which include EY, KPMG and PwC, as well as Deloitte — reflect something more complex than a simple slowdown in growth, according to people involved.
Recruiters and analysts said the need to shed staff partly reflected excessive hiring in the wake of the coronavirus pandemic. It was also the result of a slowdown in staff leaving the big consultancies, as higher interest rates and greater wariness reduced outside opportunities, they said.
That means the cuts might not — so far at least — spell the start of a period of prolonged doom, experts said. James O’Dowd, founder of Patrick Morgan, a recruitment consultancy, said the Big Four essentially had too many staff in some areas.
“The dynamic is relatively clear: they’ve overhired,” he said.
The Financial Reporting Council and KPMG are negotiating fines of between £25m and £30m that could be announced within weeks, said Sky News:
City sources said the two sides had been negotiating penalties of between £25m and £30m, before the application of a discount on the basis of KPMG’s co-operation with the probe.
After the discount is applied, the total fine is expected to land in the region of £20m, the sources added.
Sources cautioned, however, that the figures still remained subject to change, with one suggesting that they could yet be larger.
Frazer is in the news with an interesting read on noncompetes, specifically the unenforceable kind. An appeals judge told the firm if they wanted to restrict a former partner by geography then they should have done it when they drew up the noncompete.
A court probably won’t rewrite a noncompete provision in a partnership agreement that omits the required specified geographic area of non-competition, according to a recent unpublished ruling of the California Court of Appeal.
In Frazer, LLP v. Rendon, the court of appeal reviewed the enforceability of the noncompete and nonsolicitation provisions in Anaheim-based accounting firm Frazer, LLP’s partnership agreement. Frazer served clients throughout California and elsewhere. Sometime after terminating Luis Rendon’s partnership status, Frazer sued Rendon for breach of contract for doing accounting work for former Frazer clients and for hiring a Frazer employee.
The trial court summarily ruled Frazer’s noncompete and nonsolicitation provisions were unenforceable. The court of appeal affirmed.
Frazer’s noncompete provision was ruled unenforceable because it failed to specify a geographic area. The court of appeal concluded the trial court was not required to revise, or “blue pencil,” the provision to insert a geographic restriction that would make the agreement enforceable. The role of a judge, said the court, is to determine the terms of a contract as written, not to insert terms the parties omitted.
Hard Drive writes about a frustrating tech experience at a large UK accounting firm (IT’S SATIRE, YOU GUYS):
Office Has Microsoft Teams Call To Share Zoom Link
A group of employees at a multinational accounting firm were sent a Zoom link at the end of an incredibly short Microsoft Teams call, sources have confirmed.
“Hey guys, yeah I’m not sure if I can get my camera working on this. Can anyone see me? I’m just seeing a black screen” said Michael Chandler, Chief Project Manager at GWC accounting. “Yeah I’m just going to pop a Zoom link in the chat, everyone meet over there in a minute?”
The day’s Teams call concluded with everyone briefly saying goodbye, despite the fact they would all be seeing each other again within the space of a minute, and nobody would be moving from their chair.
CPA Ontario, the regulatory body responsible for the licensing and oversight of Chartered Professional Accountants and accounting firms in Ontario, has concluded an out of court settlement with Marcum LLP, to resolve CPA Ontario’s investigation and prosecution of offences under the Chartered Professional Accountants of Ontario Act, 2017, and the Public Accounting Act, 2004.
The settlement resolves allegations of multiple instances of partners at US-based Marcum LLP engaging in public accounting work in Ontario, including performing audits of reporting issuers, without being members of CPA Ontario or holding Public Accounting Licenses in Ontario.
Also from Canada. With all due respect, why the fuck would you even consider this? And why are firms so cheap??
A Singapore accountant whose license lapsed in 2009 is going to jail for 10 months. That’s some dedicated client service:
Robson Paul Douglas, 56, was previously a certified public accountant, but did not renew his licence when it lapsed on Jan 1, 2009.
Instead, he continued to audit financial statements for a pawnbroker, Chong Lee Pawnshop, for the next eight years.
Court documents said Douglas, through his company Revelation Associates, had been engaged by Chong Lee Pawnshop to prepare its audited financial statements from 2005 onwards.
Deputy Public Prosecutor (DPP) Yeo Zhen Xiong said Douglas did not renew his licence due to various family and personal issues, and realised it only when the grace period for renewal had lapsed.
But Douglas continued to take on his old client and prepared the pawnshop’s audited financial statements between 2010 and 2017.
Grant Thornton has flagged an audit client for risk of material fraud, Victoria supplies red carpets for the royal family:
The audit firm’s concerns focused on a small subsidiary of Victoria in the north of England called Hanover Flooring, where it identified “risk factors of fraud”, breaches of money laundering regulations and “potential irregularities in respect of certain transactions”.
While Grant Thornton sought to carry out further audit work on the subsidiary, Victoria’s management imposed a so-called “limitation of scope” preventing it from doing so. Victoria’s board then refused a request from the audit firm to remove this block on further work, said Grant Thornton in its opinion.
Consultants are still getting beat up in Australia, going to be a grownup today and resist the urge to chuckle at that headline:
No big consultancy left untouched by the taint around PwC
By Deborah O’Neill, Labor Senator
PwC’s gross misuse of confidential government information, and the now-public 144 pages of internal emails that detail their misconduct, sparked an unparalleled wave of criticism of the sector.
As we stare down the barrel of another two days of hearings into the management and integrity of consulting services, and as the sector feels the fatigue of sustained senate scrutiny, the necessity of this work for the safeguarding of our market security, and the security of individual Australians, must remain front of mind.
The continuing barrage of negative media, and the ongoing and unfamiliar scrutiny of established (but highly questionable) industry practices, are causing discomfort and fatigue within the sector only to an extent that is warranted.
Companies that profit so substantially from Australian government work, and which play such a crucial role in the security of our markets, the economic stability of our country, and the financial wellbeing of individual Australians, should not be surprised by the expectation of reasonable transparency and accountability. It is not a burden imposed by an overzealous Senate – it is the bare minimum.
As we cast our gaze beyond this week’s hearings and to the fundamental purpose of the inquiry, emphasis should be placed on the growth of a financial sector with genuine ethical standards, and on the expectation for companies to understand that they are answerable to regulators, to the public, and indeed to the parliament, for their conduct.
Seattle-based IPA 100 firm Moss Adams LLP (FY22 net revenue of $1.1 billion) has admitted Adam Chamberlain as a tax partner.
The firm has also appointed Kenny Wilks as the new PIC of its Dallas office. Wilks has more than 20 years of experience in public accounting, serving a broad range of industrial clients including oilfield services, energy, and manufacturing and distribution companies. He has worked in the firm’s Dallas office since 2004.
Alright, that’s it. You know the drill, let me know if you see anything interesting happening out there this week.