Hey. To our readers in tax let me just say you’re doing great! Almost there! For everyone else, hopefully you’re hanging in there as well. To everyone: be sure to touch some nice grass this week, it’s good for you.
In this news brief
The Future of Auditing Is Here
FT’s Stephen Foley wrote about AI and auditing in the opinion pages today. In his piece, he mentions new Financial Reporting Council guidance we’ve been meaning to write up that boils down to this: “auditors are responsible for what the AI spits out.” This should get interesting.
We’ll skip the part of his piece that talks about that and focus instead on this bit about what EY’s been up to with Canvas:
EY’s global leadership team had a peek late last month at the powerful AI tools about to be rolled out across its audit business. The firm’s technologists showed a revamped EY Canvas audit platform with features that dramatically speed up the corporate risk assessment used to plan an audit, ping staff as they work with relevant accounting guidance, and pre-fill work papers that document their progress.
EY’s claim is that, as the Canvas update goes live this month, audit work will not just be faster but more thorough, more likely to catch fraud and ensure the accuracy of the financial statements on which our capital markets rely.
We can’t wait for the AI age fuckups to start. How will regulators respond? How will firms dodge responsibility? What does Ja think about all this?
Auditors Take Two Ls in Court
Meanwhile, and related to the above story I suppose, Amanda Iacone at Bloomberg Law/Tax/whatever wrote a long one about auditor liability. The first paragraph sums it up:
As auditor enforcement stalls in the US, investors harmed by fraud are clinching financial payouts and notching courtroom wins in a pair of class action suits that are typically difficult to bring against accounting firms.
And those two suits in brief:
Deloitte & Touche LLP agreed in March to finalize one of the largest settlements in an auditor class action case in a decade. The $34 million payout to Scana shareholders wraps up a six-year court fight over Deloitte’s audits for an abandoned nuclear power plant project in South Carolina.
That followed a case in New York where hedge fund investors who questioned the work of auditors sued BDO, now known as BDO USA P.C., after the fund collapsed. The investors were awarded about $9 million in damages via an arbitration panel. A state judge in January upheld the award and the case remains under appeal.
She goes into each case a little so swing over there and give it a read if that’s something you’re into. And remember, big old payouts don’t necessarily mean the auditing was completely ass and clean audit opinions don’t necessarily mean there wasn’t a stitch of fraud. As our readers know, it’s a bit more complicated than that. A lot more complicated than that.
Oakland Is a Little Too Chill on the Tax Collecting
The city of Oakland, CA has some issues with tax collection. Reports KTVU:
Oakland finance officials have failed to collect millions in business taxes over the years, according to an audit of the city’s Revenue Management Bureau that was released last week.
The bureau, which operates under the city’s Finance Department, did not collect all revenue owed to the city, did not have sufficient systems in place to ensure accurate and timely billing and collection of taxes and fees, had not sufficiently collected taxes from businesses, and did not have sufficient processes in place for identifying businesses subject to business tax.
Saying there are not sufficient processes in place is downplaying the situation just a little:
“Additionally, the vast majority of accounts forwarded to the Collections Division in 2024 had not been researched, contact attempts with businesses had not been made, and no notes or supporting documents were attached,” according to the audit.
San Francisco Chronicle did a deep dive on Oakland’s fiscal situation on March 4: A budget plot twist in Oakland: From ‘fiscal emergency’ to $17 million in the black
Telework Is Way Down at the IRS But…
TIGTA published a report on the state of telework at the IRS, Tax Notes covered it here: Telework Decreased After the Return to In-Person Work Directive, but the IRS Will Face Challenges Monitoring Compliance
TIGTA analyzed keycard data as part of their report but 11 percent of the time charges don’t have any:
From March 9 through May 3, 2025, about 70,000 IRS employees reported approximately 2 million daily time charges for in-person work. Eighty-nine percent of these daily time charges matched building access card data.
For our analysis, we identified employees who charged any amount of their regular workday to in-person work and were assigned to a building that had card access.
About 200,000 daily time charges (11 percent) did not have corresponding access card data to support in-person work. According to IRS officials, there are several reasons why an employee may have reported in-person work but there was no corresponding access card data. These reasons include miscoded time charges, access card issues, or alternate building access methods (such as a physical key).
Still, telework is way, way down. Report here.
Al Capone Gets Busted Rigging Air Force Bids
Anyone want a fraud story? Here you go: Man pleads guilty to scamming Air Force out of $37 million, channeling bribes to public official nicknamed “Godfather”
A former U.S. Air Force Master Sergeant pleaded guilty this week to federal crimes in a scheme that defrauded the Air Force of $37 million and involved channeling bribes to a public official nicknamed the “Godfather,” federal prosecutors said.
Texan Alan Hayward James, 51, pleaded guilty to conspiracy to commit wire fraud, bribery, and conspiracy to rig bids in the District of Hawaii and elsewhere.
James nicknamed himself “Al Capone” in the ledgers. His parents had the code names “Capone M” and “Capone D.”
“Over thirty-seven million dollars — that’s how much the U.S. Air Force overpaid because of the scheme that the defendant admitted to, under oath and in open court.” said Acting Deputy Assistant Attorney General Daniel Glad of the Justice Department’s Antitrust Division in a press release. “Criminals who rig bids and commit fraud on government contracts steal from taxpayers and threaten the public’s confidence in government institutions. The Antitrust Division’s Procurement Collusion Strike Force will detect and prosecute those who rig bids and defraud their government customers.”
“Through this bid-rigging scheme, the defendant not only stole from American taxpayers and harmed companies seeking to compete honestly for government contracts, he also ultimately harmed essential military services designed to keep our nation safe by diverting resources away from other services,” said U.S. Attorney Ken Sorenson for the District of Hawaii. “Bid-rigging and anti-competitive behavior in government contracts erodes trust in our institutions, harms taxpayers, and will not be tolerated. We will continue to investigate and prosecute any and all who would seek to manipulate markets and undermine fair competition for their own personal gain.”
Indian Guy Who Worked For Deloitte Gives Up on Canada, Says the Healthcare Sucks Too Bad
Here’s something from Hindustan Times: Ex-Deloitte consultant explains why he lives in India despite having Canada permanent residence
TLDR He says Canadian healthcare sucks.
Sahil Peris said he went to Canada five years ago when he got into the country’s top MBA programme. After graduating, the techie joined Deloitte in Toronto as a full-time senior consultant.
During the last month of his MBA programme, Peris injured his neck. He said he was in constant pain and Canada’s healthcare system did not help.
“I was in pain every day and Canada’s healthcare system was just not helpful,” he said.
Instagram post they got their story from:
Yeah let’s wrap this up here. If you have a tip, a story, or a grip you’d like to share with the class feel free to reach out via email or text and we’ll chat. Love you byyyyye.
