Please ensure Javascript is enabled for purposes of website accessibility

Tuesday Morning Accounting News Brief: Getting Roofied at KPMG?; PwC: ‘Burnout Should Be a Concern’ | 9.5.23

Good morning and happy Tuesday. Hope everyone had a nice Labor Day, I had a productive weekend of being AFK at Meat Week (get your minds out of the gutter, it’s Fallout).

Screenshot of Fallout 76's Meat Week

Let’s get right into it.

It is suspected someone spiked a colleague’s drink at a KPMG NZ get together, it isn’t the first time either:

Two people at KPMG are suspected to have been victims of drink-spiking at separate work drinks, with the executive chair saying whoever is responsible is a “grubby little coward”.

Stuff has obtained a leaked email from Matt Pritchard, Executive Chair of KPMG in New Zealand, who begins by saying “this email is not something I ever expected to have to write”.

“Distressingly, last Friday at our monthly Auckland Partners’ shout, one of our people was a victim of drink-spiking.”

“While the location of the incident was not certain, it was likely to have also been at our premises,” added Pritchard. We’ll do a deep dive later today.

Stout put out a press release to say they helped BDO establish the ESOP:

Stout, a global investment bank and advisory firm, has advised BDO USA (BDO) on the establishment of an employee stock ownership plan (ESOP). Stout served as the exclusive financial advisor to BDO and led the ESOP structuring, financing process, and execution on behalf of the company. Stout also served as the sole debt placement agent on a term loan financing led by Apollo-managed funds to facilitate the ESOP. The transaction closed on August 31.

BDO is now among the largest ESOPs in the country and is the first large public accounting firm to transition to ESOP ownership.

Wipfli is upping its risk management game:

Wipfli LLP (Wipfli) announced today it has acquired Sheshunoff Consulting + Solutions’ risk management and loan review services divisions.

The transaction adds over 70 new members to Wipfli’s existing risk management and loan review services team, bringing the firm’s total practice size to more than 210 associates.

The Sheshunoff team will deepen Wipfli’s established experience in risk management and loan review services for the financial services industry.

KPMG gets a shout-out in this Forbes piece on big companies that laid off more than 65,000 people this summer:

More than 65,000 U.S. employees lost their jobs in major job cuts this summer, according to Forbes’ layoff tracker, as recession fears and economic uncertainty continued to prompt employers to re-adjust their head counts after more than 136,000 Americans were laid off in major layoffs over the first three months of the year.

KPMG, a big-four accounting firm, slashed more than 1,900 jobs in June, following similar moves at Deloitte and Ernst & Young, while Goldman Sachs cut just under 250 employees—five months after it laid off another 4,000 employees.

Deloitte put out a report on AI that’s getting some buzz: Generation AI: Ready or not, here we come!

And here’s Australian Financial Review on said report:

Roughly a quarter of the Australian economy will be hit hard and fast by generative artificial intelligence (GAI) disruption as highlighted in a report by economists.

Finance, ICT and media, professional services, education and wholesale trade were all earmarked for “short fuse, big bang” disruption from the buzz technology, according to Deloitte Access Economics and Deloitte AI Institute research.

The five industries make up almost $600 billion of the Australian economy, or about 26 per cent.

They are expected to face rapid and extensive transformation partly because they are the industries most young people who have already embraced the technology want to work in.

Also from AFR, Big 4 firms earn almost 100% of top companies’ audit fees:

The big four accounting firms earned 99.3 per cent of audit fees paid by Australia’s 200 largest listed companies last year, a proportion described as “to be expected” in any competitive market.

PwC, Deloitte, KPMG and EY audited 96.5 per cent, or 193, of the top 200 companies in Australia in 2022, up from 94.5 per cent in 2019, the University of New South Wales research found.

Although one academic said the concentration of fees and clients in the ASX 200 showed that the market was an oligopoly, a representative of professional body Chartered Accountants ANZ played down the dominance of the big four at the top end of town.

PwC polled 1,000 Irish workers as part of its 2023 Hopes and Fears Workforce Survey, almost a quarter of respondents are struggling to or cannot pay their bills. Good times.

Irish workers are stressed, unhappy and not at all confident in their employer’s ability to keep companies afloat, a survey by PwC has found. They are also ambivalent about skills and the impact of AI on their careers.

Laoise Mullane, director, PwC Ireland workforce, warned that “burnout should be a concern for organisations and efforts should be made to support employees in taking proactive steps to address this”.

“There is an opportunity for organisations to transform their total reward offerings, with the aim of enhancing total wellness.” Mullane’s comments on burnout are also important in the context of learning and development. If employees are stressed and underpaid and overworked they will not be likely to have capacity to learn new skills to prepare for the future.

Deloitte UK put out a news release about BrightStart, an earn-while-you-learn apprenticeship:

This week Deloitte will welcome over 1,700 new people to its award-winning graduate, BrightStart apprenticeship and Industrial Placement programmes in a blended in-person and virtual induction in 16 locations across the UK.

Ben Newton, 30, who recently became the first of Deloitte’s BrightStart apprentices to be promoted to partner, said:
“A huge welcome to everyone joining Deloitte this week, you’re at the start of a special journey which is full of opportunity. Not just the opportunity to build your careers but also to help shape our firm and society for the future. I joined Deloitte as an apprentice 12 years ago straight from school and I haven’t looked back since.

“I chose the BrightStart apprenticeship because I wanted the chance to earn money whilst I studied for the ACA chartered accountant qualification as well as getting a head start into the world of work, where I could instantly be offered a direct route into the audit profession.”

Also across the pond, EY is having some audit problems:

EY, the auditor of Wilko, has reportedly come under fire for signing off the retailer’s accounts despite the firm warning that it did not have enough funds to cope with a sharp drop in sales.

According to reports from This is Money, Wilko has been at risk of insolvency since January 2022, when the company was finishing its most recent set of accounts for the year to 19 January 2022.

The company posted a £37.6m loss and directors warned that there was a ‘material uncertainty’ because it had not been able to secure additional funding, which ‘cast significant doubt’ over its ability to continue as a going concern.

BBC on Wilko last month: Wilko homeware chain on brink of collapse

Auditors aren’t doing so hot in Hong Kong:

The number of complaints received by Hong Kong’s accounting watchdog increased 83% in the 12-month period ending in March, the Accounting and Financial Reporting Council says in a statement Monday. Top potential misconduct included failing to obtain sufficient appropriate audit evidence (87%), to perform engagement quality control review (71%), and to exercise professional skepticism and judgment (63%).

Earlier: Someone Tell Hong Kong There Is Not an Unlimited Supply of Offshore Accountants and Auditors

Alright that’s enough of that for today. Let me know if you see anything interesting and/or newsworthy this week. Please, I beg you.