Sup and good morning. We’re doing this today because yesterday was a holiday, something I hope at least some of you were able to realize.
Baltimore Business Journal reports that RSM is adding foosball and a moss wall to its office. I’m sure all the people who have been laid off and the staff in India who replaced them will appreciate that.
Sherron Watkins and Cynthia Cooper, the whistleblowers who gave accounting professors something to talk about for the next fifty years, have written an op-ed in NYT: We Exposed Fraud at Enron and WorldCom. Don’t Let History Repeat Itself.
More than two decades ago we blew the whistle at Enron and WorldCom, industry giants whose spectacular falls revealed two of the largest accounting fraud scandals in American history. We know the destruction that fraud causes. We lived through it. We witnessed how unchecked power, collusion at the highest levels and manipulated financial statements can bring down iconic companies, destabilize markets and vaporize billions of dollars and thousands of jobs overnight.
That’s why we are raising our voices now against a proposal by Republican lawmakers to eliminate the Public Company Accounting Oversight Board, a watchdog that Congress created in the wake of those scandals to protect against accounting fraud and audit failure. The rollback of this hard-won safeguard would unleash additional risk into this highly uncertain economic environment and make the next corporate disaster more likely.
Hot take: PCAOB busywork won’t prevent the next Enron. The authors disagree on a fundamental level but acknowledge the PCAOB could do better:
The accounting oversight board ushered in rigorous inspections, enhanced enforcement and an improvement in audit quality that the profession badly needed. Successive Securities and Exchange Commission chairs from both parties have affirmed the board’s value as a vital post-crisis innovation: Thanks to its work, audits today are more consistent, more credible and more accountable, helping to uncover deficiencies that might otherwise fester. The board’s continued vigilance is crucial, as many of the systemic risks that necessitated its creation — such as the inherently conflicted relationship between auditors and their clients and the temptation of fraud — still endure. Every organization has room to improve, but any needed changes can be addressed within the current framework.
Some interesting comments over there if you’re into that.
Across the pond, audit quality has taken a small dip:
The Institute of Chartered Accountants in England and Wales (ICAEW) has released its 2024 audit monitoring report, revealing that 67% of audited files were rated as either good or generally acceptable.
This marks a slight decline from the 71% recorded in 2023, although the report notes that the average audit quality is likely to be higher due to the targeted selection of complex or challenging audits.
The proportion of audits requiring significant improvements remained stable at 10%, the report said.
Big 4 audits came in at 90% good or generally acceptable with only one needing significant improvement.
Been a minute since we covered municipal messes. Here’s one in McComb, Mississippi where the state auditor is going to have to hire an outside firm to get this shit done:
The city of McComb remains under state scrutiny because it hasn’t kept track of how taxpayer money is being spent for nearly five years by failing to get audits completed.
This failure to check the books since 2020 will cost the city an estimated $330,000.
Forgive the auto translation here, it’s a little rough. A Korean site has written about a woman in her 30s who quit her accounting job to clean toilets.
A woman in her 30s who worked at an accounting firm in both Korea and Japan has chosen to work part-time in cleaning hospitals after giving up her stable career as an accountant.
Recently, a video titled “Why Do You Quit Your 100 Million Annual Salary Accountant and Clean the Bathroom” was posted on the YouTube channel “I Am the Boss.” The main character of the video, 31-year-old Lee Yun-jae, passed the Japanese CPA exam in [her] third year of university and worked as an accountant for four years in Japan and three years in Korea.
His annual salary is about 100 million won (approx. $73k USD). However, [s]he suddenly quit [her] job in October last year. The reason was that “accountants were not the life I wanted.”
“When I was in high school, my mother was sick, so I chose an accountant because I thought she would be happy if I chose a professional job,” Lee said. “But my work life was busy and sensitive, and I used to regret it by relieving my stress to my precious people.”
Toilets aren’t the final destination for Lee, she evidently plans to become a life coach eventually.
Tried looking for the video, no luck. If anyone has it or can find it let me know.
D Magazine in Dallas profiled a, well, let’s just put the headline here: Grant Thornton’s Nichole Jordan Is Leaning Into Y’all Street. Y’all Street, I can’t. Well let’s find out what she’s leaning into I guess.
Nichole Jordan can turn on a dime. By her count, she has had more than a dozen positions at Grant Thornton since joining the accounting, tax, and advisory firm in 2006. The moves have taken her to New York City and back, but she’s now settled into her current post, serving as regional managing principal of the Texoma region and recently adding the role of Dallas and Austin market manager.
Whoever got them to write this is a brilliant PR tactician. Really.
As Jordan steps into her latest post, North Texas is going through its own transition into a financial epicenter with the launch of the Texas Stock Exchange, NYSE Texas, and a Nasdaq regional HQ compounding the influx of Goldman Sachs, Wells Fargo, and Charles Schwab presence in the region. (See story on page 32.) As a firm that frequently guides private companies through the IPO process and assists with M&A, Grant Thornton’s leadership is excited about DFW’s growth in financing and capital markets.
Jordan and her colleagues have been closely following the news surrounding the Texas Stock Exchange. Last month, the firm hosted an M&A event with representatives from TXSE and former Dallas mayor Tom Leppert to help clients better understand what the new exchange could mean for them. Jordan’s diverse background has prepared her well for this moment.
Right. So TLDR, Grant Thornton is going for the not-Wall Street money that likes to hang out in Dallas. Got it. Go get ’em.
An accounting firm across the pond with a name like a pharmaceutical that causes drowsiness and diarrhea is working on an exit sale. Mainly I wanted to put it here so you could see this statue in their yard:
Wrote The Times:
The mid-market accounting firm Xeinadin is gearing up for a sale that its owners hope will fetch more than £800 million, amid a wave of investor interest in professional services firms.
Exponent, the UK private equity firm that backs Xeinadin, has drafted in advisers from the investment bank Evercore to run an auction for the business, which is expected to begin in the coming weeks.
According to Times sources, Xeinadin says its EBITDA is about £60 million. And then says:
Several bankers said that good accounting firms can fetch an ebitda multiple of 14 times their profitability, which would value Xeinadin at more than £840 million. However, others cautioned that the business will most likely be sold for less.
That feels like a barb, is that a barb? You can never tell with the Brits.
Thing is, Xeinadin isn’t some old brand that only just recently hooked up with private equity who want to make a quick exit. It’s a roll-up firm, having been created in 2019 when a bunch of individual accounting groups got together and, for some reason no one can comprehend, chose to do business under that name. It grabbed some more firms along the way and here we are.
Also this comes up when you Google them.
Good luck to them.
Deloitte Bermuda isn’t ditching diversity, it says.
Accountancy firm Deloitte may have cancelled its diversity and inclusion programming in the United States, but the Bermuda office is sticking to its guns.
“We are committed to continuously enhancing our talent experience by fostering an inclusive culture that helps all our people thrive, reach their full potential and that reflects the diversity of our society,” a spokesman for the firm said.
While some companies are cloaking the language around DEI, or quietly removing it from their literature or websites, Deloitte in Bermuda said they would continue to use the same language around DEI.
Not surprising nor particularly groundbreaking, Deloitte UK loudly announced they wouldn’t be following Deloitte US’s footsteps by removing pronouns and quietly shuttering DEI initiatives after the latter did so when Trump entered office.
That’s it for this news brief. As always, dear reader is encouraged to email or text with any tips, comments, complaints, or links from elsewhere you think should be on our radar. Have a good week, you lovely thing you.