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Fraud
Generally Unacceptable Accounting Principles: Lessons From PwC and AstraZeneca’s Contrasting Fates [The Jamestown Foundation]
The contrasting fates of foreign companies in two recent fraud cases suggest that the People’s Republic of China (PRC) treats firms differently depending on their political utility. AstraZeneca has been guilty of widespread medical insurance fraud but has probably been treated leniently by authorities because it is seen as critical to the PRC’s pharmaceutical sector—a strategic priority. The local branch of auditing giant PwC has been banned from operating for six months following its fraudulent audits of companies including the real estate giant Evergrande. The outsized impact of the real estate crisis and the realization that Beijing cannot trust audit reports of state-owned companies is likely behind the response. The divergence in punishments could also relate to the replacement value of the firms, as well as to the potential impact on foreign investor sentiment.
Private Equity
UHY Secures Strategic Growth Investment from Summit Partners [INSIDE Public Accounting]
Farmington Hills, Mich.-based IPA 100 firm UHY LLP (FY23 net revenue of $346.6 million) has announced a growth investment from Summit Partners. This investment will support the continued expansion of UHY’s team, technology and client service offerings, while helping to accelerate both organic and acquisition-driven growth.
Capital vs. control: PE’s impact on CPA firms [Accounting Today]
Private equity’s growing presence in the accounting landscape has given rise to a substantial inflow of capital opportunities, empowering firms seeking to expand into new markets or deepen their presence in existing ones. Despite all the up-front benefits of non-bank lending, accountants can’t help but wonder about the true cost of going down this road. While the money itself is a welcome addition for firms of various sizes, the conditions it could bring are less so — independence being the first such condition that could change following PE investments.
Are They Trolling?
Grant Thornton LLP named ‘U.S. Audit Firm of the Year’ by Private Equity Wire [Grant Thornton]
Did she say this with a straight face?
“For nearly 100 years, Grant Thornton has been providing exceptional audit and assurance services to the domestic and global marketplace,” said Janet Malzone, CEO of Grant Thornton LLP. “We operate with quality as our North Star and are committed to providing the highest possible audit quality for every client, on every engagement, every day.”
Talent
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Big 4
Questions Arise About Accounting Irregularities at Rome’s Famed Cinecitta Studios [The Hollywood Reporter]
There may be a problem with the annual accounting procedures at the iconic Cinecittà Studios in Rome. The auditing firm PricewaterhouseCoopers (PwC) reportedly uncovered irregularities or misstatements in Cinecittà’s financial statements. As a result, the company may need to correct its already audited accounts, presumably in order to refile them with amended numbers. While the accounts were audited and certified by Ernst & Young, the inspection by PwC suggests that at best there were accounting errors made by the previous management and/or board of directors, and, at worst, something far more serious.
Deloitte Denies Breach, Claims Cyber-Attack Targeted Single Client [Infosecurity Magazine]
Ransomware group Brain Cipher claimed to have breached Deloitte UK and threatened to publish the data it had stolen earlier this week. However, despite the claims, a Deloitte spokesperson told Infosecurity that its investigation indicates that the allegations relate to a single client’s system which sits outside of the Deloitte network. “No Deloitte systems have been impacted,” the spokesperson said. Brain Cipher, a ransomware group that first emerged earlier in 2024, said it has stolen 1TB of compressed data in a post published on 4 December. The group gave the firm 10 days, until December 15, to respond to the threat. In its statement, the ransomware group said, “giant companies do not always do their jobs well.”
Politics, Sorta
Critics see chance to close down US audit regulator under Trump [Financial Times]
If the PCAOB is so valuable why is audit quality in the toilet? Put them on a PIP.
Critics of the US audit regulator see an opportunity to defang and perhaps close down the agency after Donald Trump returns to the White House and installs officials committed to his deregulatory agenda. US accounting firms are calling for a change of direction at the Public Company Accounting Oversight Board after four years of record fines and new rules that have irked the industry.
250-Firm Accounting Franchise Tackles Post-Election Tax Challenges at Annual Conference [PR Newswire]
89% of attendees at Padgett’s annual FOCUS Tax Seminar said they expect clients to be better off or experience no significant change due to the election, though 11% anticipate challenges. When asked to rank the likelihood of various campaign promises being implemented, the majority indicated no significant tax policy changes were likely, aside from potentially eliminating taxes on Social Security benefits.
AI
AI is likely to impact careers. How can organizations help build a resilient early career workforce? [Deloitte]
“Bruce” is an early career worker in professional services who uses generative artificial intelligence for everything in his work, “even for a ping.” While he worries, at times, that his reliance on these tools may impact his critical thinking, he ultimately recognizes that they make him more effective at his work and that there may not be an alternative to learning to work with them. “I don’t think this genie can be put back in the bottle,” he said in a recent interview. “It’s something that either you get used to working with or you get left behind.” Bruce’s perspective reflects an acceptance among some early career workers Deloitte surveyed, who are racing to embrace the tools, that gen AI and other emerging technologies are likely to remake the kinds of opportunities they have access to in the coming years. These impacts on early career workers—defined as those with fewer than five years of work experience—could have significant implications for workers themselves as well as the potential success of AI-driven transformation efforts.