Friday Footnotes: Remembering Legend Sid Kess; Andersen’s Doing Great; Poland Banned Deloitte From Auditing? | 9.22.23

People

Ken Miller set to retire after more than three decades of service [Virginia Tech]
After more than 35 years of dedicated service to Virginia Tech, Ken Miller has announced his retirement. Miller was appointed vice president for finance in April 2020 and also serves as the university treasurer. In these roles, he provides financial leadership in support of Virginia Tech’s mission and serves as a trusted, collaborative resource for university leadership. As leader of the Division of Finance, Miller oversees the university’s accounting and financial reporting, procurement and surplus property, budget and financial planning, capital budgeting, financial management, debt and cash management, financial information technology, risk management, and university bursar functions. Under his leadership, the Division of Finance has enhanced university business practices and transformed several financial and business information systems to improve customer service for faculty, staff, and students.

Michael Harlow to Lead Cannabis Practice at CohnReznick [INSIDE Public Accounting]
New York-based IPA 100 firm CohnReznick LLP (FY23 net revenue of $920 million) has named Michael Harlow as leader of its cannabis industry practice. Harlow advises clients throughout the supply chain ranging from independent operators to vertically integrated operators in the largest legal cannabis markets in the country. In addition to his new role, he will continue to serve as co-director of the firm’s DC-Metro tax practice.

Mendlowitz establishes scholarship at Baruch [Accounting Today]
Ed Mendlowitz, an emeritus partner at Top 100 Firm Withum and widely respected figure in the accounting profession, has established the Mendlowitz Family Scholarship at Baruch College. Both Mendlowitz and his father, also a CPA, attended the CUNY school.

Summing up Sid: The ultimate CPA and friend to all [Journal of Accountancy podcast]
Plenty of CPAs can say they learned something from Sid Kess, who died last week at age 97. Some earned CPE credits from a Kess conference session, others read his book, and some learned simply how to treat other people.

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News

Senate publishes EY and Deloitte ‘confidential’ partner pay levels [Australian Financial Review]
The Senate inquiry into the PwC leaks scandal has served up some fantastic Schadenfreude. Not least EY’s David Larocca and Deloitte’s Adam Powick, who were reduced to puddles. That was all ego. Now, inquiry enforcers Deb O’Neil and Barbara Pocock have flipped ’em off. The Senate finance committee has quietly published the “confidential” and “commercially sensitive” details of partner pay for EY and Deloitte despite both firms repeatedly requesting they remain secret. The inquiry asked for the details and other firms like troubled child PwC and Accenture handed them over. In an August 7 letter, Powick and Deloitte’s chair Tom Imbesi got back to the inquiry with its details, but with a catch. “The information provided to the committee as part of this letter is provided on a confidential basis and on an understanding that this information remains confidential,” he wrote. You know he’s serious because he said confidential twice.

KPMG launches global ESG Academy, in collaboration with Microsoft [KPMG]
The Academy course material is structured around the latest business thought leadership in environmental, social and governance (ESG) topics, with content developed by globally recognized ESG specialists from leading universities and institutions, in collaboration with KPMG subject matter professionals in sustainability.

Former employee of Chattanooga accounting firm speaks out [Local 3]
A former employee of Croft and Frost is speaking out following the accounting firm’s shutdown that cost him and his coworkers their jobs. James Greiner said he was not shocked about the layoff, but was surprised it happened right before the third quarter tax deadline for clients. Greiner was a client-relationship manager for Croft and Frost for a year and a half.

Tax

ERC abuse brings renewed push for regulation of paid tax preparers [Journal of Accountancy]
buse of the employee retention credit (ERC) by aggressive promoters who make questionable promises has pushed Treasury to renew the call for the regulation of paid tax return preparers, an action that has the AICPA’s support. In a letter last week to the leaders of the Senate Finance Committee, Deputy Treasury Secretary Wally Adeyemo asked Congress to provide the IRS with the authority to regulate paid preparers. The regulation “could help protect taxpayers from penalties, interest, or avoidable costs of litigation that result from poor quality advice that they receive,” he wrote.

The ERC Jumps The Shark with Snoop Dogg Deepfake [The Accounting Podcast]
Blake and David expose the rampant fraud sucking billions from the federal coffers. You’ll hear an unbelievable voicemail scam promising gangbusters refunds—could it really be Snoop Dogg or is your mind playing tricks?

Deloitte Tax CEO Talks Global Reforms, Tech Future (Podcast) [Bloomberg Tax]
The new CEO of Deloitte’s tax practice is grappling with many of the same challenges as the Big Four firm’s clients: rapid shifts in how tax practitioners work thanks to artificial intelligence, a shortage of skilled staff, and reforms that will impose a new global minimum tax.

Consulting

Consulting industry Big Four sees Great Resignation drag to close [Consultancy.uk]
A slowdown in attrition at the UK’s top consulting firms is leaving fewer opportunities for new talent to advance. With many professionals at the Big Four in particular seen to be ‘clinging on’ to roles until the country’s economy improves, the quartet face the possibility of struggling to hang on to their next generation of experts in the coming year.

Allegro Funds and PwC finalize birth of government consultancy Scyne Advisory [The Mandarin]
After exploring other options, PwC Australia decided a sell-off was the only way it could save consultants’ jobs, given the tax leak scandal and its aftermath resulted in government departments expressing disappointment in the conduct of the firm in policy consultations on multinational anti-avoidance laws more than eight years ago.

Firm Watch

Revived Andersen Accounting Firm Sees Revenue Up 19% This Year [Bloomberg]
Andersen Global, a professional services firm cobbled together from the remains of the collapsed accounting giant Arthur Andersen, is on track to generate a 19% increase in revenue this year. The consultancy, created by former partners of Arthur Andersen, expects revenue to exceed $1.9 billion this year, Chief Executive Officer Mark Vorsatz said in an interview. That compares with the $1.6 billion the company generated for all of 2022.

RubinBrown creates investment bank to expand services to clients [St. Louis Business Journal]
Clayton-based accounting firm RubinBrown LLP has expanded into investment banking through the creation of a wholly-owned entity, RubinBrown Corporate Finance LLC. The new company is offering services to new and existing clients including strategic advisory services related to growth or liquidity, mergers and acquisitions, divestitures, private capital raising and valuation. “RubinBrown Corporate Finance LLC will allow us to continue to serve as our clients’ trusted advisors and ultimately assisting in achieving their vision for the business, whether that’s a liquidity event or executing a growth strategy,” John Herber, chairman of RubinBrown, said in a statement.

Outsourcing

KPMG in India and Gloplax form an alliance to offer ‘GCC as a service’ [PR Newswire]
KPMG Assurance and Consulting Services LLP (‘KPMG in India’), one of India’s leading advisors in the Global Capability Centre (GCC) space, and Gloplax, today announced a strategic alliance to offer a broad-ranging and efficient ‘GCC as a service’ model.

EY Survey: 86% GCCs cite service expansion as their top business priority [EY]
Global Capability Centres (GCCs) in India are expanding their services with a focus on transformation, innovation, and knowledge-based capabilities, as per EY India’s GCC Pulse Survey 2023. GCCs are actively rethinking their employee value proposition (EVP) and placing people’s well-being and inclusivity at the center. 77% of the GCCs surveyed believe that a majority of their workforce will continue to work in a flexible manner (hybrid) for the next 12 months, while 75% believe that less than 25% of their workforce will work remotely. The participants have seen an average attrition rate of 12.5% with almost 60% of the GCCs having an attrition rate between 5% and 15%. About three-fourth of survey respondents believed that their business is still at high to medium risk from high attrition brought on by the war for talent.

Technology

PwC Nigeria tech bootcamp IDs exposed [Cybernews]
Participants in PricewaterhouseCooper’s (PwC) Nigeria Tech Talent Bootcamp are at risk of identity theft after private data was leaked from a misconfigured Amazon Web Services account, a Cybernews investigation reveals.

Data Centers Contribute $2.1 Trillion to US Economy, New PwC Study Finds [PR Newswire]
A new PwC report commissioned by the Data Center Coalition (DCC) reveals the substantial impact of the U.S. data center industry on the national economy between 2017-2021, adding $2.1 trillion to the U.S. Gross Domestic Product (GDP) from direct, indirect, and induced effects over those five years. The industry has emerged as a catalyst for economic growth positively influencing several other aspects of the U.S. economy, including employment, labor income, and tax contributions to federal, state, and local governments.

Audit

PCAOB offers forum for auditors; SEC releases several updates [Journal of Accountancy]
Days after issuing a proposal to strengthen individual accountability for firm violations in audits, the PCAOB has announced a livestreamed forum aimed at educating auditors on how to avoid deficiencies. The 2023 Forum on Auditing in the Small Business Environment and on Auditing Broker-Dealers is set for Oct. 26. It’s free and provides CPE; advance registration is required. “Given the increases in deficiencies that the PCAOB has observed in audits of public companies and broker-dealers, audit firms must make changes so they can live up to their responsibility to investors,” PCAOB Chair Erica Y. Williams said in a news release. “The PCAOB’s annual forum enables us to connect directly with auditors of small businesses and broker-dealers about their critical role in protecting investors.

Poland Suspends Deloitte From Auditing Financial Reports: RP [Bloomberg Tax]
The Polish Agency for Audit Oversight has banned Deloitte Audyt from auditing financial reports in the country for three years, Rzeczpospolita newspaper reports, without citing anyone. Deloitte has taken steps to appeal the verdict, its press office said in emailed response to questions by Bloomberg News, adding that it can’t comment further. Newspaper says Deloitte’s unit was in charge of auditing GetBack, a Warsaw-listed debt collector that defaulted.

Audit of the Determination of Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues [Mass.gov]
For the fiscal year ended June 30, 2023, the Massachusetts Office of the State Auditor determined that the net state tax revenues were below the allowable state tax revenues, as defined in Chapter 62F of the Massachusetts General Laws, resulting in no excess state tax revenues.

Accounting Transparency Effort Tied to Decreased Funding for Innovation [NC State]
Two new studies find that regulations aimed at improving the transparency of corporate accounting practices may have had unintended consequences. Specifically, the researchers found that corporate financial reporting requirements implemented in 2007 were associated with decreases in the amount of money companies spent on innovation, capital improvements, and mergers and acquisitions. “Accounting transparency is important, particularly for publicly traded companies,” says Nathan Goldman, corresponding author of two papers on work. “That being said, our findings suggest there can be unexpected knock-on effects of some transparency efforts, such as a decline in corporate innovation.” Goldman is an associate professor of accounting in North Carolina State University’s Poole College of Management.

SEC Sends Second Message to Private-Fund Sponsors on Audit Obligations Under Custody Rule Through Enforcement Actions [Goodwin]
On September 5, 2023, almost one year since its first flurry of similar Custody Rule actions, the SEC announced settlements with five SEC-registered investment advisers to private funds with respect to alleged violations of Rule 206(4)-2 under the Investment Advisers Act of 1940 (the Custody Rule) and related Form ADV violations. Specifically, these settlements primarily addressed the following types of violations: (i) the failure to have a private fund audited in accordance with the annual audit exemption under the Custody Rule and timely deliver the audited financials; (ii) the failure of a non-US firm to have the financials audited in accordance with US generally accepted auditing standards (GAAS); (iii) the failure to follow the alternative Custody Rule requirements where the firm did not implement the audit exemption correctly; (iv) the failure to amend Form ADV, Part 1A, Schedule D, Section 7.B.23.(h) to reflect the receipt of the audit opinion following the annual amendment of the Form ADV; and (v) the failure of one firm to properly describe the status of its financial statement audits for multiple years in its Form ADV.