The big story over the weekend, and one I’ll probably be writing a biased editorial article on later because I unapologetically hold the opinion that the PCAOB is 99% tedious paper-pushing, comes from Financial Times:
Republican lawmakers are planning to shut down the US audit regulator, which was founded in the wake of the Enron scandal more than two decades ago, as part of a reform package designed to deliver Donald Trump’s deregulatory agenda.
The proposal to eliminate the independent Public Company Accounting Oversight Board was published late on Friday by the leadership of the House Committee on Financial Services, for inclusion in the giant tax and spending bill being considered by Congress.
Oh. There’s a whole bill. Well I better read it before I say more. We don’t base whole-ass opinions on a headline and a few lines of text over here.
I stand by what I said about the PCAOB.
A CPA Journal article asks “Did the CPA Evolution Leave Educators Behind?” Authors Walied Keshk, PhD, CPA and Edward J. Lynch, PhD, CPA did a little research on the ground to answer the question:
During the 2024 spring semester, the authors surveyed 97 accounting faculty members from 45 different universities across 21 states. Among other things, the survey inquired about respondents’ readiness to adapt their courses and teaching methods to the new CPA exam requirements. Surprisingly, roughly one-third of the faculty members responded that they do not feel fully prepared. Faculty members who believe they are not prepared (as well as some who do believe they are prepared) responded that they need additional resources to help them prepare their students for the new CPA exam and careers in public accounting. In addition to the survey results, this article reports the additional resources suggested by faculty to fully adapt their courses and teaching methods to the new CPA exam, including how they believe CPA firms can assist.
An interesting bit that by no means reflects the majority view of respondents:
Fourteen faculty members (including 0 adjuncts) suggested that public accounting firms share training materials and ideas for class activities and assignments. Specifically, faculty members would like firms to share materials related to the topics that are now emphasized in the new CPA exam, such as SOC reports, data analytics, and technology; as well as the skills being tested, such as critical thinking, analytical, and evaluation skills. Again, numerous accounting firms have already been sharing materials with educators for many years, but this survey indicates that faculty would like to see materials focused on topics now emphasized on the new CPA exam.
In addition, 13 faculty members (including 1 adjunct) suggested that accounting and auditing professionals work more closely with faculty members to update the accounting curriculum. This could be implemented in numerous ways. For example, many accounting departments have local accounting firm partners on their advisory boards and they meet regularly to discuss curriculum changes, scholarships, and student recruitment. Furthermore, accounting and auditing professionals can participate with faculty members in designing relevant class projects, attending student presentations, and evaluating students’ written work.
Reminder to academics: you all hold the keys to firms’ precious pipelines. Make ’em work for it!
Deloitte surveyed 200 CFOs across five sectors who work at organizations with at least $1 billion in revenue and found employee engagement (50%) and lack of skilled talent (45%) are among their biggest workforce challenges.
The situation could intensify as increasing numbers of experienced finance employees reach retirement age and the number of college graduates with accounting degrees continues to decline. When we asked CFOs to name their biggest worries related to pipeline concerns about accountants (figure 1), increased workload for existing employees was the top response (44%). Loss of credibility with institutional and private investors was the second most cited concern (42%) about pipeline issues for accountants. Erosion of board confidence in finance (41%) was third on the list.
An employee stole more than $100,000 from a Salt Lake County liquor store over a 3½-year period, according to a report from the state auditor that the Utah liquor commission’s chair described as “scathing.”
The audit’s findings included the revelation that a liquor store employee stole $112,809 from an unidentified liquor store in Salt Lake County between January 2021 and June 2024.
At the New York Stock Exchange, Diasio outlined how EY teams are leading the charge in artificial intelligence (AI) transformation. “Before we advise our clients, we needed to introspect and transform our own business practices,” he stated. This client-first approach has led to the creation of a comprehensive playbook designed to guide organizations through their AI initiatives, so they are equipped to navigate the evolving landscape.
One of the standout revelations from this journey was the essential role of executive engagement. Diasio noted, “It took significant involvement from our executives to not only understand AI but to be prepared to implement it effectively.” This proactive engagement is vital for organizations aiming to leverage AI’s potential while addressing its inherent challenges.
He says 2025 is the year “we will see AI systems that can take actions on behalf of users.”
About a week after Jackson city leaders said it could be time to bring on a new CPA firm, the city’s current CPA says the problem is not with him, but this time with JXN Water.
On Thursday, the City Council’s Finance Committee heard from Scott Hodges, a partner with Tann, Brown & Russ, to discuss the 2023 Comprehensive Annual Financial Report.
He told members that he still has not gotten the data from JXN Water to complete the audit.
A key US banking regulator unveiled settlements with two former Wells Fargo & Co. auditors who were alleged to have ties to the bank’s systemic sales-practice misconduct, according to a statement Friday.
The orders resolve actions the Office of the Comptroller of the Currency initiated against David Julian, former chief auditor, and Paul McLinko, former executive audit director. The regulator assessed a $100,000 civil money penalty against Julian and a $50,000 civil money penalty against McLinko.
In 2020, Wells Fargo agreed to pay a $3 billion fine related to its 2002-2016 scheme to artificially inflate sales numbers by opening millions of accounts without customers’ knowledge or consent.
OK I think we’re done here. As always, please email or text if you have a tip, see an interesting story, have a topic you think we urgently need to discuss, or just want to complain. Anonymity is assured.
Be well, go out and touch some grass, and have a great week!
WaMu Shareholders Win Court Investigation of Biggest U.S. Bank Failure [Bloomberg]
WaMu gets their very own Anton Valukas! Colorful claims to come? “Shareholders of Washington Mutual Inc. won court approval of a new investigation of the biggest U.S. bank failure, further delaying the company’s effort to reorganize in bankruptcy.
U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Delaware, agreed that an examiner should be appointed to review WaMu’s assets, including the value of a potential lawsuit against JPMorgan Chase & Co. and the Federal Deposit Insurance Corp. for their role in the 2008 collapse of Washington Mutual Bank.”
Ex-IRS agent pleads guilty [WaPo]
John Venuti was also with KPMG from 2002 to until this past January. WaPo reports that he was a “tax consultant and principal.”
“According to the plea agreement, Venuti did not file federal tax returns from 2001 to 2006. Each year, though, he requested and was granted a six-month extension, and made a total of $97,060 in payments along with the extension requests. Authorities said he owes more than $789,000 in back taxes.”
Reckitt to Buy Durex Maker SSL [WSJ]
“Pushing further into the lucrative over-the-counter medical market, U.K. consumer-goods firm Reckitt Benckiser PLC agreed on Wednesday to acquire health-care-product company SSL International PLC, in a deal that values the world’s biggest condom maker at £2.54 billion ($3.88 billion).”
FASB Reveals Second Attempt at Standard on Contingencies [Compliance Week]
“The standard differs from one the FASB published in June 2008, which called on companies to use some conjecture and provide estimates of possible outcomes. Corporate counsel in particular buried FASB with objections that the proposed approach would force disclosure of privileged information, especially by giving legal adversaries access to information that would compromise the outcome of disputes. The current proposal steers clear of any requirement for companies to make any predictions or estimates about possible outcomes.”
FTSE 100 audits require “significant improvement”, inspectors find [Accountancy Age]
“Auditors have also been accused of altering documents before handing them to regulators and putting cost savings ahead of quality, in the review by the Audit Inspection Unit (AIU).
The report raised a number of concerns following its inspection of 109 audits from AIM and the FTSE 350.
The report also found some cases where partners signed audit reports before the audit was complete and one instance when an auditor tried to alter an internal file after the AIU requested it. Auditors had also changed internal materiality thresholds, which effectively reduced their workload, and had also not applied enough scepticism to internal asset valuations.”
Accounting Body Picks New Chief [WSJ]
“Former Italian Finance Minister Tommaso Padoa-Schioppa has been named to head the group that oversees international accounting rulemakers. Mr. Padoa-Schioppa will assume the chairmanship of the trustees of the International Accounting Standards Committee Foundation in July. The foundation’s monitoring board appointed him chairman for a three-year term. The IASC Foundation oversees the London-based International Accounting Standards Board, selects its members and raises funds for its operations. It also helps promulgate the move toward a single set of accounting rules used world-wide.”
New York Reaches Deal to Raise Cigarette Tax [NYT]
Smokers might want to start hoarding cartons as Governor David Paterson and legislators have reached a tentative agreement to raise the cigarette tax in New York. Taxes on cigarettes in NYS, currently $2.75 a pack, would rise an additional $1.65. Taxes in New York City would rise to $5.85 a pack, marking the first city in America with a tax of greater than $5 on cigarettes.
The proposal would raise $440 million this year, according to the Times. The state’s budget deficit is approximately $9 billion.
Open Letter to the Securities and Exchange Commission: Is Medifast Complying with Revenue Accounting Rules? [White Collar Fraud]
Sam Antar is a little skeptical about a plethora of Medifast’s financial reporting and disclosures including: revenue recognition policy, “the company is possibly recognizing revenue up to 8 business days too early”; their low allowance for doubtful accounts, “the $100,000 reported for such an allowance does not seem reasonable enough given Medifast’s volume of revenues and the dates it either ships or delivers its orders to customers after processing them.”; and lack of deferred revenue liabilities, “Medifast’s financial reports going back to 2004 disclose no deferred revenue liabilities for customer orders processed before each fiscal year ended and either shipped or delivered after those respective fiscal years.”
This trifecta has Sam concerned enough that he’s asking the SEC to poke around a little more than they did the last SEC review in 2007, when the SEC found…nothing.
BP Chief Draws Outrage for Attending Yacht Race [NYT]
Probably seemed like a nice idea at the time, “BP officials on Saturday scrambled yet again to respond to another public relations challenge when their embattled chief executive, Tony Hayward, spent the day off the coast of England watching his yacht compete in one of the world’s largest races.”
BP, Transocean tap a well of Washington lobbyists and consultants [WaPo]
The obvious solution to CEOs attending yacht races, Joe Biden-esque articulation and such is paying someone a lot – a lot – of money to rep these companies. It’s pretty much the only option they have left.
