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News
AICPA moves to amend financial statement standard [CFO Dive]
Well this is a BFD!
As it’s become increasingly popular for external CPAs and even CFOs to help run a company’s financial operations, the American Institute of CPAs is looking to clarify the standard for how financial statements prepared as part of an external client advisory services engagement are treated. The move is designed to address the uncertainty, confusion and diversity of practice with respect to the subject, said Mike Glynn, associate director of audit and attest standards and staff liaison for the AICPA’s Accounting & Review Services Committee.
Firm Claims Financial Misconduct by Central Basin GM, Then Admits the Numbers ‘Could Be Incorrect’ [Los Cerritos Community News]
Los Cerritos Community News out here doing some hard-hitting journalism. That is not sarcasm.
A few weeks ago, Los Cerritos Community News exclusively reported that Central Basin Municipal Water District’s (CB) cash on hand had dropped $3 million in only seven months after attorney Victor Ponto, who was appointed in February, took over for Dr. Alex Rojas after the ruling majority on the CB Board illegally placed Rojas on leave. Two weeks later, LCCN exclusively reported that some CB Directors, after they appointed Ponto, immediately began taking thousands more in payments to attend dubious “meetings.” This past week, a report on CB was released by the firm Carr, Riggs & Ingram (CRI) alleging “lax oversight” of CB finances during the tenure of General Manager Dr. Alex Rojas, whom Ponto took over for in February. Interestingly, after ignoring LCCN’s stories that found millions in potential fraud and waste, the Whittier Daily News was at-the-ready to publish an article about the CRI report, which claimed to find $200,000. The report, which, according to sources, cost CB an eye-opening $400,000, concluded that $123,000 was misspent, including more than $75,000 in “inflated salary” extra pay and benefits that went to Rojas.
Remaining Downtown: While others move on, an accounting firm is expanding in the Golden Triangle [Pittsburgh Post-Gazette]
At a time when many firms are downsizing their office space, Louis Plung & Company is going against the flow. The accounting and advisory firm is moving its Downtown headquarters to the 20 Stanwix — an office building at Stanwix Street and Fort Pitt Boulevard overlooking the Monongahela River — where it has signed a lease for 18,041 square feet of space. The move will not only allow Louis Plung & Company to expand its team, but will keep the firm Downtown at a time when some other businesses have departed because of concerns about crime, safety, and other issues. It was “extremely important for us to remain Downtown. We’ve been a part of this city for over 100 years and we want to remain an integral part of Pittsburgh’s vibrant business community and help shape the city’s future,” Managing Partner Lou Plung said in a statement.
CLA Wealth Advisors Named to Barron’s 2024 Top 100 RIA Firms List [CLA]
CLA Wealth Advisors (CliftonLarsonAllen Wealth Advisors LLC), continued its upward climb in the annual Barron’s list of Top 100 RIA Firms. Part of CLA (CliftonLarsonAllen LLP), one of the country’s leading professional services firms, CLA Wealth Advisors ranked 45th, rising five places since last year’s list and marking the seventh year the firm has been recognized by the prestigious publication.
Talent
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Crypto
Former Crypto CEO Posts Hilarious LinkedIn Update Right Before Going to Prison [Futurism]
The LinkedIn grind never stops — not even for prison. Ryan Salame, the former co-CEO of the now-defunct crypto exchange FTX, was sentenced in May to seven and a half years in federal prison after pleading guilty to criminal charges related to conspiracy to operate an unlicensed money transmitting business and unlawful campaign donations. In addition to serving time in prison, Salame was ordered to forfeit $1.5 billion.
Tether looks to revamp US image as it celebrates 10 years [FOX Business]
Tether’s reserves have long been a source of controversy, with the broader crypto industry criticizing the company for its previous lack of transparency and auditing. As a stablecoin, Tether’s tokens are pegged to the U.S. dollar, and the company asserts that all $119 billion worth of USDT tokens in circulation are fully backed one-to-one by dollar reserves. However, since Tether is not based in the U.S. and conducts most of its business offshore, it has never undergone a full audit by a U.S. accounting firm, fueling skepticism about the true state of its reserves. As part of its settlement with the New York attorney general, Tether agreed to submit quarterly reports on its reserves for two years. The firm now uses the Italian arm of global auditor BDO to produce quarterly attestations of its stablecoin reserves. As of Aug. 1, BDO reported that Tether had $118.4 billion in reserves and $5.3 billion in excess reserves. Tether also now publishes daily reports on its website that detail the amount of Tether in circulation and the amount of USD reserves held by the company. However, Tether has never had a full audit done, even by BDO, as its quarterly attestations do not qualify as systematic examinations of the whole company and its financial statements.
Audit
Big Four audit firms conclude transition period of operational separation [Financial Reporting Council (UK)]
The Financial Reporting Council (FRC) has today announced the four largest audit firms (Deloitte, EY, KPMG, PwC), have concluded the transition period of operational separation. Throughout the three-year transitional period, all four firms have made significant improvements to their governance to prioritise the delivery of audit quality. This includes the creation of independent audit boards chaired by Audit Non-Executives, improved transparency on financial transactions between the audit and non-audit business, and greater accountability at firm level for the delivery of operational separation outcomes. The firms have also developed audit specific cultures, with behaviours focussed on challenge, openness and professional scepticism. All four firms have met the 2024 deadline set by the FRC to implement the principles of operational separation. As set out in the Operational Separation Principles, the FRC will publish an assessment of the firms’ compliance each year, following the transition period.
Salaries
This accountant makes $76,000 a year. How does she spend it? [Toronto Life]
Rent: $1,950 a month. “I used to live with a roommate and paid $1,244. But the privacy is worth the extra rent.” Takeout: $0. “I never get takeout, and I haven’t bought a work lunch in two years. I always pack a lunch and plan my meals.”
Practice Management
Case studies: How I bought/sold my accounting business [Accounting Times (Australia)]
Kev Ryan says patience with, and trust in, the buying and selling process will overcome the many challenges of making a good match. And while there is a proper process to follow, it’s vital to recognise that there is no such thing as a one-size-fits-all solution. “Every transaction has its own peculiarities, especially mergers,” Ryan says. “The individual requirements of each party must be respected. You can’t template or rush transaction advisory.” Just as accountants regularly advise their clients on process, it’s important that they also seek expert advice on what’s required in selling or buying a firm. “We’re constantly talking to our clients about following the proper purchase process of undertaking thorough due diligence,” Ballinger says. “So, it was good for us to do that ourselves, to get that experience and find out exactly how it works.”
Lawmakers press Deloitte on ‘fraud’ in application to $5B Texas fund for gas-fired power plants [Houston Chronicle]
Texas lawmakers grilled executives from Deloitte, the consulting firm contracted to manage a $5 billion taxpayer-funded program mainly intended to kickstart construction of natural gas power plants, after the organization advanced a potentially fraudulent loan application. Allegations first arose last month that a little-known company, Aegle Power, sought loans for its proposed natural gas power plant by listing another big-name company as a sponsor without permission. Additional scrutiny revealed Aegle Power CEO Kathleen Smith had previously been convicted in an “embezzlement scheme” related to the development of a different power plant. In addition to seeking to slash the consulting firm’s up to $107 million contract, lawmakers heard accusations Tuesday that Aegle Power falsified yet another aspect of its application to the state.
Technology
Deloitte: Why Only a Quarter of Cybersecurity Professionals are Women [TechRepublic]
As of 2023, women make up only 20% and 25% of the cybersecurity workforce, according to training body ISC2. New research from Deloitte explores the reasons behind this gender gap, despite the high demand for skilled professionals in the industry. Half of young working women interested in cybersecurity feel they lack sufficient knowledge of the field to pursue a career in it. Furthermore, 55% of all women surveyed believe the industry could prove intimidating, and 47% are concerned they wouldn’t be taken seriously. The results, published in “POV Reimagined: Women in Cybersecurity” in October, are based on a survey of 8,000 non-cyber professionals from around the world conducted by Deloitte Global and media company The Female Quotient.
More awareness needed to transform workforce, says EY consultant [The Edge Malaysia]
More Malaysians need to be aware that the advent of artificial intelligence (AI), digital transformation and the green economy will make some jobs irrelevant in the near future, according to a consultant from Ernst & Young (EY) Malaysia. If not addressed properly, EY Malaysia consulting managing partner Chow Sang Hoe said the Malaysian workforce risks being left far behind in the evolving global economic landscape. He said this in conjunction with the upcoming release of the future skills frameworks by the Ministry of Human Resources: a report to prepare Malaysia’s workforce for the future needs of the industry. “The study is done. We got the data. But now we need to get Malaysians [to buy in] and not be complacent,” Chow told The Edge in an interview. “I’m not trying to make people panic, but we need to increase the awareness that it’s time to do something.”
Tax firms want new tech but need infrastructure to handle it, new report shows [Thomson Reuters]
As technology has become more commonplace in the business world, the need to become tech-savvy has taken increased importance among tax & accounting firms. Leadership at all sizes of firms has pinpointed technology as a significant or central part of the overall firm strategy, and next-generation technologies such as generative artificial intelligence (GenAI) are firmly on firms’ radars. At the same time, however, leadership focus on GenAI has not translated into practical applications, according to a new report from the Thomson Reuters Institute. The 2024 Tax Firm Technology Report has found many tax & accounting firms still have a way to go in making sure technology actually works in the best interest of the firm. Even if firms are increasingly purchasing software solutions, few firms have the personnel, workflows, and leadership strategies to make sure they are getting the most out of their technology usage, the report shows. Overall, those firm leaders surveyed said they feel they are relatively mature in their technology usage compared to peers.
Exclusive: New Zealand accounting firm confirms Sarcoma ransomware attack [Cyberdaily.au]
The Feilding-based New Zealand accounting firm Advanced Accounting has confirmed it was the victim of a recent ransomware attack. Ransomware newcomer Sarcoma listed the company on its darknet leak site on 10 October, claiming to have stolen 115 gigabytes of data. No ransom demand has been listed by Sarcoma; however, the gang is threatening to publish the data within 13 days. Sarcoma has already published a raft of documents as evidence of the hack, including scans of passports and driver’s licences, as well as financial documents. Advanced Accounting has said it is aware of the incident, and a spokesperson told Cyber Daily that “we are mortified this has happened and doing our very best to get everything resolved”.