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Monday Morning Accounting News Brief: The Leadership Void; KPMG Gets Fined (Again); PwC Ups Leave | 10.3.22

Posted on by Adrienne Gonzalez
woman working on a laptop with a dog beside her

Deloitte launches Global Sustainability & Climate learning program that aims to enhance skills and capabilities of Deloitte people to help address a global societal challenge. Dubai’s financial regulator has provisionally fined KPMG and one of its former partners $2 million over the firm’s auditing of Abraaj, the emerging markets private equity group that collapsed in 2018. Meanwhile, in Australia: PwC Australia has updated its parental leave policy removing carer labels and extending the time parents can take off while on full pay to 26 weeks. There’s a leadership void around the world, according to AICPA president and CEO Barry Melancon — and the accounting profession can help fill it. IRS raises per diem standard rates for business travel. The SEC has charged Kim Kardashian for shilling crypto without disclosing the payment she received for said shilling.

Fat Joe is suing BDO, we will be diving into this story later this week with a little inside scoop we got over the weekend. From TMZ:

Fat Joe is suing his Chicago-based accounting firm, claiming it was running a Ponzi scheme that misappropriated his funds and those of some MLB players, too.

According to legal documents, obtained by TMZ Hip Hop, Joe claims tax hub BDO, its longtime CPA Andre N. Chammas and his assistant Vanessa Rodriguez defrauded him in several ways.

According to the docs, Joe noticed some accounting irregularities after Rodriguez was fired in July … and he says things really didn’t add up when he started taking a closer look.

For starters, Joe says his wife Lorena’s name was used to open AMEX accounts and make huge unauthorized purchases, including $40K in charges for Uber rides and UberEats deliveries, as well as tuition payments for Rodriguez’s daughter.

A few things we’re working on this week:

  • The one perk that will get young people back to the office (supposedly)
  • An embarrassing campaign to recruit students to the profession
  • Have you considered contract work? We talk to a dude who hasn’t had a “real” job since the 90s
  • Apparently there’s been some drama with CPA exam scores
  • Now (as in October) is the perfect time to look for a tax job, we have a couple for you to check out

Is audit dying? A Reddit thread.

Checking Twitter quick, let’s see what we’ve got.

Lastly, the Monterey Bay Aquarium Jelly Cam is still live in case you need it. Have a great week everyone!

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Troubled Audit Opinions [NYT]
On one side is an assessment of a company with a clean audit opinion from the Toronto office of Ernst & Young, and with bonds rated just below investment grade by Standard & Poor’s and Moody’s. It has raised billions in capital markets. On the other is an investment research firm using the name Muddy Waters Research. It says the company, the Sino-Forest Corporation, is a fraud, and that its shares are worthless. As this is written, there is no definitive answer as to who is right. But the initial reaction of the markets seemed to be that they had more trust in the short-seller — a company whose Web site gives no the auditor’s opinion.

Auditors face suits over Chinese blowups in U.S. [Reuters]
Investors who have suffered a drubbing from accounting scandals at U.S.-listed Chinese companies are starting to sue the auditors who blessed their financial statements, but it will be tough for them to win in American courts. Shareholders already have sued a string of China-based, U.S.-listed companies for fraud, saying they lost money when stocks tanked after financial scandals emerged. They contend companies invented sham businesses, inflated revenue or gave vastly different information to U.S. and Chinese regulators.

$100 Million Claim Against Deloitte & Touche [CNS]
SBP Capital, formerly known as Ameriquest Capital, claims Deloitte & Touche cost it $100 million by giving it bum advice on “tax issues related to Ameriquest’s securitizations” of mortgage lending and “related activities.”

Is Groupon’s Business Model Sustainable? [DealBook]
In its less than three years of existence, Groupon has established itself as the king of social buying sites. As feverish speculation mounted about its impending initial public offering, analysts and investors could only await further details of how much money it was minting. But with its I.P.O. filing now public, Groupon faces significant questions about the sustainability of its business model. A look at the company’s overall financials shows a steep decline in how much money it is wringing from its fast-growing subscriber base.

Bill Aims at Tax-Strategy Patent [WSJ]
U.S. patent No. 7,698,194 isn’t an ingenious new machine or a break-through medical treatment. It is a method of analyzing taxes related to college-savings plans. It also is one of 144 patented tax strategies and 162 pending applications, as of late May, that tax preparers say have burdened their job and made it harder for citizens to pay their taxes. Consumer and tax groups have pushed since 2007 to get such patents banned. When it returns from recess this week, the U.S. House is expected to vote on an overhaul of the patent system that would effectively prohibit patenting tax strategies.

Leona Helmsley’s rich dog is dead [DMWT]
No more Trouble.

Retief Goosen Birdies at FedEx St. Jude Classic, Bogeys in Tax Court [TaxProf]
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Payroll-Tax Break Said to Be Discussed by Obama Aides Amid Slowing Economy [Bloomberg]
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What Divorce Means For Your Taxes [SmartMoney]
Divorce has no season.