Rise and shine, a new week is upon us. Here’s some stuff going on.
PwC Australia is in court arguing that it isn’t responsible for sexual assault that happens off campus after hours and especially not so because the alleged assaulter completed two sexual harassment learning modules.
Employers can be found vicariously liable for alleged sexual assault that occurred between employees outside working hours but only where it was connected with their employment, according to a leading employment law expert.
PwC is facing legal action claiming the accountancy firm is liable for the alleged rape of a graduate employee following after-work drinks.
The graduate employee is suing PwC for damages over two alleged incidents of sexual assault by a colleague after work hours, court documents show. It includes one claim that the young woman was raped at her home after she went to pubs with colleagues following a meeting held at PwC’s office.
PwC’s argument is that happy hour was not an official work event it required the two employees to attend therefore the firm isn’t responsible for anything that may have happened that night.
The firm argued it was also not vicariously liable for the alleged incident because PwC had taken “all reasonable steps” to prevent such behavior.
It pointed out that the alleged perpetrator completed two training modules in 2022 on workplace behaviour that covered preventing sexual harassment. Two months before the alleged incident, the firm says, the man completed another introductory training on preventing sexual harassment.
This EY news almost got buried because honestly I didn’t even see the press release. Not the AI framework part, the bolded part.
Today the EY organization has announced new technology capabilities and a global Artificial Intelligence (AI) Assurance framework for EY professionals as part of a multi-year, technology driven audit transformation program which is supported by plans to align approximately 9,000 Technology Risk professionals to the Assurance service line.
In line with evolving audit and assurance standards and guidelines, the EY organization has also released a global AI Assurance framework to all EY Assurance professionals that considers the impact of AI used in companies. This includes how AI is applied in financial reporting processes and considers the related risk management frameworks and controls that organizations implement. The framework has been rolled out to more than 130,000 EY Assurance professionals.
Can someone send us those slides? Please and thank you.
Illinois CPA Society has issued a new pipeline report: Re-Decoding the Decline. Find it, and other ICPAS insights, here.
Thanks to the widespread distribution efforts, 7,780 accounting students, graduates, and young professionals under the age of 35 who were pursuing or had pursued accounting degrees and careers—including CPAs and non-CPAs—completed the survey, including 3,287 full- or part-time students. In all, the survey responses compiled represent respondent perspectives from every state in the nation, along with the District of Columbia, Puerto Rico, and even abroad.
The resulting 2024 Insight Special Feature, “Re-Decoding the Decline: An Updated CPA Pipeline Report,” reveals respondents’ perceptions of CPAs and the CPA credential, along with the top challenges and deterrents driving their decisions to pursue the CPA credential or not. The findings provide invaluable insights the CPA profession and its stakeholders cannot ignore while trying to counter the persistent decline in the number of individuals pursuing the CPA credential.
Earlier: The CPA Credential and the Profession Are in a Race For Relevance, Says ICPAS CEO Todd Shapiro (October 2021)
UK audit firms are asleep at the wheel according to a new report.
Three in four audit reports failed to provide alerts that companies, which ultimately failed, risked going bankrupt by providing a “material uncertainty related to going concern” in the year before collapse, according to a report published on Monday by the Audit Reform Lab, a think-tank at the University of Sheffield.
Auditors are required to include a going-concern warning if they believe there is a risk that the company may go bankrupt, rather than making a prediction that it will.
The research, which analysed the audit reports of the 250 largest publicly listed companies that collapsed between 2010 and 2022, found that EY gave going-concern warnings for just one in five companies it audited in the year before they failed, the lowest out of the Big Four. PwC, Deloitte and KPMG gave warnings in 23 per cent, 36 per cent and 30 per cent of their cases, respectively.
Those numbers seem impressive compared to figures outside of Big 4 where off-brand audit firms issue going concern warnings before a company goes down only about 17 percent of the time.
Michael Shaub of Texas A&M University talks about the PCAOB’s new standards in Bloomberg Tax. TL;DR It’s about time!
The quality control standard represents the give and take of a decade’s worth of consideration on how to improve audit quality among auditors of public companies. Though they have aligned these standards with other standard setters’ quality management standards, the PCAOB has chosen to go further.
The board explicitly cited some of the audit firms’ more egregious behaviors to justify the need for additional regulation—cheating on continuing education exams, altering workpapers, widespread independence reporting failures, and offering impermissible non-audit services. The result is a prescriptive model with eight components, two of which are process components, and six related to firm organization and operations.
Quality risks and responses must be documented and will be assessed similarly to independence threats and safeguards. And the larger firms with more than 100 public clients will have to have an outsider on their board evaluating quality control. The standard applies to all engagements where the firm serves as the lead auditor or has a “substantial role.”
Shout-out to NPR for continuing to stay on top of the accounting shortage.
KPMG opens an AI hub in Ireland:
KPMG Ireland has launched a new EU AI Hub to support clients using new artificial intelligence (AI) technologies and to navigate incoming regulation in the EU and globally.
The facility will lead to the creation of 200 new jobs and will be located in the firm’s Platform X Global Innovation Hub in Dublin’s IFSC.
The new roles will be filled over the next three years in the areas of AI, risk, regulatory services and cyber security.
A whistleblower in Australia says ratting out his former employer worked out great for the tax authorities but him not so much.
Bittersweet is the way tax lawyer turned whistleblower Tony Watson describes the Australian Tax Office’s decision to smack global construction giant Lendlease with an initial $112 million tax bill after his tip-off a few years ago.
He says his sense of vindication, when the ATO’s audit was made public on May 13 this year, was tainted by his sacking and the need to sell the family home, which will be listed for sale on May 22. This is just one of the many costs of blowing the whistle, including a mental breakdown and the loss of his job.
“All because I called those bastards out for doing the wrong thing,” he says.
The situation Watson finds himself in makes a mockery of the corporate whistleblower protections that were introduced in July 2019 and inspired him to take legal action three years later.
Another batch of Big 4-affiliated firms in India have been smacked down by regulators for their close relationship with the multinational body. Keep an eye on this, Indian regulators are going hard on this issue all of a sudden.
The Institute of Chartered Accountants of India (ICAI) has passed orders against five affiliates of auditing major Price Waterhouse, two other entities and two individuals for professional misconduct. In the orders issued this month, the disciplinary committee of the ICAI has directed that the entities concerned to immediately stop existing arrangements with the multinational entities, as the same is circumventing the provisions of the Chartered Accountants Act 1949.
[T]he disciplinary committee said there was apparent sharing of human resources, infrastructure, brand name and contact details, which signifies that in substance, PwC was controlling the respondent firms and that it was “professional misconduct” under the Act.
Earlier and totally related from Friday Footnotes 5.3.24:
- ICAI passes order against three EY affiliates, retired partner for ‘professional misconduct’ [Business Today]
- India’s answer to Big Four firms could be in the works: Here are the details [Business Today]
Carr, Riggs & Ingram, with an assist from CLA, is working their asses off for the city of Santa Fe:
The City of Santa Fe submitted its Fiscal Year 2023 audit Thursday afternoon—one day late of its own self-imposed deadline, and five months short of the state one. Prior to the FY23 audit, officials turned in the city’s FY22 audit more than eight months behind schedule, and before that the city’s audits for 2021, 2020, 2019 and 2018 were also late.
The FY23 audit was completed alongside external auditor Carr, Riggs & Ingram and consultant CliftonLarsonAllen which provides accounting services for the city. The City Council approved a contract in September 2023 with the Carr, Riggs & Ingram accounting firm to compile the FY23 audit for $269,454.
“Completing three audits in less than a year is a massive amount of work. It’s a massive amount of work for the city staff, for contractors, for the auditors themselves—they were working on a very compressed timeline,” Oster says.
KPMG takes a look at the current job market:
Total job openings in the United States continued a downward trend in March 2024. There were 8.5 million openings, down from 8.8 million in February and compared to the peak of 12.2 million in March 2022. Yet openings remain above the 2019 baseline monthly average of 7.2 million.
In March, job openings changed little in 37 states, increased in one state and decreased in 12 states. New Jersey led the gains with 51,000 new job openings, whereas California lost 119,000 and Pennsylvania shed 50,000; those were the largest losses.
Counting California, Florida, Massachusetts, Pennsylvania and Texas, 31 states reported lower average monthly job openings in the first quarter of this year. The opposite trend, or higher monthly job openings, showed up in 19 states including New York, New Jersey and Washington plus the District of Columbia.
And that’s a wrap. As always, please let me know via text or email if you see anything interesting while you’re wandering around out there on the big scary internet (or eavesdropping on partner conversations).
