Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you’re here, subscribe to our newsletter to get the week’s top stories in your inbox every Tuesday and Friday. P.S. We’re off for Labor Day, hope you are too. The Monday Morning News Brief will be published Tuesday.
Talent
Accounting Research Seeks to Find Solutions for Talent Shortage [EIN Presswire]
The Center for Accounting Transformation, in collaboration with CPA Trendlines, is undergoing Staffing Strategies Research to understand how to address the talent shortage and identify workable solutions for firms and organizations of all sizes. The survey investigates discerning areas of opportunity and education for firms and finance departments that offer innovative approaches and leading practices that can be used to address staffing shortages everywhere. The rapidly changing landscape of the accounting profession, shaped by technological advancements and evolving business needs, demands a fresh look into how firms are attracting, retaining, and deploying their staff. “Everyone is talking about this staffing crisis that’s going on. There’s been a ton of talk about the 150-hour rule, and there’s not enough students in the accounting pipeline,” said Donny Shimamoto, CPA, CITP, CGMA, an inspiration architect with the Center and its founder. “And while there’s been a lot of talk, what we haven’t seen…we haven’t seen any really good survey that says firms have truly done everything that they can do. There’s a lot of anecdotal evidence out there, but there weren’t any good hard numbers…We decided, ‘Hey, we’re going to tackle this, and we want to understand it.’”
Is your firm hiring? Not finding the talent you need? Check out this week’s top remote accounting candidates.
2023 Accounting Firm Industry Insider Series: Key Takeaways from In-Depth Conversations with Managing Partners (Part 2) [JD Supra]
Part 1 of interviews of accounting firm managing partners and industry insiders here
Interviewees at firms of all sizes acknowledged that the labor market is a little less challenging than in the past few years, but many expressed concerns about the long-term health of the industry’s talent pipeline because fewer people are entering the industry. “A lot of people are retiring, and few people are graduating with accounting degrees,” worried one managing partner.The CEO at one of the nation’s largest firms noted that the current training and education requirements for those entering the accounting field aren’t supported by the salaries earned at the starting level. In addition to encouraging the industry to raise starting salaries, he hopes that technology and outsourcing will enable people to spend more time on work they find meaningful.
Employers added 187K jobs in August, including 2.7K in accounting [Accounting Today]
The biggest gains occurred in the health care, leisure and hospitality, social assistance and construction industries. The professional and business service sector added 19,000 jobs, including 2,700 in accounting, tax preparation, bookkeeping and payroll services. Average hourly earnings rose in August by 8 cents, or 0.2%, to $33.82. Over the past 12 months, they’ve increased 4.3%.
Oops!
PwC Australia flags revenue hole, partner profit cut due to tax scandal legacy [Reuters]
PwC Australia on Friday said the spin-off of its government consulting business and other costs from a tax scandal will leave a double-digit revenue hole and require partners take an income haircut. The “big four” accounting firm reported revenue of A$3.4 billion ($2.21 billion) for the year ended June, up 11% on the previous year. However, the divestment of its government consulting business, which was responsible for roughly 20% of revenue, is likely to see revenue drop this fiscal year.
Audit
Battle lines drawn over auditors’ role in combating fraud [AccountancyAge
“Patisserie Valerie pushed the issue of auditor responsibility [for fraud detection] to the fore after so many accounting scandals. A lot of energy went into the debate around making auditor responsibility a priority,” says Ilias Basioudis, associate professor of financial accounting and auditing at Aston Business School, and chair of the auditing special interest group of the British Accounting and Finance Association.
EY releases more than 20 new Assurance technology capabilities supported by Microsoft alliance in first year of US$1b investment program [PR Newswire]
The first 12 months of the EY organization’s Assurance technology investment has included the release of next generation audit data analytics utilizing Microsoft Power BI. The EY organization’s release uses the combined power of EY and Microsoft capabilities, which provide agile development and delivery in a unified approach – including Microsoft Fabric. This transforms the user experience and supports the full integration of data analytics capabilities directly into the workflow of the EY Assurance technology platform. EY Assurance teams now process over 775b lines of journal entry data each year, as part of the EY digitally transformed audit. This follows the integration of EY Canvas – the EY organization’s audit technology application – with Microsoft Azure, which has provided strong performance and extensibility in support of EY’s delivery of more than 150,000 audits globally.
Law & Order
Co-Owner of Media Brokerage Firm Pleads Guilty to Filing a False Tax Return [Department of Justice]
According to court documents and statements made in court, Susan K. Patrick, now a resident of Cody, Wyoming, co-owned a media brokerage firm with her husband and hired an accounting firm to prepare business and personal tax returns for 2012 through 2014. Despite receiving the completed and accurate tax returns from the accounting firm, Patrick did not file them with the IRS. After the IRS contacted Patrick and requested that she file the unfiled returns, Patrick lied to the IRS, claiming that her accounting firm had timely filed the returns and that she would provide copies of those returns. Patrick did not provide copies of the accurate returns that had in fact been prepared by her accounting firm. Instead, Patrick doctored the business returns, removing $10,000,000 in gross receipts earned by her brokerage firm, and altered the personal returns by removing over $9,500,000 in income that she and her husband had earned from 2012 through 2014. Patrick also falsely backdated her signature on each tax return to make it appear as if the returns had been timely signed and mailed these falsely doctored documents to the IRS, hoping to evade paying the full amount of taxes she owed.
Clifton man charged in $13M tech support scam targeting small businesses, seniors [NJBIZ]
“The conspirators would contact victims under the guise of fixing victims’ technical issues with the accounting software. After receiving tech support from the conspirators under these fraudulent pretenses, the victims would either be charged exorbitant fees or additional subscription fees,” according to case documents and court statements released by prosecutors. “These ‘services’ were all fraudulent: They would not cost any additional money for customers who contacted the actual software company, and the software company never authorized Yadav or his conspirators to act on its behalf or charge any fees.” Prosecutors say Phebs Software Services LLC did business as both Phebs Software Services and Quickbooks Accounting.
Firm Watch
FORVIS highlights first-year momentum in annual report [FORVIS]
FORVIS announced revenue of $1,685,539,000 for the fiscal year ending May 31, 2023. This represents a growth rate of greater than 13% over the previous fiscal year and places FORVIS as the eighth largest U.S. firm. Revenues grew in each of the firm’s three major service lines and its 10 core industry practices.
EisnerAmper Names 21 New Partners [EisnerAmper]
It’s their largest partner class to date.
“We are proud and excited to welcome our new partners. Each one is an accomplished professional whose unique perspective, diverse expertise and client-centric mindset will help EisnerAmper continue to unlock potential,” said Eisner Advisory Group CEO Charly Weinstein. “These leaders regularly demonstrate outstanding client service and commitment. The entire EisnerAmper partnership joins me in congratulating them on this achievement.”
KPMG names Richmond office managing partner [Virginia Business]
Wendy Lewis was promoted to managing partner of KPMG LLP’s Richmond office on Aug. 1, overseeing more than 235 employees based there, the New York-based professional services firm announced Wednesday. Lewis, also a partner in KPMG’s audit practice, succeeds Paul Croston, who will retire on Sept. 30 after 33 years with the firm.
Private Equity
After failed EY offer, TPG buys Crowe’s healthcare consulting unit [Consulting.us]
Under the transaction, Crowe Healthcare will become an independent entity under the leadership of founder and managing partner Derek Bang and the existing management team. It will rebrand as Kodiak Solutions. Upon closing of the transaction (expected in the fourth quarter), Kodiak will be majority-owned by TPG Growth – TPG’s middle-market and growth equity arm. Crowe will retain a minority stake.
The Private Equity Playbook [Wealth Management]
Private equity investment in the wealth management space has seen a sustained record of growth over the last five years, with deals expected to increase a further 3% this year, according to the latest estimates from Echelon Partners. At its annual Deals & Dealmakers Summit held in Laguna Beach, Calif. this week, the Echelon team brought together some of the biggest private equity players to discuss the current ‘super cycle,’ with private capital driving a valuation premium for wealth platforms over other financial services firms, as well as the challenges and opportunities they’re seeing in the wealth management space. “You’re seeing some firms leaning into the integration, buying accounting firms or trust companies,” said Christina Walsh, principal at Aquiline. “But then you’re seeing others that are actually bifurcating and selling the wealth management business. I just think it’s an interesting time where you’re seeing both of those things happening simultaneously.”
Rockstars
Evington girl flourishes into successful woman [The Altavista Journal]
These local news stories are so cute
Caroline Light, an Evington [Virginia] woman and University of Lynchburg student, has flourished into a successful young woman that is obtaining success in equestrian, academic studies, and accounting internships thanks to all of her community leaders in Campbell County. In her academic studies, Light is majoring in accounting, a very rigorous curriculum, while obtaining equal to or greater than a 3.75 GPA. This accomplishment enabled Caroline Light to be recognized on the President’s List at the University of Lynchburg for the Spring Semester of 2023.
CFE gold medallist says win left her speechless [CPA Canada]
While Hina Bhimani didn’t expect to take the top spot in Canada, her solid study regimen—and her ability to take a break when needed—proved key to her success. “I was honestly speechless,” says Bhimani of learning about her win. “The day I got the call I was getting a lot of spam calls, so I really wasn’t picking up my phone.” She was nervous even about getting the confirmation that she had passed. But her fears were put to rest when she received an email from CPA Ontario prompting her to call the number given. “After confirming I had passed, they went on to tell me, ‘you also came in first in Ontario. And you were No. 1 in Canada!’ The news just kept getting better and better. There were a lot of happy tears. It took so much effort to even acknowledge what they had told me. I even called back an hour later just to confirm.”
Technology
MOVEit attack victim count surpasses 1,000 organizations [Higher Ed Drive]
The blast radius from the mass exploit of a zero-day vulnerability in the MOVEit file transfer service reached another milestone in its destructive spread: more than 1,000 organizations are impacted, according to Emsisoft and KonBriefing Research. Many downstream victims were exposed by accounting firms, consultancies and benefits and pension actuaries. Milliman, an actuary and consulting firm based in Seattle, filed multiple breach disclosures this month indicating its clients’ data was compromised because it shared data with Pension Benefit Information, a MOVEit customer that was directly impacted by the attacks. Broad sharing of personal and sensitive data has ensnared victims that would otherwise be unimpacted by Clop’s spree of attacks against MOVEit customers.
Optus asks court to stop release of Deloitte cyberattack report [Australian Financial Review]
Thousands of Optus customers who had personal details stolen in a cyberattack and leaked on the dark web may never find out how the breach happened after the telecommunications group pleaded “legal professional privilege” to try to stop a report into the hack being released.
New head of Ernst & Young’s Minneapolis says more companies asking about AI [Minneapolis StarTribune]
The new head of the Minneapolis office of Ernst & Young says more business leaders are coming to the legacy accounting and consulting firm looking for help with a very modern issue: artificial intelligence. “We’re now seeing all companies think about AI: How does that impact my business?” Dominic Iannazzo said in a recent interview. “We’re seeing investments of billions of dollars in AI applications.” Iannazzo, a Minnesota native, was recently promoted to office managing partner at the EY Minneapolis office, which has nearly 800 employees. He grew up in Maple Grove and graduated from the University of St. Thomas, where he was in a pre-med program until a mentor encouraged him to try a couple of accounting classes. Out of college he joined Arthur Anderson, spent some time at 3M, and then joined EY 11 years ago.
IRS Glitch Leads to Erroneous Form 8955-SSA Late Filing Notices [Thomson Reuters]
A national network of retirement plan professionals raised an issue to the IRS after members began to receive late filing notices relating to an electronic form used for satisfying annual registration requirements, which the agency claims was due to a computer issue. According to the American Society of Pension Professionals & Actuaries (ASPPA), one of the several organizations that comprises the American Retirement Association (ARA), erroneous notices were issued to taxpayers claiming their 2022 Forms 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, were filed after the July 31 deadline.
Other Stuff
Flawed accounting surges 150%: Glass Lewis [CFO Dive]
The number of companies restating results or revealing accounting flaws surged more than 150% during the 2023 proxy season, demanding extra scrutiny from company directors overseeing audits, Glass Lewis said in a report. “Problematic accounting and poor internal control over financial reporting at companies has put a strain on audit committees,” Glass Lewis said in the “2023 Proxy Season Briefing” based on analysis of 4,680 reports from companies that held an annual meeting from January through June. The number of accounting errors rose after a record number of businesses went public early this decade either as a special purpose acquisition company or as a conventional initial public offering, Glass Lewis said. Many of the companies are “in the early stages of developing strong internal controls.”
Financial consultant to the government by day, diversity champion all the time [Federal News Network]
Salome Tinker spent 20 years as an enlisted Army nurse. But she’d always loved numbers. “So I went to school at night while I was working at Walter Reed here in D.C. in the daytime and was fortunate to get to intern with Deloitte and then that started my CPA career,” Tinker said. That internship was in the mid-90s. “The medical field and consulting are very similar,” Tinker said during the American Society of Military Comptrollers’ The Business of Defense podcast on Federal News Network. “Someone comes into the hospital. You don’t know what’s wrong with them. You have to do diagnostics or triage to figure out what the problem is. I’ve taken those tools and leveraged them in the business sector to do diagnostics, figure out what the problem is, so that we can offer the best solution.”
Lightning eMotors SPAC Deal Insiders Allegedly Harmed Company [Bloomberg Law]
Electric vehicle maker Lightning eMotors Inc. has lost much of its value and faces mounting costs because of board members and officers’ misrepresentations before and after it went public in a merger with a blank-check company, investors allege. Several insiders involved with the pre-merger special purpose acquisition company had enormous financial incentives to complete the deal, shareholders Denish Bhavsar and Samhita Gera say on behalf of Lightning. The investors filed their derivative suit Wednesday in the US District Court for the District of Colorado.