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. See ya.
Talent
Deloitte UK plans to axe 150 graduate consulting jobs [Financial Times]
Deloitte UK plans to axe about 150 junior consulting jobs in two of its consulting teams, even as partners at the firm earned an annual average of more than £1mn last year. The cuts are part of a wider round of 800 redundancies announced by the Big Four firm in September. An internal presentation to staff delivered last month and seen by the Financial Times shows that first- and second-year analysts in the firm’s consultancy and advisory business will bear the brunt of the reductions. Early-career hires are set to account for the majority of job losses in some teams, as Deloitte retrenches following a slowdown in demand. “With the general decline in the market, there has been a decline in the demand for junior grades,” senior partners wrote in the presentation. “We are taking the approach of proposing redundancies at the [first- and second-year graduate] level.”
Local CPA weighs in on accountant shortage [WMDT]
The Salisbury, MD news spoke to a UHY partner about the issue.
Accounting enrollment for the past 10 years has been declining by 16.9% according to the National Center for Education Statistics (NCES), the primary statistical agency of the Department of Education. CPA at UHY Group Mark Welsh tells 47ABC that recruiting slowing down has meant firms are turning to AI, Bots, and international workers to help fill demand, raising prices as much as ten percent for end-users. Welsh says the slump has to do with lower wages compared to tech or consulting, coupled with an education pathway that requires a 5th year to be able to become a CPA. “We’ve got to do a better job of getting people excited about accounting and getting them rolled in the universities and getting the rectified that declining trend and accounting enrollment not only here on the shore but across the U.S.,” Welsh said.
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A consulting firm struggled to find the right hybrid work model. Here’s how it landed on a 4.5-day workweek [Fortune]
Management consulting firm Insigniam has seemingly found that happy medium after instituting a 4.5-day workweek, with employees in the office Monday through Wednesday and working from home Thursday and Friday. The firm didn’t land on this number arbitrarily; it listened to employees, says Shideh Sedgh Bina, a founding partner at Insigniam. The firm first conducted an experiment where one group of employees worked fully remotely, another hybrid, and a third group worked four days. Based on employee feedback, the firm’s leadership learned that the four-day workweek group was reporting far lower stress levels. “The people on the four-day work week said, ‘The amount of stress that has been taken off from me [comes from] having that Friday [off],’” Bina told Fortune’s Ellie Austin during a panel at the Most Powerful Women Summit last week.
You Work Too Hard
PwC succession twist followed debate on management style [Financial Times]
Tim Ryan’s decision to drop out of a race to lead PwC followed intense debate within the Big Four firm over whether the US senior partner’s “hard-charging” management style was suited to the role of global chair. Ryan had been widely expected to emerge victorious, but there was strong disagreement between some partners over his leadership approach. Ryan himself says he was wavering over whether to push for the job. “He’s a hard-charging, tough businessman and that comes with a lot of good things and sometimes some bad things,” said one senior partner. “He is very direct and the question is does that directness translate to the role?”
Firm Watch
Fitch Places Eisner’s Revolver on Rating Watch Negative [Fitch Ratings]
Fitch Ratings has placed Eisner Advisory Group, LLC’s revolving credit facility on Rating Watch Negative. Eisner intends to amend its revolver to remove the facility’s super priority treatment, as well as to upsize its borrowing capacity. The revolver is expected to be up to $130 million from $50 million currently. The transaction is oriented to support the recent acquisitions and provide liquidity for the company’s future pipeline. TowerBrook Capital Partners (the sponsor) has a significant investment in Eisner. TowerBrook and Eisner plan to continue acquiring regional accounting firms or partnerships. Since the LBO, Eisner has completed multiple acquisitions, and management has indicated that they may issue new debt if acquisition opportunities are appealing and appropriate. Fitch expects the debt level will be manageable unless rollup strategy becomes considerably more aggressive; however, Fitch will continue to monitor interest coverage given the higher rate environment.
PKF Mueller Joins Cherry Bekaert to Expand Chicago Market Reach [PR Newswire]
Cherry Bekaert is pleased to announce the completion of an acquisition transaction with PKF Mueller, a full-service certified public accounting and business advisory firm located in the metropolitan Chicago area. The strategic acquisition also encompasses Mueller dotKonnect, a business process outsourcing firm specializing in finance, accounting, tax and payroll functions.
Tennessee’s largest CPA firm announces expansion into Kentucky [The Tennessean]
One of the Nashville area’s top-ranked business consulting firms is expanding its services to Kentucky. Brentwood-based LBMC, a business consulting and financial services firm, will welcome Louisville-based accounting firm Strothman & Co under its family of companies. This move, effective Nov. 1, will increase the number of LBMC employees to more than 850. It also marks the firm’s fifth office location in the South. LBMC is already Tennessee’s largest CPA firm, and was recently named a 2023 best tax and accounting firm by Forbes. LBMC CEO Jeff Drummonds said the firm is aggressively pursuing growth.
AI
PwC Offers Advice From Bots in Deal With ChatGPT Firm OpenAI [Bloomberg]
PricewaterhouseCoopers LLP has teamed up with ChatGPT owner OpenAI to offer clients advice generated by artificial intelligence as the Big Four audit firms look to cut costs and boost productivity. The accounting firm will use AI to consult on complex matters in tax, legal and human resources, such as carrying out due diligence on companies, identifying compliance issues and even recommending whether to authorize business deals. The tie-up makes PwC the first of the Big Four to partner with OpenAI, which is regarded as one of the companies at the forefront of generative AI technology with its ChatGPT chatbot.
Deloitte Launches Innovative ‘DARTbot’ Internal Chatbot [Deloitte]
On October 16 Deloitte announced its development and deployment of “DARTbot,” an internal chatbot powered by cutting-edge Generative Artificial Intelligence. DARTbot is capable of generating intelligent responses and providing valuable insights to support nearly 18,000 of Deloitte’s U.S. Audit & Assurance professionals in their daily tasks and decision-making processes. As part of this ongoing commitment, Deloitte is rolling out purpose specific Large Language Models (LLMs) and chatbots to support specialized teams across its business, including DARTbot to support Audit & Assurance professionals. “Integrating Generative AI into our technology solutions, combined with the experience, critical thinking and professional judgment of our professionals, will allow us to deliver deeper insights and a differentiated client experience with distinction and trust,” said Dipti Gulati, U.S. CEO, Audit & Assurance, Deloitte & Touche LLP.
Law & Order
Investigators: Fake CPA defrauded St. John clerk of court for six years, threatened agents [WVUE]
Investigators say a New Orleans man falsely presented himself as a certified public accountant for six years, defrauding the St. John Parish clerk of court and threatening violence upon agents who recently questioned his work and credentials. Investigators say Williams’ work came under suspicion when the Louisiana Legislative Auditor and an independent auditor were unable to reconcile his reports on the court’s finances for the year 2020. Many records and documents requested by auditors were not provided by Williams and had been transferred to his personal laptop. Auditors said a backup drive Williams eventually provided was incomplete and did not contain all of the funds they had requested. Investigators said that in an April 7 meeting where Clerk of Court Eliana DeFrancesch ordered him to provide QuickBooks files and a legislative auditor tried to explain the statute that allows them access, Williams yelled, “Shut the f— up!” and took “an aggressive step” toward the agent before he was blocked by DeFrancesch.
Nevada CPA Pleads Guilty To Filing False Tax Returns [U.S. Attorney’s Office, District of Nevada]
According to court documents and statements made in court, Lance K. Bradford of Henderson, was a certified public accountant (CPA) and founder and manager of an accounting firm, LL Bradford & Company (LLB). LLB provided accounting services including tax preparation, audit and consulting services. Bradford also operated a real estate business that developed office buildings and other real property. In connection with Bradford’s real estate development activities, he operated and controlled a real estate investment partnership entity. In 2011, Bradford began offering LLB’s high-net-worth clients an “investment opportunity” through which the clients would make a payment to his partnership entity and, in exchange, receive a large tax deduction of approximately five to seven times the amount of money the client “invested.” Bradford advised that the clients’ payments would entitle them to claim the large tax deduction based on losses derived from the partnership entity even though the tax laws did not permit the sale of such deductions in exchange for an investment or money and the partnership did not incur the losses or depreciation in the amounts Bradford was selling.
Shakopee accountant charged with ‘theft by swindle’ from Hmong charter school [Sahan Journal]
Michael Pocrnich, 43, faces one count of theft by swindle. The criminal complaint comes after a Sahan Journal investigation of the alleged theft from Noble Academy, a Brooklyn Park charter school that offers lessons in Hmong language and culture. Pocrnich was the founder of The Anton Group, a St. Paul–based accounting firm that in 2022 provided services to at least 34 charter schools—about one in five charter schools statewide. The Anton Group’s other partners dissolved the firm “following allegations of Pocrnich’s fraudulent activity,” according to the criminal complaint. Pocrnich has also faced a civil lawsuit from a partner at The Anton Group, and in May 2023 the Minnesota Board of Accountancy revoked his CPA license.
Achievers
Accounting is Cool, Says Teenager Who Passed CPA Exam Before Driver’s License Test [INSIDE Public Accounting]
Believed to be the youngest person to pass the CPA Exam, Jimmy Chilimigras, 15, is dismayed that young people are growing less interested in accounting as an educational pursuit and eventual career. Why? Because accounting is versatile and cool. “I think a lot of young people, if they really knew what accounting was all about and the beauty of accounting, would have a lot more interest for sure.” Chilimigras started his path to a career when he scored a 31 on the ACT exam and graduated from high school in Bay St. Louis, Miss., at the age of 12. He then took about a year at Western Governors University (WGU) to earn his bachelor’s degree and another six months to earn his master’s degree in accounting.
Going Places [Suffolk University]
It is a beautiful September afternoon and Dat Le, BSBA ’12, MSA ’13, is on the move. He just arrived in Boston from Las Vegas, and having recently launched a new accounting firm with branches in both cities, he has places to go and people to see. Business is booming. “Clients are banging down the door,” he says. “The biggest challenge is keeping up with the demand. There are not enough hours in the day.” Le’s ability to balance his busy schedule stems from a relentless work ethic, instilled in him by his parents, who immigrated to the United States from Vietnam in 1987 as teenage newlyweds with their infant daughter. “My parents have worked so hard to provide for me and my family,” says Le. Le also credits his Suffolk professors with providing him the guidance he needed to start Motta Financial, a national CPA firm he co-founded with a team of other Big Four accounting firm alumni, including his best friend, Nick Raccuia, BSBA ’12, MSA ’13. Motta’s mission is helping underserved individuals, businesses, and nonprofit organizations with tax, accounting, finance, and business advisory services.
Tax
The Corporate Transparency Act becomes effective Jan 1, 2024 [Thomson Reuters]
The Corporate Transparency Act (CTA), enacted in 2021, was passed to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illicit activities. It is designed to capture more information about the ownership of specific entities operating in or accessing the U.S. market. The law was largely ignored by accounting professionals at first. However, the effective date of the Corporate Transparency Act is fast approaching on January 1, 2024, and people are starting to panic.
Probably Only Interesting to Us
PwC Reviewing US PR Agency Support [PRovoke Media]
Big Four accounting firm PwC is reviewing its US PR agency support, PRovoke Media has learned. PRovoke Media understands that PwC — known for its consulting and advisory services — has already closed the first round of its pitch for the business, which is estimated to be worth in the low seven figures. The firm currently works with Edelman. PwC declined comment.
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