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News
Morris County Native Michael Brown, 23, Was Set To Begin New Job At EY, Obituary Says [Pascack Daily Voice]
According to his obituary on the William Leber Funeral Home website, Michael graduated from West Morris Central High School before earning a degree from the University of Alabama. He was set to begin a new job at EY in Atlanta, GA. He had checked off an item on a summer bucket list this year, hiking across national parks along the West Coast, camping out or sleeping on a friend’s couch, Michael’s obituary reads.
North Jersey man sues law and accounting firms, says they padded his bills to nearly $2M [NorthJersey.com]
An Oradell man is suing the law firm Sills Cummis & Gross PC and accounting firm CohnReznick, alleging the two entities padded his total bills to nearly $2 million. In the four-count suit filed Aug. 26 in state Superior Court in Passaic County, Richard Hekemian alleges that Sills Cummis & Gross, based in Newark, “overcharged and overbilled” him, including through double and multiple billing “for the same legal services, or simply ‘padding’ the invoices.”
Accountancy firms fight back against audit reforms [Financial Times Opinion]
A new rule agreed by the US audit regulator, the Public Company Accounting Oversight Board, will force each of the biggest firms to establish a body to oversee quality control, and to make sure at least one person on it comes from outside the firm. The rule is part of a broader revamp of quality control standards that the industry wrote itself decades ago and which are only now being updated by the PCAOB, some 20 years after the agency was created following the Enron scandal. A number of big firms, including PwC and BDO, are trying to kill the rule at the eleventh hour in a move that has raised eyebrows among some investor groups, which point out that many firms already boast of having bodies that sound a lot like what is being proposed.
Practice Management
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How CPAs can bring order to a disorderly world [Journal of Accountancy] PCAOB Board member Christina Ho wrote something for JofA. We just want to share this unironic graphic:
Survey Says
2024 Internal Audit Priorities Survey Reveals Technology and Cybersecurity as Top Concerns Amidst Rising Generative AI Adoption [PR Newswire]
Jefferson Wells, a leading professional services firm specializing in Finance & Accounting, Internal Audit, Risk & Compliance, and Tax, and part of the ManpowerGroup family of brands, released the results of its eighth annual Internal Audit Priorities Survey. The survey reveals that while cybersecurity remains the top risk, the rise in the usage of Generative AI tools is escalating in risk priority for IA leaders and audit committees. Despite this, only 26% of organizations have fully integrated Generative AI standards into their governance framework, indicating a need for more comprehensive controls. Business Transformation and IT Deployment risks necessitate more in-depth internal audit skillsets in cybersecurity, data analytics, IT audit, and Generative AI, which are the most challenging to train and retain. Consequently, 37% of organizations are planning to increase staff to meet the heightened demand for these technology skills – the first significant increase in internal audit departments planning to expand their teams since 2020.
Associations Are Financially Optimistic and Developing their Tech Spend, According to New Wipfli Survey [PR Newswire]
According to Wipfli’s 2024 State of Associations Report, professional and trade associations alike show strong resilience and optimism about their markets, with finances and memberships up from the past year. Associations face several challenges within their space, and sometimes merging with similar organizations can help them better serve their members, leading 77% of respondents expecting to merge or consolidate with other associations in the next two-to-five years. Overall, while associations work within countless different verticals, common threadlines such as adaptability in changing scenarios, revenue streams, recruitment & retention issues, and technology concerns were present for associations of all sizes.
Municipal News
Village clerk of tiny Nebraska town resigns amid probe by state auditor’s team [Nebraska Examiner]
The village of Litchfield in central Nebraska “boasts a whopping 280 people,” according to its website, which goes on to say that the small-town atmosphere contributes to a high quality of life. But a Nebraska State Auditor’s Office probe into village operations has disrupted the calm, revealing apparent misappropriation of public funds, inaccurate utility billings and lack of documentation. Auditor Mike Foley, when releasing results, zeroed in on fiduciary responsibilities despite the size of a municipality. He said that “for various reasons” proper financial controls can sometimes be “less vigorous” among smaller political subdivisions.
Missouri state auditor granted new authority over local governments [StateScoop]
Starting Wednesday, under House Bill 2111, which Gov. Mike Parson approved in July, the Missouri state auditor will have the authority to conduct audits of local and municipal government organizations, including larger counties like St. Louis and Jackson, where most of Kansas City is located. “What we found over the years is that a lot of the fraud is in those smaller political subdivisions, because they have fewer internal controls, they have fewer employees, and they’re just in an environment that makes it easier for people to steal money,” Missouri State Auditor Scott Fitzpatrick told StateScoop in a recent interview. “House Bill 2111 will give us the ability to initiate audits of those political subdivisions, which we currently cannot do unless we get a petition from the citizens of the of that area.”
PA Auditor General releases audit claiming taxpayers were overcharged for prescription drugs [WTAE]
Pennsylvania’s auditor general released the findings of an audit on Wednesday, claiming taxpayers were overcharged for prescription drugs in 2022. “We found that $7 million in transaction fees were not disclosed by PBMs and MCOs (managed care organizations) to DHS (Department of Human Services), DHS then used this inflated data to set the rates it will pay in the future for prescription drugs,” Auditor General Timothy DeFoor said.
Audit finds Marshall County Fiscal Court had misreporting issues on financial statements [WPSD]
In a news release, Kentucky Auditor Allison Ball’s office said auditors tested 67 disbursements totaling more than $5.6 million. According to the auditor’s office, issues found included: Nineteen disbursements totaling more than $1.5 million that did not have a purchase order; Fifteen disbursements totaling more than $2.5 million that had a purchase order that was dated after the invoice date; Five disbursements totaling more than $2. 8 million that did not appear to be paid within 30 days because the invoice was not stamped when it was received; Five disbursements totaling $14,826 for utilities that were not approved by the fiscal court before being paid and were not included on the preapproved reoccurring expenses.
Firm Watch
After private equity investment, Meridian accounting firm signs deals with two other firms with Boise operations [BoiseDev]
Harris CPAs acquired Medford, Oregon-based KDP & Co., LLC, as well as Boise-based firm Chigbrow Ryan Murata, Chtd. KDP operates in the Boise area as well after a 2021 acquisition of Boise-based Whittaker & Associates. Harris President Josh Tyree told BoiseDev that the deals are more of a merger – and each of the former owners in KDP and Chigbrow Ryan remain as owners in Harris. “We’re not looking for any firm that’s just breathing, we are looking for firms that are servicing similar types of clients. We want to stay true to those things and get to some strength in numbers, we’re going to be more successful.”
Accounting firm in lease talks for Ballantyne office move, training center [Charlotte Business Journal]
Minneapolis-based CliftonLarsonAllen plans to take two floors in an unidentified Ballantyne building. Work on that 50,000-square-foot space is expected to be complete by December 2025. The firm’s Charlotte office is now in the Carillon building at 227 W. Trade St. About 250 CLA employees are expected to be located in the new space. Half of the space would be designated for office use. The other half would be used for what the company defines as a “connection center,” designed to help CLA grow and retain talent. It’s intended to bring employees from across the Charlotte area and the company under one roof for learning, development, continued training and more. CLA plans to host 150 to 200 employees at a time within the new space.
Meet Houston Business Journal’s 2024 Most Admired CEO Awards honorees [Houston Business Journal]
Bill Hickl, Texas Market Managing Principal (Tax) at BDO gets admired.
The 2024 MP Elite [Accounting Today]
To contend with a rapidly changing landscape, today’s top accounting firm leaders are required to wear more hats than ever before. Besides embodying the attributes of any great business leader, they often must serve as technologists, deal brokers, and brand ambassadors — not just for their firms but for an entire profession in dire need of attracting more young talent. PE, mergers and acquisitions, and artificial intelligence are all hot topics for the MP Elite, and it is their curious but mindful approach to these industry trends that make them role models in accounting.
Big 4
China Has Another Firm in Its Crosshairs Over Its Epic Property Bust: PwC [Wall Street Journal]
China’s epic housing bust has crushed big developers, bond-market investors and homeowners, causing billions of dollars in losses. Now Chinese regulators are zeroing in on another important player: PricewaterhouseCoopers, the auditor of choice for many of China’s biggest property firms.
Judge Rules $400 Million Algorithmic System Illegally Denied Thousands of People’s Medicaid Benefits [Gizmodo]
Thousands of Tennesseans were illegally denied Medicaid and other benefits due to programming and data errors in an algorithmic system the state uses to determine eligibility for low-income residents and people with disabilities, a U.S. District Court judge ruled this week. The TennCare Connect system—built by Deloitte and other contractors for more than $400 million—is supposed to analyze income and health information to automatically determine eligibility for benefits program applicants. But in practice, the system often doesn’t load the appropriate data, assigns beneficiaries to the wrong households, and makes incorrect eligibility determinations, according to the decision from Middle District of Tennessee Judge Waverly Crenshaw Jr. “When an enrollee is entitled to state-administered Medicaid, it should not require luck, perseverance, and zealous lawyering for him or her to receive that healthcare coverage,” Crenshaw wrote in his opinion.
What Big 4 do you think is the most morally corrupt?
byu/marihuano69x inAccounting
KPMG Recruits Veteran CPAs to Advise on AI in Audits, Quality [Bloomberg Tax]
KPMG LLP will lean on the expertise of three veteran accountants to advise the firm as it navigates the use of artificial intelligence in its audits and a ream of US rule changes. A three-person Independent Audit Quality Advisory Committee will provide outside input on how the firm responds to regulatory inspections. The committee will also help the firm as it measures progress toward strengthening the quality of its audits and builds on its adoption of AI, KPMG said Wednesday.
KPMG announcement: KPMG US Announces Formation of Independent Audit Quality Advisory Committee to Build on the Success of Quality Initiatives
You thought you knew the PwC saga. But did you know the firm released a cartoon book on its values featuring various blobs? My favourite page is this one, which presumably shows tax tweeties whispering secrets into ears pic.twitter.com/io4lPMP0g0
— Myriam Robin (@myriamrobin) August 4, 2024