October 23, 2018

Accounting News Roundup: Deloitte Legal, EY Boomerangs and Praying for the Pass-Through Deduction | 01.10.18

Deloitte Legal UK

Deloitte muscles in on legal services in UK [FT]
Oh, looky what we have here, another Big 4 firm splashing its way into some press about legal services. Deloitte is “applying for an alternative business structure licence” which allows non-law firms in the U.K. to offer legal services. And wouldn’t you know it, Matt Ellis, the managing partner for tax and legal, admits that this kinda sorta means that they’re wandering onto law firms’ turf:

“We’re planning to use our technology and advisory skills to transform legal services and help address many of the challenges lawyers . . . are facing in today’s increasingly complex legal environment,” said Mr Ellis.

Although he added that Deloitte was not seeking to replicate a traditional law firm, he acknowledged that its legal offering “may threaten some players” that rely on work outsourced by corporate counsel.

Isn’t this fun? I’m really hoping for Deloitte to launch a law firm in the U.S. this year to keep up PwC and thereby completely contradicting Cathy Engelbert’s comments from only 3 years ago.

EY adds tax advisory firm serving real estate and high net worth individuals [EY]
Imagine working at a Big 4 firm, developing a great reputation and respect among clients and then going off to start your own wildly successful firm. Then imagine selling your wildly successful business to your former Big 4 firm. That seems to be the gist of EY buying San Diego-based RPR Partners.

Robert P. Regnery and Kenneth R. Van Damme II, both previous EY professionals, are returning to the firm after having built their independent tax advisory practice. This new team significantly expands EY’s resources of private client service and real estate professionals.

This has to best Big 4 boomerang experience you can hope for. And I’m sure the acquisition of the firm has more to it than just wanting a guy named Van Damme back on your team.

Accountants hit by phase-outs under new tax law [AT]
Although it’s been reported over and over, it seems that some accountants still aren’t over the fact that they’ll phase out of the 20 percent pass-through deduction that was part of the new tax law. While some service businesses might be able to find loopholes to qualify for the deduction beyond the phase-out limit, it’s doubtful that accountants will be so lucky. Dean Zerbe, former tax counsel for the Senate Finance Committee said, “They can get out their prayer rug. They’re not going to be qualifying. That’s clear.”

FTB v. Hyatt: Get Your Popcorn Ready [BNA]
If you enjoy a decades-long tax dispute look no further than Gilbert P. Hyatt and the California Franchise Tax Board. “What began as a routine audit by California became over the last quarter-century a law school case study for the ages.”

Is Bitcoin a Scam? [FraudBytes]
South Carolina Professor Aaron Zimbelman eliminates other possibilities to conclude that “the way in which individuals are most likely to profit from bitcoin has many of the hallmarks of a scam.”

Previously, on Going Concern…

In Open Items, Big 4 or bust?

From the archives: Here’s Some Shit You’ll Hear Accountants Say During Busy Season

In other news:

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Deloitte: Folding Like a Cheap Lawn Chair?

deloitte.jpgIs it possible that the spinelessness of the FASB is spreading some of the firms?
Motely Foley is reporting that MGM Mirage got the Big D to drop the going concern language from its “financial assessment” which we confirmed with the author, Bob Steyer, that indeed meant the audit opinion.
Doing a little digging on this whole sitch, we found that MGM has done some duct tape repairs to its balance sheet in order to convince its banks and Big D that nothing is fucked.
Deloitte, wanting to be troopers and all, probably just had to step back from the whole thing to get perspective. “Yeah, when you look at it from back here, $14.4 Billion in debt doesn’t really look that bad.”

MGM Back From the Brink — for Now
[Motley Fool]

Deloitte May Be the #1 Firm of No Fun

heelys.jpgRegardless of who a client is or what their business is, accounting firms don’t like to lose them. Lost revenue, a little bit of a slap in the face, a promise that wasn’t delivered (which, let’s be honest, really isn’t all that rare).
For whatever reason, we find the story that Heelys, the skate shoe company, having fired Deloitte as their auditor, has to be an especially tough pill to swallow for the Big D.
Why, you may ask? How about the fact that Heelys MAKES SHOES THAT HAVE WHEELS ON THEM which might be something fun.
According to Reuters, Heelys gave Deloitte-period the heave-ho primarily because of cost considerations. That may be true but something tells us that the real reason might have been Deloitte putting the kibosh on Heelys request of the audit team to wear the skate shoes while working at the client’s HQ.
Deloitte, like all Big 4 firms, being the fun killer, likely argued that skate shoes did fall under acceptable attire in its dress code.
It was probably only a matter of time until the Heelys audit committee concluded that they had to find another audit firm with smaller sticks up their asses. Partners on the engagement are now quietly stewing with their decision that may have put their firm solidly in the #1 slot for hating all things fun.

Heelys dismisses accounting firm
[Reuters]