June 22, 2018

Accounting News Roundup: Deloitte’s Numbers and KPMG South Africa’s Resignations | 09.15.17

accounting news kpmg liberty tax

Deloitte

In the past, we’ve poked fun at Deloitte’s tendency for boasting. For awhile there, the firm liked to claim that it was more exclusive than Harvard, but then again, so are a lot of things.

One of the firm’s other frequent brags is that it hires lots of people. Only Donald Trump goes on more needlessly about the number of jobs he’s created. We get it, Deloitte. You’re doing well.

Anyway, it’s an annual revenue humblebrag, Deloitte drops its most recent binge:

In FY2017, Deloitte increased its workforce in all geographic regions and businesses, with nearly 70,000 new professionals, an increase of 8 percent from FY2016 – the equivalent of 1 person hired every 8 minutes.

I’m not great with numbers, but something’s not right here. As anyone who’s seen Rent can tell you, there are 525,600 minutes in a (non-leap) year. And yes, if you divide 525,600 by 70,000, you get about 8 minutes.

But where stuff gets weird, is when you look at Deloitte’s numbers for last year. The “increase of 8 percent from FY2016” is in its total headcount, from 244,400 to 263,900. That difference isn’t 70,000; it’s 19,500. So yes, Deloitte hired 70,000, but about 50,000 people also left — the equivalent of one person leaving every 10 minutes. Put in a different light, if one new person is walking in Deloitte’s door every 8 minutes, then one person is walking out two minutes later.

None of this complicated, which is why I don’t understand why Deloitte continues to pretend that we all don’t see what they’re doing. This is accounting, after all; you have to count the ins and the outs. That’s how you measure a year.

Accountant-client privilege

In his investigation to ExxonMobil, New York Attorney General Eric Schneiderman has subpoenaed PwC audit workpapers that could reveal climate change’s impact on Exxon’s business. Exxon has been claiming accountant-client privilege, but it hasn’t been working. And, hey, it still isn’t working:

Exxon Mobil Corp.’s attempt to use “accountant-client privilege” to avoid handing over audit documents in a politically charged climate-change probe was dealt a final blow by New York’s top court.

The finding on Tuesday affirms a 2016 ruling that Exxon must comply with a subpoena by New York Attorney General Eric Schneiderman, who is investigating whether investors were misled about the possible impact of climate change on the energy company’s business.

KPMG South Africa

Back in July, we mentioned that KPMG was in a bit of a bind over work it did for a wealthy family, the Guptas, who has the South African president in their pocket. To make matters only slightly worse, the firm’s former CEO Moses Kgosana and some other partners attended a lavish Gupta wedding possibly funded with South African taxpayer money that Kgosana called “an event of the millennium.”

Well, there have been some developments:

Global auditor KPMG cleared out its South African leadership on Friday after damning findings from an internal investigation into work done for the Guptas, businessmen friends of President Jacob Zuma accused of improperly influencing government contracts.

KPMG’s investigation did not identify any evidence of illegal behaviour or corruption but it did find that work done for Gupta family firms “fell considerably short of KPMG’s standards”, the auditor said in a statement.

KPMG SA’s Chairman, CEO, COO and “five senior partners” have all resigned, according to Reuters. The firm also said it would donate the fees it earned (around USD 3 million) from the Guptas to charity.

This scandal has already brought down a PR firm, and speculation is rampant as to whether KPMG could lose its license to practice in South Africa.

PCAOB

Who will be the next PCAOB chair? No one knows for sure, but there’s a name floating around:

William Duhnke, a veteran staff member for former Senate Banking Committee Chairman Richard Shelby, is on track to be selected to become chairman of the Public Company Accounting Oversight Board, according to four people familiar with the matter. An announcement by Securities and Exchange Commission Chairman Jay Clayton could be made in the coming weeks, said one of the people, who like the others asked that they not be named discussing the plan.

Duhnke’s name has been mentioned for awhile as a possible replacement for Doty, although I heard a rumor that this could be a plant to get investor advocates worked up. I guess we’ll know soon enough.

Previously, on Going Concern…

A former PwC auditor settled insider trading charges with the SEC.

In other news:

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How to find the “best and brightest” [CPA Success]
This may be a better topic for the friendly HR professional but figuring out who these future accounting rock stars are before they show up on their first day is “more art than science”, as Tom Hood notes.
Popular to some old-school thought, GPA does not always indicate who’s going to dominate in the real world and “soft skills” — besides being a terrible term — are in more demand than ever.
Help The The American Red Cross of Greater Chicago Help Haiti [Re: The Auditors]
The American Red Cross of Greater Chicago is having a drive today and since Francine’s friend is the CFO, we’ll be glad pass around the news:

One of my oldest and dearest friends, Guillermo Becerra, is the CFO of the American Red Cross of Greater Chicago. I asked him how I could help him, and the Red Cross, during what must be an incredibly busy time post-Haiti earthquake.


“The Chicagoland community will come together on Thursday, January 21 to give to the American Red Cross as we help the people of Haiti recover from the catastrophic earthquake that devastated their country last week.
The Chicago Helps Haiti media relief drive begins at 5 a.m. and lasts until 11 p.m. Nearly every TV and radio station in our area will be promoting this fundraising effort throughout the day. You can help too, by giving via phone or online, and sharing your thoughts here, on Facebook or Twitter, and by asking others to give.
To give from 5 a.m. to 11 p.m. CALL 1 (877) 565-5000 or visit www.chicagoredcross.org/haiti

Plus, we’re guessing that if you give, your 2009 tax return isn’t much of a concern.
If Your Password Is 123456, Just Make It HackMe [NYT]
The Times is concerned that you have a shitty password which puts you at a huge risk of being hacked by someone sitting in their parents’ basement.

Imperva found that nearly 1 percent of the 32 million people it studied had used “123456” as a password. The second-most-popular password was “12345.” Others in the top 20 included “qwerty,” “abc123” and “princess.”

You know who you are, ye with stupid passwords. Also, don’t even think of changing it to “654321” because that drops in at #19.

Accounting News Roundup: Haiti Relief Passes Senate; Accounting Job Surge? CPAs Basically Control People’s Lives | 01.22.10

Senate votes for faster tax breaks for Haiti gifts [WaPo]
As expected, the U.S. Senate unanimously passed legislation yesterday that allows taxpayers to deduct donations made for Haiti relief efforts. You have until the end of February to donate so that it may be included on your 2009 return.

Maybe it’s bad legislation but we’ve been over that.

CPA Jobs Set for Surge. But When? [CPA Trendlines]
That’s the question, isn’t it? Rick Telberg, who has done a great job of tracking the Bureau of Labor Statistics on accountants, points out that while the latest BLS forecasts a 22% increase (279,400 jobs) by 2018, there’s no indication that it’s happening now:

[M]any tax, accounting and finance professionals are still slogging through the Great Recession. The Association for Financial Professionals, for instance, reported that about one in four respondents say their organizations will contract in 2010. At the same time, a PricewaterhouseCoopers survey of private companies found 43 percent of CEOs and CFOs still budgeting no expansion over the next 12 months to 18 months. The data just seem to reinforce economic uncertainties and a weak outlook.


The BLS is looking past the past the recession for the jump in opportunities but just when the hell will that be? Just because the economy isn’t contracting currently, doesn’t mean it won’t in the future and this “recovery” has been tepid at best.

Theismann to CPAs: You Are the Conscience of America [Web CPA]
Joe Theismann gets it. He knows that without all of you out there in CPA land, your clients don’t stand a chance. They’d be finished. Finished!

“You’re the conscience of America,” Theismann told conference-goers. “You are the survivors in tough times. With accountants, I’m not looking for someone to file taxes and do my financials. I can do that myself online. In your position you can basically control people’s lives.”

So get out there and control somebody’s life. Joe Theismann is expecting it.