July 22, 2018

Accounting News Roundup: Fired KPMG Partners and Tax Return Selfies | 04.12.17

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Fired KPMG partners

By now you’ve probably heard that six KPMG employees, including the head of audit and 4 other partners, have been fired for receiving confidential information on the PCAOB’s plan for its inspection of the firm’s audits. The Wall Street Journal reported yesterday that Scott Marcello, the firm’s Vice Chair of Audit, as well as David Middendorf, the firm’s national managing partner for audit quality and professional practice were two of the partners let go.

The weird thing about this whole situation is why these people felt like they needed the advanced notice of the PCAOB’s plans. Do they not have confidence that their audits are up to snuff? And if so, why take the risk? A professor quoted in the Journal wonders the same thing:

The news of the leak is “pretty eye-opening,” said Bryan Church, an accounting professor at the Georgia Institute of Technology. “These guys feel enormous pressure dealing with inspectors, and they do stupid things,” he said.

Yeah. Really stupid things. Remember last year when the PCAOB told auditors to stop altering workpapers? It’s like people can’t help themselves. And now we learn that a half dozen people at KPMG including bigwigs in their audit practice couldn’t resist leaked info from the PCAOB? This doesn’t strike me as a complex ethical dilemma. But if the Vice Chair of Audit and the guy in charge of audit quality are complicit, what does that suggest?

File your taxes, already

I feel like most accountants fall into two camps when it comes to filing their own tax returns: 1) Those who file early; 2) Those who file late. The period in between is not really eligible unless you’re MFJ and your partner picks up the slack. Still, I can’t imagine many accountants letting their non-accountant spouses take charge of that chore.

Anyway, with just a few days left until the spring deadline, there’s no shortage of people who still haven’t filed and they’re likely to read a slew of tax-filing related articles as a result. For example, Alabama residents can “securely” file their tax returns with an app called eID that verifies identities with selfies. But just because you can, doesn’t mean you should:

A report from October found that the FBI now has 117 million American’s photos in its facial recognition database. That database has been in development for years and is a major source of controversy among privacy advocates. Guess who built that database? Yup, MorphoTrust, the same company that built the eID app. They also built and maintain the facial recognition databases for the Department of State and the Department of Defense. (pdf link) Can’t imagine a nightmare scenario in which those databases get crossed, nope.

Elsewhere, if you or a client still haven’t filed, this article has ideas for being “Mindful When Filing Your Taxes.” It’s the perfect thing to troll your most fervent anti-tax friends and clients

Previously, on Going Concern…

The KPMG thing. In Open Items, someone who’s graduating without a job lined up wants some advice.

In other news:

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Rumor Mill: KPMG Restructuring Plans

Thumbnail image for PomeranianSP1324.jpgWe’ve finally received some details on a possible restructuring at the House of Klynveld in the U.S.
According to our source, the plans were announced over the past week on a series of calls by Tim Flynn. The firm would be consolidated down to two regions, East and West and each would have a regional managing partner and one service line managing partner per region.
This would result in the elimination of one level of regional leadership and would transfer several partners into client-facing roles.
The restructuring would also include placing some partners on ‘profit improvement plans’ and some layoffs would occur over the next year. Additional staff layoffs would occur across all ranks over the next year as well.
The bad news is obvious. The silver lining, as some of our other sources have indicated, is that the Firm would be eliminating at least one level of bureaucracy that should allow partners to be more active in developing potential client relationships.
Messages left with KPMG were not immediately returned. We’ll update you with any response that the firm gives us.
If you can expand on of the details we mentioned on this restructuring, let us know, otherwise, discuss your thoughts in the comments.
Earlier: KPMG Atlanta Shake-up Makes Us Wonder
UPDATE, 4:45 pm: Regardless of this rumor, we learned a short time ago that KPMG admitted thirty-six new partners last month. Seventeen in Audit, twelve in Tax, and seven in Advisory. Congrats to the new partners! No, seriously. Good job.