Deloitte plays both sides of the field in Mercedes-Benz case [Australian Financial Review] Mercedes-Benz dealerships discovered longtime auditor Deloitte was taking huge fees from them while secretly working with the German parent company to write reports that would ‘hide’ the damage a change in business model would cause to margins dealer beneficiaries, a court heard.
EY fired auditor for failing to approve illegal transactions, new lawsuit claims [Reuters] Ernst & Young LLP has been sued by a former partner who says he was forced out of his job for refusing to sign client transactions that violated tax and securities laws. Sayantani Ghose filed a lawsuit in Manhattan federal court on Wednesday, claiming EY punished her for showing “professional skepticism” even after the accounting firm paid tens of millions of dollars in fines and settlements for the alleged misconduct of its auditors in recent years.
KPMG partners in Dubai call for suspension of local management [Financial Times] A group of senior KPMG associates have urged the firm’s global bosses to suspend management of its UAE business, citing nepotism, cronyism and a culture of fear allegedly stoked by the chief executive. The demands, which include a call for KPMG International to parachute in a temporary managing director of the firm’s global operations, were set out in an email to some of KPMG International’s top executives.
PwC HK and KPMG to host US regulator for China inspections -SCMP [Reuters] PwC Hong Kong and KPMG China are the first accounting firms to help the PCAOB inspect the audit work of U.S.-listed mainland companies, the South China Morning Post reported on Wednesday.
Mergers and Acquisitions of Accounting Firms
The second-largest accounting firm in the state has merged with the Meridian Group [Clarion Ledger] Watkins, Ward and Stafford from West Point and Kemp, Williams, Stevenson and Bernard from Meridian combined. Watkins Ward and Stafford, founded in West Point in 1949 by John T. Watkins, is the second largest accounting firm in Mississippi. It has offices in Amory, Calhoun City, Columbus, Eupora, Houston, Kosciusko, Louisville, Macon, Okolona, Oxford, Philadelphia, Pontotoc, Ridgeland, Tupelo and West Point.
Marvin & Co. merges with Rochester accounting firm [Albany Business Review] It’s behind a paywall so *shrugs*
Hiring and talent
Valley Accounting Organization Hosts Student Event to Help Build Job Pipeline [WHSV] In hopes of increasing the numbers, the Shenandoah Valley Chapter of the Virginia Society of CPA’s will host a “Student Accounting Night” at Laurel Ridge Community College. Junior and senior high school and college students will be able to hear from current professionals, as well as potential employers from government, industry, the financial services sector, and public accounting.
Deloitte to create 1,000 jobs outside of London as businesses in the city seek to cut costs [Proactive Investors] Deloitte will create at least 1,000 new jobs outside London in a bid to join the rush of businesses in the city stretching beyond the capital. By 2027, Deloitte plans to create around 3,500 new jobs in its consultancy division as part of a larger £220m investment, the Telegraph reports. Anne-Marie Malley, head of consultancy at Deloitte UK, told The Telegraph: “We are responding to client demand by rapidly increasing our workforce over the next few years, starting with a record number of graduates and apprentices this year. . “We are committed to creating thousands of new jobs in the UK to support our customers across a host of industries and sub-sectors, with at least a third of new hires coming from outside London,” added Malley.
ESG demand will force structural change among audit firms, experts say [AccountancyAge] As pressure mounts from consumers, stakeholders and regulators to disclose sustainability information, so does the demand for ESG assurance services. PwC has predicted that ESG assets will make up more than 50% of mutual fund assets by 2025, representing compound annual growth of 28.8% from 2019. But questions remain about how this will affect the formation of professional services businesses, with some industry players saying that silos and structures may start to change shape.
US to begin review of Chinese audit documents next week, Gensler says [Bloomberg] U.S. watchdogs will review audit documents from Chinese companies that trade in New York starting next week, according to Securities and Exchange Commission Chairman Gary Gensler.
Binance Bungles Counts Helium Tokens and Overpays Millions of Customers [CoinDesk] An accounting bug at Binance led to a windfall in Helium Network’s native HNT token for some users and shouldered the world’s largest crypto exchange with a multi-million dollar shortfall, according to people familiar with the matter.
Binance lost some 4.8 million HNT tokens that were mistakenly paid out to users, many of whom quickly sold the tokens for profit, the people said. At Friday’s prices, those assets were worth about $19 million.
Report: SEC accounting guidelines create roadblock for banks’ crypto plans [PYMNTS] Despite growing demand from their customers for cryptocurrency products and services, many banks are said to be hesitant to offer them, as accounting guidelines from the United States Securities and Exchange Commission (SEC) make it unprofitable .
Bank Agencies Assess Impact of Crypto Accounting on Capital Rules [Bloomberg Tax] The Federal Reserve’s chief accountant has urged banks and financial institutions to ask questions about how to report their cryptocurrency holdings and related agreements directly to another Washington regulator: the Securities and Exchange Commission.
SEC accuses Gol Intelligent Airlines, Brazil’s second-largest airline, of FCPA violations [SEC] The Securities and Exchange Commission today charged Brazil’s second-largest national airline, GOL Linhas Aéreas Inteligentes, with violating the Foreign Corrupt Practices Act (FCPA). The São Paulo-based company, also known as Gol Intelligent Airlines, agreed to pay $70 million to settle the SEC charges. According to the SEC order, Gol bribed prominent Brazilian government officials in exchange for certain favorable payroll tax and aviation fuel tax reductions. The scheme took place against a backdrop of insufficient internal accounting controls, and the bribes were characterized as legitimate business expenses in Gol’s accounting.
SEC Acting Chief Accountant Highlights Areas of Financial Reporting to Keep in Mind During Uncertain Economic Times [Thomson Reuters] In the current economic environment, it can be particularly difficult for financial institutions to apply the FASB’s current expected credit loss (CECL) accounting model. Currently, only large banks apply the CECL, but around 4,000 smaller banks, including community banks, will need to start applying the expected loss model in 2023.
BREAKING: Ernst announces IRS audit [Senator Joni Ernst] No, not this Ernst. In a speech to the Senate this afternoon, U.S. Senator Joni Ernst (R-Iowa) informed her colleagues and taxpayers in Iowa and across the country that the U.S. Treasury Inspector General for Tax Administration ( TIGTA) had agreed to audit the IRS at its request to determine whether employees of the tax collection agency paid their own taxes.
The IRS has the funding to hire tens of thousands of people. Can he actually do it? [Government Executive] Finally, we’re not the only ones wondering how it’s even possible for the IRS to hire tens of thousands of new employees. GovExec: The political headwinds the IRS is currently facing are just one of many challenges the agency will face in recruiting new staff. First, he has to deal with attrition. The agency said up to 50,000 staff could leave over the next few years, meaning it won’t come close to hiring 87,000 new workers or doubling its workforce, as some have claimed. The IRS has 25,000 fewer employees than two decades ago, leading the Biden administration to say it desperately needs new staff to fill long-standing vacancies. The work the IRS needs to do has only grown, and it has fewer people to do it. As a result, uncollected taxes — the tax gap — have increased.
IRS hiring and IT upgrades set high bar for taxpayer assistance in upcoming filing season [Federal News Network] The IRS is setting goals to provide a much higher level of service to taxpayers during next year’s filing season, now that the agency has the resources it needs to bolster its workforce and update level legacy computer systems. Treasury Secretary Janet Yellen on Thursday outlined “bold commitments” the IRS will make over the next six months to bolster its workforce and upgrade its IT capabilities, adding that the agency will have additional opportunities for growth. in the months and years to come.
IRS refunds $1.2 billion in late filing fees [Washington Post] This unprecedented relief is an acknowledgment of the difficulties taxpayers have faced during the pandemic. While during regular filing seasons the IRS penalizes taxpayers for procrastination, the agency reports that it realizes it’s too hard for many people who may have struggled to file their statements because of the pandemic.