EY expects ‘massive approval’ in vote to split up company [Reuters]
Partners in EY are expected to give approval for spinning off the company’s consulting arm and listing it on the stock market by the end of the year, a senior EY official said on Tuesday. Over 13,000 partners – out of EY’s 365,400 staff – are due to vote on the divestiture plan in April with the outcome known quickly, said Marie-Laure Delarue, EY’s global vice chair for assurance and member of the company’s global executive. “We expect a massive approval, but it’s not to say there is still not a lot of work to do,” Delarue told Reuters. “A lot of our clients tell us it makes total sense, but you have to do it right. Regulators are, in general, supportive.”
Big Four: EY, Deloitte, KPMG, and PwC step on law firms’ toes increasing legal revenue to £1.25bn [City A.M.]
The Big Four accounting firms – EY, Deloitte, KPMG, and PwC – are capturing an ever-larger share of the global market for legal services. The accounting giants are rapidly expanding their legal businesses, in boosting their own sales and taking work away from traditional firms, the research from Said Business School shows. The world’s four largest professional services businesses now generate $1.5bn (£1.25bn) in revenues from their legal segments, up from just $900m in 2015 and $1.2bn in 2017. Having made their first forays into the market in the 1990s, the Big Four have expanded their legal businesses dramatically over the past decade following a renewed push in the 2010s.
KPMG to cut about 200 staff amid consulting work slowdown [Australian Financial Review]
This is separate from KPMG US layoffs announced earlier this week.
KPMG Australia expects to cut up to 2 per cent of its 10,000-strong staff, or roughly 200 roles, due to a slowdown in the firm’s management consulting business caused by increasingly cost-conscious clients. The firm, which increased its staff headcount by more than 2000 last year, will begin a business-wide review to determine the exact number and roles that will be targeted. The planned cuts by one of the country’s largest consulting firms is a major sign of an impending economic downturn in Australia, as large corporate clients pull back on buying non-critical consulting services. “After a year of strong headcount growth, we’re now fine-tuning at the margins,” said Dorothy Hisgrove, the firm’s national managing partner of people and inclusion.
Ernst & Young is making a move from the Flats but staying in downtown Cleveland [Cleveland.com]
Ernst & Young is planning to move from its local headquarters but stay in downtown, moving just blocks away from its current home overlooking the East Bank of the Flats. The global accounting firm confirmed Wednesday that when its lease is up in November it will move from the Flats to North Point Tower office complex at the corner of East Ninth Street and Lakeside Avenue, across the street from City Hall.
Deloitte unveils ‘first-of-its-kind’ smart factory and warehouse in Canada [Robotics & Automation News]
Spanning over 9,000 square feet, The Smart Factory @ Montreal is designed to showcase the possibilities of automation to run production lines, efficiently store and move inventory, as well as track inbound and outbound shipments. In its first year of operation, the state-of-the-art facility is expected to draw hundreds of national and global business leaders to expose them to revolutionary ways of working in order to maximize efficiencies.
‘I was an investor’: Deloitte CEO was alleged victim of fraudster [Australian Financial Review]
The chief executive of Deloitte Australia, Adam Powick, has admitted he invested in a scheme run by former partner Amberjit Endow that is now under investigation, but said he did so in a personal capacity and never authorised the use of his name to promote the scheme. Deloitte CEO Adam Powick said the investment he made was in a “purely personal and private capacity”. In an email sent to Deloitte partners on Thursday afternoon, Mr Powick said he took “full accountability for my personal investment decisions and the outcomes associated with these decisions”. He also wrote that he had never “encouraged anybody else to be part of this investment”. The stunning admission comes after reports that Mr Endow, a former senior Deloitte partner who worked at the firm for more than 13 years, had allegedly stopped communicating with at least some investors around December, causing them to worry that they will be unable to recover their money. The revelation that Mr Endow reportedly ran the fund working as a partner at the firm, one of the world’s largest accounting and consulting firms, has raised concerns across the firm’s partnership.
Lack of Crypto Audit Regulation Raises Questions About PCAOB Authority [Wall Street Journal]
The Public Company Accounting Oversight Board is facing calls to be the regulator that brings supervision to bear on auditors of cryptocurrency companies, even as the majority of crypto businesses fall outside its jurisdiction. “It is the Wild West in the sense that nobody is requiring audits of financial statements and no one is specifying the standards that ought to apply to proof-of-reserves reports,” said Douglas Carmichael, a Baruch College accounting professor and former PCAOB chief auditor. “It’s a big concern when investors get a report from an audit firm that seems to provide assurance when it doesn’t.”
PwC probed over its auditing of collapsed property group Intu [Financial Times]
PwC is under investigation by UK regulators over its auditing of the failed shopping centre owner Intu Properties, as accountants brace for increased scrutiny of their work ahead of an expected rise in insolvencies. In its fifth outstanding probe into PwC’s work for British companies, the Financial Reporting Council is investigating the firm’s audits of the 2017 and 2018 accounts of Intu, whose shopping mall business collapsed at the height of the coronavirus pandemic in 2020. The FRC is already examining PwC’s work signing off the accounts of Babcock, Wyelands Bank, London Capital & Finance and Eddie Stobart Logistics.
KPMG pays £1.3bn to settle negligent auditing claim by Carillion creditors [The Guardian]
KPMG has settled a £1.3bn lawsuit brought by Carillion’s liquidators, who claimed the auditor was negligent and missed serious red flags in the outsourcing firm’s accounts ahead of its disastrous collapse in 2018. The lawsuit – which related to audits of Carillion accounts between 2014 and 2016 – had been launched by Britain’s official receiver, which is attempting to recoup losses on behalf of Carillion’s creditors which are owed money by the failed company. Those creditors include the UK tax authority, HMRC. Creditors had claimed that Carillion had racked up massive losses, and paid out £210m in dividends, because it relied on audits from KPMG – which itself collected £29m for its audit work for Carillion over 19 years. Neither KPMG nor the official receiver would confirm the size of the settlement. “The parties have agreed that the terms of that settlement will remain confidential,” a spokesperson acting on behalf of the liquidator said.
Grant Thornton UK named leading LGBTQIA+ employer [Accountancy Today]
Grant Thornton UK has been recognised as a leading LGBTQIA+ employer by Stonewall, Europe’s largest charity for LGBTQIA+ rights, which awarded the firm Gold Employer status. Overall, Grant Thornton ranked 38th in the latest results, 26th in the private sector and 9th in the financial services sector. This recognition is said to “represent the firm’s significant strides towards creating an inclusive environment over the last five years”.
BDO USA names Eskander Yavar head of advisory practice [Consulting.us]
You’ll recall that several advisory leaders abruptly left BDO USA in October 2022.
BDO USA has appointed Eskander Yavar as national managing partner of its advisory practice, effective October 13, 2022. In his new role, Yavar will oversee that development of a practice that is a “significant contributor to the firm’s growth,” according to BDO. Based in Houston, Yavar has more than 20 years of experience in management and technology consulting, with expertise leading complex technology, supply chain, financial, and operational improvement engagements. He has particular sector knowledge in natural resources, manufacturing, and private equity.
How firms can support employees with sick kids [Journal of Accountancy]
When professionals struggle to balance caregiving responsibilities with work duties, accounting firm leaders say a supportive company culture and individual actions can help employees meet professional and personal obligations.
Top US watchdogs press for deployment of audit officials to track Ukraine aid: report [The Hill]
Top oversight officials at the Pentagon, State Department and U.S. Agency for International Development (USAID) are pressing for the deployment of auditors to Ukraine to monitor the distribution of aid, according to The Wall Street Journal. Throughout the nearly yearlong war in Ukraine, inspectors general from Defense, State and USAID have primarily conducted oversight from afar and have yet to receive any reports of major fraud involving the more than $113 billion sent to Ukraine in 2022, the Journal reported.
State lawmakers alarmed in probe of $3.5B accounting error [AP]
Throughout several hours of sworn testimony before lawmakers tasked with investigating a $3.5 billion accounting error, South Carolina’s chief fiscal watchdog struggled to delineate a clear timeline about an admittedly complex mapping problem that plagued the office for at least a decade. The chair of the Senate Finance subcommittee probing the issue said he lost confidence Thursday in South Carolina Comptroller General Richard Eckstrom’s ability to accurately answer questions about the state’s overstated cash balance, first publicly shared on Feb. 9. “I noted many contradictions throughout today’s testimony,” Republican Sen. Larry Grooms said. “A $3.5 billion error is no small error. And to treat it as such does a disservice to the people of our state who have to have confidence in their elected officials.”
FASB votes to finalize lease accounting relief [CFO Dive]
The Financial Accounting Standards Board voted at a meeting Wednesday to move toward finalizing two narrowly targeted updates to its lease accounting standards, putting the changes on track to become part of generally accepted accounting principles as early as next month. The changes to current standards center on leases between entities under common control, such as a parent and a subsidiary or affiliates. The first update would provide a “practical expedient” or a kind of workaround for determining if a lease arrangement exists while the second update provides guidance for amortizing leasehold improvements, according to FASB materials.