Monday Morning Accounting News Brief: The Age of the Non-CPA; PwC Explains the Chevron Thing | 7.29.24
Good morning! I have a sneaking suspicion the news will be pretty dry today but as always, hoping for the best. Fingers crossed.
India Today explains why US firms love hiring accountants in India:
Consequently, American firms are increasingly turning to other countries to fill the gap, particularly eyeing India for its highly skilled accounting professionals. Indian accountants, familiar with international accounting standards, present a valuable solution to the US accounting crisis. From a business perspective, offering offshore positions to Indian accounting experts can prove to be extremely beneficial for US firms, helping them lower costs, provide easy access to a global talent pool, and achieve scalability. Given the high demand for such skilled professionals, Indian nationals have an excellent chance to explore lucrative careers in the United States and enable themselves to excel in the global market, contributing significantly to the country’s economy.
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In essence, the US accounting crisis presents a unique opportunity for Indian accountants. With the help of globally recognised certifications and enrolling in STEM-designated programs, Indian professionals can position themselves at the forefront of the global accounting industry by filling the workforce gap. These pathways not only enhance their career prospects but also ensure they become invaluable contributors to the dynamic US job market, setting the stage for a fulfilling professional journey.
All this time we thought it was going to be robots that take accounting jobs, it was Indians all along. Oh and reminder: the Institute of Chartered Accountants of India (ICAI) is working on a plan to consolidate India’s 96,000 little accountancy firms into mega-firms that they think could compete with Big 4 on the global stage.
INSIDE Public Accounting continues to tease the upcoming release of the IPA 500. Here they talk about the changing face of accounting firms:
While the profession is taking a concerted, multi-pronged approach to increasing the number of accounting graduates and prospective CPAs, IPA 100 firms have had to pivot due to the small pool of potential hires in the meantime.
As a result, last year’s data shows more IPA 100 firms were increasing the hiring of talented non-CPAs. The percentage of non-CPA professionals was 50.3% in 2019, but 55.9% in 2023. The percentage of non-CPA equity partners was 8.0% in 2019, but 10.1% in 2023.
Another weed-loving American firm has gotten hand-slapped by Canadian audit regulators:
According to its enforcement action against Macias Gini & O’Connell, CPAB inspected three audit files and identified significant inspection findings in all three files, which “indicated continued concerns over audit quality.” The action reports a lengthy list of violations of Canadian Auditing Standards and PCAOB rules. At the time of CPAB’s 2023 inspection, MGO audited fewer than 50 Canadian “reporting issuers” (i.e., public companies), and approximately 20 of such companies in the US.
The American firms were particularly active in the Canadian cannabis market. On its Facebook page in 2018, MGO declared that it “proud to have provided professional services to a growing number of cannabis businesses that have successfully gone public in Canada.” As an example of the turbulence in the market, cannabis company Bellrock Brands announced that it had changed auditors from Manning Elliott LLP, which has been censured, to Macias Gini & O’Connell LLP, also censured, due to audit delays.
This news came out on the 17th but we missed it because we aren’t on their PR list. PwC Philippines opened a learning hub:
Isla Lipana & Co./PwC Philippines launches its Learning and Experience Hub, a pioneering facility that combines education, employment and community engagement. Opening on 17 July at the PUP BPO Center, next to the Polytechnic University of the Philippines (PUP) main Manila campus, this groundbreaking initiative sets a new benchmark in bridging the gap between academia and the industry, creating unparalleled opportunities for students and communities.
The hub is the first of its kind in the industry, designed to foster a collaborative environment where learning and practical experience converge. It reflects PwC Philippines’ commitment to innovation and excellence, providing a sustainable platform that significantly supports the holistic development of students and promotes inclusive community development.
Trying to put my finger on which 80s fast food restaurant this looks like…
TIL there’s a firm in the UK with the same name as a certain hot British actor:
Accountancy firm Clive Owen LLP has welcomed 15 new colleagues, including three at its York office, the largest intake of graduates the firm has appointed in its 40-year history.
Clive Owen LLP, which has offices in Darlington, York, Durham and Middlesbrough, has seen a 16% increase in colleagues over the last year.
Now with a 148-strong workforce, the firm is one of the largest independent accountancy practices in the north of England.
I’d make some accounting-related innuendo here but it’s early and I haven’t gotten my daily dose of sugar-free Red Bull yet.
An imported Grant Thornton partner makes a list:
Grant Thornton, one of America’s largest brands for audit, assurance, tax, and advisory services, is celebrating a new award win. Becky Linnett, an Audit partner in the firm’s Miami office, has been named a ”40 Under 40” honoree by the South Florida Business Journal. This prestigious list recognizes talented individuals under the age of 40 who have made an impact in their fields, companies and communities.
In addition to her Audit role, Linnett leads the Real Estate & Construction industry group in South Florida, providing high-quality, personalized services to a wide variety of clients in those industries. These dual roles represent the latest chapter in a burgeoning career on both sides of the Atlantic.
Linnett began her career at Grant Thornton U.K. and moved to the U.S. permanently following a secondment in California. There, she managed relationships with major clients across Southern California and the Bay Area. After developing a stellar reputation for client service, she earned an opportunity to move to South Florida and serve one of the firm’s largest asset management clients. Linnett quickly rose to the position of Audit growth leader for the South Florida asset management practice, and she was named a partner at the age of 34.
We’ll probably write this one up as its own thing but for now, the Financial Reporting Council had another year of record fines against audit firms. However, it was only eight fines total. KPMG’s massive Carillion fine did the heavy lifting to pump those numbers up.
Britain’s accounting watchdog dished out a record amount in fines last year as it concluded a number of high-profile investigations, including into audits of Carillion and London Capital & Finance.
The Financial Reporting Council, which oversees the nation’s audit and accounting firms, issued financial sanctions totalling £48.2 million in the year to the end of March, surpassing the previous record of £46.5 million set in the 2021-22 financial year.
The record fines show that the watchdog is starting to bare its teeth, even before its transition into the beefed-up Audit, Reporting and Governance Authority, which Labour has promised to prioritise.
Earlier:
In government contract news, Washington Technology talks about a possible conflict of interest. Again.
The Government Accountability Office’s denial of Guidehouse’s protest over an audit support contract that went to Deloitte outlines the right way and the wrong way to determine if there is a conflict of interest.
Guidehouse has twice protested the Defense Department’s choice of Deloitte for an $80 million contract to support the DOD comptroller.
As we have previously reported, both protests alleged a conflict-of-interest because one of the DOD officials working on the procurement was a former Deloitte consultant. That person still had a 401(k) from when they were employed by Deloitte.
In the first protest, GAO said that DOD hadn’t documented the investigation into the alleged conflict. In fact, GAO said it could not rule on whether there was a conflict or not because DOD did not provide any evidence of what they had done.
GAO sent the contract back to DOD to investigate the possible conflict.
DOD did that and more. For a second time, DOD awarded the contract to Deloitte and Guidehouse again filed a protest over that DOD official’s connection to Deloitte.
GAO both denied that second protest and laid out what DOD did this time around that mitigated the possible conflict, according to the decision released Thursday.
EY analyzes consumption:
The latest wave of the EY Future Consumer Index found that influencers are growing in their power to shape consumer opinions and purchase decisions. Not surprisingly, their presence in daily social feeds means they are more likely to reach younger consumers (Millennials + Gen Z ages 18 to 49)—66% say they follow an influencers vs. 27% of older consumers (Gen X and Baby Booms ages 50 to 65+). More interesting is the fact that only a quarter (25%) of consumers follow someone for being famous. This significant difference underscores how much brands need to pivot away from tried-and-true marketing strategies so their brands and products can stay relevant to future consumers.
Hold up, millennials are 49 now???? I must have missed that memo, I thought I was the oldest, most geriatric of the millennials at early 40s.
PwC wrote something helpful on the SCOTUS Chevron decision and its potential tax implications:
The United States Supreme Court on June 28 released its opinion in Loper Bright Enterprises v. Raimondo, and Relentless, Inc. v. Department of Commerce, overturning the Chevron doctrine that generally required federal courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute. For more details regarding the court’s decision see our previous PwC Tax Insight: US Supreme Court overrules Chevron Doctrine.
In the tax context, the Supreme Court’s decision to overrule Chevron may result in more legal challenges regarding Treasury and the IRS’s interpretation of Code sections. This more stringent judicial review could invalidate existing Treasury regulations if the courts reach a different interpretation of the statutory text. Specifically, while a court generally was required to defer to an agency’s interpretation of an ambiguous statute under Chevron so long as it was ‘permissible’ (or, more specifically, not “arbitrary, capricious or manifestly incompatible with the statute”), the courts now may hold in favor of a litigant’s challenge to regulations if the regulations do not represent the ‘best’ reading of the statute. This is a potentially significant shift. Taxpayers challenging regulations might find courts more receptive to their arguments, potentially leading to less flexibility for Treasury to effect tax policy changes through regulations and to greater uncertainty in the application of Treasury regulations until Congress clarifies a respective statute or Treasury issues new regulations that withstand judicial scrutiny.
Aaaaand we’re done. Hope you found that helpful or at least a decent way to waste a few minutes on a Monday. Please email or text if you see an interesting story, have a tip to share, or just want to complain. Have a great week, you.
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