Friday Footnotes: EYers Fed Up; KPMG Love Triangle; CGMA For Young’uns | 11.19.21

EY faces staff backlash over handling of sexual harassment case [Financial Times] EY is facing a backlash by staff over the accounting giant’s handling of an incident in which a partner sexually harassed a female trainee on a work trip. On an all-staff webcast on Tuesday, EY promised staff it would do more to combat inappropriate behaviour as anger grew concerning a UK partner who was allowed to keep his job even after a professional disciplinary tribunal found that he behaved in an “obscene and aggressive” way at a team ski trip in 2019. Neil Hutt, a transactions partner, resigned on Friday.

Insurgents take on the scandal-hit Big Four [Financial Times] A fresh stream of scandals has again raised concerns that firms selling services like merger advice cannot also function effectively as auditors. That has forced Deloitte, EY, KPMG and PwC to rein in the cross-selling that helped bring them a combined $157bn in annual revenues last year—opening the door for nimble competitors to lure away star performers with generous pay cheques.

IRS Sees Crypto Seizures Worth Billions of Dollars Next Year [Bloomberg] The Internal Revenue Service could seize cryptocurrency valued at billions of dollars that’s linked to tax fraud and other crimes in the coming year, according to the agency’s head of criminal investigations. The IRS seized $3.5 billion worth of cryptocurrencies during fiscal year 2021, a figure that accounted for 93% of all the assets seized by tax enforcement that year, according to an IRS criminal investigation annual report published Thursday.

Accounting firms make adjustments for a post-COVID age [Crain’s Chicago Business] Many of Chicago’s largest accounting firms are embracing work-from-home policies, as 73.3% will allow employees to work remotely at least part time as the pandemic recedes; 40% will permit employees to work remotely full time.

Deloitte Africa Names Two Black Women Leaders in Historic Move [Bloomberg Tax] Deloitte LLP has appointed new leaders to head its Africa arm, the first two Black women to hold the posts. Ruwayda Redfearn will in June become the first female CEO of Deloitte Africa, replacing Lwazi Bam who had been in the role for 10 years. Delia Ndlovu will become chair of the Deloitte Africa board in December. The appointment of the two women is “a historic moment,” Deloitte said in a statement Monday.

KPMG: How call from a jilted lover ignited a vicious war at giant audit firm [The Standard] A call from a jilted lover inflamed what was initially just a clash of egos between two of the most powerful partners at a giant audit firm into one of the bloodiest legal fights seen in Kenya’s corporate world.

SPACs Headed for New Wave of Restatements for Accounting Errors [Bloomberg Tax] The Securities and Exchange Commission will require blank-check companies known as SPACs to restate their financial results because they incorrectly followed accounting rules on how to classify certain shares they offer to investors, according to auditors and advisers of those companies. The errors mark the latest regulatory intervention that could affect hundreds of special purpose acquisition companies, which are formed solely to buy other companies and take them public. SPACs surged in popularity in 2020 but regulators have pledged tougher scrutiny of them.

Apprenticeship: A new route to CGMA [Journal of Accountancy] Aspiring accounting professionals will have the opportunity to use an apprenticeship path to pursue a Chartered Global Management Accountant (CGMA) designation under a program that will be launched early next year by the AICPA. The U.S. Department of Labor has approved the program, which is called the Registered Apprenticeship Program for Finance Business Partners. The program is built on the rigorous Finance Leadership Program for CGMA candidates in the United States.

After 12 years: PwC likely to be replaced by EY as Aviva auditor [City A.M.] Aviva has proposed EY as its new auditor from 2024, replacing PwC after 12 years. The insurance giant said the proposal had already been approved by its board following an “extensive competitive” tender process, but is still subject to shareholder approval at its 2024 annual general meeting.

EY auditors ‘blew whistle’ on fake coal probe [Australian Financial Review] Ernst & Young auditors for ASX-listed miner TerraCom blew the whistle on their paymasters, citing concerns about a whitewash into allegations of tampering with coal results, according to court documents. The auditors allegedly approached the Australian Securities and Investments Commission after Queensland-based TerraCom issued a vehement denial of artificially boosting the results of quality tests into its coal, which was exported to nations including China and Japan.

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