Friday Footnotes: More Big 4 Lawsuits; The White Way In the UK; EY-Parthenon Found a Guy | 11.12.21
KPMG Sued for $600 Million Over Alleged Sloppy Auditing in Dubai’s Abraaj Scandal [Bloomberg] KPMG LLP was sued for at least $600 million over its role in the insolvency of Dubai private-equity firm Abraaj Group, the latest in a string of complaints of sloppy auditing made against the Big Four firm. The claimants, two units of Abraaj now in liquidation, allege that KPMG accountants “failed to maintain independence and an appropriate attitude of professional skepticism,” and breached their duty of care when auditing the private-equity firm, according to court documents filed in Dubai on Nov. 3.
KPMG set to face £15m legal claim over negligent Quindell audit [Financial News] KPMG could be hit this month with a £15m legal claim stemming from its audit of insurance outsourcer Quindell’s 2013 accounts. Quindell—an insurance and technology firm now known as Watchstone—is set to claim it suffered losses of up to £15m as a result of KPMG’s negligent audit in 2013.
PwC Greece agrees to pay $14.9 mln to settle Aegean Marine lawsuit [Reuters] PricewaterhouseCoopers’ Greek affiliate has agreed to pay $14.9 million to settle with Aegean Marine Petroleum Network Inc shareholders who accused the auditor of failing to catch a $300 million fraud. If approved by a federal judge in Manhattan, the deal proposed on Tuesday would end a Utah pension fund’s claims that the auditor recklessly disregarded red flags when it audited the fuel transport company’s financial statements in 2016. PwC Greece did not admit wrongdoing in the settlement.
PwC’s chairman wants to tackle systemic racism — and push corporate America not to ‘pass the buck’ [MarketWatch] Another day, another interview with Tim Ryan.
What Bosses Really Think About the Future of the Office [New York Times] Guess who was interviewed for this article? If you said Tim Ryan, you’re right!
PwC used unqualified staff in secret ‘hub’ to audit ASX 200 firms [Australian Financial Review] Australia’s biggest auditor PwC has used dozens of unqualified workers, on lower salaries and with less training and resources than their main office counterpart, to complete audit work for large listed clients from an unbranded office in western Sydney’s Parramatta. The 40-odd workers in the “Skills Hub”, who include university students without any accounting experience, say they work for ASX 200 clients such as Stockland and Iluka Resources, and allege they are not subject to appropriate oversight or training.
Deloitte Loses Bid to Undo Ernst & Young’s FBI Auditing Contract [Bloomberg Tax] Ernst & Young LLP will keep a contract to provide audit support services to the FBI, after the GAO determined that Deloitte & Touche LLP failed to support its challenge to the agency’s evaluation of the bids. The FBI sought bids for audit support services to aid its Office of Internal Auditing. Ernst & Young was awarded the contract over Deloitte in part because of Ernst & Young’s breadth of experience, according to the Government Accountability Office.
Audit ‘challengers’ in watchdog’s bad books as they take on Big Four [Financial Times] Grant Thornton has broken the Big Four auditors’ monopoly over the FTSE 100 for the first time in more than two years. The UK’s sixth-largest accounting firm is auditor to Darktrace, the cyber security group promoted to the blue-chip index last month. But the milestone of having a “challenger” accountant back among the FTSE 100 companies—the Big Four of Deloitte, EY, KPMG and PwC still check the accounts of the index’s other 99 companies—has been overshadowed by a flurry of sanctions and investigations against Grant Thornton and other mid-tier accountants.
Top accountancy firms more likely to hire white applicants [City A.M.] White applicants are more likely to be successful when applying for jobs in the top UK accountancy firms, over those from ethnic minority or lower socio-economic backgrounds, according to a new report. For the 2019- 2020 application round, the report found that just 48 per cent of applicants were white but they made up 60 per cent of new hires. In contrast, only four percent of hires were of black people—though applications from black people made up eight per cent of all applications.
Grant Thornton Can Withhold Docs In £209M Cafe Audits Suit [Law360] The liquidators of Patisserie Valerie were denied access on Wednesday to audit records from Grant Thornton dating back to 2010 in a £209 million ($281 million) negligence suit after a judge ruled that the request had been made prematurely.
FASB declines to extend nonpublic lease accounting effective date [Journal of Accountancy] The current effective date for nonpublic entities is for fiscal years beginning after Dec. 15, 2021, and interim periods within fiscal years beginning after Dec. 15, 2022. The standard was issued in 2016, but its effective dates for nonpublic entities previously were extended in two one-year deferrals.
EY-Parthenon names Jeff Wray as new Global Leader [PR Newswire] Wray, who joined EY-Parthenon from Boston Consulting Group in 2014 and previously served as EY strategy and transactions global consumer industries leader (and the Americas corporate and growth strategy leader), succeeds Mitch Berlin, who is transitioning into his role as EY Americas strategy and transactions vice chair.
IMA withdraws from conference over Myanmar issue [Accounting Today] The Institute of Management Accountants said Wednesday it would drop out of an accounting conference in Singapore that it was scheduled to participate in later this month, joining two other groups in withdrawing because of the involvement of Myanmar officials after a military coup overthrew the democratically elected government earlier this year.
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