Aiwyn’s Post

ir is always interesting to see what is happening within the public accounting industry. I am sure some of you have seen the latest from EY, but in case you have not, here is an update.

In this Public Chatter blog post, Perkins Coie LLP Partner Allison Handy explains how to submit a comment letter on a controversial Public Company Accounting Oversight Board (PCAOB) audit committee proposal by August 7. #CorpGov #CorporateGovernance #PublicCompanies #PublicChatterBlog

Incoming MADE Impact Report! 🗞️ Check out our #DeloitteMADE progress toward advancing a more diverse and equitable future in #accounting.

Check out what accountants had to say!

Evolving the Accounting Profession: Insights from the 2023 Unique CPA Conference 📊🚀 The winds of change are sweeping through the accounting industry, challenging traditional business models. Experts at the conference are discussing why the profession needs to adapt. The recent shift by BDO USA from a partnership to a corporation has set tongues wagging, sparking a critical conversation about the traditional CPA firm business model. 🚀 Meet Chris Vanover, AuditClub President, a visionary who analyzed the business models of accounting firms during his tenure at the Public Company Accounting Oversight Board as part of a strategic project. Now, as part of the AuditClub revolution, we're flipping the script on traditional models, pioneering new approaches that promise to reshape our profession. Don't miss the insights into this transformation; it might shape the future of your practice. 🔗 Dive into the discussion: https://lnkd.in/gZvNy2hE #FinancialSuccess #AuditClub #Accounting #Auditing #CPA #Audit #AccountingServices #AuditLeaders

The Public Company Accounting Oversight Board (PCAOB) has published its report for the audits of the 2021 financial statements of 215 public US companies. These 215 companies were audited by the big four accounting firms (Deloitte, EY, KPMG, & PWC). The report shows an average of 24% deficiency rate for Deloitte, EY, PWC. This is almost double the 13% deficiency rate reported in the previous year. (KPMG deficiency rate was redacted from the report according to the WSJ.) This raises a lot of questions about the control processes used by accounting companies and thus the accuracy of representation of the audited companies’ financial statements.

The Wall Street Journal (aka, "The Wall," per Michael Scott) has shifted their coverage of the talent crisis in accounting towards what I would call the, "partnership crisis." They highlight three major transactions (2 consummated, 1 failed) among Top 10 firms, Grant Thornton LLP (US), BDO & EY. Grant Thornton: Biggest PE deal to date (pending regulatory approval) with the traditional PE growth playbook. Reasons identified why Big 4 wouldn't pursue this: business structure is too complex and independence concerns. BDO: Created an ESOP and converted from a partnership to a corporation. Partners gave up their pensions and sold their shares to the Trust, which was funded by Apollo Global Management. Some partners took a pay cut. Reasons why other firms wouldn't follow suit: to appease partners who don't want to give up their pension or share ownership with those below partner level. EY: Attempted to split audit & advisory businesses en route to an IPO. Reason why it didn't work: audit partners rejected the deal because the majority of the lucrative tax practice would have folded into the advisory business. It's hard to not draw the conclusion that audit practices are a substantial barrier to firms changing their ownership and operational structures. Adding to this is a group of partners (not just audit partners) who feel like they're getting the raw end of the deal. And so, I arrive at my two hot takes... One. Audit is only one thing that CPAs do, yet it drives the standards that all CPA firms are held to, which creates ridiculous rules and red tape for firms and licensees that don't do attest work. Most firms would probably just divest of their audit practice if it weren't for the votes of audit partners and the revenue generating opportunities to other practice areas afforded by the audit client relationship. Two. The old, traditional partnership model is dying, and the only people who are sad about that reality are partners. We're on the precipice of a renaissance era in public accounting, not as a result of standing on the shoulders of giants but through the power that David gave to the Dark Horses, the underdogs, when he toppled Goliath.

Many accounting firms are looking to modernize their ownership structures and operations, but traditional audit practices might be unintentionally holding them back. This article from Chase Birky, CPA is really useful for CPAs!

Accounting Firms Ownership Structure and related funding opportunities (or lack thereof) - Wall Street Journal article April 5th, 2024 #accountingadvisory #auditing #eyus #kpmgus #pwcus #deloitteus #accountingprofessional #cpa #cpas #capitalmarkets Article summary (Microsoft BING AI system): 1. Ownership Re-evaluation: Large accounting firms are considering changes to their ownership structures due to challenges like capital needs and skilled worker recruitment. Some are contemplating private-equity investments or public listings of business lines. 2. Structural Changes: Firms like Grant Thornton and BDO are exploring new models. Grant Thornton’s U.S. unit plans to sell a stake to a private-equity firm, while BDO’s U.S. arm has set up an employee stock ownership plan (ESOP) to give employees a direct stake in the firm. 3. Regulatory Concerns: There are concerns from regulators like the SEC about private-equity investments in accounting firms, due to potential conflicts of interest that could affect auditor objectivity. 4. Barriers to Change: Traditional ownership models, CPA licensing laws, and SEC rules present challenges to structural changes. These include limitations on raising equity and restrictions on consulting services for audit clients. The article delves into the reasons behind these potential changes and the implications for the future of the accounting profession. #grantthorntonus #bdous

🏢 Unlocking the Allure of Big 4 Accounting Firms: What Sets Them Apart? 🏢 In the world of accounting, the aspiration to join the ranks of the Big 4 firms – Deloitte, PwC, EY, and KPMG – is a common pursuit. But what distinguishes these giants from the rest of the accounting landscape?? what are your thoughts???