Friday footnotes: EY Split lags; A consulting firm defrauds clients; Student loan forgiveness and taxes | 9.2.22

Ed. note: although Going Concern observes labor day because our handlers are not freaks, we will be back on monday as usual. See you soon and have a nice weekend (I hope it will be three days for at least some of you).

Firm watch

EY talks about a potential split will continue in the fall [City A.M.] EY talks on whether to separate its audit segment from its advisory arm are expected to continue this fall – despite early suggestions the Big Four firm could make a decision by the end of the summer. The accounting firm’s internal negotiations over plans to spin off its consulting business, with the aim of freeing itself from any conflict of interest issues that prevent it from selling consulting services to audit clients, will continue. over the next few months, Financial News reported.

KPMG UK unveils executive committee reshuffle [Accountancy Today] KPMG UK has announced a series of new executive committee appointments, effective October 1, which would support its strategy and growth under the leadership of Jon Holt.

A historic building near Dallas Fair Park is a new dig for an accounting firm [Dallas Morning News] “To accommodate the growing workforce and dynamic growth, Embark is excited to announce that it will relocate corporate headquarters to its first dedicated building,” a company spokesperson said. in an email. “The new 36,000 square foot office will have a podcast studio, golf simulator, ping pong table and other features.”

Accounting Firm Opens New Office in LaPorte [The Times of Northwest Indiana] “The field of accounting has undergone significant changes since our company began operations 30 years ago. Our firm now has the ability to provide a far more diverse range of business and personal services than ever before, and our growing team of talented professionals leverages new and emerging skills to help our clients succeed,” said Robert Lange, III , CPA and director. Partner of CLH.

SECOND

SEC accuses consulting firm and executives of devising an elaborate scheme to defraud clients of more than $75 million [SEC] The Securities and Exchange Commission today charged two North Carolina-based executives, Gregory E. Lindberg and Christopher Herwig, and their Malta-based registered investment adviser, Standard Advisory Services Limited, with defrauding clients over 75 million through undisclosed transactions that benefited themselves and their businesses. According to the SEC complaint, from July 2017 to 2018, Lindberg and Herwig, through Standard Advisory, breached their fiduciary duties to their client advisors by fraudulently coercing them into engaging in undisclosed transactions with related parties that were not in the best interest of their customers. . The SEC complaint further alleges that the defendants misappropriated more than $57 million in client funds and that Standard Advisory collected more than $21.4 million in advisory fees generated in connection with these schemes. In an attempt to cover up the fraud, Lindberg allegedly orchestrated the schemes through complex investment structures and a network of affiliates and used the proceeds to pay himself or to divert the funds to other businesses in Lindberg.

CHS avoids fine in SEC accounting fraud case [Compliance Week] A Minnesota-based agricultural cooperative has settled charges brought by the Securities and Exchange Commission (SEC) that the company violated federal securities laws when it filed materially false financial statements with the agency for five year. CHS is a global agribusiness company owned by farmers, ranchers and cooperatives across the United States, according to its website. In its settlement with the SEC, the company agreed to cease and desist any future violations of federal securities laws, but was not fined or otherwise penalized.

Mergers and Acquisitions of Accounting Firms

Pinion and Anderson ZurMuehlen to merge businesses [CPA Practice Advisor] Pinion, formerly KCoe Isom, and Anderson ZurMuehlen, two American accounting and business consulting firms, have announced their intention to merge, effective January 1, 2023. The two companies will expand their presence under the Pinion name and provide services improved advice and accounting. for the customers.

Audit

Three reasons why the PCAOB deal with China may not have changed the landscape [JD Supra] After months of closed-door negotiations, the Public Company Accounting Oversight Board (PCAOB) announced Friday that it has reached a protocol statement with the China Securities Regulatory Commission (CSRC) and the Ministry of Finance of the People’s Republic of China (PRC). .1 The protocol statement creates a pathway for companies based in China and Hong Kong to remain listed on U.S. stock exchanges after 2024, notwithstanding the Holding Foreign Companies Accountable Act (HFCAA) passed in 2020. Despite this important step, it There are at least three reasons why this deal may not be as big as the news reports suggest.

Audit under fire: is the worst yet to come? [AccountancyAge] Listeners have felt the heat recently after a series of high-profile failures, but what does it have in store for us and are they the ones to blame?

China’s securities regulator says it will implement China-US audit agreement [Reuters] China will implement an audit agreement with the United States announced last week and strengthen communication with foreign investors, a senior Chinese securities regulator said on Friday.

City of Manteo warns of audit scam [The Outer Banks Voice] There was a report of fraudulent activity where a local business received a call from someone they thought was an employee of the town of Manteo. The individual said it was time for an annual audit of the company. Audits of private companies are not carried out by the City of Manteo or its employees. Additionally, the local business was asked to count their cash drawer and then make cash deposits via barcodes provided to them through an app. Finally, they told the employee that it was okay to close the store for the day so the audit could be done.

Tax

More states will join the Flat Tax Club [Forbes] After lawmakers in nearly 10 states passed income tax cuts in the first half of 2022, a series of special sessions in the second half of the year results in further income tax relief and reinforces the recent trend of states moving from a progressive tax to a flat tax. . Most recently, Idaho lawmakers returned to the state capitol in Boise on the first day of September for a special session called by Gov. Brad Little (R) to make Idaho the newest Flat-rate tax state.

Student Loan Forgiveness Means Higher Taxes in North Carolina — and Maybe 4 Other States [CNET] If your student loans will be forgiven, whether through President Joe Biden’s recent announcement, the cancellation of public service loans, or some other program, here’s everything you need to know about your student loans and taxes, plus as some additional deductions and credits that could lower your tax bill in 2023.

Witnesses absent from tax hearings: average taxpayers [The Hill] As Congress rushed to pass health, climate and tax legislation this summer, Democrats pushed forward the country’s latest update to U.S. tax laws, giving the IRS $15 million to design a free “e-file” tax return system. However, in several months of work on the legislation, American workers were never asked in hearings before the major tax drafting and tax collection oversight committees of Congress to describe or comment on the work. administrative staff filing their annual taxes.

What has Reddit been up to this week

Long read (and frankly a little weird)

A ‘little girl’ runs Kenya’s Big Four accounting firm [Business Daily Africa] You don’t know the true meaning of “right on time” until you meet Anne Muraya. At 10 a.m. sharp, she enters the Bambara lounge of the Nairobi Serena. Not a minute before 10 a.m. but just around 10 a.m. “My father was in the army,” she explains. “It teaches you something about time; yours and others. She’s deceptively small with a mop of silver hair that gives her a very regal aura, like one of those old photos of phenomenal women who did things unimaginable in the history books. But phenomenal is a glove that fits her description perfectly, having been the first female CEO of Deloitte East Africa in June this year and also having been the first female Head of Audit in East Africa and Director responsible business and public policies for Africa for the same company. Anne continues to win.

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