\n<\/p>\n
Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you\u2019re here, subscribe to our newsletter<\/a> to get the week\u2019s top stories in your inbox every Tuesday and Friday.<\/em><\/p>\n Comments are closed on Friday Footnotes<\/a> and the Monday Morning Accounting News Brief<\/a> by default. If you have something to say about any stories linked here you are welcome to email the editor<\/a>, text us<\/a> at 202-505-8885, or hit us up on Twitter @going_concern<\/a>. See ya.<\/em><\/p>\n Services make up more than two thirds of the U.S. economy. Here\u2019s how tariffs could affect them.<\/strong> [Marketplace<\/a> (NPR)] Why CPAs face more risk than ever before<\/strong> [Insurance Business Magazine<\/a>] Navigating private equity and accounting firm independence: Insights from Pat Walsh, CEO of Withum<\/strong> [Thomson Reuters<\/a>] Why Japan\u2019s Accounting Firms Are Stuck in the Past<\/strong> [Medium<\/a>] Hey! If your firm is hiring you\u2019re going to want to check out Accountingfly\u2019s candidates of the week.<\/em><\/p>\n A tale of two Deloittes: pic.twitter.com\/6ubtrThJEx<\/a><\/p>\n \u2014 Going Concern (@going_concern) April 22, 2025<\/a><\/p><\/blockquote>\n Less money and less security \u2014 why making partner at EY, Deloitte, PwC, and KPMG isn\u2019t what it used to be<\/strong> [Business Insider<\/a>] PwC partners ordered to cut ties with brokerage after internal investigation<\/strong> [Financial Times<\/a>] Former KPMG manager working remotely in Georgia can sue under New York law, court says<\/strong> [HR Dive<\/a>] PwC drops senior Middle East executives to placate Saudi Arabia<\/strong> [The Times<\/a>] EY announces Martin Fiore as Americas Vice Chair \u2013 Tax<\/strong> [PR Newswire<\/a>] Accounting research shows how firms can strengthen diversity among auditors<\/strong> [Northeastern Global News<\/a>] PCAOB Posts Latest Staff Videos on New Quality Control Standard in Continued Efforts To Help Firms With Implementation<\/strong> [PCAOB<\/a>] EY under investigation for Post Office auditing amid Horizon scandal<\/strong> [International Accounting Bulletin<\/a>] KPMG Advances AI Integration in KPMG Clara Smart Audit Platform<\/strong> [KPMG<\/a>] Grant Thornton US goes global in private equity-backed buying spree<\/strong> [Financial Times<\/a>] CRI Welcomes New Chief Financial Officer and Chief Legal Officer<\/strong> [INSIDE Public Accounting<\/a>]Practice<\/h2>\n
The big concern for the services sector as a whole \u2014 both for firms that export and those that do all their business here \u2014 is what will happen if the tariffs cause the whole economy to contract, said Meagan Schoenberger, senior economist at KPMG. \u201cBecause when economies either slow or enter a recession, spend on services tends to decline,\u201d she said. That\u2019s something Matt Hetrick has already noticed. He runs an accounting firm called Harmony Group, and many of his clients are restaurant owners, who are especially vulnerable to tariffs on imported goods. Hetrick said many of them are trying to cut back on accounting services.<\/p>\n
In a push to diversify revenue and better serve clients, accounting firms are branching out into advisory services, fractional CFO roles, investment consulting, and even life insurance sales. These services mark a departure from traditional accounting and bring a corresponding rise in liability \u2013 especially as firms turn to offshore outsourcing to fill staffing gaps.<\/p>\n
Private equity\u2019s interest in accounting firms is not unprecedented. Private equity sees the industry as an attractive investment due to its steady profitability and high cash flow. Walsh recalls past attempts by American Express and HR Block to roll up independent accounting firms into larger conglomerates, which ultimately failed. However, today\u2019s environment is different as firms are now more open to private equity because the liquidity it provides and the ability to grow rapidly through acquisitions Walsh acknowledges that while private equity can and will be successful for some firms, time will tell if it suits all.<\/p>\n
Before coming to the U.S. in 2011, I worked as an administrative assistant at a Japanese education company located just outside Tokyo. It wasn\u2019t an accounting firm, but the experience offered a firsthand look into the deeply rooted traditionalism that still characterizes much of corporate Japan. One of my earliest memories was being gently reprimanded for typing an internal memo instead of handwriting it. My manager explained that handwriting was a \u201csign of sincerity\u201d. Sincerity? What about efficiency? What about common sense? But efficiency didn\u2019t matter in the workplace, especially if it interfered with the expected decorum.<\/p>\nTalent<\/h2>\n
Big 4<\/h2>\n
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As more partners retire, fewer are filling the ranks to replace them. Instead, the next generation of senior professionals is being held back in the role of non-equity partner, meaning they receive a salary rather than profit-sharing status.<\/p>\n
PwC has ordered nearly 300 of its US partners to cut ties with a tiny brokerage firm offering speculative small-cap investments after an internal investigation into the relationships. The ruling has caused consternation at the highest levels of the Big Four accounting firm, where senior executives have for years offered an introduction to the brokerage Black River Management to colleagues and junior partners rising up the ranks, telling them it provides access to lucrative and hard-to-find investments.<\/p>\n
At the height of the COVID-19 pandemic, KPMG hired the manager, who is African-American, to work in New York City, according to court records. Due to its COVID remote workplace, the tax advisory and accounting firm required her to work from her residence in Georgia for six months and then relocate to the New York City area, court records reflected. The manager claimed that during this time, KPMG allegedly refused to give her business opportunities because it didn\u2019t \u201cwant to put an African American face\u201d on available projects. She allegedly complained several times, including to KPMG\u2019s ethics office, but was fired a short time later.<\/p>\n
PwC is clearing out some of its most senior executives in the Middle East in an attempt to patch up relations with Saudi Arabia\u2019s sovereign wealth fund after the firm was punished for trying to poach a senior figure from Neom, the kingdom\u2019s proposed mega-building project. Last week the Big Four giant told partners in the region that members of its Middle Eastern board would be leaving after the firm fell foul of Saudi authorities.<\/p>\n
Ernst & Young LLP (EY US) announces the appointment of Martin Fiore as Americas Vice Chair \u2013 Tax, effective July 1, 2025. Fiore succeeds Kevin Flynn, who has led the business since 2022 and is retiring at the end of the fiscal year. Fiore had previously served as EY Americas Deputy Vice Chair \u2013 Tax.<\/p>\nAudit<\/h2>\n
Audit firms are recruiting and investing to maintain a diverse workforce, but many still see high turnover. Northeastern University accounting professors Udi Hoitash and Jaehan Ahn were involved in a study to be published in The Accounting Review that looked at how these firms can prevent this. \u201cWe believe it\u2019s a very important topic,\u201d says Hoitash, the Lilian L. and Harry A. Cowan professor of accounting at Northeastern. \u201cBig Four audit firms have invested millions and millions of dollars to diversify the workforce and there was evidence on whether it actually worked and helped audit firms at least maintain and recruit a more diverse workforce. We identified this gap in the literature and have this very cool data that allows us to examine this question.\u201d<\/p>\n
Led by staff in the PCAOB\u2019s Office of the Chief Auditor, the presentations are the latest in a series of videos aimed at assisting firms with the implementation of QC 1000.<\/p>\n
The UK\u2019s Financial Reporting Council (FRC) is investigating accounting firm EY for its auditing of the Post Office during the Horizon software scandal. In a statement, the FRC said its \u201cinvestigation will be focused specifically on the role of statutory auditors in meeting the auditing standards that pertained at the time, and not the broader issues related to the Horizon IT system itself\u201d.<\/p>\n
The AI agents deployed in this release will: Automate routine tasks: AI agents can handle repetitive and time-consuming tasks, such as data analysis and document review; Support decision-making: AI agents provide auditors with insights and recommendations based on data analysis, helping them make informed decisions and improve audit quality; and Help auditors focus on high-risk areas: With AI handling routine tasks, auditors can dedicate more time to high-risk areas and sector-specific challenges, ensuring that audits are more comprehensive and targeted.<\/p>\nFirm Watch<\/h2>\n
Grant Thornton US is planning to buy more than half a dozen of its sister firms in Europe and the Middle East in a private equity-driven acquisition spree that will dramatically reshape the accounting firm\u2019s global network.<\/p>\n
Enterprise, Ala.-based IPA 100 firm Carr Riggs & Ingram LLC (CRI) (FY23 net revenue of $455.3 million) announced the appointment of Jean Mathews as CFO and Patrick J. Gordon as chief legal officer (CLO).<\/p>\n<\/p><\/div>\n