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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 Fraud culture was \u2018pervasive\u2019 at union, auditors say<\/strong> [BBC<\/a>] Audit partners increased pessimism over US economy<\/strong> [The Accountant Online<\/a>] Members of Congress Introduce Comprehensive U.S. Gold Audit Legislation<\/strong> [ACCESS Newswire via USA Today<\/a>] CARES Act update: Audit risks and compliance insights for 2025<\/strong> [Nixon Peabody<\/a>] Big Four firms race to develop audits for AI products<\/strong> [Financial Times<\/a>] Top Federal Reserve official promises major overhaul of US bank regulation<\/strong> [Financial Times<\/a>] Consulting Disruption Is Finally Here<\/strong> [Inc.<\/a>] India explores creation of home-grown Big Four consulting firms<\/strong> [International Accounting Bulletin<\/a>] U.S. consulting firm quits Gaza humanitarian aid effort amid criticism<\/strong> [Washington Post<\/a>] Attention employers! If you\u2019re hiring you\u2019ll want to check out this week\u2019s top remote accounting candidates<\/a>. Browse prescreened, handpicked professionals for hire with no obligation.<\/em><\/p>\n I.R.S. Upheld a Biden Pledge: More Audits, but Only on the Wealthy<\/strong> [New York Times<\/a>] IRS open-sources Direct File tax software amid political and industry pushback \u2013 here\u2019s why<\/strong> [ZDNet<\/a>]Audit<\/h2>\n
There was a \u201cpervasive fraud environment\u201d at one of the UK\u2019s largest trade unions Unite, an auditors\u2019 report obtained by the BBC has concluded. In a highly critical 35-page document, auditors BDO said in the 2021 financial year \u201cdominant personalities and a weak control environment facilitated opportunities to commit fraud\u201d at the union. The BDO report says there were \u201cunusual relationships\u201d between former senior staff and Unite\u2019s customers and suppliers, as well as a culture that \u201cdid not challenge\u201d financial transactions and \u201cfailed to ensure\u201d appropriate financial reporting.<\/p>\n
More audit partners have expressed pessimism regarding the US economy, the survey of the US Center for Audit Quality (CAQ) said. The Spring 2025 Audit Partner Pulse Survey, now in its fourth year, captured audit partners\u2019 perspectives on the future economic landscape, evolving business risks, and workforce trends. The percentage of audit partners expressing pessimism about the US economy has surged from 10% in Autumn 2024 to 44% currently, while optimism has dropped significantly from 38% to 15%.<\/p>\n
As U.S. debt soars and foreign central banks stockpile gold, four members of Congress today introduced a bill to require the first comprehensive audit of America\u2019s gold reserves in decades. Sponsored by Reps. Thomas Massie (R-KY), Troy Nehls (R-TX), Addison McDowell (R-NC), and Warren Davidson (R-OH), the Gold Reserve Transparency Act (H.R. 3795) would require a full assay, inventory, and audit of all United States gold holdings. Importantly, H.R. 3795 will also require full disclosure of all transactions involving America\u2019s gold, including any purchases, sales, loans, pledges, leases, swaps, and other encumbrances, dating back 50 years. Such activities have not been publicly disclosed.<\/p>\n
Contrary to earlier expectations that loans under the safe harbor\u2019s $2 million ceiling would be largely exempt from scrutiny, our experience and review of recent actions shows that the SBA and its enforcement agencies like the Department of Justice are now requesting documentation for numerous Paycheck Protection Program (PPP) loans, regardless of amount. Some lenders have reported receiving far ranging requests for loan files, signaling a comprehensive review effort. This means that businesses, even those with small loan amounts, should be prepared for potential audits and possibly civil and\/or criminal enforcement action and ensure thorough documentation.<\/p>\n
Big Four accountancy firms are racing to create a new type of audit that verifies the effectiveness of artificial intelligence tools as they seek to profit from clients\u2019 demand for proof that their AI systems work and are safe. Deloitte, EY and PwC told the Financial Times that they were preparing to launch AI assurance services as they hope to use reputations gained in financial audits to win work assessing whether AI systems, such as those in self-driving cars and cancer-detecting programmes, perform as intended.<\/p>\nRegulation<\/h2>\n
Michelle Bowman, who was confirmed by the Senate this week as the Fed\u2019s vice-chair for supervision, used her debut speech to set out plans for a broad rethink of crucial regulations. Bowman, who has long been critical of stricter capital rules, said the regulations introduced after the financial crisis have been \u201cpushing foundational banking activities out of the regulated banking system into the less regulated corners of the financial system\u201d.<\/p>\nConsulting<\/h2>\n
Consulting has long followed a familiar formula. Deploy smart people. Charge high rates. Deliver strategy. Create slides. Bill for time. Upsell more work. But when AI can generate a strategic plan, analyze massive datasets, or synthesize market trends in seconds, the rules change. What clients will pay for, and how they expect to receive value, is being dramatically redefined. Gone are the days of the 100 slide PowerPoint that\u2019s outdated the moment the final deliverable gets presented by the overstaffed consulting team.<\/p>\n
The Indian government is considering the establishment of home-grown consulting firms to rival the Big Four\u2014Deloitte, PwC, EY, and KPMG, reported Moneycontrol citing government sources. The move is reportedly a bid to lessen dependence on foreign advisory firms and foster global capabilities in the professional services sector.<\/p>\n
On Friday, a leading U.S. management consulting firm hired last fall to help design the program and run its business operations withdrew its team operating on the ground in Tel Aviv. A spokesperson for the firm, Boston Consulting Group (BCG), said the company had terminated its contract with the Gaza Humanitarian Foundation (GHF) and placed one of the senior partners leading the project on leave, pending an internal review.<\/p>\nTalent<\/h2>\n
Tax<\/h2>\n
Daniel Werfel, the I.R.S. commissioner for the last two years of Mr. Biden\u2019s term, said in an interview Wednesday that he had changed the agency\u2019s mandate so that it could \u201cramp up\u201d audits on certain types of returns, while keeping audit rates steady for most individuals. On average, audits of individuals with high incomes return substantially more money to the government, so proponents have argued they are the most effective way for the tax agency to collect more revenue.<\/p>\n
Despite making users happy, Direct File has faced fierce opposition from the commercial tax preparation industry. In particular, Intuit, the maker of TurboTax, has long opposed the IRS offering free tax filing services. These companies do so because, as the National Taxpayers Union Foundation points out, \u201cThe average 1040 filer now faces $290 in out-of-pocket costs and spends 13 hours preparing a return. The compliance burden for Form 1040 for individual income taxes reached $144 billion, an all-time high.\u201d For tax software companies and services, that\u2019s a fortune.<\/p>\n<\/p><\/div>\n