KMPG Fires Head of U.S. Audit, Others After Improper Warning of Inspection

KPMG has fired the head of its U.S. audit practice, four other partners and one employee after the Big 4 firm found they improperly received advance warning of audits the PCAOB planned to inspect.

KPMG says they violated the firm’s Code of Conduct. The PCAOB, which oversees just under 2,000 accounting firms, says that one of its employees had left over the matter and that it had taken steps to “reinforce the integrity of its inspection process,” the Financial Times reported.

KPMG said it discovered in February that an employee who had joined the company from the PCAOB had received confidential information from someone who still worked there about which audits would be inspected. The new employee then shared the information with other KPMG staff. All six fired employees, “either had improper advance warnings of engagements to be inspected by the PCAOB” or were aware that others had received this information but “failed to properly report the situation in a timely manner,” the firm reported.

The five partners included Scott Marcello, vice chair of its U.S. audit practice. “We are taking additional steps to ensure that such a situation should not happen again,” says Lynne Doughtie, KPMG CEO.

The firm says a whistleblower reported the information and the firm then reported the leak to the PCAOB and SEC and hired an outside law firm to conduct an investigation.

James Doty, chairman of the PCAOB, says, “This demonstrates the importance the accounting firms and the investing public place on our inspection results, and warrants a hard look by us at what is needed to reinforce the integrity of our inspection process.”

Marcello will be replaced by Frank Casal, a KPMG veteran of 38 years. The firm also replaced its national managing partner for audit quality and professional practice, naming Jackie Daylor, who is already on the firm’s board. David Middendorf previously held the role.

KPMG said the affair would not have any effect on any client’s financial statements.

Peric Appointed to Illinois Department of Revenue Group

Gary Peric

Gary Peric

Chicago-based Baker Tilly Virchow Krause (FY16 net revenue of $522.3 million) announces that partner Gary Peric has been appointed by Illinois Department of Revenue (IDOR) Director Constance Beard to serve on the director’s advisory group. The group comprises state tax practitioners willing to devote time to advise the director on issues faced by the IDOR and the state of Illinois.

“This is a great opportunity for Baker Tilly to give back to the business community by advising in a nonpartisan manner on significant tax changes,” Peric says.

Peric leads Baker Tilly’s state and local tax (SALT) practice. Baker Tilly’s SALT professionals offer specialized expertise that helps businesses and individuals understand and comply with increasingly complex state and local tax and unclaimed property requirements.

Kinsight Joins Warren Averett Asset Management

Birmingham, Ala.-based Warren Averett Asset Management and Kinsight have joined forces to create the largest fee-only financial planning and investment advisory firm in Alabama, with combined assets under management in excess of $2.2 billion.

Charlie Haines, Kinsight’s founder, is a well-known leader in the financial planning industry across the country and a pioneer in the fee-only field,” said Josh Reidinger, president of Warren Averett Asset Management. “We have like-minded clients – successful and affluent families – and are grateful we can now offer even more ways to help our clients thrive.”

“When we looked at the overlap Warren Averett and Kinsight have in our investment philosophy and portfolio construction approach, a merger made perfect sense,” Haines says.

Kinsight, which advises over 160 families with assets under management in excess of $400 million, will operate under the name Warren Averett Asset Management, and will maintain their location in Birmingham. Eleven people are joining the combined firm. Warren Averett Asset Management has over $1.8 billion in assets under management.

Deloitte Helps Prepare Gen Z for Audit of the Future

Big 4 firm Deloitte and the Deloitte Foundation hosted the 2017 National Audit Innovation Campus Challenge at Deloitte University, awarding students of Morehouse College first place for their idea to develop an application to automate the audit risk assessment process.

The winning idea involved developing an application to improve the effectiveness of the risk assessment process by using artificial intelligence to identify non-financial data from external sources such as social media, journals, periodicals and newsfeeds, among others. This data, used in combination with public and non-public financial data, would contribute to the auditors’ ability to identify risks of misstatement in a company’s financial statements. The software continuously curates data and learns through direct feedback from auditors.

Under the guidance of the faculty advisors and subject matter leaders, student participants were presented with a glimpse of how innovative technologies can be applied to the audit profession in new ways. The experience highlights how an evolving audit profession requires a workforce that can tackle business challenges more effectively in a world of continuously evolving technologies, while also providing auditors with increased opportunities to deliver value for the capital markets.

Student teams from 33 top colleges and universities participated in the event, with six teams advancing to the final round. Students from Pace University earned second place. The University of Pittsburgh, University of Southern California, College of William and Mary, and University of Wisconsin-Madison were awarded honorable mentions.

Multiple emerging technologies are transforming the audit and creating exciting new opportunities, Deloitte says. Workflow automation, artificial intelligence and analytics have enhanced a number of the labor-intensive, manual processes traditionally associated with an audit, freeing up auditors to offer better judgments and deeper insights.

“As technology disrupts business at an unprecedented rate, the next-generation of talent will need to possess proficiency with emerging technologies and data analytics to help develop more innovative solutions to business challenges,” says Mike Fucci, chairman of Deloitte and the Deloitte Foundation.

Blue & Co. Welcomes DiFrancesco to the Firm

Julie DiFrancesco

Julie DiFrancesco

Carmel, Ind.-based Blue & Co. (FY15 net revenue of $70.7 million) announces that Julie DiFrancesco joined the firm as a principal on the reimbursement team in the Columbus, Ohio, office April 3.

With more than 26 years of experience in the health care industry, and more than 20 years working specifically in reimbursement, she brings a wealth of knowledge and expertise to the table, the firm says.

Before joining Blue & Co., DiFrancesco served in multiple leadership positions within very large firms. As a principal at Ernst & Young, she led the national wage index team. She has been a national speaker on wage index and taught a Medicare cost report class nationally for the Healthcare Financial Management Association for nine years.

Borcheck & Gase Joins CRI

Borcheck & Gase of Winter Park, Fla., has merged with Enterprise, Ala.-based Carr Riggs & Ingram (FY15 net revenue of $195 million). All personnel will operate under the CRI name and join a team of more than 1,600 professionals across the southern United States.

Borcheck & Gase, serving individuals and businesses in Winter Park for more than 15 years, provides business valuation, employee benefit plan audits, tax management and a host of other services. As a part of CRI, the Borcheck & Gase team can expand its specialty services offerings – including cybersecurity risk assessments and cost segregation studies.

“Joining CRI means that we can utilize a greater breadth of resources to deliver on our mission – to proactively help our clients achieve their financial goals,” says Jim Gase, MP of Borcheck & Gase. “Plus, our staff can take advantage of firm-wide training and career growth opportunities. This merger is an all-around win for us.”

CRI serves 27 markets throughout nine states – including 10 markets in Florida.

“We look forward to immediately serving a larger part of the Orlando community and helping them take advantage of our educational resources, innovative client service delivery technologies, and in-depth business insights,” says William H. Carr, chairman and MP of CRI.

EY Announces New MP for Seattle

Tim Tasker

Tim Tasker

Big 4 firm Ernst & Young (EY) has announced the appointment of Tim Tasker as MP of its Seattle office.

Tasker will be responsible for maintaining high-performing client-serving teams, developing EY’s people, fostering a strong culture of exceptional client service, and furthering strong relationships with community, government and business leaders in Seattle.

Tasker has more than 27 years of experience providing audit services to public and private companies, including extensive experience working with entrepreneurs and multinational growth companies and their leadership teams. He has worked with some of the most recognizable technology and life sciences companies in the Pacific Northwest and around the world, and has led several successful IPOs, mergers and acquisitions and debt financings. Tasker succeeds Dan Smith, who will focus exclusively on the firm’s Seattle-based market-leading technology client before he retires in 2018, after 38 years with the firm.

During his tenure at EY, Tasker also has served as the program director for Entrepreneur Of The Year® in the Pacific Northwest. In addition to his leadership at the firm, Tasker is passionate about helping young people prepare for and succeed in the global market through entrepreneurship education and financial literacy.

“It’s truly an exciting time to take on this role and to lead the firm’s Seattle practice. The entrepreneurial community and the financing environment are flourishing here, and the strength of our technology ecosystem is palpable,” Tasker says.

EY Appoint Two MPs in California

Joe Muscat

Joe Muscat

New York-based Ernst & Young (EY) (FY16 gross revenue of $11.2 billion) has announced the appointments of Joe Muscat to MP of its Redwood Shores, Calif., office and Ibi Krukrubo to MP of its San Jose, Calif., office.

Muscat and Krukrubo will be responsible for maintaining high-performing client-serving teams, developing EY’s people, fostering a strong culture of exceptional client service, and furthering strong relationships with community, government and business leaders in the Silicon Valley.

Muscat succeeds Dianne Glynn, who will resume full-time client service for a growing roster of tech-enabled emerging companies. Muscat, an assurance partner, has been with the firm for nearly three decades and has extensive experience serving innovative and high-growth entrepreneurial clients in the cleantech, life science and technology industries. Muscat has helped some of the world’s most admired brands complete successful high-profile public offerings, collaborations, acquisitions and private placements.

Muscat says, “We have been advising and guiding entrepreneurs in the West for the past five decades, supporting innovators as they grow great ideas into global brands and I’m looking forward to continuing and building on this legacy of exceptional client service.”

Ibi Krukrubo

Ibi Krukrubo

Krukrubo, an assurance partner, succeeds Kailesh Karavadra, who will transition into his new role as the firm’s West Growth Markets Leader, focusing on taking companies public and recognizing the world’s most exceptional entrepreneurs through the Entrepreneur of the Year program. Krukrubo has extensive experience serving market-leading tech clients and is one of the youngest professionals to assume the MP role.

“San Jose is a dynamic place to be right now and we’re fortunate to work with the top innovators and game changers who are driving growth here and around the world,” Krukrubo says.

“Joe and Ibi are exceptional leaders and I am confident that they’ll thrive in their new roles and build on the impressive legacies of their predecessors,” says Kay Matthews, Ernst & Young West Region MP. “Their commitment to building a better working world and deep experience working with high-growth entrepreneurs and leading technology companies will serve our clients and the Silicon Valley community well.”

Muscat and Krukrubo are also deeply committed to creating social impact in their local communities and are involved in numerous organizations.

BDO USA Acquires Hilton Consulting

Chicago-based BDO USA (FY16 net revenue of $1.29 billion) has announced an expansion of its public sector practice through the addition of Hilton Consulting, a Virginia-based consulting firm that assists government clients improve operational and financial performance.

Hilton Consulting provides working capital fund planning, cost modeling, strategic planning, best practices research and business process re-engineering services to federal government clients. The firm’s enterprise data analytics solutions enable clients to make more informed decisions on resource allocation and performance management. The deal brings about 25 staff to BDO’s McLean, Va., office.

“Hilton has been working with major government agencies for more than 20 years –through multiple administrations – which is a testament to the quality insight and advice they bring to each client relationship,” says Mark Ellenbogen, national leader of BDO USA’s public sector practice.

“By joining BDO, we will leverage the firm’s national brand and global resources to build on that strong tradition to reach the next level of growth,” says Steve Hilton, founder and CEO of Hilton Consulting. “Clients will continue to receive the close personal attention that they have come to expect from Hilton Consulting’s team, but now they will have access to a wider array of solutions and the full coverage of BDO’s global network.”

Andersen Tax Names New Transfer Pricing Managing Director

San Francisco-based Andersen Tax (FY15 net revenue of $197 million) welcomes Laurie Dicker as a managing director in the firm’s U.S. national tax office.

She is based in Washington, D.C., and will be part of the transfer pricing practice. She has more than 25 years of experience in transfer pricing across a broad set of industries. She assists clients throughout the entire transfer pricing cycle, from planning and documentation to controversy resolution.

Prior to Andersen Tax, Dicker was a managing director at Alvarez & Marsal, where she served multinational clients for over nine years and wrote frequently on current transfer pricing issues. Before that, she worked as a principal at EY. Earlier in her career, she held multiple roles at Arthur Andersen.

“Laurie embodies both the quality and passion for client service that remain central to our firm’s seamless and best-in-class service,” says Andersen Tax CEO Mark Vorsatz. “Her technical expertise and wide-ranging experience will sharpen our ability to compete in today’s global market.”