Aprio to Partner with CPAsNET

Atlanta-based Aprio LLP, an IPA 100 firm, has entered into a new strategic partnership with accounting and business consulting association CPAsNET, allowing the association’s member group of 20 U.S. firms and 120+ international firms to benefit from the expertise and services of Aprio professionals.

Under the five-year agreement, Aprio will provide technical guidance, support and access to a range of specialty services to the association’s members, including R&D tax credits, state and local tax, cybersecurity and international tax services.

“As our profession becomes more competitive and client needs become more sophisticated, providing a comprehensive range of services and technical acumen is key to growing and retaining a loyal client base,” says Aprio CEO and MP Richard Kopelman. “This partnership with CPAsNET is another example of how Aprio is providing innovative ways to serve our fellow CPA firms and their clients.”

More news from Aprio

BDO USA Goes Back to the Future with IPA 200 Acquisition

Chicago-based BDO USA, an IPA 100 firm, is merging in Denver-based IPA 200 firm ACM LLP in a deal expected to close on Aug. 1. ACM has been a member of the BDO Alliance since 2002 and was a part of BDO prior to that.

From its offices in Denver, northern Colorado, Boulder and Laramie, Wyo., ACM provides assurance, tax and consulting services to companies ranging in size from start-up organizations to established entities with multi-state and international operations. BDO will add 167 professionals from ACM and will maintain the firm’s four existing offices.

“In officially welcoming back ACM partners and professionals to BDO, we expand our resources in the Rocky Mountain region and open up opportunities for our people to thrive,” says Wayne Berson, CEO of BDO USA. “From industry focus to market-facing strategy to advanced technical attention, BDO and ACM bring incredible insight and industry-leading creativity to our work. Our common commitment to prioritizing exceptional client service and supporting our people will ensure a seamless transition for clients in the weeks and months ahead.”

More news from BDO USA

IPA Pulse Survey: Growth Amid Turmoil

Accountants frequently speak of wanting to be trusted advisors for their clients, and the COVID-19 crisis provided a crucial test of that aspiration. So how did they do? More than 100 MPs weighed in on client feedback and other revelations in the wake of the pandemic in IPA’s latest pulse survey.

One of the topics the June survey covered was a potential upside arising from the pandemic – that is, amid lingering client attrition and/or cash flow issues, how many firms have seen an uptick in business from both existing and new clients to help offset some of these challenges?

Almost 66% of survey respondents reported having gotten new unique business from their existing clients during the crisis, much of which was related to PPP work, but some crisis management and cybersecurity consulting as well.

Meanwhile, 85% of respondents reported earning new business from new clients over this span (much of it again PPP-related), thanks in part to increased exposure from webinars and thought-leadership pieces they offered during the early weeks and months of the crisis.

Catch up on more insights from this IPA Pulse Survey:

Pandemic Priorities

Watchdog in U.K. Tells Big 4 to Do Better

The U.K.’s accounting watchdog is challenging the Big 4 to improve audits after releasing evaluations that showed more than 60% of audits at PwC and KPMG were dismissed as unsatisfactory, Bloomberg reported.

The Financial Reporting Council’s latest annual review is based on a sample of audits. FRC determined that 65% of PwC’s audits were unsatisfactory. KPMG’s percentage was 61%. Deloitte scored the highest, with 24% needing improvements, and EY’s evaluation showed 29%, according to Bloomberg.

“We are concerned that firms are still not consistently achieving the necessary level of audit quality,” David Rule, the FRC’s executive director of supervision, said in a statement. “The tone from the top at the firms needs to support a culture of challenge and to back auditors making tough decisions.”

The reports were released a week after FRC decided the Big 4 must split their audit units from their advisory arms due to conflict of interest concerns.

Richard Murphy, an accountant and economics professor at City University in London told Bloomberg, “It’s an outright failure of the audit profession and regulators. There has been a rapid decline in auditing standards which will increase costs for investors relying on the accounts for information and lead to more company failures at a time when society can least afford it.”

Auditors are under the microscope since the collapse of U.K.-based Carillion, Thomas Cook, Patisserie Valerie and German payments provider Wirecard.

The FRC said it was dissatisfied with the Big 4’s record of standing up to the management of their clients. “Firms’ senior management need to be clear that taking difficult decisions is an appropriate response to improving audit quality, even if it might sometimes mean delaying or modifying opinions, and ultimately losing some audit engagements,” the FRC said, The Financial Times reported.

The FRC has placed KPMG under special scrutiny because of its poor performance in previous evaluations, and it plans to evaluate a larger number of PwC audits after this year’s test results.

Additionally, the FRC studied some of the Big 4 audits of the listed Financial Times Stock Exchange (FTSE) 350. Deloitte came out on top with 90% of its FTSE audits rated good. EY scored 78%, PwC 67% and KPMG 58%.

U.K. Accounting Watchdog Orders Big 4 to Split Consulting and Auditing Business

In light of numerous high-profile accounting scandals in the U.K., the Financial Reporting Council has ruled that the Big 4 must separate their audit functions from the rest of the firm.

The FRC, the U.K.’s accounting watchdog, decided Monday that the Big 4 have until June 2024 to make the move, with Oct. 23 of this year as the deadline for submitting a plan to do so.

The move, in response to concerns about a real or perceived conflict of interest, aims to draw a sharp line between consulting with clients versus overseeing the accuracy of a company’s financial records. Consulting revenue has grown, while audit revenue has shrunk to about one-fifth of total firm revenues of the Big 4, according to CNN London. Some fear the shift is dimming the focus on high-quality audits.

The FRC declared that profit payments to audit partners “should not persistently exceed the contribution to profits of the audit practice.” Additionally, auditors “should work for the benefit of shareholders of audited entities and wider society” and were “not accountable to audited entities’ executive management.” An independent audit board will oversee the practice, according to The Financial Times in London

Some observers say the reforms aren’t enough, according to two people who spoke to the newspaper. “It is a semi-split that is unlikely to be the last reform that will be needed,” says Erik Gordon, professor at the University of Michigan. One senior executive says, “If this is held out as the solution to audit quality then we’re all kidding ourselves.”

The Big 4 are the only firms impacted by the rule because they conduct more than 95% of the audits of the top 350 companies in the London stock exchange (FTSE 350), according to the FRC. All the Big 4 firms expressed support for the move in prepared statements and called for even more stringent reforms.

Some recent scandals include:

  • EY’s audit of Wirecard, a payment processing company in Germany, which filed for bankruptcy following discovery of a $2 billion hole in its accounts. The FRC says its reform measure was unrelated to Wirecard, as the move had been in the works previously, CNN London reports.
  • KPMG’s audit of Carillion, a construction company that went bankrupt in 2018. The firm was also investigated for its failure to detect corruption by South Africa’s Gupta family, which has close ties to President Jacob Zuma.
  • PwC’s audit of India-based Satyam Computer Services, which falsified its accounts. PwC was banned from auditing public companies there from 2018 to 2020.
  • Deloitte’s audits of collapsed furniture retailer, Steinhoff, and the lender African Bank, also in South Africa.

More news from EY

More news from KPMG

More news from PwC

More news from Deloitte

Postlethwaite & Netterville to Head Up Louisiana Small Business Grant Program

Baton Rouge, La.-based Postlethwaite & Netterville, an IPA 100 firm, has been selected to administer the state of Louisiana’s new Main Street Recovery Program.

Among the firm’s responsibilities will be vetting and processing applications to determine eligibility and award amounts for the $300 million program, which will dole out up to $15,000 to small businesses to help them recoup expenses related to COVID-19.

In the first 21 days of the program, only small businesses that have not already received federal aid or insurance settlements will be eligible for a grant. After this period, if any money is still available, the program will be open to all small businesses so long as they are based in Louisiana, have suffered a business interruption due to the pandemic, have filed recent tax returns and have no more than 50 employees.

More news from Postlethwaite & Netterville

Mix of Optimism, Pessimism as CFOs Face Reckoning of Pandemic

CFOs expect a slow to moderate recovery from the economic shock of the pandemic according to the results of a COVID-19 survey conducted by Big 4 firm Deloitte. The survey compiled the responses of CFOs representing 118 large North American companies polled between June 17 and June 19, and found that over half don’t expect their companies to reach pre-crisis operating levels until 2021, with nearly 20% expecting 2022 or later.

In addition, almost three-quarters of respondents (72%) say they are currently operating at or above 80% capacity. The proportion of CFOs who say none of their workers are working at less than half capacity rose from 26% in Deloitte’s April survey to 37% now, but one-third again say at least 20% are at less than half capacity. CFOs in the retail, wholesale and services spaces indicated the strongest challenges.

CFOs are also mostly optimistic about their ability to operate effectively, safely and profitably as the U.S. economy continues reopening, even as the virus continues to spread in many parts of the country. They feel less optimistic about the ability of the U.S. economy and their companies to return to pre-crisis performance levels. Responses are mixed when it comes to staffing and liquidity – only 30% of respondents expect a return to normalcy by the end of the calendar year, while 50% peg 2021 and 20% expect a return in 2022 or later.

In terms of focus, some CFOs are honing in on the here and now while others are planning for days to come, with 47% of respondents adapting their company to maximize mid-crisis performance and 34% attempting to evolve their business model for the post-crisis future.

More news from Deloitte

New Study Examines Why Belonging at Work is Crucial During Crisis

New research from Center for Talent Innovation points to stark differences in workplace experiences along lines of race, gender, and ethnicity, and calls upon companies to make dramatic change.

At a time when the pandemic, economic fallout, and social uprising have magnified inequities in American society, new research from the Center for Talent Innovation (CTI) calls upon business leaders to create workplace cultures that drive a sense of “belonging” for all employees.

The new report, The Power of Belonging: What It Is and Why It Matters in Today’s Workplace, measures employees’ sense of belonging and finds that White men score higher than female employees and employees of other races or ethnicities. Among those groups, Black women and Asian women score the lowest.

The nationally representative survey of 3,711 college-educated professionals was fielded in February and included a scale with 24 questions used to calculate a “belonging score” ranging from 0 to 10. Respondents’ median belonging scores were analyzed across a broad range of demographics including gender, race/ethnicity, generation, LGBTQ identity, and status as a parent, veteran, or immigrant. Belonging was defined as being 1) seen for your unique contributions; 2) connected to your coworkers; 3) supported in your daily work and career development; and 4) proud of your organization’s values and purpose. The report offers data-backed solutions for what organizations, leaders, managers, and colleagues can do to promote a workplace culture of belonging for all.

Belonging scores correspond with positive career indicators. Professionals in the highest quartile of belonging scores are far more likely than those in the lowest to say they are very engaged at work (97% vs 54%), very loyal to their organization (93% vs 35%), intend to stay at least two years (88% vs 61%), and would recommend their company as a good place to work (71% vs 17%). A lack of belonging is associated with negative outcomes. Those in the lowest quartile of belonging scores were over four times as likely to say they felt “stalled” in their careers compared to those in the highest quartile (47% vs 11%).

“Companies are being called upon to dismantle bias within their organizations, and that means they need to look inward at their corporate cultures to understand what makes it so hard for certain groups to advance,” says Lanaya Irvin president of CTI.  “Belonging will become increasingly relevant in the aftermath of global pandemic, economic disruption and social unrest. This report gives corporate leaders a path forward toward creating inclusive cultures where all employees feel seen and heard and respected in their authentic identities and across lines of difference.”

“To recover from our current global crises, companies need employees who are engaged, loyal, and proud to work for their companies,” says Julia Taylor Kennedy, CTI executive vice president and co-lead researcher on the report. “That’s what you get when employees feel they belong. Inaction on systemic racism and the disproportionate impacts of COVID will damage belonging at companies, when it’s needed most.”

A follow-up survey in May revealed stark differences of the COVID-19 crisis across racial groups in the trauma employees of color are bringing into the workplace. Black professionals were more than five times as likely to have lost a family member as a result of COVID-19 as their White colleagues (11% vs 2%), and Latinx employees were four times as likely as their White colleagues to have lost a family member as a result of COVID (8% vs 2%). Asians in our sample were twice as likely as their White colleagues to have lost a family member to COVID (4% vs 2%). In addition, more than one in five Asian women (21%) have changed their behavior outside of work to avoid racial harassment.

“There’s potential for real, systemic change right now, as the systems and structures that promote inequity get torn down and rebuilt,” says Pooja Jain-Link, executive vice president and co-lead researcher. “Belonging is crucial to the creation and forming of new systems. We need to feel like we belong to each other and belong to this new world.”

Anders to Merge in Fellow St. Louis Firm

With an eye toward expanding its financial institution expertise, IPA 200 firm Anders CPAs + Advisors of St. Louis will merge in crosstown firm Cummings Ristau & Associates, effective June 30. Partners Mark Cummings and David Ristau and all 19 staff members of Cummings Ristau will join Anders.

Formed in 1996, Cummings Ristau has strong expertise in the banking industry in Missouri and Illinois, providing audit, tax, regulatory compliance and loan review services to banks and credit unions. The firm also provides agreed-upon procedures, IT audits, bank directors’ examinations, employee benefit plan audits and internal control reviews.

“Adding a strategic partner with an established niche unique to our industry offerings is important to our vision for growth, and we found a great match with Cummings Ristau,” says Anders MP Robert J. Minkler Jr. “Given the current environment and the increasing relationship between clients, accountants and their bankers as a result of the Paycheck Protection Program (PPP) and other parts of the CARES Act, the timing of this merger will add value and expertise for clients from both firms. The role community banks and financial institutions will play in the recovery and growth of our economy has never been greater and we welcome the opportunity to provide them with the services and information they will require.”

Survey Reveals Some of the Challenges of Working Remotely

In a recent IPA Pulse Survey, 41% of respondents noted that it is either very or somewhat likely that more than half of their staff will continue working remotely for the foreseeable future.

It seems, in other words, that many firms have found that the technological and logistical challenges that accompanied the sudden shift to working from home at the outset of the COVID-19 pandemic have mostly been met and overcome. But it’s also possible that firms are just trying to make the best of what remains a somewhat problematic situation.

Igloo Software, a digital workplace intranet solutions provider, recently conducted a survey about remote working that gauged the thoughts of 255 professionals working in the finance and accounting departments of their organizations, 29% of whom did not work remotely in any capacity in their current position and 81% of whom expected working from home to present challenges they never experienced when working in the office.

The survey’s findings show that some of those challenges have indeed manifested themselves as the pandemic forced companies to fully embrace remote work, many of them stemming from technology issues, including:

  • 37% of financial professionals couldn’t access important documents or information remotely
  • 47% reported having lost a piece of company technology or having had it stolen
  • 58% have been overwhelmed by the amount of non-work-related messages sent by co-workers in a work-related communication tool while working remotely
  • 65% are using communication/collaboration applications that are not approved by their company, generally because they either save time or are easier to use than company-approved options

While several of the above issues might arise for in-office workers as well, it’s clear that firms looking to move to a more remote workforce will have some kinks to work out in order to make sure things keep running smoothly in the weeks and months to come.