Category: Accounting Services

Deloitte Canada Fined $350,000 By the PCAOB For Fudging Audit Workpapers

Christina Lane

Someone lit a fire under the asses of those who work in the PCAOB enforcement division because they issued seven disciplinary orders to audit firms and accountants from Sept. 22 to Sept. 30. One of those firms was Deloitte Canada.

Compliance Week reported:

The Public Company Accounting Oversight Board (PCAOB) on Wednesday [Sept. 29] imposed a $350,000 civil penalty on Deloitte Canada for reasonable assurance quality control failures.

The PCAOB further required the Canadian branch of the Big Four firm to establish or revise its quality control policies and procedures and provide additional training to employees involved in any audit.

According to the PCAOB’s order, from November 2016 through early March 2018, Deloitte Canada failed to “establish, implement, and communicate appropriate quality control policies and procedures to provide … reasonable assurance that the work performed by engagement personnel complied with applicable professional standards, regulatory requirements, and the firm’s standards of quality.”

In particular, according to the enforcement order, this:

Deloitte Canada’s system of quality control failed to provide reasonable assurance that Firm personnel appropriately dated their preparation and review of audit work papers. As a result, during that period, the Firm failed to comply with PCAOB audit documentation standards in connection with certain audits and quarterly reviews.

No matter how many times they’re told not to by the PCAOB, auditors just can’t resist the temptation to alter workpapers. It’s like they have an angel on one shoulder telling them not to do it and they have a devil on the other shoulder telling them to do it. And many times they side with the devil. And a lot of times they get caught.

PCAOB rules require auditors to prepare audit documentation that accurately reflects when audit work was completed and reviewed. Makes sense. Up until November 2016, Deloitte Canada’s electronic workpaper system allowed Deloitters to document their performance and review of work by manually selecting preparer and reviewer sign-off dates for each workpaper, according to the PCAOB. But in November 2016, Deloitte updated its system:

[The updated system] removed Firm personnel’s ability to manually select sign-off dates. Under the new system, when an auditor entered a sign-off, the current date was automatically generated. At the time the Firm adopted its new system, personnel from the Firm’s National Office were aware of a risk that individuals could override the new system by changing their computer date settings to backdate work paper sign-offs. Despite that awareness, the Firm did not take sufficient steps—through written policies, guidance, training, or otherwise—to address that risk.

Thus, Deloitte auditors faced the temptation of overriding the system. Did they resist that temptation? Of course not!

During the 16 month-period following the adoption of the new work paper system, Firm personnel overrode the system and backdated their work paper sign-offs in at least six issuer audits and two quarterly reviews subject to PCAOB standards. This conduct occurred while teams were assembling a complete and final set of work papers for retention, or earlier, in these engagements. Additionally, some auditors on these engagements deleted and replaced sign-offs in order to ensure that reviewer sign-offs were dated after preparer sign-offs. Collectively, this conduct obscured the dates on which work had actually been completed and reviewed.

Then in February 2018, a Deloitte auditor sided with the angel on his or her shoulder and put a stop to all the overriding and backdating:

[A] Deloitte Canada auditor raised a concern with senior Firm personnel about auditors altering the dates on their computers to backdate work paper sign-offs. In response, the Firm identified and implemented in early March 2018 a method to remove personnel’s ability to change the date settings on their computers, which prevented further backdating of work paper sign-offs. The Firm also promptly instructed personnel to “[a]lways use the actual date on when the physical sign-off occurs.”

Deloitte Canada is no stranger to $350,000 fines from the PCAOB. The firm got one in October 2018 for failing to maintain independence during its 2012, 2013, and 2014 audits of Canadian gold-mining company Banro Corp.

PCAOB fines Deloitte Canada $350K for quality control failures [Compliance Week]

Related article:

PCAOB Fines Deloitte Canada $350,000 for Breaking Independence Rules Thrice on Audits of Banro

The post Deloitte Canada Fined $350,000 By the PCAOB For Fudging Audit Workpapers appeared first on Going Concern.

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Early Black-Owned CPA Firms Pushed For Diversity Before Pushing For Diversity Was Cool

Christina Lane

Firms established by pioneering Black CPAs decades ago created an indelible legacy within the accounting profession. Built by Black CPAs who succeeded despite adversity, the firms continue to play an important role in the profession’s recruitment and advancement initiatives, and with the clients they serve. Here are a few examples.

Guiding others along the journey

Benjamin King Sr. became Maryland’s first Black CPA—and the nation’s 48th—in 1957. In trying to earn his CPA credential, he was unable to get hired even when he offered to work for free, despite his experience as an auditor with the Army Audit Agency. He moved from Washington, DC, to Prince George’s County because Maryland had a less-restrictive experience requirement for the CPA license. After establishing Maryland residency status and passing the exam, he launched a firm with Maryland’s second African American CPA, Arthur M. Reynolds Sr. King, and other new local Black CPAs kept other jobs because initially there wasn’t enough work to sustain their firms full time.

King’s firm was still able to help other young Black professionals become CPAs. “It was built on the premise of helping,” said Tony King, CPA, CGMA, Benjamin’s son. As the elder King’s career advanced and he became an adjunct lecturer at Morgan State University, a historically Black college and university, he invited its current and future accounting students to reach out to him for mentorships, internships, or job opportunities. “There are probably numerous Black CPAs in the area who can attribute their CPA credentials to him,” Tony King said. The elder King also recruited close to home. None of his children were allowed to get their driver’s license before they’d spent some time working in the firm. All five are accountants, and Tony and two sisters run King, King & Associates (KKA) today.

As noted in the Black CPA Centennial’s April article, “Breaking a Barrier: The First Black Partner of a Big Eight Firm,” Thomas S. Watson Jr. teamed up with another Black CPA, Robert Rice, to found Watson Rice & Company (now known as BCA Watson Rice LLP). Watson Rice was believed to be one of the largest Black-owned CPA firms in the world during the 1980s. Watson wanted to create a path to help other Black CPAs like himself achieve success in the accounting profession.

Seizing new opportunities

Although larger white-owned accounting firms slowly began to hire Black professionals as the 20th century progressed, Black CPAs often left because they concluded it would be too difficult for a Black person to be named partner. “That was the catalyst” for the birth of many new Black-owned firms, according to George Willie, CPA, CGMA, managing partner of Bert Smith & Co.

At the same time, by the late 1960s and early 1970s, opportunities for minority-owned firms began to increase. Black businesses—including CPA firms—benefited from certain federal programs and prohibitions against discrimination in contracting and procurement. Black-owned firms were able to serve governments and agencies and to become advisers for an expanding population of Black professionals and entrepreneurs, according to Willie. And although the large firms may have lagged in promoting Black professionals, they did often bring in smaller Black-owned firms on engagements or refer work to them, especially on government accounting engagements, another factor in the minority firms’ success, he said. In fact, Willie said, alliances between large firms and smaller minority-owned firms—such as one between BDO and Black-owned firms, in which his firm is involved—can be critical to the smaller firms’ survival. Given the challenges facing many minority-owned firms, “collaboration with and tangible support from the major firms, through alliance, may offer a future” for smaller firms struggling to succeed.

Recognizing that diversity is an economic imperative, the leaders of Black-owned firms today take a variety of steps to benefit from contributions by people with a variety of backgrounds, as two firms’ efforts show. Willie’s firm, for example, continues to be involved in major engagements with several large national firms. That enables staff from both practices to get to know each other and their firms, Willie noted. At KKA, many of the firm’s associates have been people of color from outside the United States, and the firm has non-minority clients, as well. BCA Watson Rice LLP also has a long history of having firm associates and partners from diverse backgrounds and was supporting diversity, equity, and inclusion efforts well before the term was coined.

Expanding the talent pool

Thomas S. Watson Jr. taught his son Timothy, CPA, about the profession. During Timothy’s childhood, his father introduced him to audit engagements and computers and often took him to business meetings. “I didn’t always understand what was going on, but I learned enough to know I wanted to follow in my father’s footsteps,” he said.

Benjamin King Sr. influenced a young family friend to become a CPA. The woman was about to start college and told King Sr. that she was going to study math and become a teacher, according to Tony King. In one sitting, King Sr. successfully convinced her to change her career plans, pointing out all the CPA profession had to offer.

However, given the low percentage of Black CPAs, Black students are less likely to learn about the profession from family or friends. Tony King advocates for efforts to introduce students of color to the profession in high school before they decide on a college major. “They’re not going to change their major when they’re a sophomore or junior,” he said.

Improving the number of Black CPAs will require, among other things, getting the word out, said Willie, who speaks frequently about the profession to minority student groups. He believes the message should emphasize the many opportunities the profession can provide and the financial rewards it can offer. He recommended that other Black CPAs and firms get involved in efforts to share their experiences with Black young people “to present a profession that represents success.”

To attract and retain Black professionals, firms will have to offer them an opportunity to take on challenging assignments and to advance as their expertise grows, Willie said. “That is the most critical issue,” Willie said. “That is the reason our staff stays with us.”

About the author:

Anita Dennis is a freelance writer based in New Jersey.

The post Early Black-Owned CPA Firms Pushed For Diversity Before Pushing For Diversity Was Cool appeared first on Going Concern.

BrightPay and Relate Software join forces to create an accounting & payroll software champion

Christina Lane

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The combined business will provide an integrated suite of cloud payroll and accounting software tools for accounting bureaus and small to mid-sized businesses in the UK and Ireland.

BrightPay, a leading provider of payroll and HR software solutions, and Relate Software (“Relate”), a champion in post-accounting, practice management and bookkeeping software, today announce that they have agreed to join forces to create a software champion serving payroll and accounting bureaus and SMEs across the Republic of Ireland and the United Kingdom.

Paul Byrne, co-founder and CEO of BrightPay, and Ray Rogers, co-founder and CEO of Relate, will remain as significant investors in the combined business and will become co-CEOs. Ross Webster and Richie McMahon, also co-founders of BrightPay and Relate respectively, will also remain as investors and will continue to focus on developing the combined business’ best-in-class product suite.

Hg, a leading software and services investor with over two decades’ experience in growing tax & accounting technology businesses across Europe and North America, will become majority investor in the combined business.

The two complementary businesses will bring together their operational strengths and sector-leading products whilst, with the support of Hg, investing further in new cloud innovations to deliver increased automation, efficiency and value for their customers. The combined group will have over 190 employees and has plans to further grow headcount to continue providing best-in-class services and support for its payroll, accounting and SME customers across both the UK and Ireland.

Paul Byrne, founder and CEO of BrightPay, said: “We are delighted to be joining with Ray and his team at Relate. They have a proven track record in a sector we know well and, together, we will aim to be a leading solution for many businesses and accountancy firms. We are also delighted that Hg continues to support us. Their deep sector knowledge has proven invaluable to us and will be instrumental in fuelling the further growth of BrightPay/Relate.”

Ray Rogers, founder and CEO of Relate, said: “Combining products from both businesses will provide a compelling offering for our customers, with the scope and backing for further innovation and development. I’m looking forward to working with Paul and am also excited to welcome Hg, a leading software investor with a track record of supporting growth in Irish software businesses.”

Jonathan Boyes, Hector Guinness and Thomas Martin at Hg, said: “Both BrightPay and Relate are very highly regarded businesses and champions in their field. The two companies bring together core operational strengths whilst also unlocking a high-quality, complementary suite of products to a newly combined customer base. We’re proud to bring together this highly accomplished team. This is a sector and region we know deeply and we are excited for what we’ll all be able to achieve together.”

The terms of the transaction are not disclosed.

The post BrightPay and Relate Software join forces to create an accounting & payroll software champion appeared first on Accounting Insight News.

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A Bachelors in Accountancy Can Lead to Financial Success

Christina Lane
accountant

Accountants are an important part of our society because they help us track and control spending. Without accountants, we would be completely lost. The most basic function of an accountant is to come up with a budget for a particular business. It is the accountant who is responsible for determining how much money the business should spend on certain activities, such as marketing and advertising. In addition to coming up with a budget, the accountant will also determine if the business is getting the best deal by charging the right amount for services.

In order to become an accountant, you have to earn a bachelor’s degree from an accredited university with a major in accounting, prior to you taking the examination to become certified in accounting. Some of the most important skills that accountants must have been computer proficiency, problem-solving skills, writing and grammar skills, interpersonal skills, and good organization skills. Having these skills helps accountants prepare financial reports are the key to success for any business. Accountants also need to be very organized as they are expected to create a spreadsheet of the financial data for the company, which they then have to run a financial analysis on.

When choosing a college to attend to earn your bachelor’s degree, you must make sure that the college has the programs that suit your major in accounting. If you are unsure of what your major in accounting entails, then you should ask a guidance counselor at the school that you are going to attend. They will be able to tell you what courses you should take and how many specific majors each major has. You may want to look into a number of online bachelor’s degree programs to choose from.

Upon graduation from your chosen college or university, you then have to decide what you would like to do with your degree. Some accountants elect not to pursue a professional career in accounting by becoming a certified public accountants. This career field is much less competitive than the accounting field, so there are more jobs available for this type of person. However, the hourly pay for a certified public accountant position is significantly lower than the wages that accountants with bachelor’s degrees earn.

Some other accounting professionals that need to be accountants include public accountants, forensic accountants, bankruptcy lawyers, insurance accountants, land accountants, and internal auditors. These professionals all have important skills that are extremely important for running a business. There is a high need for these individuals in today’s world as financial data is stored, manipulated, and presented in every business that exists.

Accountants are in high demand because there are so many important tasks that need to be performed. Businesses must calculate taxes, handle payrolls, manage their resources, and even figure out their profits. Without the help of an accountant, many businesses would fail. Therefore, accountants may very well be the most highly-needed individual in a business.

Many people choose to become certified accountants in order to capitalize on the high demand for accountants. If you decide that you want to become certified, it will take four years of law school and the completion of a four-year degree course at a university before you can apply for certification. In order to become a certified fraud analyst, the person must also pass three additional examinations that were created by the AICPA (American Institute of Certified Public Accountants). After certification, most accountants will work for the government as a government fraud investigators. Most accountants also open their own consulting firm or run their own accounting firm.

Becoming a certified public accountant requires that you have a bachelor’s degree or a bachelor’s and a master’s degree in accounting. The key requirement for becoming a certified management accountant, however, is having two years of experience as an accountant in the United States. After you have completed your four years at a community college or four years at a four-year university, you will be able to apply for jobs as an independent certified public accountant. If you meet these requirements and pass the CPA exam, you will be certified as an accountant and will be able to work for the government or for a financial consulting firm.