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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’re here, subscribe to our newsletter to get the week’s top stories in your inbox every Tuesday and Friday.
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Tax
MicroStrategy Suddenly Has a Tax Problem, and Needs Help From Trump’s IRS [Wall Street Journal]
If you think MicroStrategy’s business model is wild, wait until you see its tax issues. After years of raising money through stock and debt offerings to buy bitcoin, MicroStrategy owns a stash worth about $47 billion, which includes $18 billion of unrealized gains. In an unusual twist, it could have to pay federal income taxes on those paper gains—even if it never sold a single bitcoin. The tax bill could total billions of dollars starting next year, according to a new disclosure this month by MicroStrategy that has received little attention.
AI
Accounting Firm’s AI Caught Telling Customers About Each Others’ Financial Records [The Byte]
Sage Group, a self-described “leader” in accounting and financial tech for businesses, temporarily suspended its Sage Copilot AI assistant after it was caught giving out customer’s financial records, The Register reports. All you had to do to get this information, which allegedly included recent transactions, was ask. “A customer found when they asked [Sage Copilot] to show a list of recent invoices, the AI pulled data from other customer accounts including their own,” a source told The Register last week. In a statement to The Register, its spokesperson described the AI blunder as a “minor issue” that only involved a “small amount” of customers.
AI chat firm GameOn couple arrested for defrauding investors of over $60M to finance wedding and more [VentureBeat]
Authorities yesterday arrested GameOn Technology founder Alexander Charles Beckman and attorney Valerie Lau Beckman (a married couple) for allegedly defrauding investors of $60 million. In a 25-count indictment, the U.S. Department of Justice said the couple allegedly falsified dozens of bank statements and audit reports defraud GameOn investors. The alleged fraud spanned six years.
Deloitte Davos Survey: Gen AI Projects Face Scale Hurdles [Technology Magazine]
The rapid development of generative AI (Gen AI) has prompted a wave of enterprise experimentation over the past year, with companies across sectors testing applications from content creation to software development. Yet the path from pilot projects to full-scale deployment presents significant challenges, according to new research from Deloitte.
Companies need to expose employees to AI so they start seeing it as a ‘digital colleague,’ says PwC head [Business Insider]
Don’t be afraid of AI in the workplace — think of it as your digital colleague. That’s what the global chairman of PwC, Mohamed Kande, said about AI augmentation during a panel at the World Economic Forum conference in Davos, Switzerland, on Tuesday. “People fear what they don’t understand, so exposing them to the technology, putting in their hands makes a big difference,” Kande said about AI. Doing so allows employees to view AI as a “digital colleague” they can work with, said Kande.
Audit
KPMG Slated to Post Best Audit Inspection Report in 15 Years [Bloomberg Tax]
KPMG LLP may have finally cracked the code on delivering better audits to investors: Giving its staff more time to do their work and ensure they increasingly have weekends off during the busy corporate filing season. Those steps have led the US accounting firm to expect its best annual inspection results in 15 years with a deficiency rate of 20%. “It turned out that what our people needed was just a little bit more time,” Christian Peo, the firm’s national managing partner for audit quality and professional practice, said in an interview. “If you’re in hour 63 of a week in February, you might not be at your best.”
UK ministers explore shelving stricter audit rules for private companies [Financial Times]
UK ministers are exploring scrapping promised stricter audit rules for private companies as the government seeks to dial back regulation in a bid to boost economic growth. Business secretary Jonathan Reynolds and employment minister Justin Madders have met large audit firms and big investors in recent months to discuss watering down or axing reforms that would designate about 600 companies “public interest entities”, according to people familiar with the talks.
KPMG appoints Scott Flynn as Global Head of Audit [KPMG]
Scott Flynn, currently the Head of the US firm’s audit practice, will become KPMG’s Global Head of Audit on 1 April 2025. Scott brings more than 30 years of experience working with some of the world’s leading multinational companies and has been Head of Audit, KPMG in the US since 2020. He brings strong international experience from three years working in Asia and leading the US GAAP and Risk Management teams within the Chinese firm’s Shanghai office.
Talent
Why Minnesota’s accounting sector is losing talent — and what can be done [Minneapolis/St. Paul Business Journal]
The CPA exam’s requirement of 150 academic credit hours is a major obstacle, observers say. The typical college degree requires just 120 hours. “We did not structure [the rules] in a way that provided flexibility,” said Geno Fragnito, government relations director for the Minnesota Society of CPAs (MNCPA). “The profession evolved, the economy evolved, the world evolved and things have changed.” When it comes to the credit hours fix, “nothing else is a quicker, tangible fix,” said Boz Bostrom, an accounting professor at the College of Saint Benedict and Saint John’s University and board chair of MNCPA. Other issues are going to take several years to play out, such as struggles to increase diversity and continue appeals to younger generations.
Presented without comment:
AND IF you are a remote employee, you can claim ANY state has harmed you.
Why can the outsourced labor at your company, who is working for Deloitte, Cognizant, or Infosys, work from ANYWHERE in India but you’re not allowed to work in Pennsylvania or Montana?
— Unfiltered Truth (@UnfiltdTruth) January 24, 2025
Is your remote or hybrid firm hiring? Check out this week’s top candidates from Accountingfly and sign up for Always-On Recruiting to get more candidates like these in your inbox every week.
Firm Watch
CBIZ Board Adds Kathy Raffa as Independent Director [Business Wire]
Raffa was added to the Board of Directors pursuant to CBIZ’s acquisition of the non-attest assets of Marcum, which closed Nov. 1, 2024. Ms. Raffa was President of Raffa, PC, a top 100 accounting firm based in Washington, D.C., where she also served as an Audit Partner for over 25 years prior to its merger with Marcum in 2018. She then served as the Office Managing Partner for Marcum’s offices in the D.C. region until her retirement in October 2023. Ms. Raffa has more than 40 years of experience providing audit, accounting and consulting services to clients primarily in the nonprofit industry.
The CEO of a $5 billion consulting firm explains why she has no ambition to be a lesser version of a Big Four giant [Business Insider]
Francesca Lagerberg is CEO of Baker Tilly, one of the world’s 10 biggest accounting firms. In an interview with BI, Lagerberg explained why her firm has managed to buck the downward trend in the sector and how she doesn’t want to turn Baker Tilly into a lesser version of a Big Four firm.
People
Muhammad Ali’s Accountant Tells His Story For The First Time! [Athlon Sports]
When Mohammed Ali needed an accountant, he turned to Arthur Andersen, one of the world’s largest accounting firms, which put a 23-year-old, Elliott Broidy in charge of Ali’s dollars and cents. Broidy came to see a surprising side of the world’s most iconic boxer. “I was just lucky I got assigned an account like that,” Broidy said. “I was a big boxing fan and obviously a huge fan of Muhammad Ali’s.”
News
CEOs ramp up deal outlook under Trump, EY survey shows [Reuters]
Global chief executives see much more corporate dealmaking in 2025, with an increased number expecting to pursue mergers and acquisitions after U.S. President Donald Trump was elected to a second term in November, a survey showed. Some 56% of CEOs expect to actively pursue M&A activity in 2025, compared with just 37% in September, according to an EY-Parthenon CEO Outlook Survey in November and December. The deal appetite was the largest in nearly two years, with 60% of global CEO respondents expecting an increase in transactions worth more than $10 billion, the consultancy’s survey released on Tuesday showed.
ARRESTED AGAIN: Former Calgary accountant charged with ripping off second business for more than $500,000 [Western Standard]
A 46-year-old woman from Gold River, B.C., has been charged with fraud and theft after allegedly embezzling over $575,000 from her Calgary employer over a four-year period. The owner of the company came forward to police after reading about another case Manhas was involved in. In 2023, Calgary police arrested Manhas and alleged that between October 2013 and September 2015, a woman worked at a local oil and gas company on a temporary contract posing as an accountant.
FinCEN says BOI reporting remains on hold [Journal of Accountancy]
Reporting companies covered by the Corporate Transparency Act’s (CTA’s) beneficial ownership information (BOI) reporting requirement do not have to file the reports while an injunction remains in place, the Financial Crimes Enforcement Network (FinCEN) said Friday morning. Companies that do not file BOI reports also are not subject to liability while the injunction remains in place, FinCEN said. However, the estimated 32 million small businesses covered by the reporting requirements may submit their BOI reports voluntarily, FinCEN said.
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