Footnotes

Footnotes offers a selection of narratives about the accounting field, curated by actual individuals, and is published every Friday at 5pm ET.

Audit

Missing State Library Inventory Data Valued at $215 Million
A recent audit from the Comptroller of Public Accounts revealed that over $215 million in assets belonging to the Connecticut State Library were not adequately documented. The report notes that the library had been carrying forward balances of art objects for years, with management unaware of their historical context. It appears that many acquisition records may no longer exist due to the age of the collection.

Former KPMG Partner Fined Again for Audit Mistakes
A retired KPMG partner faces fines for the third time for audit shortcomings. He was in charge of an audit involving four major firms for N. Brown, the parent company of Hakamo, which uncovered “numerous deficiencies.” Anthony Sykes, who stepped down in September 2022, led the approval for KPMG’s audit of N Brown during the 2021-22 financial year, which the Financial Reporting Council flagged for “material non-compliance,” notably regarding the potential impairment of N Brown’s business segments.

Iowa Republican Auditor Candidate Wants to Revitalize Auditing
Abigail Maas, running for the position of state auditor, expressed her dedication at a gathering. “Not everyone loves the idea of crunching numbers or working early hours, but that’s my passion. I have the spirit of a cowgirl,” she shared at an event in Urbandale. She indicated her commitment to advocating for taxpayers.

R.T.O.

AI Encourages PwC Employees to Return to the Office
Remember when PwC claimed employees could work remotely indefinitely? Now, hybrid workers are anticipated to spend half of their time in the office. Thanks to AI applications, employees can choose when to come in based on personal preferences. “Our younger staff thrive in a vibrant environment,” stated Garrett Tripp, managing partner in Raleigh. “I don’t need to push my team to show up anymore. They understand the value of collaboration when they come in.” This approach is leading to better space utilization and improved attendance.

Law and Order

Senators Investigate Contractors Over Medicaid System Errors
A group of senators is probing the contractors responsible for significant taxpayer-funded Medicaid eligibility system, expressing concerns that the problematic technology and impending work requirements could cause many to lose their Medicaid coverage.

Zimmer Biomet Files $172 Million Lawsuit Against Deloitte
Zimmer Biomet has filed a lawsuit against Deloitte, citing significant disruptions and risks to patient care due to false assurances before the system launch. Chad Phipps, the general counsel, stated, “We cannot accept this kind of behavior from our partners.”

Tax

IRS Furloughs Nearly Half of Its Workforce Amid Operational Closures
The IRS announced that most operations are halted due to funding issues, with a message to employees indicating that only essential modernization efforts would continue. Although greatly reduced, they plan to keep over 24,000 staff on board for critical tasks.

IRS Unveils Guidance Priorities and Paper Refund Check Phase-Out
The IRS and Treasury Department have published their 2025-2026 Priority Guidance Plan, outlining key projects for resource allocation. Included in the plan is the announcement that paper tax refund checks will gradually be eliminated, a change affecting tax-exempt organizations.

Pay with Partners

PwC Partners Greenlight “Luke Sayers Amendment”
Following the tax leak scandal, PwC partners have approved amendments to their partnership agreement, increasing penalties for misconduct that impacts the firm’s reputation. Now, partners could lose their retirement benefits if found guilty of significant misconduct.

Grant Thornton Partners Poised for Large Payouts
With speculation surrounding the value of Grant Thornton Australia, estimates suggest the firm could be worth around $800 million, based on typical industry valuations.

Outgoing EY U.S. Leader’s Successor Expected to Be Named Soon
As EY prepares to select a new U.S. leader, discussions are underway about the impact of emerging AI technologies on the consulting and accounting sectors.

Technology

Residents Seek Clarity After Data Breach at Camden Accounting Firm
Sheheen, Hancock & Godwin, LLP reported a data breach where unknown attackers accessed files. One resident, Robert Baskins, expressed frustration over receiving notice that his personal information may be compromised, stating, “This is ridiculous; we deserve answers.”

CEOs Increasingly Invest in AI – A Concern for Middle Management?
A KPMG survey highlighted that nearly 70% of CEOs anticipate returns on AI investments in one to three years, a notable rise in confidence compared to last year, suggesting a shift in corporate perspectives on AI’s value.

Career

A Reflection on Choosing Between Big 4 Consulting and Big Tech
In my view, one year at Meta feels like two years anywhere else due to the fast-paced environment. The pressure is high, but the learning experience is invaluable among smart peers. Conversely, consulting brought its own stress, primarily related to client expectations and timely responses.