KPMG admits misconduct in BNY Mellon reports

KPMG and the firm’s partner, Richard Hinton, admitted to misconduct over the audit work the firm carried out for BNY Mellon, the United Kingdom’s Financial Reporting Council (FRC) said this month. A probe into the 2011 reports on client assets held by the bank and its London branch revealed that the firm and Hinton failed to give adequate consideration on whether the records of custody relationships maintained by BNY Mellon were compliant with certain rules, the FRC said. The accounting watchdog issued new guidance for client assets reports in 2011. “We accept and regret that our work did not fully reflect all aspects of this new guidance,” KPMG said in an email to Reuters. A disciplinary tribunal will be convened to decide what sanctions should be imposed.

Hotpot chain shares soar in Hong Kong debut

Hotpot restaurant chain Haidilao saw its shares climb as much as 10 percent in early trading as it made its debut on the Hong Kong stock exchange on 26 September. Shares opened at HK$18.80, up from an initial public offering price of HK$17.80 – the top end of its target range – and reached HK$19.64 at one point. Haidilao’s stock closed at HK$17.82 per share. Haidilao owns more than 300 restaurants in Mainland China as well as branches in Japan, Singapore, South Korea and the United States. It is known for its Sichuan-style hotpot and for offering board games and manicures to customers waiting to get a seat.

Apple pays Ireland more than €14 billion taxes

Ireland’s government has collected €14.3 billion in back taxes and interest from Apple, which it will hold in an escrow fund pending the company’s appeal against a European Union tax ruling, media reported this month. The European Commission ruled in August 2016 that Apple had received unfair tax incentives from the Irish government, allowing the company to pay a maximum tax rate of 1 percent instead of the usual corporation tax rate of 12.5 per- cent. The tech giant and Dublin are appealing against the ruling, saying the tax treatment was in line with Irish and EU law.

Hong Kong banks share customer details in global anti-tax evasion scheme

More than 1,700 financial institutions in Hong Kong have submitted account details to local authorities of customers who are tax residents of 75 jurisdictions in a bid to clamp down on tax evasion, the South China Morning Post reported this month. The city will send information annually to local tax authorities in 50 of the jurisdictions, with which it has agreements. The first exchange is set to take place end of this month. Mabel Chan, immediate past president of the Institute, urged financial account holders in the city who are tax residents elsewhere to seek advice from professional consultants on their liabilities, reported the SCMP. “This [would be especially important] for those from jurisdictions implementing worldwide tax, such as China,” Chan said.

US$1 billion

The estimated value of claims faced by insurance companies following the damage caused by Typhoon Mangkhut, which ripped through Hong Kong on 16 September, according the South China Morning Post.

57%

The percentage of accountants in the United Kingdom who have felt pressured to act unethically, according to a survey conducted by the Chartered Institute of Public Finance and Accountancy. The most common forms of misconduct include supporting excessively optimistic budgets and business cases, and downplaying risks.

¥57.8 billion

The total value of proceeds from Chinese telecommunications, media and technology (TMT) IPOs in the first half of 2018, according to PwC. Foxconn Industrial Internet Co., iQiyi, and Bilibili were the three largest TMT IPOs of the first half of the year.

Former PwC executive to replace Jack Ma

Jack Ma, Chairman of e-commerce giant Alibaba Group Holding, will be replaced by current Chief Executive Officer and former PwC executive Daniel Zhang, as part of a succession plan announced on Ma’s 54th birthday. By 10 September 2019, the multi-billionaire will resign to focus on philanthropy and teaching, and says the move will fostering long-term growth and reduce independence on any one person in the company. “I have put a lot of thought and preparation into this succession plan,” Ma wrote in a letter to Alibaba customers and shareholders. Zhang, the current Director and Chief Executive Officer of the company, was senior executive at PwC’s audit and business advisory division in Shanghai. Alibaba was founded in 1999 by Ma and 17 co-founders.

PwC U.K. launches flexible working scheme

PwC is allowing some of its new recruits to decide on their own working hours. By providing better hours and even part-time contracts, the firm aims to attract a more diverse pool of talent that might have otherwise dismissed the firm due to its traditional work schedules. Dubbed the Flexible Talent Network, the scheme also offers new employees the option of working only a few months of the year. Laura Hinton, Chief People Officer at the firm said, “People in the network will get to spend their year their way, whether it’s because of caring commitments, entrepreneurs supplementing their income, people who want to travel or simply not work all of the year.” More than 2,000 people registered for the scheme within the first two weeks.

Tesla chief accountant officer resigns

The Chief Accounting Officer of Tesla, Dave Morton, quit just shy of a month after signing his contract, claiming he was ignored on multiple occasions by colleagues, including Chief Executive Officer Elon Musk. Morton notes that executives, including Musk, were not concerned with various financial obstacles, even after he brought up specific details such as equity change of control provisions and potential step-ups in the value of Tesla’s debt associated with a new controlling shareholder. Following a meeting with Musk to discuss details regarding taking the company private and a tweet announcing the decision, Morton claims he was ignored, and after two weeks concluded he was neither heard or understood.

No need to break up Big Four, says EY chief

Mark Weinberger, EY’s Global Chairman and Chief Executive Officer, hit back at calls for the Big Four to break up by critics concerned about the audit market being dominated by EY, KPMG, PwC and Deloitte, leading to low quality audits of companies, and conflicts of interest. Weinberger said EY needed to draw on expertise from across its business in order to conduct high-quality audits for multinational clients, the Financial Times reported this month. While he understands the scrutiny of auditors, he commented that clients such as Google and Amazon could not be served “without a multidisciplinary group of people to assess their risks going forward as a business, and [those employees] don’t all sit in our audit practice.”