IAASB revises standard for auditing accounting estimates

The International Auditing and Assurance Standards Board (IAASB) has revised International Standard on Auditing 540 Auditing Accounting Estimates and Related Disclosures, as part of its efforts to improve audit quality globally. The revisions include an enhanced risk assessment that requires auditors to consider complexity, subjectivity and other inherent risk factors in addition to estimation uncertainty, and an emphasis on the importance of applying appropriate professional scepticism when auditing accounting estimates to foster a more independent and challenging sceptical mindset in auditors. Still subject to final approval by the Public Interest Oversight Board, the changes come into effect on 15 December 2019.

EU plans to boost powers to counter financial crime

The European Union (EU) plan to counter money-laundering at banks urges a review of a series of high-profile cases but does not propose a comprehensive reform of EU rules, Reuters reported this month after seeing a draft document. The EU’s plan is in response to alleged scandals involving lenders in Denmark, Estonia, Latvia, Luxembourg, Malta, Spain, the Netherlands, United Kingdom and Cyprus conducting money-laundering schemes through foreign branches within the EU. The document, dated 29 October, mandates the European Central Bank (ECB) and the European Commission to review alleged money-laundering cases by mid-2019 with a view to “possible additional actions” to bolster the EU legal framework. It is subject to changes until its adoption in early December. According to Reuters, the draft does not explicitly mention forming a common agency to supervise financial crime, as demanded by the ECB.

U.K. Big Four face competition probe

Britain’s competition watchdog announced this month that it was launching an investigation into the audit sector. The Competition and Markets Authority (CMA) will look into the dominance of the Big Four and whether the sector is “competitive and resilient enough to maintain high quality standards,” following fears that the sector is not working well for the economy or investors. Andrew Tyrie, Chairman of the CMA said: “If the many critics of the audit process are right, it is not just the companies which buy audits that lose out; it is the millions of people dependent on savings, pension funds and other investments in those companies whose audits may be defective. ” The announcement came a day after the Financial Reporting Council said that it was working with the CMA to consider whether the Big Four should be banned from offering consultancy services to clients they audit.

KPMG South Africa to replace CEO

Nhlamulo Dlomu will step down from her role as Chief Executive Officer of KPMG South Africa, the firm announced this month. The move to find a new leader from outside the firm is part of its aim to restore its reputation following the corruption scandal involving VBS Mutual Bank and the politically-tied Gupta family, which has led to it losing several major clients and cutting jobs. Dlomu will remain at the firm, but take on a new global role with a focus on organizational cultural change and ethical leadership. She said: “It has been a huge privilege to lead KPMG this past year. Although it has been challenging, we have managed to stabilize the business.” Until a successor is found, the firm’s Chairman, Wiseman Nkuhlu, will serve as an executive chair.

Green group to talk sustainability at WCOA

The Accounting for Sustainability (A4S) project will promote sustainability at the World Congress of Accountants (WCOA). The A4S project, established by Prince Charles, challenges accountants to inspire action in the global finance industry and drive a fundamental shift towards resilient business models and a sustainable economy. Executive Chairman Jessica Fries, who will lead a session entitled “Can accountants save the world?” told Accounting Today: “The risks from environmental, social and economic crises are clear to see – not just for our planet and society, but also the future resilience of the global economy.” Attracting over 6,000 accountants and business leaders from over 130 countries, the WCOA will take place in Sydney, Australia from 5-8 November.

Vegan start-up seeks investors for possible IPO

Vegan food startup Beyond Meat has made plans to go public. According to CNBC, the company has sought help from investment banks including JP Morgan, Goldman Sachs and Credit Suisse to lead the initial public offering (IPO), but has not specified the valuation amount. The IPO is the first of its kind for a company which makes vegetarian food products which appeal to meat-eaters. Now in its ninth year of operation, the Los Angeles-based company was founded by Chief Executive Officer Ethan Brown, and is most well known for its Beyond Burger, a burger patty made with plant-based proteins. Since 2016, it has sold more than 26 million burgers. Its list of investors includes billionaire Bill Gates and movie star Leonardo DiCaprio.

EY U.K. scraps final stage of interview process

EY in the United Kingdom is replacing its one-to-one interview with an assessment event for the final stage of its student recruitment process. The change is part of the firm’s plan to cut the process from nine weeks to five, and increase diversity among new employees. Announced this month, the assessment event will comprise of eight separate activities all in one day, with five appraisers then providing input on whether to offer the job. Research commissioned by the firm on perceptions of graduate and apprenticeship application processes at large organizations found that 28 percent were put off from applying as they thought the process was too stressful, while 21 percent believed it was too time consuming. KPMG also shortened their multi-stage interview process in 2016 for similar reasons.

Trump denies tax allegations

United States President Donald Trump has denied dodging a hefty tax bill, when he inherited money from his father in the 1990s. A detailed investigation by The New York Times on 2 October, found that Trump’s parents transferred more than US$1 billion in wealth from their real estate empire to their children, which could have produced at least US$550 million worth of taxes. The Trumps, however, have only paid back a total of US$52.2 million, or about 5 percent, according to Economia. Following the report, a spokesman for New York’s tax authority said, “The tax department is reviewing the allegations in the [Times] article and is vigorously pursuing all appropriate avenues of investigation.”