Gone are the days when auditors were manually checking and ticking lots of pieces of paper. Today’s auditing techniques involve significant use of computers.
But how far can this computer use go? Will they be able to predict when accounting fraud is going to take place as opposed to tracking transactions that have already occurred?
The film Minority Report starring Tom Cruise was based around software that could predict when a crime was going to happen and the culprits would be arrested before they actually committed the crime. Although this film seemed well and truly within the realms of science fiction, two police forces in the UK have undertaken trials of a sophisticated computer software package which aims to predict where and when future crimes are likely to occur.
The software is known as Crush (Criminal Reduction Utilising Statistical History) and is used to identify potential crime hotspots based on a variety of data including crime reports, offender profiles and strangely enough even weather forecasts.
Once these upcoming crime hotspots have been identified then the police can allocate resources accordingly.
The system is produced by IBM and the UK tests are based on a successful roll out of the software in the US by the Memphis police force which resulted in a reduction of serious crime by 30%.
Back to auditing though and will the next step be predicting when a fraud is likely to occur using statistical analysis based on industry, profit movements, director’s personal life and spending habits (plus the weather of course)?
Given the reliability of some computers though, one thing for sure is that if you happen to live in a town called “Syntax Error” then you may have a surprise visit from a Tom Cruise lookalike with a briefcase and a calculator…
https://www.theexpgroup.com/wp-content/uploads/2019/09/robot-auditors.png9441678Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2019-09-14 08:49:392019-09-30 12:27:22Will auditors become more like Tom Cruise in the future?
Do you work in an office? Do you sit down at your desk most of the working day?
If you do, then it may be a good idea to ensure you stand up and move around a bit during the day.
Recent research has estimated that 1 in 9 deaths can be blamed on sitting down for at least 6 hours a day.
Let’s pause for a moment as that’s a shocking figure!
In the UK alone that would equate to thousands of people dying every year due to lack of movement and the cost to the National Health Service is estimated at £700 million annually.
Research published in the Journal of Epidemiology and Community Health estimated that 17% of diabetes, 5% of heart disease and 8% of lung cancer cases could be avoided with less sitting.
Leonie Heron from Queen’s University Belfast was the lead author of the study and said “You need to put your body under a little bit of stress to maintain a healthy heart and whole system”.
She went on to say that “It suggests that it is bad for our health how our working lives are structured for a lot of people. You can attenuate that risk by being more active in your leisure time, but it’s something employers can look at. Maybe they should be providing opportunities for employees to be active during the day, perhaps making sure people move every hour…or providing opportunities during lunch and coffee breaks.”
My guess is that a lot of you do sit down for at least 6 hours a day working at your computer. It’s probably a good idea therefore to remind yourself to get up and move a bit when you can as it will be good for your health.
Unless, that is of course, you’re getting up to walk out of the office to have a cigarette…
https://www.theexpgroup.com/wp-content/uploads/2019/04/health-problems-at-office.png281500Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2019-04-17 10:46:062019-04-21 18:05:11Would you stand for this?
What do you do if you work for PwC and you’re due to be promoted to a partner in October?
Well, if you’re Max Livingstone-Learmonth the answer is to catch a suspected handbag thief.
Now, this in itself is admirable but Mr Livingstone-Learmonth did it in style as he was actually dressed as a bishop.
“A future partner of PwC dressed as a bishop?” I hear you ask.
Although it may sound strange that he was dressed as a bishop, he was in fact in fancy dress as he was part of a charity world record attempt for the longest non-stop relay.
He was running as part of the I Move London Relay. This involved 2,500 runners taking it in turns to carry a relay baton over a combined distance of 4,000 miles by running 10km and 5km loops continuously over 30 days and nights in central London.
Mr Livingstone-Learmonth was part of the team of runners and according to London’s Evening Standard newspaper, he saw a woman chasing a man who had reportedly taken her bag. He then sprinted 100 metres to her rescue and caught up with the thief keeping him pinned to the wall until the police arrived.
He told the newspaper that “I’m not religious but it does feel a bit like divine intervention that I was there”.
He went on to explain that “A guy shouted, ‘stop that man’, and it was just pure instinct to run after him. I caught up to him and pinned him to a wall with my crosier.”
“I said, ‘It’s not your day if you’ve been run down by a bishop’,” he added.
So, well done to the future partner but one thing is even more impressive – during the struggle he kept hold of the relay baton. If he had dropped it the Guinness World Record attempt would have been jeopardised as it would not have been a complete relay.
Nice work Mr Livingstone-Learmonth.
https://www.theexpgroup.com/wp-content/uploads/2018/08/pwc-handbag.png9441678Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2018-08-09 21:10:532018-08-10 15:56:16PwC, a Bishop and a thief...
Do you have children? Have they ever told you a lie? Even a small teeny weeny lie?
Well, if they have then although you may not be particularly pleased with them, it may actually mean that they have good memories and excellent thinking skills.
Psychologists at the University of Sheffield tested 135 children and found that those children that lied performed much better than the honest children in the group.
The children in the study were aged between 6 and 7 years old and during the study they were given a trivia game. The answers to the trivia game were on the back of the card which they had been given. Initially, each child was in a room accompanied by one of the researchers but the researcher then left the child alone with the card with the answer on the back.
Before leaving the room the researcher told the children not to look at the answer but what the children didn’t know was that when they were alone in the room there were hidden cameras which were monitoring whether they would look at the answers on the back.
25% of the group subsequently cheated and looked at the answers on the back of their cards but claimed that they hadn’t cheated when the researcher returned to the room.
At a later stage, all of the children had to perform a separate memory test and the research found that the children who had lied performed significantly better than those children who didn’t lie.
Dr Tracy Alloway, project lead from the University of North Florida was also involved in the research and said that “this research shows that thought processes, specifically verbal working memory, are important to complex social interactions like lying because the children needed to juggle multiple pieces of information while keeping the researcher’s perspective in mind”.
This has got me thinking as a lot of the readers of this blog are accountants or studying to be accountants.
“Thought processes”, “verbal working memory”, “juggling multiple pieces of information” and “keeping other people’s perspective in mind” are all skills which many accountants need.
Does this mean that you would make a good accountant if you were a good liar when you were a child?
Whatever your answer is, I’m not sure I would believe you…
https://www.theexpgroup.com/wp-content/uploads/2016/02/Young-accountant.jpg7691361Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2018-05-03 13:00:252018-05-03 13:00:25Would a good liar make a good accountant?
Some of you may have heard of the website Ashley Madison.
For those of you who haven’t heard of Ashley Madison, it’s a website where married people can register to meet other married people without their respective husband or wife knowing and then have an affair.
In fact, some of you may be registered members of the site (this does raise the question that if you are a registered member of Ashley Madison and are reading this business blog then at the moment you are finding business stories more interesting than having an affair so well done on that).
Ignoring the rights or wrongs of a website facilitating affairs, Ashley Madison has had an up and down ride over recent years.
Back in 2015, they were hacked. As a result the personal details of their users were leaked and there were a lot of users. When I say “a lot”, there were 32 million users.
The situation got worse for Ashley Madison though.
As well as their systems being hacked and details of who had signed up being leaked, it turned out that the vast majority of users were men and of the women who had signed up a significant proportion were Bots (i.e. a piece of software) or prostitutes.
All in all, not great selling points when trying to encourage new members.
In an attempt to build up trust (if trust is a relevant word for people looking for affairs that is…), Ashley Madison commissioned Ernst & Young to cast an eye over the membership data and see if it stood up to scrutiny.
There were some interesting results including the fact that 15,542 new members signed up each day in 2017 (that’s nearly half a million new users per month).
There were also more active women on the site than men. Globally, the ratio of active males to active females was 1 to 1.13 but there were variations on a regional basis ranging from Australia where the male to female ratio was 1 to 0.78 and Columbia where the ratio was 1 to 2.39.
Ernst & Young also reported that “The Client had used Bot programs to generate message activity with paying customers in prior years. The Bot programs were decommissioned in 2015 and our procedures related to calendar 2017 found no evidence that the use of Bot programs previously operated had been reinstated.”
So, in theory the registrations are human and there’s no danger of falling in love with a bot.
The full Ernst & Young report can be found at www.ashleymadison.com/2017report but I would be careful as if you’re viewing this on a computer at home and your husband or wife finds you’ve been visiting ashleymadison.com then there could be some difficult questions to answer.
Then again, if you start typing in the website and your web browser recognises it from a previous visit to that site then maybe…
https://www.theexpgroup.com/wp-content/uploads/2018/04/ethics-in-business.jpg18833347Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2018-04-26 13:34:212018-04-26 13:34:21EY confirm the women were real
KPMG UK released their results last month for their most recent accounting period and they showed a fall of 10% in pay for the KPMG partners when compared to the previous year.
Although the firm’s revenue rose by 5% to £2.2 billion, it’s profit fell to £301 million.
The firm wrote off a number of technology investments.
KPMG, like the rest of the Big 4, have invested heavily in technology companies in an attempt to stay at the forefront of technology.
Unfortunately for KPMG, not all of their investments were successful. Bill Michael, the Chairman of KPMG, highlighted one investment that hadn’t done so well – KPMG had committed £3 million to Flexeye, a tech company that analyses large amounts of data and it hadn’t proved to be the wisest investment.
Whilst profits fell, it hasn’t all been bad news for KPMG as their audit practice grew by 10%.
Back to the average pay of the KPMG partners though and although their average pay fell by 10% I’m sure that the partners will still be able to afford to buy a sandwich for lunch.
The average pay for the KPMG partners was £519,000 each.
That’s not too bad is it?
But how does it compare with the average pay from the partners of the remaining Big 4.
The most recent reported results show the following average pay per partner:
Deloitte – £865,000
EY – £677,000
pwc – £652,000
It looks like Deloitte partners will be having the more expensive sandwiches for lunch.
https://www.theexpgroup.com/wp-content/uploads/2018/01/KPMG-salaries-1.jpg476846Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2018-01-28 21:37:382018-05-11 07:41:46How much do Big 4 partners get paid?
Picture the scene – you’re the senior auditing partner of KPMG in America with more than 30 years of experience serving some of KPMG’s most prestigious clients. There are over 9,000 KPMG people in the US who look up to you as the boss.
You receive some leaked information about which of your audits the US audit watchdog is going to examine as part of their annual inspection of how well KPMG perform audits.
(a) Disclose this unethical breach immediately, or
(b) Try to keep things quiet and make sure that the audit files of the audits selected are perfect?
Unfortunately for Scott Marcello, the (now ex) head of KPMG’s audit practice in America, he didn’t choose option (a).
The background to the issue is that every year the US audit regulator, the Public Company Accounting Oversight Board (PCAOB) selects a sample of audits to inspect and ensure they have been performed properly.
A former employee of the PCAOB had joined KPMG. A friend of his who was still working at the PCAOB tipped him off about which audits would be selected for inspection this year.
The confidential information was then passed up the KPMG hierarchy until it reached Mr Marcello.
We can only guess what Mr Marcello and 4 other KPMG partners were planning on doing with the leaked information but one thing was for sure and that was they didn’t disclose the leak.
Whilst the 5 partners clearly weren’t very ethical, KPMG as an organisation acted quickly once they found out about it.
The 5 partners were fired and Lynne Doughtie, the chairwoman and chief executive of KPMG was quoted as saying “KPMG has zero tolerance for such unethical behaviour. Quality and integrity are the cornerstone of all we do and that includes operating with the utmost respect and regard for the regulatory process. We are taking additional steps to ensure that such a situation should not happen again”.
The PCOAB publish the results of their inspections and the previous results of the KPMG inspections perhaps give a reason for why Mr Marcello was keen for any help, whether it was ethical or unethical.
In 2014 and 2015, KPMG had more deficiencies in their audits than any of the other Big 4 in America.
38% of their inspected audits in 2015 were found to be deficient whilst in 2014, 54% were found to be deficient.
I admire them for being brave enough to do it but if I’m honest, by the look on some of their faces, I think a few of them aren’t sure that this will be the high point in their career.
Partners in accounting companies are renowned for being hard working and intelligent individuals.
One thing they are not renowned for is singing.
Now, whilst there are no doubt a number of partners who are good at singing, the PwC partners in Hungary have just released a video of them singing a cover of the famous John Lennon song “So this is Christmas” and it has confirmed that their finance and business skills are far superior to their singing skills (or at least I hope their finance and business skills are better than their singing…)
Congratulations though to them for getting into the festive spirit and their singing skills can be seen in the video below (if you’re viewing this in the office I’d advise headphones so as not to alarm any of your colleagues…)
If I had asked that question 10 years ago the chances are that a large proportion of answers would have been “a suit”.
Things are different now though. Tastes are changing and so are a number of office dress codes. As a result, fewer people are now wearing suits to the office.
A number of major companies revised their dress codes this year. JP Morgan for example decided to allow their employees to wear business-casual attire on most occasions. PwC also switched to a more casual dress code where employees were allowed to wear jeans as long as there were no client meetings.
Whilst this relaxing of business wear rules can have benefits for individuals who prefer to work in more casual clothing, there are some organisations who will suffer.
Fashion brands focussing on tailored men’s suits are an obvious example of a business which could suffer due to the decline in demand for men’s suits.
Brioni, the Italian menswear fashion house owned by French holding company Kering was founded in Rome in 1945 and is renowned for its high-quality suits. It has had numerous famous faces as its customers including James Bond in the Bond films from Goldeneye to Casino Royale and more recently it was reported that Donald Trump has been wearing Brioni suits during his US presidential campaign.
But things aren’t going well for Brioni.
Earlier this year Bloomberg reported 400 job losses due to a fall in demand and recently Justin O’Shea, the creative director of Brioni who was brought in to modernise the luxury Italian brand, left abruptly after just six months in the job.
Mr O’Shea is well respected in the fashion industry and has a reputation for being a very straight talking person. He told Vogue that “First of all, I would change the shitty logo. I would change the campaign. I would change the clothes. In fact, I would change pretty much everything.”
When it comes to change though, one thing seems certain and that is that the fall in demand for men’s suits is unlikely to change given the relaxing of more and more office dress codes.
https://www.theexpgroup.com/wp-content/uploads/2016/11/suit-product-life-cycle.png475844Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2016-11-01 10:39:402016-11-01 10:39:40Does this suit you?
Let me ask the men who are reading this a quick question – how would you feel if you had to wear uncomfortable high heels during a 9 hour working day?
My guess is that unless you have a pretty unusual job, as a man you wouldn’t feel too happy wearing high heel shoes. There would also probably be some fairly blunt discussions with your employer if they made it compulsory that you wore high heels.
If you’re a woman though, then it’s a different matter.
Nicola Thorp, a 27-year-old lady was temping at PwC’s office in central London as a receptionist. She turned up for her first day of work at PwC in flat shoes but she was told she had to wear shoes with a “2 inch to 4 inch heel” (5 cm to 10 cm).
According to the BBC, when she refused and complained that male colleagues were not asked to do the same, she was sent home without pay.
To be fair to PwC though, they had outsourced the reception duties at their London office to outsourcing firm Portico and the dress code was not a PwC policy. A PwC spokesman told the BBC that “PwC does not have specific dress guidelines for male or female employees.”
Portico said that Ms Thorp had signed the appearance guidelines but would now review them.
Ms Thorp however has taken the matter further. She has launched a petition on the UK Parliament website calling for it to be illegal for companies to demand that women wear high heels.
The UK Parliament website works in such a way that if a petition receives more than 100,000 signatures the matter will be considered for debate in parliament.
As at the time of writing, the petition has received over 140,000 signatures so it’s likely that the matter will be debated in Parliament.
My guess is that being debated in the UK parliament was the last thing on her mind as Ms Thorp put on her shoes to head into her first day of work at the offices of PwC in London…
https://www.theexpgroup.com/wp-content/uploads/2016/06/pwc-heels.jpg8841571Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2016-05-29 17:29:252016-05-29 17:29:25High heels at PwC
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