• Skip to primary navigation
  • Skip to main content
Earmark CPE

Earmark CPE

Earn CPE Anytime, Anywhere

  • Home
  • App
    • Web App
    • Download iOS
    • Download Android
  • Webinars
  • Podcast
  • Blog
  • FAQ
  • Authors
  • Sponsors
  • About
    • Press
  • Contact
  • Show Search
Hide Search

Blog – Full Posts

Why Withum Got Slapped with a $2 Million PCAOB Fine

Blake Oliver · March 20, 2024 ·

The PCAOB’s recent $2 million fine against WithumSmith+Brown, PC has sent shockwaves through the audit profession, and for good reason. A prominent audit firm is in hot water due to severe audit quality issues.

In a recent episode of The Accounting Podcast, I discussed this alarming development with Chris Vanover, a former Big 4 firm chief auditor who now leads CPAClub. Our conversation highlighted the root causes behind Withum’s missteps and the broader implications for the audit profession.

As Chris Vanover pointed out, “I think this is the PCAOB’s shot across the bow, where they’re starting to hammer firms with respect to whether they actually have the resources to execute the audits… The crux of the issue is they didn’t have enough people to get through the significant number of audits they decided to take on.”

SPAC Audits: A Lucrative but Risky Opportunity

Chris highlighted a startling fact from the PCAOB disciplinary order: Withum’s issuer audits skyrocketed from a mere 76 in 2020 to a staggering 445 in 2021 – a nearly 500% increase in just one year! This explosive growth can be attributed to the rise of SPACs, which have become a lucrative opportunity for audit firms as the market for these investment vehicles has soared.

However, the allure of SPAC audits has come with a heavy price for Withum, which failed to properly assess the resources needed to handle such a massive uptick in engagements.

Overworked and Overwhelmed Partners & Staff

Chris pointed out that the firm’s partner headcount only increased from 15 to 23 despite the nearly 500% increase in issuer audits. A mere eight additional partners were expected to handle an extra 369 engagements – an equation that doesn’t balance.

Partners found themselves drowning in an overwhelming number of audits. Chris revealed that according to the PCAOB, just five partners were responsible for a staggering 62% of the firm’s issuer audits, with one partner reported working an astonishing 200 hours in a mere two-week period.

The Consequences: Audit Deficiencies Galore

But the pain didn’t stop at the partner level. Chris said, “Imagine what the ripple effect is for the senior managers, the managers, the seniors, and the associates on the engagement.”

The strain on Withum’s people greatly affected the firm’s audit quality. The PCAOB’s investigation revealed a litany of deficiencies, including inadequate consultation with external resources when faced with complex accounting issues and improper auditing of estimates. These are just a few examples of how Withum’s audit quality suffered due to the firm’s overstretched resources.

Partner Incentives: The Elephant in the Room

As we dig deeper into the root causes of Withum’s audit quality issues, it’s impossible to ignore the role that partner incentives may have played. In many audit firms, partner compensation is heavily tied to revenue growth and client acquisition. This incentivizes partners to prioritize short-term profits over long-term quality and sustainability.

In Withum’s case, the explosion of SPAC audits presented an irresistible opportunity for partners to boost their bottom lines at the risk of creating a toxic work environment. This contributes to staff burnout and turnover and increases the risk of errors and oversights.

As Chris told me, “This is the fundamental issue with audit quality. People are overworked, and they’re missing things that are critically important to executing a qualified audit.”

Was the PCAOB Fine Enough to Deter Future Misconduct?

The PCAOB’s decision to slap Withum with a $2 million fine signals that the regulatory body is taking a harder line on audit firms that fail to prioritize quality, especially considering that the PCAOB also levied a $3 million fine on Marcum in June 2023 for similar problems.

But are these penalties enough to change behavior and deter future misconduct?

On one hand, a multi-million dollar fine like this represents a serious reputational blow. No one wants to be the next firm in the headlines for all the wrong reasons, and the threat of public embarrassment may be enough to spur some much-needed introspection and reform.

However, there are also reasons to be skeptical about the deterrent effect of this fine. Chris argues, “At the end of the day, you need a higher penalty for what they did wrong.”

While it sounds like a lot, a one-time $2 million fine may not be enough to change the calculus for large audit firms, which generate hundreds of millions or even billions of dollars in revenue. Withum brings in $550 million per year. For firms that prioritize profits via their partner compensation model, a fine of this size may be seen as simply a cost of doing business.

How to Build A Stronger, More Resilient Audit Profession

The Withum case is a stark cautionary tale for the entire audit profession, highlighting the dangers of taking on too many engagements without adequate resources.

Only time will tell whether Withum learns from its mistake. We cannot rely on fines to drive meaningful, lasting change. To address these issues, the profession must examine the incentive structures and cultural norms prioritizing short-term revenue growth over long-term quality and sustainability. This may require a significant overhaul of partner compensation models and a renewed focus on talent development, work-life balance, and technological innovation.

For insights from industry experts like Chris Vanover, subscribe to The Accounting Podcast. We aim to spark meaningful conversations and drive positive change in the accounting profession. By coming together as a profession and facing these challenges head-on, we can build a stronger, more trusted, and more valuable audit function for the future. Will you join me?

Lights, Camera, Deception: How CPAs Protect Entertainment Clients

Blake Oliver · March 19, 2024 ·

Imagine a blockbuster film that grosses hundreds of millions of dollars at the box office, yet the actors and creators are told they won’t receive any profits because the film didn’t make a profit. Sounds unbelievable, right? This scenario is all too common in the entertainment industry thanks to a practice called “Hollywood accounting.”

Kendale King is a CPA who specializes in entertainment accounting. In a recent episode of the Earmark podcast, Kendale shared his insights and experiences navigating the accounting tricks of Hollywood and highlighted strategies CPAs can use to protect their entertainment clients’ financial interests.

What is “Hollywood Accounting?”

At its core, Hollywood accounting refers to the accounting practices used by studios to manipulate financial statements and make it appear that a successful film or TV show has not generated a profit. This is done to avoid paying profit shares to actors, writers, directors, and other participants entitled to a share of the net profits.

As Kendale explained in the podcast, “Hollywood accounting is a term that is generally used in a deceptive light, where studio accountants or studio execs are trying to make a successful film look like it’s not profitable on paper, so they don’t have to pay out certain participations or residuals to individuals, which are all based on the accounting.”

When actors, writers, and directors are deprived of their fair share of profits, it can take a significant emotional and financial toll. Many high-profile cases and lawsuits have been filed by individuals who feel cheated of their rightful earnings.

Harry Potter and the Questionable Cost

One of the most famous examples of Hollywood accounting in action is the case of Harry Potter films. Despite the franchise’s enormous success, many actors have claimed they never received their fair share of the profits. Kendale noted, “It was a huge success, but the actors were left wondering where their piece of the pie was.”

So, how do studios get away with this? A big part of the problem lies in the complex contract language and how profits are calculated.

“The profit calculations can be complex, and it depends on who’s in charge of determining what’s included in those calculations. The actors weren’t getting their fair share because the executives and accountants were including costs that were borderline questionable.” Kendale explained.

These questionable costs include overhead, marketing expenses, distribution fees, or even interest charges that might not directly relate to the production. This practice can lead to a significant reduction in net profits, which affects the amount of money available for distribution to the talent and creators entitled to a share of those profits.

Best Practices for Protecting Clients’ Financial Interests

As CPAs, we promote transparency and protect our clients’ financial interests. This means being vigilant in identifying and addressing potential Hollywood accounting issues and collaborating with legal teams to ensure fair profit participation.

So, what can CPAs do to protect their clients from falling victim to Hollywood accounting? Here are some best practices to keep in mind:

Thorough contract review and negotiation: I suggested that actors negotiate their share based on top-line revenue rather than profit participation to avoid the impact of studios inflating expenses to reduce profits. However, Kendale cautioned that this is easier said than done: “Negotiating for top-line revenue is unlikely, as it’s not standard practice. Depending on the deal, you might not have much negotiating power.”

Defining clear terms for revenue sharing and profit calculation: Because most industry participants will have no choice but to take a share of the profits, Kendale advised that it’s critical to have clear, unambiguous language in contracts that spell out precisely how profits are calculated.

Ongoing monitoring and auditing of financial statements: CPAs should regularly review and audit their clients’ financial statements to identify potential issues. Kendale advises, “The main thing I advise is to get another accountant or financial manager to audit the financials because they’re open for audits. More often than not, you can have your representative, your own ‘creative accountant,’ go in there and question why certain things are included and push to remove them if they don’t fit the definition.”

For a Deeper Dive, Listen to the Full Episode

This is just the tip of the iceberg regarding the fascinating world of entertainment accounting. We dive deeper into various topics in the full podcast episode with Kendale King.

From Big Four to Entertainment: For example, Kendale shares his journey from working at a Big Four accounting firm to launching his practice specializing in entertainment accounting. He discusses the unique challenges and opportunities of serving clients in the entertainment industry and offers valuable advice for CPAs looking to make a similar transition.

How Netflix Changed the Game: We also explore the evolving landscape of entertainment accounting in the era of streaming services like Netflix and how these platforms have changed how content is produced, distributed, and accounted for. Kendale provides insights into the complexities of revenue recognition and cost amortization in this new environment and discusses the potential implications for talent compensation.

How Blockchain Could Revolutionize Royalties: We visit the intersection of entertainment and emerging technologies like blockchain and cryptocurrency. Kendale shares his experiences working with clients in this space and discusses how these technologies can revolutionize tracking and distributing royalties and residuals.

If you’re a CPA looking to expand your knowledge and stay ahead of the curve in the rapidly changing world of entertainment accounting, listen to the full Earmark Podcast episode.

And if you like what you hear, subscribe to Kendale’s podcast, Hollywood Accounting, for a wild ride through the finances of film, music, gaming, and sports.

A ProAdvisor’s Guide to the New Era of QuickBooks

Earmark Team · March 8, 2024 ·

QuickBooks has consistently led the charge in the accounting tech world, evolving to cater to the diverse needs of small businesses and accounting professionals. On a recent episode of the Earmark Podcast, I had the opportunity to delve into the latest changes with Hector Garcia, a top QuickBooks ProAdvisor and educator. 

Our conversation highlighted the impact of Intuit’s QuickBooks Live Bookkeeping and Tax services on our community. Hector and I delved into whether Intuit is now competing with its ProAdvisors or is fostering a collaborative future. We also explored the challenges and opportunities for accounting firm owners.

Keep reading for the highlights of our discussion, or watch the full episode here:


Want to listen on the go? Find the link to the podcast version at the bottom of this article.

A Closer Look at Intuit’s Live Services

Intuit launched QuickBooks Live Bookkeeping in 2019. This year, they’re adding Live Tax, meaning that QuickBooks customers can now discover and purchase basic bookkeeping and business tax services directly from inside the product. Intuit is targeting these services to businesses that are not yet ready to hire a full-time accountant or bookkeeper but require professional help. Sounds a lot like our clients, doesn’t it?

The Accounting Community Reacts

The announcement was met with unease – to say the least – across the ProAdvisor community, sparking concerns about direct competition from Intuit’s vast resources. Hector put it bluntly, saying, “When this first thing launched, it was something that mostly accountants just hated.”

A Nuanced Impact: Analyzing the Effect on ProAdvisors

Many accountants feared Intuit’s “Live” services would compete directly with ProAdvisors, but the impact has been more positive than anticipated. Hector believes that the new services have increased awareness of professional bookkeeping and tax services among small businesses, resulting in a surge in demand for tailored and advanced advisory services that only ProAdvisors can provide. QuickBooks Live doesn’t compete with this.

Carving Out Opportunities for ProAdvisors

Intuit’s move has highlighted ProAdvisors’ value to their clients. Here are some ways Hector says ProAdvisors can distinguish themselves and expand their offerings:

  • Specialization: Develop expertise in niche markets or complex accounting needs, delivering a level of specialization that transcends Intuit’s offerings.
  • Advisory Services: Capitalize on the increasing demand for strategic financial guidance, budgeting, forecasting, and business planning—where your impact can be profound.
  • Technology Integration: Employ your deep understanding of the QuickBooks ecosystem to provide bespoke technology solutions, enhancing your clients’ operational efficiency.

Adapt and Thrive: Embracing the New Landscape

Hector says adapting to these changes involves embracing innovation and identifying ways to enhance Intuit’s services. Here are his suggestions for how to adapt and thrive:

  • Market Your Unique Value: Communicate the advantages of your services, emphasizing the personalized touch you offer beyond Intuit’s scope.
  • Embrace Technology: Harness the full potential of QuickBooks features and third-party apps to deliver state-of-the-art solutions.
  • Invest in Continuous Learning: Stay abreast of industry shifts and technological advances to offer forward-thinking services.

Transforming Challenges into Opportunities

Intuit’s introduction of Live Bookkeeping and Live Tax has undoubtedly prompted concerns about competition. Yet, it has also acted as a stimulus for innovation within our field.

“The essential lesson for ProAdvisors is to recognize the necessity of adapting and discovering new ways to distinguish their services,” Hector says. By focusing on areas where their expertise can outperform automated services, ProAdvisors can continue to deliver unparalleled value to their clients. Specialization, strategic advisory services, and advanced technological integration within the QuickBooks ecosystem are paths to enhancing your offerings and making yourself indispensable to clients.

Are you prepared to navigate these changes and seize the opportunities they present? To explore these topics more in-depth, tune into my conversation with Hector Garcia on the Earmark Podcast.

3 Digital Marketing Trends Transforming Accounting Firms

Blake Oliver · November 8, 2023 ·

Did you know top accounting firms are now generating 6-figure leads from their websites? Digital channels are rapidly replacing traditional networking for customer acquisition.

That’s according to David Toth, an expert on strategic growth for accounting firms, who joined my podcast to talk about how digital marketing and AI are disrupting accounting firm marketing.

David opened my eyes to how the top 400 firms leverage digital marketing to grow. Here are three trends that should excite and inspire us all.

1. Marketing Automation & CRMs 🤖

Top accounting firms are implementing marketing automation platforms like HubSpot to track website leads and deals. David said, “I know a significant number of firms dropping Marketo or Pardot and going to HubSpot for marketing automation.”

The agility of HubSpot gives them invaluable data to analyze revenue sources and optimize their sales process.

They also utilize data intelligence tools like Introhive to auto-populate their CRMs by pulling contacts, subject lines, and calendar data from email and cloud storage. This injects CRMs with 30 times more contacts without manual entry.

However, firms still face challenges getting professionals to fully adopt CRMs day-to-day. As leaders, we must guide our teams to embrace these technologies wholeheartedly if we want to compete digitally!

2. Optimizing LinkedIn 🔎

Most accounting firms are significantly under-realizing LinkedIn’s potential for lead generation and recruitment. Employees’ collective networks stretch far wider than the firm’s followers.

To build a bigger digital presence, encourage partners to showcase thought leadership consistently on LinkedIn through long-form posts, articles, and video. This builds personal brands and firm credibility.

With Gen Z and Millennials driving business decisions now, LinkedIn is a crucial platform for attracting top young talent and reaching emerging clients. Frims that want to grow must optimize for digital networking.

3. High-Value Leads from Digital 💰

While most dealmaking historically relied on in-person networking, leading accounting firms now frequently generate 5 and 6-figure leads from their websites. David said, “I have a client that received a $450,000 opportunity, sight unseen through their website.”

As buyers increasingly research and vet firms online before contacting them, digital channels now replace traditional networking for initiating deals.

It’s time for a mindset shift – we must embrace digital marketing as a vital revenue generation channel, not just a brand awareness tool. The future of deals is digital.

Dive Deeper on the Earmark Podcast

Want to dive deeper into the digital marketing strategies and innovations shaping the accounting industry? Listen to my conversation with David Toth.

In the episode, you’ll learn more about:

  • How firms are using webinars as a “content engine” to fuel their marketing
  • David’s perspective on the future of SEO given the rise of AI chatbots
  • Actionable tactics for optimizing your LinkedIn profile and network
  • Adopting short-form video content on platforms like TikTok and Instagram
  • Leveraging generative AI tools like ChatGPT for efficient content creation

If you want to get your firm’s marketing on the right track, be sure to listen to this episode. You can also earn free CPE for listening! Tune in to learn how. And let me know what you think. Leave a comment or contact me at BlakeOliver.com.

Elevate Your Client Advisory Services with LiveFlow’s New Courses on Earmark

Blake Oliver · October 31, 2023 ·

We’re pleased to welcome the “Empowering Client Accounting Services (CAS) with LiveFlow” channel to Earmark! Presented by LiveFlow, this channel focuses on taking CAS to the next level.

Read on for details about their first course and how to start earning free CPE credits.

Overview of the Channel

The “Empowering CAS with LiveFlow” channel features webinars and courses aimed at advancing accounting professionals’ client advisory skills.

Topics covered include:

  • Financial forecasting and projection strategies
  • Data-driven insights for strategy and growth
  • Technology to improve workflows and advisory
  • High-value services like budgeting and planning

With real-world expertise, this channel provides the knowledge to expand your CAS offerings.

First Course Details

The debut course dives into 13-week cash flow forecasting to elevate client financial planning.

Led by Amy Walker, CPA and Anita Koimur, participants will learn:

  • The role and value of 13-week forecasts
  • Steps for building accurate cash flow projections
  • Using forecasts to guide business strategies
  • Reporting methodologies and best practices

Listeners will gain skills to immediately improve their CAS capabilities.

Earn Free CPE with Earmark

Earmark makes it easy to earn CPE credits for listening to accounting podcasts and webinars. 

Get started with LiveFlow’s cash flow forecasting course here.

  • « Go to Previous Page
  • Page 1
  • Interim pages omitted …
  • Page 27
  • Page 28
  • Page 29
  • Page 30
  • Page 31
  • Interim pages omitted …
  • Page 35
  • Go to Next Page »

Copyright © 2025 Earmark Inc. ・Log in

  • Help Center
  • Get The App
  • Terms & Conditions
  • Privacy Policy
  • Press Room
  • Contact Us
  • Refund Policy
  • Complaint Resolution Policy
  • About Us