Think you know the best cities for accountants? The number one spot may surprise you.
Keeping up with the latest news in the profession can be challenging, but The Accounting Podcast makes it easy. In episode 352, my co-host David Leary and I break down need-to-know news, such as the top cities for accountants, how Donald Trump defrauded banks, tightened audit confirmation rules, the latest AI developments, and a surprising admission from a Deloitte CEO.
Continue reading for a roundup of the top five stories discussed in our latest episode, and be sure to subscribe to get our weekly updates delivered directly to your podcast player.
1. The Number One City for Accountants
Think New York, Chicago, and Los Angeles are the top cities to be an accountant? Think again. An analysis by Forbes Advisor ranked Salt Lake City, Utah, as the #1 city for accountants to build their careers.
What factors propelled Salt Lake City to the top spot? The relatively low cost of living and projected job growth in Utah’s capital provided advantages.
By contrast, traditional accounting hub cities like New York and Los Angeles ranked #72 and #41 respectively. While salaries may be higher in coastal cities like San Francisco and New York, so is the overall cost of living.
This data suggests that selecting locations based solely on short-term earnings may negatively impact accountants in the long run. Considering factors such as reasonable living expenses and work-life balance is crucial. Places like Salt Lake City may offer a better quality of life in the long term.
Plus, with remote work on the rise, accountants may have more flexibility when optimizing their location. The key is weighing affordability, growth potential, and lifestyle fit. Just don’t assume the traditional big-name cities are necessarily the best bet.
2. How Trump Falsified Financial Statements
A judge ruled that Donald Trump defrauded banks and insurers while building his real estate empire. This high-profile case underscores the real legal risks of misleading financial reporting.
The judge found clear evidence that Trump falsified financial statements to exaggerate his net worth. Specific examples included:
Inflating the size of his Trump Tower triplex from just under 11,000 sq ft to 30,000 sq ft.
Valuing his Seven Springs estate in Westchester County, NY, at $291 million when appraisals estimated $25-30 million.
Claiming that 2,500 luxury homes could be built at Aberdeen Golf Course in Scotland when local authorities only approved 1,500 homes with severe restrictions.
Overvaluing several Vornado Realty partnership properties at hundreds of millions more than professional appraisals.
Misclassifying non-liquid assets as cash, such as his 30% limited partnership interest in Vornado Realty. As a limited partner, Trump had no right to withdraw or use funds, making the partnership stake illiquid.
The judge ruled these actions constituted a "demonstrated propensity to commit fraud" due to the number of false statements, their magnitude, and the duration of the misconduct. The intent was to deceive banks, insurers, and the IRS about Trump's net worth to gain financial benefits.
As a result of this financial statement fraud, Trump could lose control over specific properties. He may also be subject to massive financial penalties.
What’s the lesson here? Even high-profile individuals can face repercussions for presenting a misleading financial picture to stakeholders.
3. A Senator's Wads of Cash Raise Eyebrows
Federal agents raided Democratic Senator Robert Menendez’s home in New Jersey and uncovered $480,000 in cash stashed around the house.
The cash was stuffed in jackets and hidden throughout the Senator’s home. While Menendez denies wrongdoing, why an elected public representative needs vast stacks of cash at home rather than in above-board accounts raises questions.
In response to this news, The Wall Street Journal published a piece examining how much cash is prudent for people to keep at home for emergencies. Experts recommend having 2 weeks to 2 months of living expenses available in case of disasters, bank failures, or technology outages that could freeze access to accounts.
However, holding excess cash heightens the risk of theft. The article notes individuals should balance emergency fund needs with appropriate security measures like fireproof/bolted-down safes and splitting amounts across multiple concealed locations.
4. PCAOB Tightens Requirements for Audit Confirmations
Confirmations have long been a necessary procedure used by auditors to gather evidence and verify information with third parties. However, the PCAOB recently approved tighter standards around how confirmations are handled.
The big change is that the PCAOB is now mandating positive confirmations rather than allowing auditors to rely solely on negative confirmations, which assume no response equates to agreement. Auditors can no longer depend on this passive approach for cash, cash equivalents, and accounts receivable.
The PCAOB is also requiring enhanced objectivity and skepticism by reducing reliance on internal auditors during confirmation selection, request, and response handling.
For auditors, these new PCAOB requirements represent the first major update to confirmation procedures since 2003. They could significantly alter how auditors plan and conduct confirmations to obtain sufficient evidence. While potentially raising challenges in implementation, the changes offer opportunities to improve audit quality by reducing risks.
5. Major AI Investments Show Machine Learning Future
Two big AI investment stories covered on the podcast exemplify artificial intelligence's rapid progress and potential. This emerging technology is poised to transform how accountants access data and insights.
First, Amazon announced a massive $4 billion investment into Anthropic, the creator of Claude. (Claude is an AI assistant and competitor to ChatGPT.) This partnership will bring Claude's natural language capabilities to the AWS cloud platform.
Second, the Pentagon revealed they created an AI system called GAMECHANGER to make sense of their complex bureaucracy and budget rules. The system ingested Department of Defence documentation equivalent to 100 times the length of War and Peace and has answered over 100,000 policy questions for users.
As emerging AI technologies continue to revolutionize the accounting industry, accountants must keep up with the latest advancements in order to stay competitive. One way to do this is by leveraging virtual assistants like Claude, who can analyze financial documents, contracts, and unstructured data to provide valuable insights. In addition, AI can be used to automate workflows, assist with audits, improve reporting, and much more. By embracing AI, accountants can streamline their processes, reduce errors, and ultimately provide better service to their clients.
BONUS: Deloitte CEO Admits He Doesn't Deserve His Multi-Million Dollar Salary
(Sorry — I couldn’t stick to just five top stories.)
High CEO compensation often goes unquestioned, especially by CEOs themselves. However, a remarkable story provides a counterpoint.
The CEO of Deloitte Australia, Adam Powick, earned a $3.5 million salary last year. During a government inquiry into Deloitte leaking confidential client tax information, Powick admitted he does not deserve that pay.
When asked if he deserves to earn seven times more than the Australian Prime Minister, Powick responded, "No, I happen to deeply recognize that I’m incredibly privileged to earn what I do for what I do."
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