Become more informed in minutes....

The PCAOB has released a report on the impact of generative artificial intelligence (AI) on audits. The report reflects limited outreach to audit firms and companies, revealing that generative AI is primarily used for administrative and research activities. However, there are potential areas where generative AI can assist with planning and performing audits, such as summarizing accounting policy and legal documents. A Gartner survey found that only 12% of audit executives use generative AI for audit-specific use cases. The PCAOB report states that auditing standards are not viewed as impediments to the development and use of generative AI. It also emphasizes the importance of human involvement in auditing and financial reporting, with generative AI augmenting rather than replacing humans. The report highlights the need for strong quality controls and professional skepticism when using new tools like AI. The PCAOB's findings also indicate that generative AI is more commonly integrated in operational and customer-facing areas rather than accounting and financial reporting processes.

 

Accounting Today

Pricing Models for Growth

We’ve brought together several top industry influencers to walk through what it takes to redefine your business for the modern era, including strategies to help you grow with intention.

This ebook includes: 

• Core growth principles leaders should focus on to evolve their business model
• How to build a structured pricing ecosystem
• Key action items to implement change

Download eBook

 

A recent survey conducted by Thomson Reuters reveals that tax professionals have mixed feelings about the rise of generative AI in tax work. While 47% of practitioners are hopeful or excited about the new technology, 50% express hesitation or concern. Only 3% are actively fearful. Those who are enthusiastic see opportunities for productivity gains, business growth, and industry transformation. However, skeptics worry about unethical use and job displacement. Despite the divided opinions, 73% of tax professionals believe generative AI can be applied to tax work. However, only 52% think it should be applied. The survey also shows that adoption of generative AI tools has been slow, with only 10% of organizations currently using them. The most common use cases are accounting/bookkeeping and tax research. Lack of client direction may be a factor in the slow adoption. Tax professionals also believe that the use of generative AI will allow them to charge higher rates. 38% expect a slight increase in rates. Overall, the survey highlights the mixed feelings and cautious approach of tax professionals towards generative AI in tax work.

 

Accounting Today

The Federal Trade Commission (FTC) has ordered eight companies, including Mastercard, Revionics, and JPMorgan Chase, to provide information on their artificial intelligence (AI)-powered "surveillance service pricing." The FTC is investigating how these companies use AI and other technologies to change pricing based on consumer behavior, location, and personal data. The agency is concerned that this practice allows companies to charge different prices to different customers. FTC Chair Lina M. Khan stated that Americans deserve to know if businesses are using consumer data to deploy surveillance pricing.

 

Techcrunch

CNBC

Los Angeles Times

Reuters

New Jersey is allowing the reallocation of up to $500m in tax credits from two incentive programs, Aspire and Emerge, to attract AI companies. The move aims to encourage AI companies to build data centers or other facilities in the state, creating new jobs and investment. The tax incentive programs were established in 2021 as part of a $14bn economic recovery law.

 

Bloomberg Tax

Financial institutions are being advised to evaluate and enhance their compliance programs in light of proposed revisions to anti-money laundering and counterterrorism financing (AML/CFT) rules. The Financial Crimes Enforcement Network (FinCEN) has put forward these rules to streamline AML/CFT program rules across various financial institutions. The proposed changes include the introduction of a new statement of purpose, the requirement for an "effective" compliance program, additional components or pillars, a risk assessment process, qualified personnel for pillars, periodic assessments and audits, and the responsibility of U.S. persons. The proposed revisions are driven by the Anti-Money Laundering Act of 2020. Companies are urged to prepare for increased regulatory scrutiny and engage in the regulatory comment process. Comments on the proposal can be submitted until September 3.

 

Bloomberg Tax

A report by the AICPA and North Carolina State University's Enterprise Risk Management (ERM) Initiative reveals that only a third of organizations have complete ERM processes in place. The report also highlights that just over a quarter of organizations rate their overall risk management oversight as "mature" or "robust." Despite the changing landscape of corporate risks, including economic concerns, geopolitical developments, and technological advancements, most organizations lack robust ERM practices. The study emphasizes the need for organizations to adopt a proactive and strategic approach to risk management. While the adoption of ERM processes in the US has increased over the years, the majority of entities still overlook or make slow progress in advancing their ERM processes. The report calls for action to enhance the strategic value of risk oversight and provides questions for senior executives and boards to consider. Overall, organizations need to prioritize ERM to protect their business, create value, and ensure long-term viability.

 

CPA Practice Advisor

A recent report from Netskope Threat Labs reveals that 96% of offices are now using some form of generative AI, with ChatGPT leading the way in 80% of workplaces. Other popular applications include Grammarly, Microsoft Copilot, and Google Gemini. Despite widespread adoption, security remains a critical issue, with 77% of companies blocking at least one AI application to safeguard proprietary data. Commonly blocked apps include Beautiful.ai, Writesonic, and Craiyon. To combat potential data breaches, over 42% of companies have implemented sophisticated data loss prevention measures, such as blocking sensitive queries and adding "coaching" interventions. While these methods prove effective—more than half of users halt actions when prompted—the industry continues to focus on AI's role in coding, with source code being the most common sensitive data uploaded.

 

Forbes

U.S. transparency rules for private equity and hedge funds were struck down by the Fifth Circuit Court of Appeals in June and the SEC has not moved to appeal, letting a deadline for a rehearing to pass. The SEC had required private fund managers to disclose more information on earnings, expenses, and separate agreements with large investors but the court ruled the SEC had exceeded its authority in imposing these requirements. "It's a huge defeat. It was a signature rulemaking. The implications of it are a major setback," said Marc Elovitz, head of the investment management regulatory group at Schulte, Roth & Zabel.

 

Financial Times

Reuters

Tax practitioners can gain insight into the Treasury Department's response to the end of agency deference by examining its approach to forthcoming partnership tax regulations. Brett Bissonnette, a tax controversy services leader at Plante Moran, details how the Treasury is expected to focus on defining a "limited partner in a limited partnership" and applying the "disguised sale of a partnership interest" rule. Despite the loss of deference, the Treasury intends to finalize regulations proposed in 2011, which may face challenges from taxpayers. The Treasury's delay in finalizing its own proposal and the potential restrictiveness of the regulations may be viewed as unnecessary and duplicative by the courts. Additionally, the Treasury may take a more conservative approach in issuing regulations for the "disguised sale of a partnership interest" rule. The Treasury's previous attempt at issuing regulations for this rule was withdrawn in 2009. The Treasury's response to the end of agency deference will be closely watched by tax practitioners and taxpayers alike.

 

Bloomberg Tax

A federal appeals court has upheld a landmark law giving temporary workers in New Jersey sweeping new protections and rights. The law, known as the "Temp Worker Bill of Rights," fully took effect on July 1. The law was inspired by an investigation that found some low-paid temp workers being exploited and mistreated by temp agencies. The court's decision is a blow to business groups and staffing agencies that sought to stop the law's implementation. The law requires agencies to provide temp workers with basic information about their work, pay rate, schedule, and sick time. It also eliminates many fees deducted from workers' paychecks and guarantees them at least minimum wage. Supporters say the law is critical for temp workers, many of whom are people of color or first-generation Americans. The New Jersey Business and Industry Association expressed its disappointment with the decision but noted that a separate claim is pending before the district court.

 

NJ.com

The California Supreme Court has upheld Proposition 22, allowing gig economy companies including Uber and Lyft to classify drivers as independent contractors. The court rejected claims that the law is unconstitutional, stating that it does not interfere with lawmakers' authority over workers' compensation. The ruling marks the end of a long legal battle and means that delivery and ride-hailing services will continue to operate under the current classification. The decision has significant implications for the over 1 million drivers in California and may have ripple effects on drivers in other U.S. states. The law, which passed with 59% of the vote, grants limited benefits to drivers but exempts companies from providing full-fledged employee rights. Labor groups expressed disappointment but highlighted other avenues for workplace protections.

 

Los Angeles Times

Wall Street Journal

John Tuttle, a veteran executive at the New York Stock Exchange, is leaving after 17 years. He has been hired as the president of Acrisure, a Michigan-based insurance brokerage and real-estate services company. The move was announced by Acrisure after it was reported by The Wall Street Journal. Tuttle is known for his success in attracting IPOs during his time at the NYSE. The decision to leave the exchange and join Acrisure is seen as a surprising career move.

 

Wall Street Journal