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31st October 2025
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THE HOT STORY

AI risk disclosures surge among S&P 500

In 2025, 72% of S&P 500 companies have reported AI-related risks in their disclosures, a significant increase from 12% two years ago. A report by The Conference Board and ESGAUGE highlights concerns over AI's impact on reputation, security, and compliance. Reputational risks, such as implementation and privacy issues, were noted by 38% of companies, while 20% cited cybersecurity risks like AI-amplified threats. Financials, industrials, IT, and health care sectors are most affected. The report emphasizes the need for integrating AI into governance with the same rigor as finance and operations to maintain stakeholder confidence.

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TAX

Election day: tax hikes on ballot

Next Tuesday's off-year election is expected to see lower voter turnout compared to last November's presidential election. However, voters will still face significant decisions regarding ballot measures that could lead to an estimated $3.1bn in tax increases across 20 states. According to the National Taxpayers Union (NTU), there are 13 statewide and 911 local measures on the ballot, which include higher property and sales taxes, as well as new local levies. Tommy Aiello, senior director of government affairs at NTU, said: "These ballot measures may not generate the same headlines as political races, but they have a far more lasting effect on taxpayers' finances." In addition to tax increases, voters will also consider $37.3bn in new bond issuances, imposing long-term obligations on taxpayers.

AI and sales tax: a new frontier

As AI increasingly integrates into professional services, the implications for sales tax are becoming complex. Matt Graham, JD, CPA, explains that the “true object test” is crucial in determining whether a service is taxable. This test assesses what the customer is primarily purchasing. For instance, in an HVAC repair scenario, if AI handles diagnostics and scheduling, the nature of the service may shift, potentially making it taxable. Graham warns that practitioners must be vigilant, as tax authorities are adapting to these changes. He notes: “Taxing agencies aren't bound by the label on the invoice; they care about what's being delivered.” As AI continues to evolve, the risk of misclassification in tax obligations will grow, necessitating careful consideration by advisors.

REGULATORY

Audit firms breathe easier in Q3

The Securities and Exchange Commission (SEC) and the PCAOB have reduced their enforcement actions against auditors, with only one action taken in Q3 2025, according to a report by the Brattle Group. This period marked a significant shift in auditor oversight, particularly following leadership changes at both agencies. "After several months of uncertainty, the third quarter of 2025 marked a defining inflection point for auditor oversight in the United States," the report stated. The PCAOB initiated 32 actions during this quarter, but most penalties were imposed before the resignation of former chair Erica Williams. The report also highlighted ongoing challenges, including constitutional issues affecting the SEC and PCAOB's authority. Additionally, the report noted that from Q1 to Q3 2025, total monetary sanctions against auditors amounted to $17.7m, a significant decrease from $51.1m in the same period of 2024.

INDUSTRY

Transforming accounting through tech

Ariege Misherghi, SVP & GM of Accounts Payable, Accounts Receivable, and Accountant Channel for BILL, emphasizes the transformative power of technology in accounting. She argues that accountants are not tech-wary but are strategic partners in innovation. Misherghi says: "Success for accountants, tech companies, and the products themselves depends on meaningful collaboration." To enhance this partnership, she suggests understanding product development mindsets, realigning agendas, and improving communication. Engaging early in the product development process and translating needs into business outcomes are crucial strategies for effective collaboration. Ultimately, user input is vital for shaping future developments that align with accountants' needs.

AI vs. human: the exam showdown

As AI capabilities advance, the significance of passing the CPA, CFA, or bar exam is under scrutiny. Jack Castonguay, a CPA and associate professor at Hofstra University, highlights that large language models (LLMs) like ChatGPT have transitioned from failing these exams to passing them with ease. The trend raises questions about whether these exams reflect true technical proficiency or merely minimum competency. While LLMs can consistently pass these rigorous exams, human candidates are experiencing declining performance. As AI takes on more tasks traditionally performed by entry-level staff, certifications like CPA and CFA may become crucial for distinguishing professionals in the field.

Breaking barriers in accounting

Natalie Quan, CFO of CalCPA, discusses the removal of the 150-hour rule for CPA licensure, emphasizing that it will not diminish the quality of new accountants. She believes this change will attract qualified individuals who previously hesitated due to the time commitment. Quan says: "It's not about hours, it's about knowledge," as she advocates for a shift towards skill acquisition rather than merely fulfilling hour requirements. She also addresses the Big Four's hiring cuts, asserting that the CPA credential still holds significant value due to the knowledge and ethics it represents. Furthermore, she highlights how technology, particularly AI, is transforming the billable hour model, prompting firms to explore subscription-based services. Quan's insights reflect a broader evolution in the accounting profession, focusing on knowledge and value over traditional metrics.

 
CFO

ECONOMY

Treasury criticizes Fed's rate cut stance

U.S. Treasury Secretary Scott Bessent has criticized the Federal Reserve's communication strategy, saying it reflects outdated thinking. Despite supporting the Fed's decision to cut interest rates by 0.25%, Bessent expressed concern over the Fed's reluctance to commit to further cuts this year. He emphasized the need for the Fed to modernize its approach to align with current economic realities. Bessent's remarks underscore a potential disconnect between fiscal and monetary policy strategies under the current administration.

SNAP shutdown threatens grocery sales

U.S. grocers and food companies face a potential $8bn drop in November sales if the government shutdown halts Supplemental Nutrition Assistance Program (SNAP) benefits, which serve 42m Americans. Retailers including Walmart, Dollar General, and Dollar Tree, along with suppliers such as Kraft Heinz and Tyson Foods, could see reduced revenue and layoffs. Walmart, the top SNAP retailer, alone collects over 26% of SNAP grocery spending. “It’s not only poor people . . . it means the places where they spend the money aren’t going to get that money,” said NYU professor Marion Nestle. Industry groups warn of food waste, price hikes, and cuts to worker hours if SNAP funds lapse.

Vance warns Thanksgiving travel ‘could be a disaster’

Vice President JD Vance and Transportation Secretary Sean Duffy have warned of a potential holiday travel 'disaster' if a government shutdown continues into the Thanksgiving holiday travel season. “Look it could be a disaster. It really could be, because at that point you’re talking about people [who] have missed three paychecks. They’ve missed four paychecks. How many of them are not going to show up for work?” Vance said, adding “That’s going to lead to massive delays. We want people to be able to get home for Thanksgiving. We want people to be able to travel for business.” Vance said that the only way out was for Democrats to pass a clean spending bill to reopen the government.

 
CNN

CORPORATE

Stocks rally faces earnings challenge

U.S. stocks are maintaining resilience as they approach a critical week of corporate earnings reports. Investors are scrutinizing the sustainability of the artificial intelligence-driven market surge and the Federal Reserve's potential interest rate cuts. Concerns about capital allocation and shareholder value are heightened amid these market dynamics. The strategic focus is on how companies will navigate these headwinds and deliver on earnings expectations. According to Reuters, the market's response to these earnings will be pivotal in determining the trajectory of the current rally.

LEGAL

'Fraud' hits BlackRock's shadow banking unit

BlackRock’s private credit investing division and other lenders are seeking to recover more than $500m after falling victim to what has been described as a “breathtaking” fraud. Bankim Brahmbhatt, the owner of telecom services companies Broadband Telecom and Bridgevoice, is accused of fabricating accounts receivable that were supposed to be used as loan collateral. BNP Paribas helped BlackRock’s HPS Investment Partners finance the Brahmbhatt loans, according to people familiar with the matter. Brahmbhatt disputes the allegations of fraud.

CYBERSECURITY

Nation-state hack hits Ribbon systems

Hackers linked to a foreign nation infiltrated Ribbon Communications' IT network undetected for nearly a year, starting in December 2024, the company has disclosed in an SEC filing. Ribbon, a Texas-based telecom technology provider, confirmed the breach in an October 23 statement, noting three smaller customers were affected. The company has not named the nation-state involved or specified impacted clients. “We do not have evidence at this time that would indicate the threat actor gained access to any material information,” said a company spokesperson, adding that security enhancements are underway.

CRYPTO

Cryptocurrency exchange to launch in U.S. by year end

Decentralized cryptocurrency exchange dYdX is set to launch in the U.S. market by the end of 2025, aiming to introduce spot trading for Solana and other cryptocurrencies while facing regulatory changes. President Eddie Zhang said: "It's very important for us as a platform to have something available in the United States." As part of its entry, dYdX plans to reduce trading fees significantly and hopes U.S. regulators will eventually allow for the trading of crypto perpetual contracts.
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