FloQast

. Join leaders in finance, accounting, audit, risk, and compliance Sept. 17–18 as they meet to learn from experts. Access cutting-edge AI strategies and practical solutions needed to stay ahead in an ever-changing industry. 

FloQast_CFOott_Accounting_Aug25

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.

CFO Brew

Graison Dangor

cfobrew.com

Audit committees are ‘zeroed in on’ cybersecurity: report

New SEC rules may be partly why nearly 70% called it a top-three priority.

Planning taxes in unplannable times

KPMG experts laid out the dilemmas facing tax leaders.

Drew Adamek

Cheat sheet round up: aligning FP&A and the C-suite, retained earnings, and essential skills. 

More quick reference guides for corporate finance.

Cheat sheet round up: FP&A and the C-suite, retained earnings, and essential skills. 

A broken out piechart icon denoting accounting

Accounting

Natasha Piñon

Just like you might turn to McDonald’s for truly delectable soft serve, Denny’s for breakfast at a mock trial tournament in middle school, and KFC when all hope is lost, earnings reports from the key fast-food players all have a slightly different function, too.

Denny’s, which reported first this week, was something of an appetizer—one that left a not-so-savory taste in the mouth about the state of the US consumer.

The chain’s adjusted net income came in at $4.8 million, down from $6.9 million the same time last year, but total operating revenue was $117.7 million, up from $115.9 million last year.

Denny’s CEO Kelli Valade said at the top of the company’s earnings call that the “very choppy consumer environment” Denny’s faced in Q1 continued into Q2.

“Household incomes remain under pressure and consumer sentiment continues to be volatile, meaning consumers are pulling back on spending across most categories, and they’re being more selective about where to spend,” Valade said, adding the company expects “the volatility in consumer sentiment will moderate over time.”

And that was a telling appetizer for the main course(s). Yum Brands, which owns Taco Bell, KFC, and Pizza Hut, reported net income of $374 million, up from $367 million a year ago.

Despite bright spots in its earnings report, CEO David Gibbs was quick to acknowledge the “tough consumer environment” at the start of the company’s earnings call. And domestic challenges for Pizza Hut and KFC were on display; both brands reported US same-store sales declines of 5%. Gibbs noted that both chains struggled to convey a value proposition to consumers this quarter.

Taco Bell fared better, with same-store sales growth of 4%. “Most people are reporting negative quarters,” Gibbs said. “We haven’t even had a negative week for Taco Bell.” The power of crunchy tacos…

For dessert? McDonald’s, which offered a look at the spending habits of low-income consumers, while showing signs of a rebound for the fast-food giant.

Same-store sales grew 3.8% in the three months ending June 30, McDonald’s reported. That was higher than analysts expected, and a welcome change from the last four quarters when same-store sales either dropped or changed only slightly, per the 

But executives took pains to point out that the low-income consumer is still cash-strapped, meaning McDonald’s is far from out of the woods. In 

, McDonald’s has reported a spending and visitation pullback from low-income customers, which has pushed the company to focus on affordability and value.

For Q2 2025, McDonald’s CEO Chris Kempczinski noted during an earnings call that store visits from low-income customers “once again declined by double digits versus the prior year period,” while visits from middle-income customers improved from Q1. He stressed that “reengaging the low-income consumer is critical” since they tend to frequent McDonald’s more often than middle- and high-income consumers.

“This bifurcated consumer base is why we remain cautious about the overall near-term health of the US consumer,” Kempczinski said. “In this environment, we will continue to remain agile with respect to our value offerings to ensure the US strengthens its leadership in value and affordability.”

Fast-food chains warn of ‘choppy consumer environment’ 

The latest batch of earnings reports from fast-food restaurants highlights consumer pullback.  

Alex Zank

The top 25 accounting firm announced Friday it entered into an agreement with New Mountain Capital for a “significant minority investment.” In a news release, Wipfli noted the PE deal will unlock more investments in tech and talent and will also “fuel innovation.” Wipfli remained majority-owned and partner-led after the agreement, per the release.

Wipfli didn’t disclose the terms of the transaction in its announcement. Following the deal’s closing, subject to regulatory approval, Wipfli will separate its operations into Wipfli LLP, a licensed CPA firm that will provide attest services, and Wipfli Advisory LLC, which will provide business advisory and non-attest services.

“Wipfli has been on the offensive, scaling smartly and profitably. And now, we’re accelerating the course we already set with this investment,” Wipfli managing partner Kurt Gresens said in a statement. “New Mountain gives us more capital and confidence to expand and deliver even greater value to our clients and our people.”

New Mountain is far from a stranger to the world of public accounting. It acquired a majority stake of Citrin Cooperman in 2021, and recently revealed it would 

 in the firm to PE funds managed by Blackstone. New Mountain also bought a stake in Grant Thornton 

“New Mountain continues to see strong, long-term growth tailwinds in the accounting, tax, and advisory profession, a sector which is well aligned with our defensive growth investment strategy,” Andre Moura, managing director at New Mountain Capital, said in a statement. “In other investments in this space, we have been proud to support initiatives that grew client satisfaction, maintained the highest quality standards, invested in people, and expanded the breadth of service and technology capabilities.”

Wipfli joins the PE club in deal with New Mountain Capital

The top 25 accounting firm is selling a minority ownership stake to the PE company.

Courtney Vien

After convincing some 9,000 employees in the IRS’s taxpayer service division to resign this year, the federal government has realized that, um, maybe that wasn’t the best idea.

 for around 4,500 IRS contact (aka customer service) representatives, according to the Federal News Network (FNN). Those are the employees in the agency’s Taxpayer Service division who answer phone calls, reply to mail, and work with taxpayers who visit its in-person service centers.

The agency had one of the smoothest “filing seasons 

” this year, National Taxpayer Advocate Erin M. Collins wrote in her midyear report to Congress. It processed upward of 98% of individual tax returns and improved the Level of Service on its phone lines from 63% in 2024 to 87%. Last year’s filing season was 

, thanks in part to Biden-era IRA funding that allowed the IRS to hire around 2,000 customer service representatives (CSRs) in 2023. In 2024, it answered 9 million more phone calls than in 2022, and cut wait times in half.

 of its workforce once this year’s reductions in force are in full effect. More than 9,000 of the departing employees are from the Taxpayer Services division, which will shrink by around 22%.

, the IRS said it would need to employ around 11,000 CSRs to maintain its current level of service. Collins recommended that the agency hire more “essential filing season employees,” including CSRs and tax processors, by the end of this summer, so that they could be trained in time for next tax season.

The IRS seems to be looking to reduce at least some of that training time: Around three-quarters of the new job postings are open only to current or former IRS or federal employees, while around a quarter are open to the general public, FNN reported.

“The IRS is using its direct hire authority,” FNN said, which will allow it to hire in 40–45 days, versus the 101 days it typically averages to hire a federal employee.

Whether former IRS staff will want the newly opened positions remains to be seen. Morale at the agency is said to be low, and many of the new gigs are listed as “seasonal.”

Technically, the IRS is under an indefinite hiring freeze due to a Trump 

, but the freeze can be thawed if the Secretary of the Treasury, working with the Director of OMB and the Administrator of USDS, decide it’s in the “national interest” to do so. (Maybe Scott Bessent got tired of the IRS’s hold music?)

The IRS is…hiring?

After getting 9,000 taxpayer services employees to resign, IRS looks to hire 4,500.

Tax filing season 2025, against all expectations, went 

. Despite the fact that the IRS had been roiled by successive rounds of 

, and that its leadership resembled a game of 

, spring ’25 still brought “one of the most successful filing seasons in recent memory,” according to National Taxpayer Advocate Erin M. Collins.

But the relative efficiency of this year’s tax season could mask trouble on the horizon. The IRS will experience a 26% reduction in headcount this year, with around 26,000 of its more than 102,000 employees leaving or intending to do so. But many departing employees took deferred resignation agreements which don’t require them to leave until September 30—meaning that, throughout tax season, the IRS hadn’t yet felt the full impact of the job cuts.

In fact, taxpayer services employees, around 9,000 of whom are resigning, weren’t allowed to leave until June 30. Other staff who accepted the first round of deferred resignation agreements were classified “essential” and had to stay until May 15.

In years to come, spring 2025 may well be remembered as the calm before the storm.

The staff and budget cuts the IRS faces will undo the progress it was able to make with funding from the Inflation Reduction Act (IRA). And even the IRA money was largely a stopgap for an agency that’s seen its resources cut time and time again.

To understand the impact of the 2025 job cuts, it’s helpful to look back—way back, to before MTV even aired its 

The 2025 reduction in force will take the IRS down to around 76,000 employees, or close to 

. That doesn’t sound too bad, until you consider that, in 2016, the IRS employed 11,000 

And naturally, the IRS’s job has only gotten bigger since the heyday of the Buggles. For reference, in 1980, with a staff of 87,46, the IRS collected $5.2 billion (that’s “billion” with a “b”) in revenue, compared with $5.1 

The 2025 cuts also come on the heels of a turbulent fifteen years for the agency. Throughout much of the 2010s, Congress 

 the IRS’s funding, lowering its budget from $14b in 2010 to $12b in 2017. A hiring freeze was in place from 2011 to 2018.

“We lost a whole generation,” former IRS Commissioner Chuck Rettig said during a speech at the AICPA’s 2025 Engage conference.

Then, Covid hit. During the pandemic, the IRS 

, and initially, remote work capabilities were limited. The agency halted mail processing between March and July 2020, and tax returns and other paper correspondence piled up. In 2021, it faced a backlog of more than 35 million tax returns that needed processing. The IRS struggled well into 2022, answering just 12.5% of calls, with wait times averaging 29 minutes.

The IRA threw the IRS a $78.9 billion life preserver. The funding “did not plug the hole, but it definitely started to right the ship,” Elena Patel, a senior fellow at the Urban-Brookings Tax Policy center and business professor at the University of Utah, told CFO Brew. The IRS used the funds to hire around 12,000 people, bringing its staffing levels northward of 100,000 for the first time since 1997.

. The agency answered 9 million more calls in 2024 than it did in 2022, more than doubling the percentage of calls it answered overall. It halved the time it took to respond to individual taxpayer correspondence. And it was finally able to work through the “mountain of paper returns and correspondence that piled up during the pandemic,” Collins wrote in a report to Congress.

That said, service levels still aren’t exactly stellar. In 2024, IRS employees still answered less than a third of individual taxpayer calls on its primary line, and only 55% of practitioner calls. Practitioners spent an average of 12 minutes on hold. Staff took an average of 110 days to complete a work cycle for a piece of individual correspondence, and spent an average of 147 days—nearly five months—on business correspondence.

And more budget cuts are coming. Congress began cutting the IRA funding, which was intended to last the IRS 10 years, in 2023. It has now rescinded $41.8 billion. The IRS is now also slated to lose 20% of its appropriated funding from Congress. That, atop the IRA cuts, will slash its budget by 37%, Collins wrote in a midyear 2025 report.

Morale among the remaining IRS employees is, as you can imagine, not great. Patel said she’s heard that “it’s kind of melee inside the IRS, because every day, employees are waiting to hear if ‘today’s the day I’m going to be RIF’d.’” Rettig, in his talk, stated that “there’s a tremendous amount of anxiety and stress in the hallways of the Internal Revenue Service.”

Tax and finance professionals should brace themselves for frustration when dealing with the IRS in the months and years to come. But they might also want to show IRS employees some grace, Rettig suggested. He called upon the accounting community to support the embattled agency, and to let IRS staff know that they’re appreciated.

“That goes a long way with people who have one eye on the door and a lot of stress,” he said.

The IRS rolls with the punches—for now

Job and budget cuts will soon do a number on service levels.

Jesse Klein

You probably won’t see Elon posting about this news much.

Tesla’s total revenue fell for the second straight quarter, coming in at $22.5 billion, slightly less than the $22.6 billion–$22.7 billion analysts forecast. This represents a 12% YoY revenue drop, down from $25.5 billion a year ago.

. At the beginning of the year, the company seemed 

 the benefits of President Trump’s favor as Musk palled around with the president as head of the “Department of Government Efficiency.”

But the happy days didn’t last long—Trump and Musk fell out 

 soured on Musk’s involvement with Trump. Now the blowback is showing up in Tesla’s balance sheet; deliveries fell 13% YoY. And there are more sales challenges on the horizon: Trump’s “One Big Beautiful Bill” cuts the 

 for electric vehicles at the end of September, making the company’s vehicles more expensive to buy.

On the earnings call, Musk pointed to the 

 as a factor that could hurt future Tesla sales, warning that the company “probably could have a few rough quarters.”

Even with the incentive to buy an EV before September 30, Tesla’s vehicle deliveries dropped in the second quarter as 

looked to other, more affordable (or less controversial) brands.

CFO Vaibhav Taneja signaled Tesla would increase production of its more affordable model for the post-EV credit era. Tesla has been flirting with a 

 for years, and started production in June. The company is also looking into other delayed projects like the Tesla Semi and its Cybercab robotaxi, which has started a 

As for Musk’s frenemy, Trump posted on Truth Social that he isn’t 

 and that he wants “Elon, and all businesses within our Country, to thrive, in fact, THRIVE like never before!”

We’ll see if that warrants a tweet from Elon.

Tesla revenue drops 12% year over year 

With an expiring EV credit and more competition from other automakers, Tesla is feeling the heat.

If the Oscars tell us the best movies of the year, there’s always the Razzies to honor the worst. And if earnings reports can tell us who’s winning amidst a 

Enter a new loser in the tariff saga: General Motors, which reported a $1.1 billion hit from tariffs in the latest quarter. Yes, 

. That sent GM’s profit plummeting in Q2 by 

In May, GM lowered its full-year profit guidance, saying it expected to face from $4 billion to $5 billion in tariff-related costs over the course of the year. In its latest earnings report, the company affirmed its guidance, but said it anticipates a larger tariff hit in Q3 than in the latest quarter “due to timing of indirect tariff costs.”

For Q2, profit came in at $1.9 billion, declining from $2.9 billion in Q2 2024.

Despite the apparent doom and gloom, General Motors stressed that it was “making solid progress” toward its goal of mitigating “at least 30%” of the tariff impact “through manufacturing adjustments, targeted cost initiatives, and consistent pricing.”

And if the company is sweating, it’s not letting it show. “We’ve got a longer-term plan to be able to mitigate a substantial part of this,” CFO Paul Jacobson said in reference to tariffs during the company’s earnings call. “We’re obviously looking for things to normalize around these trade deals that will get done, and we expect that will happen.”

GM is far from the only automaker struggling with tariff costs. Earlier this week, Stellantis, which makes Chrysler, Jeep, and Ram cars and trucks, reported a 

, which it attributed in part to tariffs and other Republican policies.

GM reports $1.1 billion tariff hit 

Oof, that’s gotta hurt. 

You’ve heard about it a thousand times—the 

. But this time there might be an unexpected solution to the talent crunch.

While accounting as a career has seen—let’s be kind and say a 

 have become the cool new kids on the block. The answer to accounting’s popularity decline might be combining the two into a role that gives employees a sense of purpose.

And luckily there’s already a role that exists for which companies are 

, 90% of surveyed Gen Z and millennials said “having a sense of purpose is important to their overall job satisfaction and well-being.” Carbon accounting might be the way to bring that aspiration into the finance profession.

Instead of tracking dollars and cents, carbon accountants 

 and environmental impacts of business operations. But beyond that, according to Ian Thomson, professor of accounting and sustainability at the University of Dundee in Scotland, a carbon accountant’s role is to help businesses align their objectives with protecting the planet from even more harm. It allows them to 

 impacts, costs, and solutions that are excluded when companies only focus on money, he told CFO Brew.

“Financial accounting almost separates you as a human from other humans and from nature,” Thomson said. “When you start looking at greenhouse gas, you have to look at the connections.”

Thomson said he has “absolutely” seen an increased interest in carbon accounting among his students over the past few years, and credits the uptick with carbon accounting’s inherent purpose.

 And it’s not just accountants who’ve bought in on the hype of carbon accounting. Companies know they’ll need 

 from climate requirements during the second Trump administration, other stock exchanges and countries have not. Within the next few years, Brazil, China’s Shanghai Stock Exchange, the EU, Hong Kong Exchanges, New Zealand, the UK, the state of California, and more will all 

 to be disclosed in order to be listed or do business within its borders. And 

 now require companies vying for contracts over £5 million to have a 2050 net zero strategy.

“I think there’s a whole lot of these different pressures coming on that are tied to this investment,” Thomson said. “They’re tied to consumer boycotts. They’re tied to business relocation models, as [resources] are no longer there.”

Beyond regulations, financial institutions worry about climate change because of the risk of stranded assets. Thomson pointed to mines, oil wells, and farmland that could vanish as sea levels rise—even airports and 

 may end up underwater. Lenders don’t want to finance investments that may never yield a return. Carbon accountants can help avoid those bad investments.

Thomson expects sectors like insurance, agriculture, and transportation to be the first movers on hiring and taking advantage of carbon accountants.

“A lot of the problems that people are associating with carbon accounting, things like double counting, accounting has the solution,” Thomson said.

Accounting schools are starting to take notice. Many prestigious schools, even in the US, have added carbon accounting curricula to their offerings, including 

Professional accounting bodies like the ACCA have 

 the accountant work force. But it’s still a bit of the Wild West out there, Thomson said. Government and industry haven’t coalesced around one carbon accounting method or regulations, and there are many standards from different organizations, including the 

It’s also early days for carbon accounting software and technology.

“There is a problem with being an early adopter,” Thomson said. “Right now the software is not there. You’ll be helping develop the software. But that’s often costly, takes time. There’s no real infrastructure in place.”

But “if you want to future-proof your career,” he said, there’s no better time to get into carbon accounting.