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Inside EY’s U.S. Auditing Cleanup to Reduce Shortfalls
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Good morning, CFOs. EY expects its U.S. auditing deficiencies to fall to lowest level since 2009; what are the AI applications Amazon uses in finance?; plus, Berkshire Hathaway nears $10 billion deal for Occidental’s petrochemical unit.
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Ernst & Young expects to achieve its lowest U.S. auditing shortfall rate in 16 years after working to improve its practices by shedding dozens of audit clients, setting up centralized support teams and relying more on tech tools.
Auditing deficiencies are expected to be at or below 9% this year for EY as the Public Company Accounting Oversight Board wraps up its inspections process for the Big Four accounting firms, people familiar with the matter told me.
EY has chipped away at the rate from 46% in 2022, then 37% and 28% in 2023 and 2024, respectively. The firm had the highest deficiency rate among the Big Four—which also includes Deloitte, PricewaterhouseCoopers and KPMG—in the U.S. in those three years. EY’s 2025 standing among peers is unknown as the other three firms haven’t disclosed their deficiency rates yet.
The PCAOB is expected to issue its inspection findings in the coming months. PwC said it is seeing “meaningful improvement” over its 2024 results, which saw a 16% deficiency rate.
EY on Wednesday is set to release a report stating that it anticipates its deficiency rate will fall below 10%.
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Content from our sponsor: Deloitte
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Transformational M&A: Accelerating Growth in Asia Pacific
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📆 Earnings
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Cal-Maine Foods
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Conagra Brands
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RPM International
📈 Economic Indicators
ADP releases its National Employment Report for September.
The Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for September.
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The AI applications Amazon uses in finance
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I recently spoke to top Amazon executives about the new, complex ways the e-commerce giant’s finance team has applied generative AI tools. Readers have since asked us which applications Amazon is using in some of these areas. Here’s what Amazon told us.
Transfer pricing: AWS Bedrock, Amazon S3 (Amazon Simple Storage Service), AWS Inferentia chips, Amazon Nova.
AWS analysis of revenue and customer data: Amazon Q, Amazon Q Topics, AWS Bedrock, Amazon Q Developer CLI, Claude Sonnet 4 in Bedrock.
PR/FAQ: Pippin, an internally created AI tool.
Amazon said it uses the following applications for AI agents that build products: Amazon Kiro, Amazon Q Developer CLI, and Cline, an open-source AI coding agent.
The finance and product management teams, among others, for decades have wrestled with the drafting of a product document, known as PR/FAQ, sometimes over the course of weeks. The document lays out the business case and customer experience for a new product. Software teams used to then build the product based in part on that document.
After the PR/FAQ, an agent can then start generating the design documents and requirements, Amazon said. Once those exist, coding agents can start building the product. There are humans in the loop throughout the entire process to refine everything and ensure quality, among other things. But agents play a role to the end. Agents work with the humans and then execute the tasks with humans in the loop, according to Amazon.
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What Else Matters to CFOs
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Occidental Petroleum has been selling noncore assets to pay down debt. PHOTO: GETTY IMAGES
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Warren Buffett’s Berkshire Hathaway is in talks to buy Occidental Petroleum’s petrochemical business for around $10 billion, according to people familiar with the matter. The deal, which would be Berkshire’s largest since 2022, could come together within days, the people said.
Houston-based Occidental is largely known for its oil-and-gas operations. The company has a market value of around $46 billion and already counts Berkshire as its largest shareholder.
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ExxonMobil is slashing 2,000 jobs worldwide, it said Tuesday, the oil industry’s latest mass layoff as companies adapt to anemic oil prices and get more efficient at extracting fossil fuels.
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Exclusive: President Trump on Tuesday unveiled a direct-to-consumer website for Americans to buy drugs, dubbed TrumpRx, and said Pfizer plans to offer some of its drugs on the site at a reduced rate.
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📰 Other headlines
📈 Earnings wrapup
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$65,000
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The midpoint of the average U.S. starting salary range for an audit services associate at an accounting firm, according to new data from staffing and consulting firm Robert Half. That’s compared to $62,750 a year earlier. Average salary gains across finance and accounting roles are up 2.1% compared to a year ago.
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In an era defined by rapid change, how do today’s decision-makers shape tomorrow? The WSJ Leadership Institute Presents: Leaders, a new podcast series hosted by Alan Murray. Each episode features guests on the cutting edge of change—navigating technological, geopolitical, and market upheaval to build companies that can thrive in the chaos. Great leaders aren’t born—they’re made. Listen now.
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Content From Our Sponsor: DELOITTE
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New Attitudes Toward Corporate Crypto Use
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CFOs are shifting their attitudes and approaches to using cryptocurrency in operations and as investments. Read about what’s happening in the latest CFO insights here
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The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax, accounting, regulation, capital markets, management and strategy. Follow us on X @WSJCFO. The WSJ CFO Journal Team comprises reporters Kristin Broughton, Mark Maurer and Jennifer Williams, and Bureau Chief Walden Siew. You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.
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