The Tuesday Lowdown ⬇️

Hope everyone had a great 4th!

If you're new around here, every day I share the 4-5 best accounting insights I saw in the past 24 hours.

I scroll. so you don't have to.

💎 WTF of the Day

Audit Firms Use AI But Don't Measure It

The UK’s top accounting firms (Deloitte, EY, KPMG, PwC, BDO, Forvis Mazars) are throwing AI into audits, scanning transactions, reading contracts, summarizing board minutes. Sounds smart, right?

None of them are tracking if AI is actually improving audit quality. The regulator (FRC) just called them out, said most firms are only tracking usage, not outcomes.Since the review, some firms have started updating their systems to actually track AI’s impact, but it’s early.

Source: FT

💎 What’s poppin in accounting

Retail’s Go To Accounting Method Is Breaking Under Tariff Pressure

Many big retailers use the retail inventory method to track inventory value. It’s standard and works fine when prices are stable. But with tariffs constantly changing, this method is backfiring.

It averages costs across all inventory. So if new shipments get hit with tariffs, even the old, untaxed inventory gets revalued. That’s caused huge swings in profit margins.

Walmart had to pull its earnings forecast because of it. Target, Kohl’s, Dollar Tree, and JCPenney still use the same method. Retailers like Macy’s and Nordstrom have switched to cost accounting, which tracks actual item costs. That gives a clearer picture when only some inventory is affected by tariffs.

Source: Retail Dive

 📊 Weekly Trend Chart

Del Monte Is Broke and Canned Food Might Be Too

Del Monte filed for bankruptcy after overproducing during COVID, then getting stuck with unsold inventory and rising interest costs. But the bigger problem? Americans just aren’t buying canned food anymore.

Canned veggies and fruit have been steadily declining for decades. Now with fresh food trends, cheaper store brands, and new tariffs on steel cans, Del Monte’s core business is collapsing.

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