Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

IT tools for auditors – Extract from PR Prompts!, part 4

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Description of research tools for auditors working in the IT area is courtesy of the AICPA’s Spring 2020 PR Prompts! newsletter. The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

Since the AICPA is making it available for firms to use in their marketing, an extract follows.

For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote from the AICPA.

 

Digital Assets

The digital asset ecosystem is changing and expanding rapidly. For financial statement preparers or auditors, either currently in the digital asset ecosystem, or considering entering it, the AICPA’s Digital Assets Working Group developed a practice aid, which includes vital information for you on how to account for and audit digital assets. It is intended for those with a fundamental knowledge of blockchain technology, is based on existing professional literature and the experience of members of the Digital Assets Working Group and is specific to U.S. GAAP and GAAS.

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Written by Jim Ulvog

June 11, 2020, 7:15 am at 7:15 am

Posted in Audits

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Resources for auditors during pandemic – Extract from PR Prompts!, part 3

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Image courtesy of Adobe Stock.

Following news on variety of audit issues is courtesy of the AICPA’s Spring 2020 PR Prompts! newsletter. The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

Since the AICPA is making it available for firms to use in their marketing, an extract follows.

For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote from the AICPA.

 

Resources from the AICPA’s Enhancing Audit Quality(EAQ) Initiative

Through the EAQ,  the AICPA shares resources and education to help you avoid the most common audit quality issues. Check out the latest resources:

COVID-19 Audit Implications

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Written by Jim Ulvog

June 8, 2020, 6:45 am at 6:45 am

Deferral of SASs #134 to #140 – Extract from PR Prompts!, part 2

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Image courtesy of Adobe Stock.

Following news on deferral of a long string of major SASs is courtesy of the AICPA’s Spring 2020 PR Prompts! newsletter. The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

Since the AICPA is making it available for firms to use in their marketing, an extract follows.

For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote from the AICPA.

Ready, Set, Implement: News on A&A Standards

Deferral of effective dates for SAS Nos. 134-140

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Written by Jim Ulvog

June 4, 2020, 6:50 am at 6:50 am

Posted in Audits

Tagged with ,

Resources for auditors during the pandemic – Extract from PR Prompts!, part 1

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Image courtesy of Adobe Stock.

In May 2020, the AICPA published the second of their PR Prompts! newsletter. This semi-annual publication is designed to help firms stay current.

The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

I received explicit permission to reprint items from the first newsletter. Since the email that accompanied the newsletter and the description of the top indicates firms are free to put their name on the material then distribute it, I am comfortable in posting information on my blog without further permission.

So here goes. The following information is from the AICPA. For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote.

 

COVID-19 Updates and Resources

Many standard setters, including the ASB, FASB, GASB and PEEC, have evaluated, or are evaluating, effective dates and standard setting agendas. There are known and potential delays of effective dates of new standards and deadlines. As auditors navigate the challenges presented by the COVID-19 pandemic, the AICPA is working hard to provide help. They have launched an A&A resource center at aicpa.org/covidaudit where you can access free resources addressing pressing topics like remote auditing, subsequent event disclosures and going concern.

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Written by Jim Ulvog

June 1, 2020, 7:00 am at 7:00 am

It is even more important this year to remember that we are the land of the free because of the brave.

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Image courtesy of Adobe Stock.

With our freedom under assault by many state and local politicians across the United States, it is more important than ever before that on this Memorial Day we remember those who shed all their blood so that we may be free.

A ‘thank you’ from me is so trivial.  I will demonstrate my appreciation for freedom purchased by others by exercising my freedom of speech today. Yesterday I exercised my freedom of religion. Today and tomorrow I will exercise my economic freedom, also called pursuit of happiness, by running my business the way I choose to do.

Following post was first published on May 29, 2017. It reprints an earlier post of May 30, 2011. I will update the discussion slightly. Deletions are struck through, new comments are in italics. This feeble tribute to those who have gone before will be posted across several of my blogs.

 

Image courtesy of Adobe Stock.

From May 29, 2017:

Those of us living in the United States are blessed with religious freedom, political freedom, and economic freedom because those who went before us fought for freedom.

Many of those fighting offered up their life for freedom and the offer was accepted.

I am humbled and grateful to God that some of my ancestors are included in the long list of those who fought. I am especially humbled that a great, great grand-uncle is in the list of those who died in the defense of freedom and the effort to crush slavery.

Because of their sacrifice, I get to enjoy this kind of freedom:

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Written by Jim Ulvog

May 25, 2020, 7:56 am at 7:56 am

Posted in Pondering

Economic destruction from lockdown continues to expand.

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There is severe danger that a growing number of businesses are going to look like this over the next few months. Abandoned Safeway store [01] by Ben Schumin is licensed under CC BY-SA 2.0

Going concern thoughts for accountants:  I have stopped cross posting all my comments on the pandemic to this blog. The focus here is accounting and attestation issues.

The following conversation is worth listing here, so you can bring into consideration what is going on in the broader economy as you ponder your client’s going concern assessments. The economic damage from the shutdown is an issue for audits, reviews, and comps.

You might pay particular attention to comments by  the Atlanta Fed on near-term GDP forecasts.

 

The damage from the lockdown is spreading. More news is emerging about the devastation that took place in just the first full month of the closure.

The damage will continue to grow the longer the shutdown continues. At some point it will start compounding, growing at a faster rate out of proportion to the time that is passing. Keeping the economy closed now is unnecessarily so the compounding damage is a choice.

Merely a few of the articles in recent days:

  • Guess on GDP shrinkage in next quarter
  • Disproportionate number of poorer households hit by job losses
  • Collapse of tax revenue in New York state
  • Collapse of home sales in Southern California
  • Another retail chain announce store closures and another announces liquidation

It is imperative to reopen the economy in full, not just for ‘curb-side delivery.’ If we don’t open soon, I fear the following articles will be mild in comparison to what we will see in the future.

This discussion will be posted on several of my blogs.

5/16/20 – Fox Business – US GDP could sink over 40%: Atlanta Fed – Federal Reserve Bank of Atlanta is forecasting a 42.8% drop in GDP for the second quarter of  2020.

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Written by Jim Ulvog

May 22, 2020, 9:24 am at 9:24 am

A few highlights from CalCPA’s Not-for-profit Conference.

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Image courtesy of Adobe Stock.

Listened to CalCPA’s virtual Not-for-profit conference today.

Lots of great stuff during the sessions. Three items were worth sharing on Twitter during the day. Thought I’d share them here as well:

How to account for PPP forgiveness.

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Written by Jim Ulvog

May 20, 2020, 17:23 pm at 5:23 pm

Posted in Accounting, Other stuff

Forgiveness of PPP loans.

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Image courtesy of Adobe Stock.

There are lots of details and nuances to the federal Paycheck Protection Program. I’m not up to speed on PPP so I won’t be commenting on the program, especially the forgiveness rules.

There is a growing volume of information on the ‘net describing the program. Here are some resources you can check out to learn more.

SBA forgiveness application

5/15/20 – Small Business Administration – Paycheck Protection Program Loan Forgiveness Application,” Small Business Administration, – The SBA published the text of the forgiveness application.

Commentary on forgiveness application

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Written by Jim Ulvog

May 19, 2020, 8:03 am at 8:03 am

Posted in Accounting, Other stuff

U-3 and U-6 Unemployment rate.

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For a number of years I have been tracking the monthly unemployment data. That information is shown in the graph above. Included is monthly information back to April 2010. Prior to that I only picked up a few data points.

This graph shows the hit from the Great Recession and the painfully slow recovery which followed.

This discussion will be posted on several of my blogs.

Six different ways to measure unemployment

There are actually six different ways to calculated labor underutilization, all provided by the US Bureau of Labor Statistics. The economic devastation caused by the shutdown of the US economy means we need to start looking at these different indicators.

The above graph shows what is referred to as the U-3 and U-6 rates.

“What in the world are you talking about,” I hear you ask.

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Written by Jim Ulvog

May 9, 2020, 11:00 am at 11:00 am

Posted in Economics, Other stuff

Unemployment rate rises to 14.7% in April.

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Shutting down the economy has predictable, expected consequences. One that became visible on Friday was 20 million jobs vaporizing in the last month which resulted in an expected soaring unemployment rate.

A ban on everything other than immediate emergency medical care has cratered revenue of hospitals bringing layoffs to the entire industry.

Finally, making unemployment benefits higher than the earning capacity of a large portion of people has the fully expected consequence of making people hesitant to return to work.

This discussion will be posted across several of my blogs.

5/8/20 – Wall Street Journal – April Unemployment Rate Rose to a Record 14.7% – Thirty-three million people filing a first-time claim for unemployment drove the unemployment rate to 14.7%. Oh, lots of those new claims were filed after the cutoff for the April calculations.

A staggering 20.5 million jobs disappeared. Article points out the number of jobs destroyed are equal to all the job gains over the last decade.

Picture it this way – that is the equivalent of everybody who found a job over the last decade getting laid off.

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Written by Jim Ulvog

May 9, 2020, 8:05 am at 8:05 am

Posted in Economics, Other stuff

More big businesses failing. Revised budget forecast for state of California shows even governments are going to have a hard time when the economy is frozen. Maybe it is time to restart the economy.

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Even the state government in California may be starting to realize that putting the economy in a deep freezer for an extended and unknown period of time might have some adverse consequences.

Just a few of the business casualties over the last few days:

  • Neiman Marcus (bankruptcy filed)
  • Souplanation/Sweet Tomatoes restaurants (all 97 stores permanently closing)
  • Lord & Taylor (likely BK)
  • J. Crew (bankruptcy filed)
  • J. C. Penney (likely BK)

This discussion will be posted on several of my blogs.

California budget deficit

5/7/20 – ABC news – California doom: Staggering $54 billion budget deficit looms 

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Written by Jim Ulvog

May 8, 2020, 8:24 am at 8:24 am

Posted in Economics, Other stuff

3.2 million new claims for unemployment last week. Running out of negative words to describe the severity of job losses.

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Unemployment by Sean MacEntee is licensed under CC BY 2.0

New unemployment claims for week ending 5/2/20 are 3,169,000, seasonally adjusted.

The tally of new claims is 33.48 million since the economy was put in an induced coma.

That means about 1 out of every 5 people in the civilian labor force back in February are out of a job today.

I’m running out of words to describe how horribly the economy has been hit. Seem to have exhausted the adjectives that apply. We have a terrible mess and it is going to take a long time to fully recover from the lost jobs and even longer to recover consumer and business confidence.

This discussion will be posted across several of my blogs.

Data:

Expectations from economists interviewed by the WSJ, or perhaps we should say their wild guesses, are the flood of new claims will taper off in May. Will likely be months before the new jobs exceed the new unemployment claims. Will likely be years before new jobs offset the tidal waves of job losses in March, April, and May.

Summary of new claims and running total

I have prepared a running tally of the new unemployment claims, which is shown below.

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Written by Jim Ulvog

May 7, 2020, 8:20 am at 8:20 am

Posted in Economics, Other stuff

Economic devastation from shutdown spreads. Signs showing of deteriorating health and increased deaths caused by shutdown.

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Indications of damage caused by the shutdown are getting stronger. First articles are appearing to describe the harm to health from the shutdown.

Comments today:

  • Estimated 35 deaths from not getting cardiac care in Ontario, Canada
  • Indications people are not seeing doctors and not getting meds they need
  • Harsh impact on Jewish owned businesses
  • New vehicle sales collapsing
  • Temp layoffs transition to permanent
  • More students suing more universities, now claiming discount on tuition for missing out on the on-campus experience

Damage to health from shutdown

5/5/20 – Daily Wire – Dozens Dead After Lockdown Measures Delayed Their Heart Surgeries; Health Official: “Certainly Was Not Intended” – Count this as the first in what I predict will be an exquisitely long list of unintended consequences from putting the economy into an induced coma. The sad part is these unintended consequences were predictable and expected.

Thousands upon thousands of needed health procedures were canceled in Ontario, Canada in order to make room for the massive surge of coronavirus patients which never arrived.

New study in Ontario estimates that 35 people are dead because their heart surgeries were postponed. There were 12,200 surgeries and other procedures postponed each week.

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Written by Jim Ulvog

May 7, 2020, 6:05 am at 6:05 am

Posted in Economics, Other stuff

California starts first few steps to start opening up the stalled economy.

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Economic doors will start to open on Friday – Opening or closing? by Paolo Gamba is licensed under CC BY 2.0

Friday of this week, 5/8, California will take the first baby steps to revive the state’s economy. Some retail stores will be able to provide curb-side delivery of products.

I don’t quite know how many people will order clothes online in order to pick them up at a store’s curb, but that is a first step.

At least half the value of a bookstore is browsing the shelves to see what book you really have to read right but that you previously didn’t even know existed.

Well, it’s a baby step.

Several articles describe the beginning here in the state. First article describes that government officials better start opening up quick or they will find the everyone already has done so.

5/1/20 – Forbes – Apple Data Shows Shelter-In-Place Is Ending, Whether Governments Want It To Or Not – Apple and Foursquare are tracking data that show people are getting out more.

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Written by Jim Ulvog

May 6, 2020, 21:54 pm at 9:54 pm

Posted in Economics, Pondering

Three states tighten the shutdown while others start to revive their economy.

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Green line is the unemployment rate in every state of the country. Red line is the financial health of universities, restaurants, airlines, and every small business.  Sinkender roter und steigender grüner Pfeil symbolisieren das Auf und Ab des Aktienmarktes by Marco Verch is licensed under CC BY 2.0.

With extremely short notice, governors of Arizona and Tennessee extended the lockdown and economic shutdown in their states. California governor orders beaches closed in the county with lowest infection rate, leaving open beaches in county with three times higher rate.

Meanwhile, many other states are trying to allow their economies to re-start.

Arizona extends lockdown

4/29/20 – Fox 10 Phoenix – Gov. Doug Ducey extends Arizona’s stay-at-home order to May 15 – The shutdown and lock-in for Arizona was scheduled to expire in one day as the governor extended the economic catastrophe by 15 more days.

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Written by Jim Ulvog

May 3, 2020, 7:25 am at 7:25 am

Posted in Economics, Other stuff