Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

More on the ‘tipping point’ for Big 4 firms

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

If you casually pay attention to what is going on in the land of Big 4, a world far, far away from most of us in the accounting world, you might have interest in two recent articles from Jim Peterson, pondering the survivability of the huge firms. I will summarize what I think are a few highlights.

2/13 – Jim Peterson at Re:Balance – If the Big Four Went “Ex-advisory” – Deja Vu? Or Worse? – Regulators don’t like the huge consulting practices in the Big 4 and the partners in the Big 4 consulting arms don’t like the constraints on their growth, opportunities, and compensation from being tied to the audit & tax practices.

Article speculates on the impact if the consulting work were to be spun off, as happened back in 1998 through 2001.

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Written by Jim Ulvog

February 17, 2017, 9:30 am at 9:30 am

Posted in Audits, Pondering

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Efforts continuing to clean up fake account fiasco at Wells Fargo

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October 2016 photo at Wells Fargo's museum in San Diego by James Ulvog.

October 2016 photo at Wells Fargo’s museum in San Diego by James Ulvog.

There haven’t been a lot of high-profile articles about the Wells Fargo fake account fiasco recently. I’ve noticed a number of articles though, which suggest there is ongoing activity addressing the intentional, systemic failure. This disaster will not be cleared up soon.

  • How does Wells fix the indirect harm it caused?
  • New compensation plan removes cross-selling as a benchmark
  • Possible MD&A enforcement action?
  • Branches received 24 hour notice of internal inspections
  • Bank may eliminate 2016 bonuses for senior staff

12/27/16 – Wall Street Journal – Wells Fargo Is Trying to Fix Its Rogue Account Scandal, One Grueling Case at a Time – Making customers whole will be easy if the customer was only charged a few dollars a month for a while. Still simple to resolve if there were monthly charges and a bunch of overdraft fees because money was taken out of an account unknowingly which resulted in some bounced checks.

What do you do when the unpaid fees on a credit card flowed into negative information on a credit report which resulted in a customer being denied funding for a home loan somewhere else? That’s what happened to one interviewed customer.

Destroying someone’s credit is a tough thing to make right.

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Written by Jim Ulvog

February 13, 2017, 9:14 am at 9:14 am

Posted in Other stuff

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Look at music and newspapers as hint of what could happen in accounting. Then consider how ripe Hollywood is for the same disruption. In your accounting job what are you doing to get ready?

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

The music and newspaper industries have revenue trends that look vaguely comparable to the graph above. The IT revolution caused that severe disruption.

Hollywood is facing the same disruption.

Here is the question for accountants:

  • What are you going to do before that type of disrupting change overruns your firm and your career?

I’ll be quite upfront with my challenge: I can see the impact of massive change in other industries, but I am not quite able to see what disruption would look like in my world. I’m struggling with how to get ready. Maybe you are too.

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Written by Jim Ulvog

February 3, 2017, 8:47 am at 8:47 am

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Wild guess on the tally of people enslaved by Alexander the Great

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Statue of Alexander the Great at Thessaloniki, Greece. Image courtesy of Adobe Stock.

Statue of Alexander the Great at Thessaloniki, Greece. Image courtesy of Adobe Stock.

One more followup on the human devastation caused by Alexander the Great.

There are a lot of posts on my blog discussing Professor Frank Holt’s delightful book, The Treasures of Alexander the Great: How One Man’s Wealth Shaped the World.

In Appendix 2, the professor tallies the reported plunder, tribute, and other resources seized by Alexander the Great. Quantifying the destruction is not possible because the ancient literature often does not quantify amounts, only that slaves, or plunder, or cattle, or tapestries, or something else was seized.

The professor does quantify the reported information in an algebraic format. I’ve previously mentioned:

Total proceeds from the wars is then estimated in a formula expressed as 81.67( X) +311,761.

The author guesses the grand total for his years of campaigning at something between 300,000 and 400,000 talents. With the fixed portion of the second estimate at 311k, I think the total would be well over 300k.

Those amounts are in talents, with each talent being a massive amount of wealth. For an order of magnitude, consider that my guess is an ancient Athenian talent would be expressed something somewhere in the range of around $28M today.

I just went through the Appendix looking at the tally of slaves taken.

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Written by Jim Ulvog

February 2, 2017, 8:37 am at 8:37 am

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Fun reading for accountants

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Manual accounting records. Anyone miss those? Didn't think sol. Image courtesy of Adobe Stock.

Manual accounting records. Anyone miss those? Didn’t think so. Image courtesy of Adobe Stock.

A few fun reads for accountants:

  • Why no Hollywood movie will ever show a profit.
  • Adrienne Gonzalez is back at Going Concern, talking about the idea of TBTF Big 4 firms possibly, maybe, becoming SIFI (not likely to ever happen, but a fun read anyway).
  • Talent shortage appearing in the CPA world.
  • Research from Management of an Accounting Practice now available.

9/14/11 (yes, 2011) – The Atlantic – How Hollywood Accounting Can Make a $450 Million Movie “Unprofitable” – If you have never taken a look at the astoundingly creative accounting in Hollywood, this article will give you a superb introduction.

Several years ago I took a fraud education CPE course in which the instructor went on a tangent to explain why no Hollywood movie has ever made a profit and none of them ever will.

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Written by Jim Ulvog

January 23, 2017, 8:31 am at 8:31 am

Posted in Accounting, Other stuff

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Common findings on audits during peer review

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Image is from AICPA. Used under Fair Use since, after all, I am promoting three of their products.

Image is from AICPA. Used under Fair Use since, after all, I am promoting their products.

The AICPA’s annual Audit Risk Alert General Accounting and Auditing Developments—2016/17 provides a useful summary of common peer review findings on audits.

What I like about this particular list is that it is short enough to actually provide focus. Frequently such lists have the filter set so broadly that the list covers practically all the findings that have surfaced during all peer reviews. Sometimes I’m left with the feeling that a list of findings reads like a list of every single step you need to perform during an audit.

Here is the short list provided in the risk alert, along with my explanation:

Incorrect dating of audit report – The auditor’s report needs to be dated no earlier than when sufficient appropriate audit evidence has been obtained to support the opinion. This means Read the rest of this entry »

Written by Jim Ulvog

January 20, 2017, 8:09 am at 8:09 am

A few highlights from 2017 Audit Risk Alert

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Image is from AICPA. Used under Fair Use since, after all, I am promoting three of their products.

Image is from AICPA. Used under Fair Use since, after all, I am promoting their product.

The AICPA’s annual audit risk alert had been out a little while. There is a lot of good stuff covered that all auditors really ought to check out. I heartily recommend reading the annual update before you get very far into your 12/31 audits.  The document is Audit Risk Alert General Accounting and Auditing Developments—2016/17.

I will mention just a few highlights.

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Written by Jim Ulvog

January 19, 2017, 7:36 am at 7:36 am

Posted in Accounting, Audits

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