If your peer review resulted in anything other than a pass report there are a couple of deadlines you need to remember if you are in California.
Keep in mind you are responsible for your compliance with regulations. Here are a few tips to point you in the right direction. These comments discuss the regs in California. If you are in another state, you really ought to check out what your board of accountancy has to say. I’ll guess there is some comparable reporting requirement when a peer review does turn out well.
Notification requirement for reports less than pass — 45 days
If you received either a pass with deficiency or a fail report, you need to be in touch with the California Board of Accountancy (CBA).
Seriously, if you are providing audit, review, or compilation services to your clients, you really need to be in the peer review program. And you really, really need to be doing fairly good work. I doubt any CPAs in California who desperately need to read this post will be doing so, but it is still worth mentioning.
The California Board of Accountancy is coming down hard on CPAs who have avoided the peer review program. Seriously missing the boat on audit quality is getting hammered as well.
The Spring/Summer 2016 edition of the quarterly Update newsletter from CBA, issue 81, has several reports of firms drawing serious sanctions. There are 21 pages of narrative describing the sanctions through April 24, 2016. Of 28 disciplinary issues, 7 deal with peer review, which are the ones I will highlight.
Entrepreneur magazine tells us to Stop These 8 Negative Mindsets That Make Entrepreneurs Miserable. The article is focused on entrepreneurs and the ideas apply to every sole practitioner, even partners in small firms.
Actually, these warnings apply to everyone who is looking at flower petals instead of flower roots.
Here are some highlights of the points, along with my comments. (If you aren’t an entrepreneur or partner in a small CPA firm, focus on the numbered points and translate my comments to your situation.)
1 Seeking the approval of others
Hey, you’re running a small firm because you want to. It is astoundingly fun. You don’t need anyone else’s approval. You approve of yourself.
My discussion continues of how much wealth Alexander the Great looted while on his rampage around the world. These calculations are based on two books I’ve really enjoyed:
- Professor Frank Holt – The Treasures of Alexander the Great: How One Man’s Wealth Shaped the World
- Professor Deirdre McCloskey – Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (I’m still working on her book – it is rather long)
Loot from Persia
Prof Holt provides a couple of ancient estimates of the total haul in Persia. Here is a recap:
- ?? Babylon
- 50k talents – Susa
- 120k – Persepolis
- 6k – Pasargadae
- 26k – Ecbatana
That gives a point estimate of 202k talents. Back out some poetic license exaggeration and add an amount at Babylon about equal to Susa (author’s estimate) gives me an estimate of about 225k talents, give or take. That is only the precious metals without art, statuary, spices, clothes, pottery, or gold inlaid stuff.
In addition, Darius fled with maybe 8,000 talents, Alexander paid bonuses of around 12,000 talents to his soldiers, with another 2,000 talents to Thessalain soldiers. There was enough stray coins found a century later to mint 4,000 talents of coins. That is around another 26,000 talents or so of additional bullion. Add in the unquantifiable amount soldiers looted and all the non-bullion treasures means there was an incalculable amount of wealth looted from the Persian empire.
I’ll work with 202K point estimate, plus 50K from Babylon, less 25K for poetic license, plus 26K sundry disposition. That gets to a point estimate of 253K, with my very wild guess of a margin of error of minus 50K to plus 100K. Let’s work with a 250,000 Talent estimate. That means I’ll roughly estimate Alexander looted 250,000 talents of silver-equivalent from Persia.
Total haul during Alexander’s extended raid around the world
The total haul from looting is estimated by the Prof. Holt as 69( X) + 216,820 talents, where X is an unknown amount from one raid or battle. The total is unknown and unknowable.
Shortly after that estimate the author adds in tribute from conquered areas that were not looted in return for payments and loyalty.
Total proceeds from the wars is then estimated in a formula expressed as 81.67( X) +311,761.
The massive volumes of change you see surrounding you everywhere you look isn’t going to stop. In fact the pace of change is going to increase.
Each of us have a choice. Either figure out how to cope with and embrace the change or ignore it.
The cost of ignoring massive change is that you and your organization will get left behind. That doesn’t just mean you will be a laggard as you continue doing next month what you did last year. Instead that means your organization will radically shrink and before you know it, will disappear.
The downsides are serious. There is an upside and it is exciting.
Four articles I’ve seen lately focus the mind. While these articles are written in either the accounting or church context, they also fully apply in the church and accounting context. They also apply to every individual and organization.
This article will be posted across all my blogs because it applies to all of them.
7/7 – Bill Sheridan at LinkedIn – Embrace change or resist it: Only one option is viable.
The odds are really high that tax preparation will be completely automated in the next two decades. Estimated odds are almost as high that both accounting and auditing will be fully automated.
Consider my business and my core tasks of auditing charities. There is a real possibility those types of audits could be heavily automated in 10 or 15 or 20 years. I am not old enough to bank on retiring before that massive change starts eating away the entire audit profession.
Automation will take over an increasing number of tasks. The world of tax, accounting, and audit will be affected. Mr. Sheridan explains the shelf life of education and experience we have is shrinking.
As the Maryland Association of CPAs routinely points out our learning needs to be greater than the rate of change; L>C is their formula.
An ongoing challenge for law enforcement in pursuing charges against bankers is actually getting convictions at trial. Even manipulating Libor is a tough sell to juries.
For those who wanted to see bunches of bankers in prison stripes, keep in mind there is that hurdle of persuading a jury a crime was committed. It may be difficult, but is possible to do.
Here are a few recent articles on the Panama Papers leak. Doesn’t seem to be a lot of new developments since my last post three weeks ago.
6/5 – New York Times – Panama Papers Show How Rich United States Clients Hid Millions Abroad – The NYT has finally gained access to the Panama Papers.
In their research they have only found 2,400 Americans who ran money through companies set up by Mossack Fonseca, none of them high-profile, and apparently none of them from the political world.
Article tells the tale visible from correspondence for a few people who had already built a private fortune and then decided to park money overseas.
The basic asset protection shell structure includes two entities: a for-profit into which money is moved from the US, and a Panamanian based foundation which receives a contribution from the first shell, thus protecting the money from litigation, taxation, or disclosure.