September 2012

‘If it isn’t documented, it wasn’t done’ is almost the law in California

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While doing the required CPE for regulatory ethics, I reread the California state law on audit documentation. The standard is that if something wasn’t done documented, there is a rebuttable presumption that it was not done.  You can overcome that presumption, but the burden would be on you as the CPA to persuade a jury you really did something for which you prepared no documentation.

That gets back to a comment I’ve made in CPE courses that …

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Former president of Olympus and two others plead guilty

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Associated Press reports the ex-president pled guilty to securities law violations. Two other senior staff pled guilty as well.

The AP report can be found in the Wall Street Journal article, Ex-President of Japan’s Olympus Pleads Guilty.

The Reuters report can be found in the New York Times article, Guilty Pleas in Trial Over Olympus Scandal.

The three individuals pleading guilty:

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This is all you have to do to calculate a loan loss reserve under possible new GAAP rules – calculate the cash flow by year for the remaining life of every loan

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Yes, that’s all you have to do. For each loan in your portfolio, determine the cash flow by year so you can figure out what cash flows won’t be collected.  Then calculate the present value of what won’t be collected. For every loan. Repeat every year.

That’s the model FASB is thinking about. 

For a critique, check out Tom Selling’s post, “Anything But Market” is the FASB’s Mantra for Loan Loss Accounting.

Here is a one paragraph overview of the concept:

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This is all you have to do to calculate a loan loss reserve under possible new GAAP rules – calculate the cash flow by year for the remaining life of every loanRead More »

CEO of Peregrine signs plea agreement

1 Comment / Accounting, Fraud / By

The Wall Street Journal reports that the CEO of Peregrine Financial Group has signed a plea bargain deal with the feds. The article, Peregrine CEO Signs Plea Deal says:

Under the agreement, Russell Wasendorf Sr. would plead guilty to charges of embezzlement and mail fraud alongside two counts of lying to government regulators, assistant U.S. attorneys said in a Cedar Rapids, Iowa, court Tuesday.

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New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employee

1 Comment / Audits, Fraud / By

The mess involving a faked audit report in New Mexico is growing. The former controller wasn’t acting alone and the faked audit report isn’t the only issue.

The controller has been arrested for alleged securities fraud. It is now alleged that the former controller coordinated with the Chief Operating Officer (COO) in misstating the financial statements. The COO has also been arrested.

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What improvements will we see from the revenue recognition project? What is the cost? Topic 605

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Ponder this:

what will a new revenue recognition standard accomplish to improve financial reporting? And at what cost?

Those are Tom Selling’s questions in his post, Revenue Recognition Sure Isn’t Perfect – But Convergence will be much Worse.

What cost?

As to the cost question, I expect it would be very high. The disruption to preparers, confusion for report users, and increased time for auditors would be big.

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What improvements will we see from the revenue recognition project? What is the cost? Topic 605Read More »

2nd Blogiversary

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(cross-post from my other blog, Nonprofit Update with minor changes.)

August 29th marked the 2 year blogiversary of my blog Nonprofit Update, which talks about nonprofit issues. I split off posts of interest to CPAs to this blog (Attestation Update) on October 14, 2010 and started Outrun Change on October 3, 2011. That site ponders the radical change around us and how we can stay ahead of it.

Nonprofit Update is my lead blog and I consider its start to be the birth of all three blogs. So, this is also the blogiversary of Attestation Update.

Thanks so much to those who have stopped by. I hope it has been a blessing to you.  In case you can’t tell, I’ve been having a blast.

Most visitors and page views are coming in from internet search engines. That is really cool.

One of the best things in the last year is a growing number of people interested enough is my musings to follow by e-mail or Google RSS feed.  Thanks very much for stopping by.

For the second year, I will report some stats for my sites.  Here’s some stuff for those interested in such things. I will adjust this time around to an August 31 cutoff instead of the 29th.  I’ll list stats for this year with the prior year in parentheses.

I’ll provide this data for two reasons. First, to let those who may be interested in blogging see what data looks like for a really small blogger. Second, since I am active on three sites with different topics, it provides a test bed to see what different sites may look like for different blogs from the same author.

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