Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

More good stuff for auditors – 10-21-13

leave a comment »

A few links and comments that I think would be of interest to auditors –

  • Minor guilty plea in Olympus fiasco
  • Depressing survey of issues in audit world
  • Revenue recognition ED a reduction in accounting quality?
  • Existential threat from large litigation cases
  • Pushback against lease ED

Bank scandals, Olympus department

Reuters – Ex-banker pleads guilty in Olympus accounting fraud and New York Times – Former Banker Pleads Guilty in Olympus Accounting Case – A minor player who helped facilitate the multi-billion dollar Olympus fraud pled guilty in U.S. court to conspiracy to commit wire fraud. He held a large Olympus investment, liquidated the funds, used to funds to repay an Olympus loan, and told the auditors the funds were on hand.  He was paid $10M for his effort. Sentencing expected in January 2014.

Accounting and Auditing

Re: The Auditors – McKenna Gives Luncheon Keynote For Professional Liability Defense Federation Annual Meeting – Depressing must-read for auditors.  Text of Francine McKenna’s speech to those who defend professional firms in court. Superb survey of the major issues she has been covering over the last few years. Lots of things to make you sad/irritated about the state of the profession. I do hope those attitudes & behaviors aren’t in play below the Big 4 level.

The Accounting Onion – The Big Revenue Recognition Fizzle – Tom Selling believes a revenue recognition standard that is actually principles-based would improve GAAP. However, the current proposal…

If finalized in whatever form, …  will effectively have only accomplished one highly questionable thing for U.S. GAAP:  the FASB and the IASB will have adopted the same set of lousy rules – that could turn out to be a whole lot worse than current US GAAP.

The largest weakness is that the idea of “performance obligation” would be defined by each company leaving much room for earnings management, in Prof. Selling’s view.

He also thinks it is time to hear some sound reasons the benefits of the proposed revenue recognition standard will exceed the costs.

As an aside, he labels the “IFRS is inevitable” chant as finally dead and calls the “IFRS is principles-based” chant a myth. Good news on both accounts, in my opinion.

Re:Balance – Dixon Illinois and Its Stolen $ 53 Million: The Dust Settles, and So Do The Auditors and Auditor Liability for the Dixon Fraud – Scape-Goat Hunting in the Courthouse – Jim Peterson discusses the $35M settlement from CliftonLarsonAllen over their work on the city where the comptroller ripped off $53M over 22 years.

Major issue he discusses is the idea that litigation risks at a certain level threaten the existence of a firm. His calc suggests a $53M settlement would have collapsed that firm. He thinks the existential threat level for the Big 4 firms is so low that several current cases could collapse one of them.

Full disclosure:  A professional friend of mine became a new partner at CLA when his firm merged.

Wall Street Journal – Criticism Mounts Against New Accounting Rules for Leases – Michael Rapoport describes growing list of companies and analysts pushing back against putting on the balance sheet all leases other than very short-term ones. Criticism is growing over the two-track method to amortize the leases. Hundreds of companies have sent comment letters opposing the new rule.

Written by Jim Ulvog

October 21, 2013, 7:57 am at 7:57 am

Posted in Accounting, Audits

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: