Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

More good stuff for auditors – 8/18

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A few links and comments of interest to auditors. Trained investigators can’t read when someone is lying; too-big-to-fail/jail/govern is just too big; and update on lease accounting.

6/10 – FBI – The Truth About Lying: What Investigators Need to Know – Detecting lies, especially in high stakes interviews (like a criminal investigation) is far more difficult that interviewers and investigators realize. There are complex factors behind why people react they way they do. Not telling the truth is merely one of many causes. Vast interpersonal differences create more complications.

If you try to discern truthfulness during your auditing interviews, might be worth reading the article. Since trained pros can’t do it very well, us CPAs might want to reconsider how well we do at detecting liars.

Of investigators from many federal agencies who were tested to see if they could detect lies, the authors assert that staff from only one agency (one!) did better than 50%. The others would have been better off taking a wild guess whether the interviewee was telling the truth.

As a tangent, this is yet one more reason you ought not talk to an investigator from the state board, SEC, CID, or local police without an attorney. Talk about stress – your interviewer only has a coin toss probability of correctly assessing when you are telling tell truth during a high-stress, high-stakes interrogation.

Keep in mind this article is from the FBI. Not some attorney from the defense bar. The FBI.

7/13 – re:The Auditors – Auditors and the Financial Crisis: Part of the Solution or Part of the Problem? – Survey of issues with Big 4 auditing is a good read. One of many lessons is the moral hazard of too big to fail.

Francine McKenna’s point is the Big 4 know the feds and courts won’t do anything that puts them out of business. That changes the motivations for behavior.

Whether it is too big to fail, too big to jail, or too big to manage, we are looking at the reality of too big is too big.

The risks to everyone else are off the charts when that happens. Doesn’t matter whether we are talking about Big 4 auditors, banks, or car manufacturers, the too-big phenomenon puts all of us at risk.

7/15 – Financial Director – Conceptual differences hamper lease accounting project – In-depth article on status of the converged lease standard. Disputes will push the final standard into 2015, according to the article. Large pushback from the leasing industry is part of the issue. Divergence of approach between FASB and IASB is a new, major issue.  There’s agreement on bringing all leases over 12 months onto the balance sheet. FASB wants two-track treatment, handling amortization of real estate and equipment different. IASB wants one-track.

8/8 – Going Concern – IASB Backtracks on Lease Accounting But Definitely Not Because of FASB Here’s one way to say convergadoption(tm) on leases isn’t going to happen:

Funny that the IASB and FASB working together on a new lease accounting standard was totally kumbaya up until recently, when everything fell apart and both sides realized this convergadoption thing is totally never going to happen.

I only browsed the IASB’s project status, but it does look like they are back to single model. That would amortize all lease liabilities on the interest method. The FASB is on track with dual models: amortizing operating leases straight line and what is more of a financing on the interest method.

8/11 – Going Concern – IFRS 15 Will Not be Tested on the CPA Exam Any Time Soon Focus of story is covered in the title. What caught my eye is the fun turn of phrase in the following paragraph describing the probability the U.S. will adopt IFRS:

Considering how anxious the Board of Examiners was to shove IFRS content into the exam long before the U.S. actually decided to use those standards (which, as of 3:04 PM today, isn’t happening unless Satan ice skated to work this morning), this development is interesting: {followed by quote from Board of Examiners}

Written by Jim Ulvog

August 18, 2014, 6:51 am at 6:51 am

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