October 2014

Update on Forex manipulation. Also, another thought why the banking fiascos won’t be ending anytime soon

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Previously mentioned the big banks are under investigation for allegedly manipulating forex: Next banking fiasco? Manipulating foreign exchange rates? Those are the rates used to trade currencies. In addition to admitting manipulation of Libor, many banks now stand accused of manipulating forex.

Just two updates..

10/30 – Wall Street Journal – Big Banks Brace for Penalties in Probes – Tons of leaks feed the story of the typical cast of big banks being in negotiations to settle allegations of their manipulating foreign exchange rates, or forex. Big news to me is the banks are all trying to settle at the same time with all of the regulators.

(If one company reaching a simultaneous agreement with every regulator is called a global settlement, then if every company in the industry reaches an agreement with all regulators on the same day, would that be called a global global settlement? Universal global settlement?)

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Sample compilation report under SSARS 21

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Update: If you are checking out the requirements for compilation reports, you might benefit from buying a Primer on Compilation and Preparation engagements under SSARS #21. Book is written by my friend, Charles Hall, CPA. For Wednesday 12/2 the price is a mere $0.99.

Here is the new compilation report that will be used when SSARS 21 goes into effect.

I will provide three examples. First, the illustrative standard report. Second, modification of the standard report for a sole practitioner. Third, modification for a non-profit organization.

Copy and paste at your own risk.

Illustrative standard report …

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Frauds are a cancer destroying capitalism

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My previous post described a comment by Sam Antar during his CPE session that the fines arising from of a long list of financial fiascos are essentially a tax on illegal behavior.

He made another comment in that session that I wanted to describe in detail. He said these frauds are a cancer destroying capitalism.

I had opportunity to visit with him a few weeks ago and asked him to expand on this idea. I will summarize what we discussed.

Cancer destroying capitalism

He indicated the foundation of capitalism is reliability of financial information. If you can trust financial information you read then we can do business with each other.

He says the extent of frauds we have seen are leading people to lose faith in financial information. That leads to losing faith in their counterparties. Therefore people have less trust. In financial terms that means the risk premiums for transactions go up. The interest rate built into a transaction increases and the return drops.

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Flash update on SSARS #21

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The new statement that overhauls the SSARS body of knowledge and opens up a new service called preparation was released on October 23, 2014.

Update – See also:

From the 30,000 foot level, here are just a few changes:

Huge fines are a tax on illegal behavior

3 Comments / Fraud, Pondering / By

Several weeks ago I listened to a continuing education class presented by Sam Antar, current felon and formerly CFO of Crazy Eddie.

In the session, he made two comments that caught my ear. First, the fines we read about as a result of various financial scandals are just a tax on illegal behavior. Second, those fiascos are, he said, a cancer destroying capitalism.

After the session, I had opportunity to interview him by phone and follow-up on both of those ideas.

Fines are a tax on illegal behavior

He indicated that essentially no one has been implicated in any of the disasters we’ve read about, which I have discussed extensively on my blog.

He said corporations don’t commit crimes. People commit crimes.

And the people who committed crimes aren’t going to jail.

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SSARS #21 to be released today (10-23) – 2 hour AICPA webcast to describe changes

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SSARS #21 is an overhaul of the entire body of SSARS. It will be released today. I’ll have lots of discussion of the document over the next few weeks.

The AICPA is presenting a 2 hour CPE webcast today at 2 Eastern Time. Cost is $99 for one attendee, with discounts for multiple people.

Check out Understanding the SSARS 21 Clarification and Revision.

Great course to listen to if you aren’t going to be at the always superb CalCPA A&A conference.

Update – See also:

Warning to bankers that too-big-to-manage might mean too-big-to-exist

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Federal Reserve officials gave too-big-to-fail bank leaders a warning at a private lunch that they need to improve the risk management and ethical behavior inside the banks. The alternative put on the table is a suggestion that if they are too large to manage then they may need to be broken up into smaller banks that can be managed.

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SSARS 21 will be issued 10/23; will allow “preparation” and revise comp & review standards

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The rewrite of SSARS into clarified format will be issued this week, Thursday, October 23.

Here is a one sentence summary: The new document will completely rewrite the SSARS literature, will add a new service called “preparation”, and will add new requirements for comps & reviews.

For a bit more information, check out AICPA Modernizes Non-Audit Standards for Accountants in Public Practice.

FASB is starting to write a major overhaul of NPO accounting

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One discussion inside the accounting rule maker deals with a massive restructure of the accounting for nonprofit organizations. The FASB staff have started drafting the changes.

Exposure draft might be released in early 2015. Adjust the estimate by a few months to allow for the complexity of a rewrite that affects such a wide variety of organizations and I’ll guess we may see an exposure draft in spring or summer 2015.

Thomson Reuters Tax & Accounting News reports Not-for-Profit Proposal Targeted for 2015 Release.

If you are involved in the finance or accounting areas of the NPO world, it might be worth keeping your eye out for this issue.

Starting template to develop a Quality Control document for CPA firm. It’s even legit to copy & paste.

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Image courtesy of Adobe Stock.
Image courtesy of Adobe Stock.

The AICPA has provided a number of new documents to help firms improve the quality control systems and to start looking at the enhancing audit quality initiative. I’ll list a few of them. It’s easy to copy & paste and at a great price.

Tools to develop a quality-control document

Every CPA firm performing assurance services is required to have a quality-control document. That applies even if you only do comps and reviews. Even if you aren’t going through a system review.

The AICPA has free practice tools to explain the QC standards along with a sample document based on the size of the firm.

You can find the documents on this page.

You can also find a document that is geared to the size of a firm: …

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