June 2015

Fellow CPAs, we need to step up our audit game

Leave a Comment / Audits, Compilations & reviews, Peer Review / By

Today I listened to the rebroadcast of 2015 Peer Review Update. Check out the class if you have the chance.

Update 7/7: The next rebroadcast will be July 20, 2015. Link is here. If that link has expired or disappeared, this page has a long list of all upcoming events in peer review.

Heard several few things that distressed me.

In particular, we CPAs collectively need to improve the quality of the work we are doing in the audit arena.

Consider a few points. This is what I heard from the presentation. I haven’t gone back to source documents to verify the numbers or explanations. This is what I heard and jotted down in my notes while listening to the session.

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Disclosure of open tax years is now only required for a nonpublic entity that has material unrecognized tax benefits

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Disclosing which fiscal years are open to audit by tax authorities has been required for nonpublic companies for several years. An explicit requirement came into play with Technical Practice Aid 5250.15.

Effective March 2015 that TPA was deleted. The requirement now is based on a comment buried in the Basis for Conclusions of ASU 2009-06, which says disclosure of open tax years is only needed when there are material unrecognized tax benefits.

Impact of TPA 5250.15

That requirement has produced a standard comment on all nonpublic entity financial statements that looks something like this:

The entity files income tax returns with the U. S. and (state) governments. With few exceptions, the entity is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 20×1.

The AICPA has deleted TPA 5250.15. That type of comment will not be required unless the entity has material unrecognized tax benefits.

What changed?

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Thoughts on jumping into cloud computing

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Bruce Schneier has a series of articles that ponder the risks and rewards of jumping into cloud computing. That is the concept of storing your data and computing power with an on-line service provider.

(This discussion is cross-posted from my other blog, Nonprofit Update, because the same issues apply in a CPA firm. You may find this discussion helpful for your clients who are pondering a jump to the cloud for major applications.)

Some things to consider:

6/10 – Schneier on Security – Should Companies Do Most of Their Computing in the Cloud? (Part 1) – The answer is complicated. The efficiencies and cost savings are real and a major advantage.

On the other hand, there may be legal issues, such as your government creates far higher privacy standards than the country where your data will be stored or another country places severe restrictions on data you store there. …

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Minor updates on the banking fiascos: Forex settlements and a new fiasco

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Settlements of private lawsuits are continuing. Also, settlements with CFTC underway for another rate manipulation scheme.

6/18 – Wall Street Journal – Banks’ Civil Forex Settlements Near $2 Billion/ Barclays, BNP Paribas, Goldman Sachs and HSBC recently signed agreements to settle case  – The settlements for private litigation over manipulation of foreign exchange rates are moving forward. Article says HSBC has settled up for $285M, Barclays for $375M, Goldman Sachs is in for $129.5M, and an unknown amount for BNP.

By my calculation that brings the total for seven banks to …

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Post-release interview with Scott London – 1

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Just finished watching a 2 hour webcast from CPA Crossings. Gary Zeune interviewed Scott London on what got him into prison on an 14-month sentence for securities law violation.

This interview will be available again on June 18 and June 22. More info here.

The four-hour interview from last June, before Mr. London reported to prison, will be broadcast again on June 15, 25, and 30. More info here.

I heartily recommend the webcast. If you are looking for an ethics course that’s a lot more interesting than the typical “here are the rules” presentation, check out one or both of the above webcasts.

I will have several articles on the interview over the next few days. Will talk about one part of the interview now –

Incarceration timeline

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Speculation on upcoming bank settlements

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Not much news on the bank fiasco front in the last week or so. Here are two articles pondering what settlements are on the horizon.

5/26 – Alison Frankel at Reuters – Forex class action deals may hint banks braced to lose Libor appeal – Citigroup settled up for $394M with private parties over manipulation of forex.

Article points to one settlement I missed:

1/5 – Reuters – JPMorgan settles currency manipulation lawsuit in U.S. – Morgan will settle up with about $100M.

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