Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Why I talk about economic indicators so often.

with 2 comments

Image courtesy of Adobe Stock.

One of the frustrations I have experienced as an auditor is the statistical information made visible by the AICPA and publications from others is the economic data lags behind two or three quarters.  Another trade association reports giving trends in the religious communities, but the survey information usually is provided late in the year for the prior calendar year.

Long time ago I came across a comment that CPAs ought to start tracking key economic indicators on their own.

What a great idea!

(Cross-post from my other blog, Nonprofit Update.)

For many years I have been accumulating data for inflation, unemployment rates, labor force participation, new unemployment claims, and GDP by quarter and full year. Doing so not only lets me monitor trends at an economy wide level but also nudges me to monitor for economic data as it is released.

All that keeps me better informed on what’s going on in the wider economy beyond what I see amongst my clients. At least I think it keeps me better informed.

Tracking the data real-time also lets me think through by myself what is going on instead of reporters telling me what to think.

I will continue to track various economic indicators and share with you here on this blog. Will accumulate some additional graphs from the data I’m tracking.

My hope is this information will help you while providing audit, review, compilation, and consulting services.

Also hope it is helpful for finance leaders in the non-profit community.

Written by Jim Ulvog

October 19, 2020, 14:00 pm at 2:00 pm

Posted in Economics

2 Responses

Subscribe to comments with RSS.

  1. Jim,

    I always felt that these macroeconomic surveys had little relevance to our clients. I would expect donations to drop off this year. They have in the church I left and the one we joined in Pahrump. When capacity regulations limit attendance you expect a drop in income. I used common sense and asked the client how the year went. I would evaluate his answer. We also knew how other clients were doing. You might ask why one stood out from others. We never subscribed to any services. In the newspaper today it discussed how Gaming/entertainment are 60 % of state revenues. This income stream was completely closed for months. So unemployment is up. The paper also covers the delay in unemployment checks. I think this is more relevant than some generic report from the AICPA. My point is that there is a lot of material for free that is useful enough for analytical purposes.

    Bill Cleary

    ________________________________

    William A. Cleary

    October 19, 2020, 19:08 pm at 7:08 pm

    • Hi Bill:

      General trends in giving cover all sectors of the charity world. Giving in a particular sector, such as the church world likely won’t track the pattern. A concentration of clients provides great information.

      What prompted me to start gathering data for myself was the AICPA risk alert for nonprofits was published in the summer with giving data for the prior year and economic data for the prior 4th quarter and current 1st quarter. That was the most current info rolling into audits and reviews of 12/31 data for field work in the next several months. That means the data was over a year old. Same with data from a major trade association; the data was always for the year prior to the year under audit.

      Thanks for taking the time to comment!

      Jim

      Jim Ulvog

      October 19, 2020, 19:24 pm at 7:24 pm


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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: