Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Archive for the ‘Accounting’ Category

Various thoughts from continuing education classes this year, part 1

leave a comment »

Image courtesy of Adobe Stock.

As part of working on a big writing project, I’ve reread my notes from several continuing education classes this year. (More details later and a link to the published material much later.) Thought I would share a variety of stray ideas. Here are a few tidbits from the classes.

Probably need to note that I have not gone back and read the original pronouncements supporting each idea and therefore I do not have a specific citation for you. (Reading three of the documents is the next step for my writing project.)

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

For what it is worth here are some tidbits you might enjoy:

Leases – ASU 2016-02.

One of the key on/off switches is whether a particular transaction or document is a lease. That will require an assessment of each transaction.

Right of use assets (the new description) resulting from operating and financing leases need to be listed separately on the statement of financial position. Those two categories (operating right of use and financing right of use) will be presented separately from fixed assets.

Read the rest of this entry »

Written by Jim Ulvog

October 3, 2017, 8:35 am at 8:35 am

Posted in Accounting

FASB exposure draft on contributions and grants.

with 2 comments

Image courtesy of Adobe Stock.

FASB has released an exposure draft which slightly redefines the distinction between revenues and contributions for the nonprofit world.

Exposure draft is called Not-for-Profit Entities (Topic 958) – Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.

On 9/11/17 I watched FASB’s one hour webcast on the exposure draft. This is only the second time I’ve seen a presentation on the issue and I haven’t yet dived into the 51 page document. That means I’m just starting to understand the changes.

What I’m going to do here is give a high level introduction. Keep in mind this is just an overview without all the details. Furthermore it is my preliminary understanding after having only heard the presentation twice and looking at the slide deck once. Please don’t cite this in your workpapers!

This exposure draft does not call for any change in how transactions are presented in the statement of activities. Organizations can present particular transactions as either revenue or contributions as they wish. The point was made several times in the presentation that the rules spelled out here determine which model is used for recognizing a transaction, not what presentation is used on the statement of activity.

There is a fantastic graph in the slide deck that provides a good visualization of the current and proposed accounting. It is copyrighted and thus I won’t be presenting it here. I’m sure you’ll be seeing the graphic before you get very far into your study.

Here’s a breakout of how exchange transactions are currently handled. These are also called reciprocal transactions. Currently we think of these as revenue, although the verbal comments in the presentation indicate that is no longer necessarily how exchange transactions must be presented.

Read the rest of this entry »

Written by Jim Ulvog

September 12, 2017, 8:08 am at 8:08 am

Posted in Accounting

Another overview of blockchain technology; time to start figuring out this stuff.

leave a comment »

Sure does look like this blockchain technology is going to be a big deal. Might be time to start getting our minds wrapped around the concept.

For starters, check out this short overview:

 

 

For a bit more detail:

8/4/17 – Bill Sheridan at Business Learning Institute – Block chain might remake accounting. The opportunities are huge. – Introductory article is one of the better overviews I have read. It introduces the video shown above.

One sentence description of Block chain, quoting from the article:

Read the rest of this entry »

Written by Jim Ulvog

August 15, 2017, 7:31 am at 7:31 am

Before the tsunami hits it might be time to tune into the accounting rules on the horizon.

leave a comment »

tsunami” by hansol is licensed under CC BY 2.0

While you have been sitting on the beach enjoying life this summer, have you noticed that dark, odd horizontal line out there on the horizon?

It isn’t a figment of your imagination. There really is a tsunami wave out there in the distance of the accounting ocean and it is going to hit the shore where you are sun bathing.

As if that wasn’t bad enough, there will be fresh waves of water hitting the beach over four years.

The good news? Maybe one or two or three of the waves will miss your organization.

Here is a quick glance of what’s on the horizon:

  • Overhaul NFP financial statement presentation
  • Restricted cash on cash flow statement
  • Revenue recognition for all entities
  • Grant and contribution recognition for NFPs
  • Most leases brought onto the statement of financial position
  • Credit losses on loans and receivables

Here is just a bit more detail:

(Cross-post from my other blog, Nonprofit Update, so this will focus on not-for-profit issues.)

Read the rest of this entry »

Written by Jim Ulvog

July 10, 2017, 8:39 am at 8:39 am

Posted in Accounting

Accountants coping with change. PTIN fees tossed out. New audit report from PCAOB.

leave a comment »

Image courtesy of Dollar Photo Club

A few interesting reads for accountants.

  • If we keep learning, robots will free us up from dreary work but won’t take away our jobs
  • Federal court keeps PTIN requirement in place but overturns the fee requirement
  • PCAOB expands standard auditor’s report

5/30/17 – Bill Sheridan at Business Learning Institute – Robots aren’t stealing our jobs. They’re setting us free. – Mr. Sheridan describes how we as accountants could thrive as computers take away the basic number crunching parts of our work.

Those tasks we do that can be automated will shift. That will leave the strategic thinking, critical thinking, collaboration, communication, and anticipation to us.

In my little brain, I have a way to describe this – So let’s say you have a program that can review 100% of disbursements instead of you drawing a sample of 40 or 60 items. Cool.

In any client that still uses humans to run their organizations, how many exceptions do you know think you will need to address?

Read the rest of this entry »

Written by Jim Ulvog

June 8, 2017, 8:20 am at 8:20 am

Posted in Accounting, Audits

Tagged with

Comments on changes to financial statement presentation during 2017 CalCPA Not-for-profit conference, part 2

leave a comment »

Image courtesy of Adobe Stock.

Here are a few of the comments from CalCPA’s May 24, 2017 Not-for-profit conference about major overhaul of financial statement presentation that I thought would be of interest to others in the nonprofit community. This post addresses ASU 2016-14. Part 1 addressed tax, revenue recognition, and single audit update sessions.

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

Accounting update – The first presenter is a FASB staff person. While comments made are the presenter’s opinions, we ought to pay attention to such a person’s opinions. Another disclaimer is the following summaries are from me.

ASU 2016-14 is the document changing not-for-profit financial statement presentation. We all need to get to the place where ASU 2016-14 or 16-14 easily rolls off our tongues.

ASU 2016-14:

Read the rest of this entry »

Written by Jim Ulvog

June 2, 2017, 15:52 pm at 3:52 pm

Posted in Accounting

Brain stretching accounting articles for CPAs

leave a comment »

Image courtesy of Dollar Photo Club before their merger into Adobe Stock.

Here are a few articles to stretch your brain when you are ready for some mental exercise:

  • Is the double-entry accounting system broken?
  • What is the recidivism rate for white-collar criminals and how could that affect my audits?
  • What  possible changes are on the horizon for the audit opinion?

5/17/17 – Tom Selling at The Accounting Onion – Double-Entry Accounting and Modern Times – As a real brain stretcher, consider whether our double-entry accounting system is fundamentally broken.

Work with me a minute while I highlight and summarize a few ideas from the article.

A basic concept of double-entry accounting is that debits on the left side of the balance sheet represent all the assets of the entity. This includes all of the resources that are available for the entity to use in order to make money and all the assets against which creditors have a claim.

On the credit side, liabilities represent all of the claims against the organization. The equity section represents the value that belongs to the owners.

Prof. Selling points out there’s a variety of problems with using the statement of financial position as a representation of economic reality.

He points out and then moves past the idea that not all debits are assets and not all credits are liabilities. That’s easy to understand.

More significantly is that not all assets are reflected as debits and not all liabilities are reflected as credits.

Read the rest of this entry »

Written by Jim Ulvog

June 1, 2017, 9:43 am at 9:43 am

Posted in Accounting, Audits

Tagged with ,