Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Archive for the ‘Audits’ Category

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

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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?

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Written by Jim Ulvog

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

Posted in Accounting, Audits

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Brain stretching accounting articles for CPAs

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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.

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Written by Jim Ulvog

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

Posted in Accounting, Audits

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Helpful comments from 2017 CalCPA Not-for-profit conference, part 1

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Here are a few of the comments from the May 24, 2017 Not-for-profit conference presented by California Society of CPAs that I thought would be of interest to others in the nonprofit community. Since all comments are the opinion of the speaker, neither their name nor organization will be mentioned. The ideas mentioned can stand or fall on their own.

This is the first of two posts. The next discussion will address changes in financial statement presentation outlined in ASU 2016-14. In this post: tax, revenue recognition, and single audit.

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

Tax update:

  • It might just be possible that filing a form 1023 or 1023-EZ is so easy that people can get exempt status for an organization without knowing the requirements to properly operate a charity and maintain exempt status. In examinations to follow-up on exempt status, the IRS is finding a lot of charities are out of compliance.
  • One of several focuses of the IRS is filing of FBARs, those forms used to report overseas bank accounts. One ripple effect of chasing money laundering is the impact on charities who have overseas accounts. Even though there is minimal risk of those accounts being used for tax evasion the FBAR filing requirement still apply. As a reminder, the deadline for filing FBARs is now April 15 with a six-month extension available.

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Written by Jim Ulvog

May 30, 2017, 7:46 am at 7:46 am

Posted in Accounting, Audits

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Not-for-profit risk alert for 2017 is available

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Cover of 2017 risk alert from the AICPA, used under fair use since I’m urging you to buy their product.

The 2017 risk alert for non-profits is available from the AICPA.

Highlighted updates this year include:

  • AUS 2016-14 – New financial statement presentation
  • ASU 2016-02 – Leases
  • SAS 132 – Going concern

If you don’t feel overwhelmed, you haven’t been paying close enough attention to recent pronouncements. If so, the risk alert will help you catch up.

If you are feeling overwhelmed, the risk alert is a great first step towards to getting comfortable.

Written by Jim Ulvog

May 25, 2017, 21:01 pm at 9:01 pm

Posted in Accounting, Audits

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Like a persistent vampire in a horribly bad horror movie, IFRS just won’t stay dead in the U.S.

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Image courtesy of Adobe Stock.

I thought IFRS in the US was dead. In case you didn’t know, I have a fairly strong opinion on the issue.

A presenter at the CalCPA’s Accounting and Auditing Conference on April 25, 2017 had the following comment on IFRS at the end of the presentation:

Death, taxes, cockroaches, and IFRS aren’t going away.

My immediate thought:

Unfortunately, that now seems to be true.

IFRS is baaaack

He perceives the pendulum of discussion on IFRS is swinging back to the topic being on the table.

His comments consistently contained the inference that IFRS is one body of knowledge, consistent in its application in every country across the planet that has adopted the rules.

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Written by Jim Ulvog

April 26, 2017, 7:15 am at 7:15 am

Posted in Accounting, Audits

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Minor updates while we wait for more news on the PCAOB leak to KPMG

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There is little new information on the leak from PCAOB to KPMG since the first reports.

I’m expecting to hear a lot more, most likely after PCAOB and SEC finish their investigation. If I read this situation correctly, and if public reports are correct, there will be sanctions from SEC against some of the KPMG staff. At that point, the SEC public documents will tell us a lot more.

While we wait, here are two articles that give some general background.

4/17/17 – Francine McKenna at re:The Auditors – KPMG takes its turn with a Big 4-sized scandal – If you’ve been looking for an article with a long time horizon to survey the assorted scandals in the Big 4 world, this post will give you the deep background you want.

Leak from PCAOB to KPMG

Post describes the current information that is public on the leak of inspection engagements from someone at PCAOB to someone at KPMG. Article illustrates there still is not a lot visible in the public realm to answer all the questions that come to mind.

Ms. McKenna quotes my comment earlier on the PCAOB-KPMG leak feeling to me like a red flag of something deeper. She agrees with me.

Each firm has their own round of fiascos

All the firms have had their turn of embarrassing publicity, often with fines or undisclosed settlements.

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Written by Jim Ulvog

April 18, 2017, 9:05 am at 9:05 am

Posted in Audits, Pondering

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Update on PCAOB leak to KPMG: 6 departed staff at KPMG were fired.

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A minor update on the leak from a now-former PCAOB staffer to a now-former KPMG staffer giving advance notice of audits selected for inspection. Also, many questions come to my mind after thinking about this situation.

Previously mentioned this fiasco yesterday.

CFO.com provides some clarifying info from KPMG’s executive director of media relations and corporate communications:  KPMG Replaces Audit Chair in Wake of PCAOB leaks.

The KPMG representative says that KPMG discovered the issue and notified the SEC and PCAOB.

Most significant piece of new information is that the six people who left the firm were fired.

They did not resign.

Why is this significant, at least to me? In the initial reports, I saw verbs used indicating all of the following possibilities for the partner’s departure. They may have:

  • resigned (which means sorta’ kinda’ voluntary terminations), or
  • were fired (which means the firm unilaterally terminated them), or
  • departed (which doesn’t addressed which party made the termination decision; in other words could have been a summary firing, or truly voluntary, or under the proverbial threat of you-can-either-resign-or-I’ll-personally-throw-you-out-the-window).

At first read, I did not analyze which of the above options actually was in play. I put together all the reports I read and assumed (you know what that means) these were all forced resignations, as in “I think it’s time for you to resign.

Other comments by the PR person confusing me are statements that the fireable offenses were possessing the leaked information or knowing others knew about it.

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Written by Jim Ulvog

April 13, 2017, 8:29 am at 8:29 am

Posted in Audits, Pondering

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