Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Archive for the ‘Audits’ Category

New standards on audit evidence and auditing estimates: SASs 142 and 143

leave a comment »

Image courtesy of Adobe Stock.

So far in July, the AICPA has issued two new auditing standards:

The AICPA provides a list of Recently Issued Auditing and Attestation Standards: Information and Resources.

I will try to provide a condensed description of the condensed summary provided in the At a Glance press releases linked above.

Audit Evidence

Read the rest of this entry »

Written by Jim Ulvog

July 13, 2020, 9:18 am at 9:18 am

Posted in Audits

Tagged with ,

IT tools for auditors – Extract from PR Prompts!, part 4

leave a comment »

Description of research tools for auditors working in the IT area is courtesy of the AICPA’s Spring 2020 PR Prompts! newsletter. The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

Since the AICPA is making it available for firms to use in their marketing, an extract follows.

For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote from the AICPA.

 

Digital Assets

The digital asset ecosystem is changing and expanding rapidly. For financial statement preparers or auditors, either currently in the digital asset ecosystem, or considering entering it, the AICPA’s Digital Assets Working Group developed a practice aid, which includes vital information for you on how to account for and audit digital assets. It is intended for those with a fundamental knowledge of blockchain technology, is based on existing professional literature and the experience of members of the Digital Assets Working Group and is specific to U.S. GAAP and GAAS.

Read the rest of this entry »

Written by Jim Ulvog

June 11, 2020, 7:15 am at 7:15 am

Posted in Audits

Tagged with ,

Resources for auditors during pandemic – Extract from PR Prompts!, part 3

leave a comment »

Image courtesy of Adobe Stock.

Following news on variety of audit issues is courtesy of the AICPA’s Spring 2020 PR Prompts! newsletter. The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

Since the AICPA is making it available for firms to use in their marketing, an extract follows.

For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote from the AICPA.

 

Resources from the AICPA’s Enhancing Audit Quality(EAQ) Initiative

Through the EAQ,  the AICPA shares resources and education to help you avoid the most common audit quality issues. Check out the latest resources:

COVID-19 Audit Implications

Read the rest of this entry »

Written by Jim Ulvog

June 8, 2020, 6:45 am at 6:45 am

Deferral of SASs #134 to #140 – Extract from PR Prompts!, part 2

leave a comment »

Image courtesy of Adobe Stock.

Following news on deferral of a long string of major SASs is courtesy of the AICPA’s Spring 2020 PR Prompts! newsletter. The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

Since the AICPA is making it available for firms to use in their marketing, an extract follows.

For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote from the AICPA.

Ready, Set, Implement: News on A&A Standards

Deferral of effective dates for SAS Nos. 134-140

Read the rest of this entry »

Written by Jim Ulvog

June 4, 2020, 6:50 am at 6:50 am

Posted in Audits

Tagged with ,

Resources for auditors during the pandemic – Extract from PR Prompts!, part 1

leave a comment »

Image courtesy of Adobe Stock.

In May 2020, the AICPA published the second of their PR Prompts! newsletter. This semi-annual publication is designed to help firms stay current.

The format of the newsletter is set up to allow firms who provide peer reviews to put their logo and branding information at the top of the newsletter, print it, and send it to all their clients.

I received explicit permission to reprint items from the first newsletter. Since the email that accompanied the newsletter and the description of the top indicates firms are free to put their name on the material then distribute it, I am comfortable in posting information on my blog without further permission.

So here goes. The following information is from the AICPA. For ease of reading, following text will not be put into quotation marks even though it is a verbatim quote.

 

COVID-19 Updates and Resources

Many standard setters, including the ASB, FASB, GASB and PEEC, have evaluated, or are evaluating, effective dates and standard setting agendas. There are known and potential delays of effective dates of new standards and deadlines. As auditors navigate the challenges presented by the COVID-19 pandemic, the AICPA is working hard to provide help. They have launched an A&A resource center at aicpa.org/covidaudit where you can access free resources addressing pressing topics like remote auditing, subsequent event disclosures and going concern.

Read the rest of this entry »

Written by Jim Ulvog

June 1, 2020, 7:00 am at 7:00 am

Economic destruction from lockdown continues to expand.

leave a comment »

There is severe danger that a growing number of businesses are going to look like this over the next few months. Abandoned Safeway store [01] by Ben Schumin is licensed under CC BY-SA 2.0

Going concern thoughts for accountants:  I have stopped cross posting all my comments on the pandemic to this blog. The focus here is accounting and attestation issues.

The following conversation is worth listing here, so you can bring into consideration what is going on in the broader economy as you ponder your client’s going concern assessments. The economic damage from the shutdown is an issue for audits, reviews, and comps.

You might pay particular attention to comments by  the Atlanta Fed on near-term GDP forecasts.

 

The damage from the lockdown is spreading. More news is emerging about the devastation that took place in just the first full month of the closure.

The damage will continue to grow the longer the shutdown continues. At some point it will start compounding, growing at a faster rate out of proportion to the time that is passing. Keeping the economy closed now is unnecessarily so the compounding damage is a choice.

Merely a few of the articles in recent days:

  • Guess on GDP shrinkage in next quarter
  • Disproportionate number of poorer households hit by job losses
  • Collapse of tax revenue in New York state
  • Collapse of home sales in Southern California
  • Another retail chain announce store closures and another announces liquidation

It is imperative to reopen the economy in full, not just for ‘curb-side delivery.’ If we don’t open soon, I fear the following articles will be mild in comparison to what we will see in the future.

This discussion will be posted on several of my blogs.

5/16/20 – Fox Business – US GDP could sink over 40%: Atlanta Fed – Federal Reserve Bank of Atlanta is forecasting a 42.8% drop in GDP for the second quarter of  2020.

Read the rest of this entry »

Written by Jim Ulvog

May 22, 2020, 9:24 am at 9:24 am

Issues for auditors to consider as result of pandemic.

leave a comment »

Image courtesy of Adobe Stock.

This economic catastrophe is giving auditors lots to think about during audits. Reviews and comps are also affected.

Going concern will be a major issue on all engagements for a long time to come.

Goodwill impairment will be more important and more difficult.

Finally, consider that the rules for PPP eligibility are being rewritten after the first round of loans have already been approved by SBA and funded.

Going concern

4/23/20 – Bloomberg tax – Dave & Buster’s “Going Concern” Warning Signals Wave to Come – Management issued a going concern warning. For nonaccountants this means the company concluded “there was a substantial risk that the entertainment company would not survive the next 12 months.”

Article reports many companies are doing a much more in-depth analysis of the going concern assessment.

Read the rest of this entry »

Written by Jim Ulvog

April 28, 2020, 8:50 am at 8:50 am

Economic damage from shutdown – 4/15.

leave a comment »

Image courtesy of Adobe Stock.

A few more articles on damage we are seeing from the economic shutdown.

Guess on California unemployment rate

April 2020 – Eberhardt School of Business, University of Pacific – Initial Estimates of Employment Impacts of Covid-19 Pandemic – The school of business estimates an unemployment rate of 18.8% in California for the month of May 2020.

This is in contrast to 2010 rate of 12.2% and 2019 rate of 4.0%.

Likely increase in bankruptcies

4/13/20 – Washington Examiner – Pandemic likely to exceed Great Recession in number of bankruptcies – Economists from a leftist think tank and a conservative think tank both guess that the  number of bankruptcies from the current shutdown of the economy will exceed the number from the Great Recession.

Read the rest of this entry »

Written by Jim Ulvog

April 15, 2020, 9:53 am at 9:53 am

Collateral damage from shutdown.

leave a comment »

Image courtesy of Adobe Stock.

The damage from the shutdown of the U.S. economy will be severe. Having ‘flattened the curve’, rapidly expanded hospital capacity, and kicked critical production lines into high gear, it is time open up the economy before the second order impacts cause more health damage and death from the shutdown than from the coronavirus.

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

4/10/20 – originally posted on Medium but was pulled; do a bit of reading and then make your own assessment why the site didn’t want the article to remain visible to the public – Eight Reasons to End the Lockdowns Now – article was written by five medical doctors and one Doctor of Nursing Practice.

The eight reasons:

Read the rest of this entry »

Written by Jim Ulvog

April 14, 2020, 7:55 am at 7:55 am

News For CPAs During The Pandemic: AICPA guidance on accounting, reporting, and auditing – 4/10

leave a comment »

Image courtesy of Adobe.

Guidance from AICPA can help with financial reporting and auditing. Also, there is a need for COBOL programmers.

If you had not noticed, the California Society of CPAs is offering a lot of CPE webcasts on tax and auditing issues during the pandemic. Many of them are free. Yeah, no charge CPE. How ‘bout that?

4/8/20 – Journal of Accountancy – AICPA issues audit and accounting guidance FAQs on COVID-19 – The AICPA published a 21 page document on accounting and audit issues: Audit Matters and Auditor Reporting Issues Related to COVID19

Read the rest of this entry »

Written by Jim Ulvog

April 10, 2020, 8:33 am at 8:33 am

Articles for CPAs during the pandemic: CECL postponement & going concern – 4/4

with 3 comments

Your new office. Image courtesy of Adobe Stock.

A few more articles as you work through your audits, reviews, and compilations during the pandemic, plus a video on how to make your own cloth masks out of a t-shirt.

Key issues in this post:

  • Postponement of new CECL accounting
  • Deep dive into going concern assessment

3/26/20 – Nicola White at Bloomberg Tax – Congress Poised to Derail Biggest Bank Accounting Change in Decades Congress put a provision in the giantic CARES Act to postpone CECL until 12/31/20 or when the governemnt declares the pandemic over.  CECL otherwise went into effect on 1/1/20.  This is the first time Congress has dictated accounting rules.  Article mentions this is a reminder of the debate over mark-to-market during the Great Recession.

Read the rest of this entry »

Written by Jim Ulvog

April 4, 2020, 8:25 am at 8:25 am

Articles for CPAs during the pandemic – 4/2

leave a comment »

The new conference room. Image courtesy of Adobe Stock.

A few more articles as you work through your audits, reviews, and compilations during the pandemic. Stretch question at the end: what are going concern implications if a third of grad MBA students will defer classes a year if they are not on campus and just under half expect a large tuition discount if classes are online?

3/25/20 – Financial Management – Ethical leadership at a time of crisis – Encouragement to maintain high ethical standards in time of turmoil and uncertainty.  Summary of tips:  Be transparent, be empathetic, be available.

4/1/20 – AICPA – Addressing pandemic-related audit challenges – Reminder that while creative techniques can be used to perform audit steps, the professional standards have not changed. Article points to following document:

4/1/20 – AICPA’s Center for Plain English Accounting – Consequences of COVID-19 –  Potential Auditing Challenges Agility and creativity is needed to complete audits. Document is a reminder that the professional standards still need to be complied with because they have not changed.

Document reminds us there are a range of possible scope limitations in an audit. Discussion includes a range of issues:

Written by Jim Ulvog

April 2, 2020, 13:42 pm at 1:42 pm

Articles for CPAs during the pandemic.

leave a comment »

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

Lots of articles are appearing that can help CPAs during the pandemic. There are new and depressingly creative ways this is going to affect financial reporting. I’ll start mentioning some of those articles that grab my attention and may be of interest to you.

3/31/20 – FEI Daily – How Lease Accounting Will Be Affected by Coronavirus – Turmoil in leasing office space will create lots of complications under ASC 842, the new lease accounting rules. Article calls attention to: rent concessions, discount rate, fair market values, impairment, partial termination, reassessment, full termination abandonment, and information delay.

3/29/20 – Forbes – For Higher Education, Nothing Matters More Than September Read the rest of this entry »

Written by Jim Ulvog

March 31, 2020, 10:54 am at 10:54 am

Financial reporting issues to consider during early stages of COVID-19 pandemic

leave a comment »

Image courtesy of Adobe Stock.

A range of financial reporting issues need careful attention during the COVID-19 pandemic. These issues are old news in the professional literature but need to be considered more intentionally.

The AICPA published a special report on March 18, 2020. The report, Consequences of COVID-19 Financial Reporting Considerations, was drafted by the Center for Plain English Accounting and is available at no charge.

On 3/14/29, I was Pondering impact of coronavirus prevention steps on financial statements. An auditor’s perspective. The AICPA report goes into far more detail.

Here, in bullet point italics, are the items mentioned for your focus, with a few of my comments for highlight:

  • Subsequent Events

Type II subsequent events are those which take place after the financial statement date which are so significant that they warrant mention in the financial statements to keep those statements from being misleading.

  • Subsequent Events – Market-Value Declines

A technical Q&A (TQA 9070.06) indicates there are some occasions that can arise which warrant adjusting financial statements based on subsequent declines in market value.

  • Subsequent Events – COVID-19

Read the rest of this entry »

Written by Jim Ulvog

March 26, 2020, 8:08 am at 8:08 am

Pondering impact of coronavirus prevention steps on financial statements. An auditor’s perspective.

with 3 comments

Image courtesy of Adobe Stock.

If you are an auditor getting ready to issue opinions on client financial statements, you might want to ponder the subsequent event implications of the U.S. shutting down large portions of the economy this week. Might want to take a closer look at going concern assumptions.

If you happened to have slept well last night, you might ponder the impact on the financial statements you released a couple weeks ago.

Subsequent events

Here are some initial thoughts for consideration as disclosable material subsequent events and perhaps contingent liabilities:

Read the rest of this entry »

Written by Jim Ulvog

March 14, 2020, 9:26 am at 9:26 am