Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Archive for the ‘Compilations & reviews’ Category

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

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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.

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Written by Jim Ulvog

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

Economic destruction from lockdown continues to expand.

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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.

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Written by Jim Ulvog

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

Issues for auditors to consider as result of pandemic.

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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.

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Written by Jim Ulvog

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

Economic damage from shutdown – 4/15.

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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.

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Written by Jim Ulvog

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

Collateral damage from shutdown.

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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:

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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

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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

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Written by Jim Ulvog

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

Articles for CPAs during the pandemic: Expect delay in lease effective date for private companies and NFPs – 4/9

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Big news from FASB yesterday. They are planning to postpone the new lease rules for private companies and most not-for-profit entities.

4/8/20 – Journal of Accountancy – FASB effective date delay proposals to include private company lease accounting and Wall Street Journal – FASB Proposes Delaying New Accounting Rules for Some Companies Because of Coronavirus – FASB is moving towards a deferral of revenue recognition that applies to a very narrow slice of companies. Also moving toward a deferral of new lease accounting for private companies and private not-for-profit organizations.

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Written by Jim Ulvog

April 9, 2020, 10:21 am at 10:21 am