Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Archive for the ‘Pondering’ Category

Staying ahead of change in the CPA profession

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We need to be ready for what’s around the curve. We will be there really soon whether we want to or not. Image courtesy of Adobe Stock.

In the short-term, looks like a shortage is emerging for experience accountants. In the longer term, the massive change surrounding us means we need to keep learning and adapting.

As CPAs, we need to keep learning new skills and focus on things computers can’t do.

 

1/30/17 – Bill Sheridan at Business Learning Institute of MACPA – Want to beat the machines? Learn to do what they can’t do – Here is a way to think about automation that you might be able to wrap your brain around – How will you adapt then 30% of the work you do is automated, done faster, quicker, cheaper, and more accurately than you can do? Not 99% of what you do, not 10%, but 30%?

I can’t get my arms around audit or tax or consulting completely going away. I just can’t picture that. However, I can imagine 30% or 40% of my work as an auditor becoming completely automated. Actually, I sort of like that idea.

Computers don’t do well at applying professional judgment, courage, empathy, flexibility, and reacting to body language.

Point of article is learn to do those things better.

1/31/17 – Bill Sheridan at Business Learning Institute of MACPA – Change is a choice. So are relevance … and your future – Each of us has a choice. We can keep doing what we are doing. Or we can decide to change and grow and learn new things.

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Written by Jim Ulvog

March 14, 2017, 7:27 am at 7:27 am

Posted in Accounting, Audits, Pondering

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More on the ‘tipping point’ for Big 4 firms

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

If you casually pay attention to what is going on in the land of Big 4, a world far, far away from most of us in the accounting world, you might have interest in two recent articles from Jim Peterson, pondering the survivability of the huge firms. I will summarize what I think are a few highlights.

2/13 – Jim Peterson at Re:Balance – If the Big Four Went “Ex-advisory” – Deja Vu? Or Worse? – Regulators don’t like the huge consulting practices in the Big 4 and the partners in the Big 4 consulting arms don’t like the constraints on their growth, opportunities, and compensation from being tied to the audit & tax practices.

Article speculates on the impact if the consulting work were to be spun off, as happened back in 1998 through 2001.

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Written by Jim Ulvog

February 17, 2017, 9:30 am at 9:30 am

Posted in Audits, Pondering

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Danger lurks in cool tech tools

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

Those cool tech tools we are all making such good use of, such as text messaging, tweets, DMs, and all other other tools I don’t even know about carry a hidden danger for CPAs.

The tools push us to have short, brief comments, that may or may not be retained.

Accounting work requires detail, precision, and full explanation along with documentation of the advice we give and positions we take.

Those super cool tools can set us up for trouble.

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Written by Jim Ulvog

December 6, 2016, 9:10 am at 9:10 am

Posted in Pondering, Social media

Pondering on the Wells Fargo fiasco and more news

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Original finish on mud wagon used by subcontractor to Wells Fargo on San Diego-Julian run in 1870s. Wagon is housed at the Seeley Stable Museum in Old Town San Diego Historic Park. April 2012 photo by James Ulvog.

Original finish is visible on mud wagon used by subcontractor to Wells Fargo on the San Diego-Julian run in 1870s. Lighter and cheaper than the Concord wagon, this was useful in desert and mountain areas. Wagon is housed at the Seeley Stable Museum in Old Town San Diego Historic Park. April 2012 photo by James Ulvog.

Here’s a few articles that were interesting to me in the last two days about the Wells Fargo fiasco, previously discussed here, here and here.

  • First, a digression into the ethics and audit issues of systemic faking of accounts and coding diesel engines to cheat.
  • Next, pondering whether there will be any clawback of the $124M bonuses from the senior executive who managed the retail banking area.
  • Finally, two articles describing the DoJ opening a preliminary investigation.

9/14 – Prof. Mike Shaub at Bottom Line Ethics – Plausible deniability and the insulation of upper management – Prof Shaub ponders two fiascos in the news for the deeper ethical issues. Both the Volkswagon diesel engine scheme and the Wells Fargo fake account fiasco reflect poorly not only on the companies and their culture, but the state of ethics in business and our society.

We, collectively, need to grapple with those issues.

The article raises unsettling issues for auditors. Let’s ponder for a moment…How can we detect corporate cultures and entity tone-at-the-top environments which allow building a cheating code into the core operation of a company’s software? How can we detect an environment that incentivizes staff to cheat customers or risk losing their jobs for not hitting sales targets? Those are sobering questions.

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Written by Jim Ulvog

September 16, 2016, 8:05 am at 8:05 am

Lots more information on the case settled by PwC

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

I stumbled across the website of the law firm that handled the lawsuit against PwC over their audit of Colonial Bank. The case has been settled for an undisclosed amount.

The firm has a section of their website that covers litigation news and settlements. The website is here, the news section is here.

Rare glimpse inside major audit

To put this into context, this is the biggest case against a CPA firm to actually get into court in a very long time. If I’m understanding the case correctly (a massive assumption!) after briefly browsing the articles, there were 12 days of testimony spread over either 3 or 4 weeks of in-court proceedings.

Phrased another way, this case provides lots of sworn testimony on the details of a major audit disaster. It is rare for outsiders to see the inner workings of an audit that did not go well.

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Written by Jim Ulvog

September 1, 2016, 8:39 am at 8:39 am

Posted in Audits, Pondering

One of three major cases against PwC is settled.

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

Of the three lawsuits against PwC that are large enough to potentially be life threatening, one was settled by PwC after several weeks of the trial. I previously discussed Litigation cases that could possibly take down a Big 4 firm.

On 8/26, the Wall Street Journal reports PricewaterhouseCoopers Settles $5.5 Billion Crisis Era Lawsuit.

Francine McKenna has repeatedly pointed out on Twitter that this is the first major case in a long time against an accounting firm which actually got into court. There are a few weeks of testimony which will likely be a good source for researchers and journalists wanting to understand how audits of large companies can go sour.

Amount of settlement is confidential. This settlement still leaves a $1B suit by the FDIC over the failed bank that was audited by PwC.

Let me give a thumbnail picture of this suit. My simplification will obviously show my confusion. Yeah, my bias will probably be visible too.

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Written by Jim Ulvog

August 29, 2016, 6:07 am at 6:07 am

Posted in Audits, Pondering

Tagged with ,

Good reads for accountants: Twelve minute CPE courses. Big data AI taking over audit work?

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

In the near term, your CPE options will include twelve-minute courses.

In the long-term, ponder how much of your audit work could be replaced by artificial intelligence. I can grasp the idea of automating a large portion of detail testing. I can’t see the possibility of replacing the entire audit function. Stretch your brain with two articles from Jim Peterson.

8/11 – Journal of Accountancy – CPE standards update accommodates new forms of learning – It will be a while before you see this in a CPE class, but the AICPA and NASBA changed the CPE rules to allow for nano-learning and blended learning.

Nano-learning is a short course, say 12 minutes that will allow CPE credit in 0.2 hour increments. Picture a 24 or 36 minute course on how to conduct an inventory observation. Or a 12 minute class on how to prepare the planning materiality worksheet.

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Written by Jim Ulvog

August 25, 2016, 8:08 am at 8:08 am