Attestation Update – A&A for CPAs. – Page 14 – Technical stuff for CPAs providing attestation services.

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

Leave a Comment / Accounting, Compilations & reviews / Jim Ulvog

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

Economic damage from pandemic is severe and will continue to be severe.

Leave a Comment / Economics, Pondering / Jim Ulvog

We are starting to see some guesses about the economic damage from the shutdowns driven by the pandemic.

When you read about the 10 million people who have filed for unemployment in the last two weeks and consider there will be millions more and the unemployment will continue for another month or two, ponder the ripple effects.

That shock of unemployment translates into cars not purchased, summer & Christmas vacations not taken, conferences not attended, college enrollment delayed a year, fancy wedding receptions never planned, and house renovations postponed by a decade.

4/5/20 – Wall Street Journal – State Shutdowns Have Taken at Least a Quarter of U.S. Economy Offline – Study by Moody’s Analytics estimates that 29% of the U.S. economy has shut down. That is the estimated drop in output we have already seen.

Some of the staggeringly dangerous hits to U.S. output and wealth:

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Economic damage from pandemic is severe and will continue to be severe.Read More »

Economic damage from pandemic is severe and will continue to be severe. Read More »

Legal issues arising from the pandemic. It’s gonna’ get messy…

Leave a Comment / Accounting, Other stuff / Jim Ulvog

Time to read that insurance policy. Image courtesy of Adobe Stock.

ECFA presented a webcast Navigating Critical Legal Issues in the COVID-19 Crisis on 4/7/20. If this condensed summary of issues is at all interest to you, check out their website,www.ECFA.org. Webcast is now available at no charge if you are a registered member or if you are an ECFA member. Registered status is free.

I won’t be giving any legal advice here. Instead I will merely identify issues for you to consider. Consult with your attorney if you need to go in depth.

A long yet partial list of legal issues to consider

Intentionally assess whether you perceive taking a PPP loan under the SBA rules will have any effect on your ability to exercise your religious freedom. Webcast provides good guidance.

OSHA – there are general rules under federal OSHA and state equivalent regulations affecting the workplace. These may be more significant in a coronavirus environment.

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Legal issues arising from the pandemic. It’s gonna’ get messy…Read More »

Legal issues arising from the pandemic. It’s gonna’ get messy… Read More »

Articles for CPAs during the pandemic: Possible delay in SAS effective dates – 4/7

Leave a Comment / Accounting, Compilations & reviews / Jim Ulvog

Ultra modern audit interview. Image courtesy of Adobe Stock.

Some background articles for CPAs. Won’t be covering the CARES Act here or general pandemic news. Instead these posts focus on those of us running an attestation practice.

4/6/20 – Journal of Accountancy – ASB to consider one-year deferral of effective dates – There is a string of new audit rules that go into effect the end of this year. The ASB will be meeting on April 22 considering whether to postpone the effective dates by a year. Under consideration are SAS 134 through 139 which have already been issued plus SAS 140 which is expected this week. Those include:

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Articles for CPAs during the pandemic: Possible delay in SAS effective dates – 4/7Read More »

Articles for CPAs during the pandemic: Possible delay in SAS effective dates – 4/7 Read More »

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

3 Comments / Accounting, Audits, Compilations & reviews / Jim Ulvog

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.

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

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

Articles for CPAs during the pandemic – 4/2

Leave a Comment / Accounting, Audits, Compilations & reviews / Jim Ulvog

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:

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Articles for CPAs during the pandemic – 4/2 Read More »

Articles for CPAs during the pandemic.

Leave a Comment / Accounting, Audits, Compilations & reviews / Jim Ulvog

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 – …

Articles for CPAs during the pandemic.Read More »

Articles for CPAs during the pandemic. Read More »

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

Leave a Comment / Accounting, Audits, Compilations & reviews / Jim Ulvog

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

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Financial reporting issues to consider during early stages of COVID-19 pandemicRead More »

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

When will this mess from the pandemic be over? Focus on the idea that it will end, not what that date will be.

2 Comments / Pondering / Jim Ulvog

We will prevail. Image courtesy of Adobe Stock.

When will we be done with this stay-at-home restriction?

When will the economy recover?

When will we be back to “normal?”

I don’t know the dates for any of those transitions.

I have a suggestion for you.

Don’t set a specific date in your mind. Instead firmly set in your mind that this mess will end, we will get through it, we will survive, and we will thrive at the end.

What is the danger of setting a date in your mind and having faith it will be over on that date?

Let me introduce you to the Stockdale paradox.

Admiral James Stockdale was an American pilot shot down during the Vietnam war. He was a prisoner in North Vietnam for 7 1/2 years, routinely subject to brutal torture, legs broken twice during interrogation, and held in solitary confinement during four of those years with his legs locked in a metal stock each night. He was awarded the Congressional Medal of Honor a few years after his release.

I think we should listen to him. His physical courage and moral courage are a role model for all of us.

For one explanation of the phenomenon he described check out article titled The Stockdale Paradox.

Who did not come home from captivity?

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When will this mess from the pandemic be over? Focus on the idea that it will end, not what that date will be.Read More »

When will this mess from the pandemic be over? Focus on the idea that it will end, not what that date will be. Read More »

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

3 Comments / Accounting, Audits, Compilations & reviews, Pondering / Jim Ulvog

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:

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

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

Disciplinary actions by California Board of Accountancy in first half of 2019.

Leave a Comment / Audits, Compilations & reviews, Peer Review / Jim Ulvog

That view is enough to make you cringe. Sort of like some of the situations recently addressed by the Board of Accountancy. Image courtesy of Adobe Stock.

Update newsletter issue 89 for Fall 2019 has 33 disciplinary actions listed. Timeframe of the effective dates is the first half of 2019. My recap of actions by the California Board of Accountancy is listed below. I counted as one action those situations involving a firm and the owner of the firm.

Revocations

audit fail	other	issue
1	3	felony
1	1	didn’t complete contracted service
1		audit fail
1		audit fail and no peer review
	1	no peer review & expired license
	2	probation violations
	1	some deeper issues, not quite apparent from summary
4	8	total revocations

Of the CPAs with felony issues, two were for embezzlement, one also had an audit failure, and another ended up with conviction on 12 counts.

Two of the revocations were for rather extensive violations of a previous disciplinary action.

Revocations stayed

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Disciplinary actions by California Board of Accountancy in first half of 2019.Read More »

Disciplinary actions by California Board of Accountancy in first half of 2019. Read More »

Additional penalties for Wells Fargo and former executives over the fake-account fiasco.

Leave a Comment / Other stuff / Jim Ulvog

Concord coach, from the days when Wells Fargo was the undisputed gold standard of honesty and integrity. Photo at Wells Fargo’s San Diego museum by James Ulvog.

The wheels of justice grind slowly, but grind they do.

Wells Fargo agreed to pay the feds three billion dollars for the fake account fiasco. Actually, the board agreed to hand over stockholder’s money.

Also, the feds (specifically OCC) laid sanctions on seven former executives of the bank for their role in the fake account mess.

2/21/20 – Wall Street Journal – Wells Fargo Reaches Settlement With Government Over Fake-Accounts Scandal. To settle with the SEC and U.S. Department of Justice for the fake-account fiasco, the bank will pay $3 billion.

For those keeping score at home of bank disasters (like me) this settlement is only with the SEC and DoJ and only for the fake account scandal.

The bank also accepted a deferred prosecution agreement and will continue cooperating with the feds over the fake-accounts mess for another three years.

Running total of fines and penalties

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Additional penalties for Wells Fargo and former executives over the fake-account fiasco.Read More »

Additional penalties for Wells Fargo and former executives over the fake-account fiasco. Read More »

SEC practice ban for three accountants tangled up in KPMG/PCAOB fiasco.

“Resources from the AICPA’s Enhancing Audit Quality (EAQ) Initiative” – PR Prompts!, part 6

Leave a Comment / Audits, Peer Review / Jim Ulvog

In November 2019, the AICPA published the first of a new semi-annual newsletter, PR Prompts!, designed to help CPAs keep current on peer review news.

The AICPA gave me permission to reprint portions of the newsletter on my blog.

This is the last of six posts to help you stay up to date.

The following comment is quoted verbatim. For ease of reading it will not be set inside quotation marks:

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

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

Risk Assessment and Response

In a survey of peer reviewers, over 50% of firms reviewed failed to comply with the risk assessment standards. Access free risk assessment tools, including industry-specific resources, to help you avoid common issues.

Also, watch the EAQ’s ENGAGE conference presentation with methodology providers to learn how to properly apply their methodologies and avoid the areas creating the most challenges for practitioners.

Internal Control

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“Resources from the AICPA’s Enhancing Audit Quality (EAQ) Initiative” – PR Prompts!, part 6Read More »

“Resources from the AICPA’s Enhancing Audit Quality (EAQ) Initiative” – PR Prompts!, part 6 Read More »

“Auditor Reporting” – PR Prompts!, part 5

Leave a Comment / Audits, Peer Review / Jim Ulvog

A complete overhaul of the auditor’s report for audits of 12/31/20 financial statements is going to be a very big deal. Please tune in to the new standards!

In November 2019, the AICPA published the first of a new semi-annual newsletter, PR Prompts!, designed to help CPAs keep current on peer review news.

The AICPA gave me permission to reprint portions of the newsletter on my blog.

This is the fifth of six posts to help you stay up to date.

I have looked at this page on the AICPA website. It is quite helpful. If you provide audits to your clients, it would be worth your time to find, browse, and bookmark this page.

The following comment is quoted verbatim. For ease of reading it will not be set inside quotation marks:

Auditor Reporting

The form and content of the auditor’s reports will change substantively which will be effective for audits of financial statements for periods ending on or after December 15, 2020. Statement on Auditing Standards (SAS) No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, was issued in May 2019. SAS No. 134 includes a new AU-C section 701, Communicating Key Audit Matters in the Independent Auditor’s Report, and replaces the following AU-C sections in AICPA Professional Standards:

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“Auditor Reporting” – PR Prompts!, part 5Read More »

“Auditor Reporting” – PR Prompts!, part 5 Read More »