‘If it isn’t documented, it wasn’t done’ is almost the law in California

Leave a Comment / Audits /

While doing the required CPE for regulatory ethics, I reread the California state law on audit documentation. The standard is that if something wasn’t done documented, there is a rebuttable presumption that it was not done.  You can overcome that presumption, but the burden would be on you as the CPA to persuade a jury you really did something for which you prepared no documentation.

That gets back to a comment I’ve made in CPE courses that …

‘If it isn’t documented, it wasn’t done’ is almost the law in CaliforniaRead More »

‘If it isn’t documented, it wasn’t done’ is almost the law in California Read More »

Former president of Olympus and two others plead guilty

1 Comment / Fraud /

Associated Press reports the ex-president pled guilty to securities law violations. Two other senior staff pled guilty as well.

The AP report can be found in the Wall Street Journal article, Ex-President of Japan’s Olympus Pleads Guilty.

The Reuters report can be found in the New York Times article, Guilty Pleas in Trial Over Olympus Scandal.

The three individuals pleading guilty:

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Former president of Olympus and two others plead guiltyRead More »

Former president of Olympus and two others plead guilty Read More »

Complexity is only going to increase – consider the accounting rules for revenue recognition

Leave a Comment / Accounting, Pondering /

I’ve realized for a long time that the complexity of everything is increasing. About the time you get your brain wrapped around that idea, consider that the rate of change will accelerate. Especially in accounting.

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Complexity is only going to increase – consider the accounting rules for revenue recognitionRead More »

Complexity is only going to increase – consider the accounting rules for revenue recognition Read More »

This is all you have to do to calculate a loan loss reserve under possible new GAAP rules – calculate the cash flow by year for the remaining life of every loan

Leave a Comment / Accounting /

Yes, that’s all you have to do. For each loan in your portfolio, determine the cash flow by year so you can figure out what cash flows won’t be collected.  Then calculate the present value of what won’t be collected. For every loan. Repeat every year.

That’s the model FASB is thinking about. 

For a critique, check out Tom Selling’s post, “Anything But Market” is the FASB’s Mantra for Loan Loss Accounting.

Here is a one paragraph overview of the concept:

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This is all you have to do to calculate a loan loss reserve under possible new GAAP rules – calculate the cash flow by year for the remaining life of every loanRead More »

This is all you have to do to calculate a loan loss reserve under possible new GAAP rules – calculate the cash flow by year for the remaining life of every loan Read More »

CEO of Peregrine signs plea agreement

1 Comment / Accounting, Fraud /

The Wall Street Journal reports that the CEO of Peregrine Financial Group has signed a plea bargain deal with the feds. The article, Peregrine CEO Signs Plea Deal says:

Under the agreement, Russell Wasendorf Sr. would plead guilty to charges of embezzlement and mail fraud alongside two counts of lying to government regulators, assistant U.S. attorneys said in a Cedar Rapids, Iowa, court Tuesday.

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CEO of Peregrine signs plea agreementRead More »

CEO of Peregrine signs plea agreement Read More »

New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employee

1 Comment / Audits, Fraud /

The mess involving a faked audit report in New Mexico is growing. The former controller wasn’t acting alone and the faked audit report isn’t the only issue.

The controller has been arrested for alleged securities fraud. It is now alleged that the former controller coordinated with the Chief Operating Officer (COO) in misstating the financial statements. The COO has also been arrested.

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New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employeeRead More »

New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employee Read More »

What improvements will we see from the revenue recognition project? What is the cost? Topic 605

Leave a Comment / Accounting /

Ponder this:

what will a new revenue recognition standard accomplish to improve financial reporting? And at what cost?

Those are Tom Selling’s questions in his post, Revenue Recognition Sure Isn’t Perfect – But Convergence will be much Worse.

What cost?

As to the cost question, I expect it would be very high. The disruption to preparers, confusion for report users, and increased time for auditors would be big.

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What improvements will we see from the revenue recognition project? What is the cost? Topic 605Read More »

What improvements will we see from the revenue recognition project? What is the cost? Topic 605 Read More »

2nd Blogiversary

Leave a Comment / Pondering /

(cross-post from my other blog, Nonprofit Update with minor changes.)

August 29th marked the 2 year blogiversary of my blog Nonprofit Update, which talks about nonprofit issues. I split off posts of interest to CPAs to this blog (Attestation Update) on October 14, 2010 and started Outrun Change on October 3, 2011. That site ponders the radical change around us and how we can stay ahead of it.

Nonprofit Update is my lead blog and I consider its start to be the birth of all three blogs. So, this is also the blogiversary of Attestation Update.

Thanks so much to those who have stopped by. I hope it has been a blessing to you.  In case you can’t tell, I’ve been having a blast.

Most visitors and page views are coming in from internet search engines. That is really cool.

One of the best things in the last year is a growing number of people interested enough is my musings to follow by e-mail or Google RSS feed.  Thanks very much for stopping by.

For the second year, I will report some stats for my sites.  Here’s some stuff for those interested in such things. I will adjust this time around to an August 31 cutoff instead of the 29th.  I’ll list stats for this year with the prior year in parentheses.

I’ll provide this data for two reasons. First, to let those who may be interested in blogging see what data looks like for a really small blogger. Second, since I am active on three sites with different topics, it provides a test bed to see what different sites may look like for different blogs from the same author.

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2nd BlogiversaryRead More »

2nd Blogiversary Read More »

Watching and learning from the money laundering cases

Leave a Comment / Audits /

Those of us auditors outside the huge firms may not have to deal directly with the impact of banks engaging in money laundering, yet we can still learn by watching.  Here’s the background in one sentence –  – Many of the largest banks were systematically ignoring U.S. laws against sending money into certain countries.

On my other blog, Nonprofit Update, I have several posts discussing the mess.

Of interest to me as an auditor is the apparently intentional violation of laws and how the corporate tone at the top could have prevented the fiasco.

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Watching and learning from the money laundering casesRead More »

Watching and learning from the money laundering cases Read More »

Fake website used to support claim of unintented steroid use by baseball player

1 Comment / Fraud /

How’s this for a creative scheme? If you are accused of having a banned drug in your bloodstream, create a website that offers an innocent sounding topical cream and then claim that you bought the cream from that site and used it not knowing it contained any bad stuff.

I don’t discuss sports here, but fabricating a website is too good a story to pass up. So here we go…

Giant’s outfielder Melky Cabrera is under a 50 game suspension for using a banned substance.

At the hearing to consider this case, his defense was that he saw a topical cream advertised at a website and bought it. He did not know it had any banned substances in it. That is the reason he tested positive. The unintentional use of a banned substance would be plenty of reason to lift the suspension.

Only one little problem…

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Fake website used to support claim of unintented steroid use by baseball playerRead More »

Fake website used to support claim of unintented steroid use by baseball player Read More »

The new Audit Guide’s here! The new Audit Guide’s here!

Leave a Comment / Accounting, Audits /

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

Well, maybe the release of the draft Not-for-Profit Entities Audit and Accounting Guide isn’t quite as exciting as those ancient commercials announcing the release of the new phone book by showing people running around celebrating that it arrived. (The line was also in the movie The Jerk, starring Steve Martin.) For auditors of NPOs, the arrival of the long-expected audit guide is far better than what the old commercials would have you think about a new phone book.

The draft guide can be found here. The AICPA’s page for the draft is at Overhaul of the Not For Profit Entities Audit and Accounting Guide.

The AICPA’s announcement can be downloaded here. Some highlights, as described in their announcement: …

The new Audit Guide’s here! The new Audit Guide’s here!Read More »

The new Audit Guide’s here! The new Audit Guide’s here! Read More »

See that swirl on the weather map? Looks like a cat 5 hurricane headed for landfall on the big banks

2 Comments / Accounting /

In ‘Blood in the water’, The Economist describes the swelling number of lawsuits against the big banks who are accused of manipulating LIBOR.

From the article:

So far, at least 28 serious lawsuits have been filed. The most recent, for fraud, came from Berkshire Bank, a small lender, on July 25th. It echoes a case filed in May by Wisconsin’s Community Bank & Trust under Wisconsin racketeering statutes against Citigroup, Bank of America, and JPMorgan Chase (the American banks on the LIBOR panel).

That would be 28 suits since the issue exploded about a month ago.

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See that swirl on the weather map? Looks like a cat 5 hurricane headed for landfall on the big banksRead More »

See that swirl on the weather map? Looks like a cat 5 hurricane headed for landfall on the big banks Read More »

2 year prison sentence for corruption case

Leave a Comment / Fraud /

I’ve been following the corruption case in the city next to where I live. Links to earlier discussions are at end of this post.

The mayor was accused of accepting bribes from a local business in return for helping them get back in business. In April 2012, he pled guilty to one count of bribery. The remaining 9 charges were dropped at the sentencing.

Yesterday he was sentenced to two years in federal prison.

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2 year prison sentence for corruption caseRead More »

2 year prison sentence for corruption case Read More »

On capital punishment of organizations – Arthur Andersen and Penn State – corporate death versus mild sanctions

4 Comments / Pondering /

Jim Peterson explores the hesitancy our society has to carry out capital punishment on seriously misbehaving organizations.  See his post, Of Crimes and Punishments – And Where Shall Justice Be Found?

He starts by pondering a question from a retired Arthur Andersen partner. The retired CPA wonders if the conviction of a mid-level manager in the Roman Catholic Church who hid abuse by priests will result in the indictment of senior-level executives or the church itself. The painful irony felt by the questioner is that Arthur Andersen was indicted and put out of business because of the bad behavior by one partner and his audit team in following the bad advice of their general counsel.

Essentially, the penalty for Arthur Andersen was capital punishment. Not so for the Catholic Church, Penn State football, or a long string of financial institutions in the news during recent years.

The question is when does our society carry out capital punishment against misbehaving organizations?

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On capital punishment of organizations – Arthur Andersen and Penn State – corporate death versus mild sanctionsRead More »

On capital punishment of organizations – Arthur Andersen and Penn State – corporate death versus mild sanctions Read More »