Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘audit methodology

Peer review tips – tidbits from the 2019 Peer Review Conference

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If you get a peer review of your attestation practice, I heard a few ideas in the AICPA’s Peer Review Conference you might want to know about.  I attended this year’s conference via webcast. First time I’ve gone through a 16 hour class online. The technology worked acceptably well. Saving the travel time was wonderful.

Annual update to Peer Review Information form

Starting next year, May 2020 specifically, every firm enrolled in the peer review program will need to update the Peer Review Information (PRI) form annually. Each firm will have to log into PRIMA and update the list of the type of engagements performed.

Not sure the reasons this change is going into effect. One component is so AICPA can monitor for changes the nature of a firm’s client base to see if a higher level of service is needed.

Focus areas in system reviews

The AICPA surveyed CPAs who provide a large number of reviews asking them what portion of their peer review clients had significant struggles with complying with the risk assessment standards. Read the rest of this entry »

Written by Jim Ulvog

August 8, 2019, 7:00 am at 7:00 am

New audit standards for ERISA audits and other information in annual reports (SAS 136, 137)

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Two more audit standards have been issued by the Auditing Standards Board addressing ERISA audits and other information in an annual report:

  • SAS 136Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA
  • SAS 137The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports.

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Written by Jim Ulvog

July 17, 2019, 8:34 am at 8:34 am

Posted in Audits

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Comments from recent continuing education classes worth repeating: not-for-profit entities.

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Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs that apply to not-for-profit organizations.

Previous posts had comments on

Non-attest services and Yellow Book independence. Everyone probably knows that charities with more than $2 million of revenue who are registered with the California Attorney General must have an audit. Excluded from the requirement would be religious organizations, who are exempt from registering with the AG.

That requirement was created by the Nonprofit Integrity Act of 2004, so it’s old news.

The best payoff from attending CPE conferences is to compare every piece of information you hear to what you think you know. So, here is one of the big rewards for me attending this class…

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Written by Jim Ulvog

July 5, 2019, 8:36 am at 8:36 am

Posted in Accounting, Audits

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Comments from recent continuing education classes worth repeating: peer review

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Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.

Previous post had comments on accounting and auditing.

Peer review

One speaker said there are several common issues for weaknesses in risk assessment:

  • Limited assessment
  • No linkage (relating the assessment of risks to further audit procedures)
  • Poor use of third-party practice tools
  • No assessment of IT risks

Not doing any risk assessment is now a major problem for you in a peer review if you missed the boat on the risk suite of standards.

For Yellow Book audit, the workpapers must document SKE (skills, knowledge, experience) of staff overseeing non-attest services.  Although the professional standards do not exactly require documentation of SKE for non-attest service on a non-yellow book audit, the speaker said (if I heard correctly) that the California Peer Review Committee has a considered opinion that such documentation is required.

So, if you have non-attest services on a non-yellow book audit, Read the rest of this entry »

Written by Jim Ulvog

June 28, 2019, 7:54 am at 7:54 am

Comments from recent continuing education classes worth repeating: accounting and auditing

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To get ready for a writing project this summer, I’ve been going over my notes from some CPE conferences and classes.

Thought I’d share some of the fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.

Auditing

The auditor’s report will be completely reworked with implementation first required for 12/31/20 reports. The statement has been issued. Check out SAS-134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements if  you want to get a head start on the overhaul to audit rules.

By the way, an omnibus standard, SAS 135, makes lots of little changes you need to know about.

An exposure draft is out which addresses audit evidence. Final document expected in late 2019.

Accounting

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Written by Jim Ulvog

June 27, 2019, 6:58 am at 6:58 am

KPMG agrees to $50 million fine from SEC. The details are really bad.

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Oh, remember that post about the SEC considering a $50M fine against KPMG?  Initial report suggested it was for gaining access to the list of engagements which were going to be inspected by PCAOB.

It is much worse.

The firm is fined for altering workpapers based on the inspection list. In addition, there was a lot of cheating on the tests for CPE courses, including a class required by the SEC.

The SEC says KPMG has agreed to settle and pay $50M.

If you want to read the gory details for yourself, you can do so:

This is for real. Seriously.

By the time you finish reading this post or other reports on the SEC’s action, you may be wondering whether there needs to be an assertion the source of information for this post was neither The Onion nor Babylon Bee.

Reports of setting your own passing score for an ethics test could make you wonder if it is very early April. “Cooperate and graduate” exchanges of test answers with the engagement partner and your audit team makes one wonder whether we have entered some sort of alternate reality.

You may want to glance at the linked documents and verify for yourself they are for real.

I assure you the above documents are from the SEC.gov website.

SEC action

In part II of the administrative action/cease & desist order, KPMG admits the facts described in part III.

Here are some highlights of part III.

First cause of action

The first cause of action by the SEC is the firm obtained the list of engagements which were going to be inspected by PCAOB and then altered workpapers which had not yet hit the lock-down date.

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Written by Jim Ulvog

June 17, 2019, 9:22 am at 9:22 am

Posted in Audits

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Exposure drafts propose change to definition of materiality for audit and attestation standards.

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The Auditing Standards Board has issued exposure drafts to subtly change the definition of materiality in the SAS and SSAE literature. Both exposure drafts are titled Amendments to the description of the concept of materility and can be found here.

A Journal of Accountancy article describes the proposed changes:  ASB seeks alignment of materiality definition.

The exposure draft gives a four page history of how the definition of materiality has evolved over the last several decades.

What the proposed changes would do is shift the definition of materiality in the audit and attestsation literate to match what is used by the US courts, PCAOB, SEC, and FASB. Currently the definition is aligned with IASB and IAASB.

I will quote portions of one paragraph in the exposure draft and make some comments.

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Written by Jim Ulvog

June 7, 2019, 8:11 am at 8:11 am

Posted in Audits

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