Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘audit

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

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Image courtesy of Adobe Stock.

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

Two articles provide more info on SEC sanctions against KPMG for ‘stealing the exam’ and CPE course cheating fiascos.

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Image courtesy of Adobe Stock.

For more discussion on the dual fiascos of the now-former-senior KPMG partners getting the PCAOB inspection list and altering workpapers along with cheating on continuing education classes, check out these two articles:

 

Francine McKenna at MarketWatch on 6/18/19 The KPMG cheating scanal was much more widespread that originally thought.

Article provides a good summary of the settlement.

Try this on for a word picture, which I’m expanding from Francine’s description in the article:

Getting a $50M fine from stealing the inspection list (and then altering workpapers) is the powerful right punch that everyone was expecting. The test cheating part is a staggering left hook that nobody saw coming.

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Written by Jim Ulvog

June 20, 2019, 7:57 am at 7:57 am

Posted in Audits

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Disciplinary actions from California Board of Accountancy through the end of 2018.

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The Update #88 newsletter from California Board of Accountancy for Winter 2019 lists 22 disciplinary actions, by my count. These are the actions taken with effective dates through the end of 2018.

Here is a tally of license revocations, surrendered licenses, and revocations with stay categorized by the underlying issue as I aggregate them:

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Written by Jim Ulvog

June 18, 2019, 8:00 am at 8:00 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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SEC considering a $50M fine against KPMG

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It will take a bigger stack of currency than shown above if the SEC follows through with what they are considering. Image courtesy of Adobe Stock.

The Wall Street Journal reported on June 13, 2019 that the SEC is considering a fine of $50,000,000 against the Big 4 firm KPMG for it gaining access to the highly confidential list of audits scheduled for inspection by PCAOB.

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Written by Jim Ulvog

June 14, 2019, 10:20 am at 10:20 am

Posted in Audits

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Two convictions for former-KPMG staff gaining access to PCOAB inspection list

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Image courtesy of Adobe Stock.

Back in March a jury returned convictions for two of the players in the effort to get a list of the audits which were scheduled to be inspected by PCAOB.

(Yeah, yeah, conviction was in March and I’m mentioning it now in June. I’m just a tad bit late to the story but still want to discuss it.)

A senior level former-partner, David Middendorf, was found guilty on 4 of 5 counts. He was the National Managing Partner for Audit Quality and Professional Practice Group, in the firm’s Department of Professional Practice. That means he was the top technician in the national office of top technicians.

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Written by Jim Ulvog

June 14, 2019, 9:20 am at 9:20 am

Posted in Audits

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California bill AB 1181 would address valuation of GIK when donor restricts distribution to outside U.S.

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What is the fair value of donated medicine restricted for use outside the U.S.? Image courtesy of Adobe Stock.

The California Assembly has passed and sent to the Senate a bill which would require specific accounting for charities who receive gifts-in-kind which are restricted by the donor for distribution outside the U.S.

For that very specific type of GIK, the bill would require the donation to be recorded at the fair value in the country where the items will be used.

This will particularly affect donated pharmaceuticals, which often have a severely different value in the U.S. compared to values internationally.

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Written by Jim Ulvog

June 13, 2019, 8:41 am at 8:41 am

Posted in Accounting

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