Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘review

News For CPAs During The Pandemic: AICPA guidance on accounting, reporting, and auditing – 4/10

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Image courtesy of Adobe.

Guidance from AICPA can help with financial reporting and auditing. Also, there is a need for COBOL programmers.

If you had not noticed, the California Society of CPAs is offering a lot of CPE webcasts on tax and auditing issues during the pandemic. Many of them are free. Yeah, no charge CPE. How ‘bout that?

4/8/20 – Journal of Accountancy – AICPA issues audit and accounting guidance FAQs on COVID-19 – The AICPA published a 21 page document on accounting and audit issues: Audit Matters and Auditor Reporting Issues Related to COVID19

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Written by Jim Ulvog

April 10, 2020, 8:33 am at 8:33 am

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

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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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Written by Jim Ulvog

April 4, 2020, 8:25 am at 8:25 am

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

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Image courtesy of Adobe Stock.

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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Written by Jim Ulvog

March 26, 2020, 8:08 am at 8:08 am

Average cost of health insurance plan. Reference point for your next analytical review of health insurance costs.

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Image courtesy of Adobe Stock.

Here are some tidbits for your next analytical review of health insurance costs during an audit or review.

From annual survey by Kaiser Family Foundation of employer provided health insurance:

  • $20,576 – average annual cost of family plan in 2019
  • $19,616 – average annual cost of family plan in 2018
  • 71% – average portion of costs paid by employer

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Written by Jim Ulvog

September 25, 2019, 10:50 am at 10:50 am

Comments from recent continuing education classes worth repeating: “get in or get out”

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If you are an auditor and that is a diagram of new audit rules, then you need to completely understand the graph. Image courtesy of Adobe Stock.

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 posts had comments on accounting and auditing as well as peer review.

“Get in or get out”

The second speaker who discussed peer review in previous post also said that if you are doing A&A work you need to “get in or get out.”

Let me translate that…

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Written by Jim Ulvog

July 1, 2019, 6:31 am at 6:31 am

Summary of disciplinary actions from California Board of Accountancy, Winter 2018

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What you will be doing if you ignore professional standards and then get caught messing up your audits and reviews, although the amount won’t be quite as large. Image courtesy of Adobe Stock.

The new Update newsletter from the California Board of Accountancy goes back to providing details on disciplinary actions. The Winter 2018 edition (#86) takes 20 pages to describe the 24 actions. The previous Update provided far less detail, which generated lots of feedback to the board, so the newsletter will again give the ugly details for the causes for discipline.

Update 11/30/18:  Thanks to CBA for listing the messy details on what CPAs are doing to earn their consequences.

Three things jump out at me from the current list of discipline.

First, every action comes with a substantial financial penalty in the form of reimbursing the CBA for their investigative costs.

Second, just about every CPA that got in trouble for audit or review problems was given a ban from performing attestation work until some time in the future when the firm requests and receives permission from CBA to again perform such work.

Third, several CPAs received a suspension from their CPA practice. This means the individual may not perform any actions which would otherwise require a license. I think that means the firm halts all their attestation work and unless also holding an enrolled agent credential ceases their tax compliance work.

Here is my summary of the causes of discipline for the license surrenders and the stayed revocations:

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Written by Jim Ulvog

August 6, 2018, 6:41 am at 6:41 am

How to stay away from the most popular ways to get in trouble with the California Board of Accountancy.

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Don’t send one of these to CBA unnecessarily. Image courtesy of Adobe Stock.

These must be the preferred ways CPAs pick to get in trouble with the regulators because the board of accountancy says these are the three most common reasons they issue monetary penalties.

What are the three most popular ways to draw a fine from CBA?

  • Don’t get minimum of 20 hours each year of your license term or don’t get 12 of those hours in technical topics.
  • Ignore a formal inquiry from CBA.
  • Don’t submit that Peer Review Reporting Form with your license renewal.

For more detail, check out the following article, quoted with permission, from the California Board of Accountancy.  Since it is quoted verbatim, I won’t put quotes around the entire article.

 

IT’S EASY TO AVOID CBA CITATIONS

To help increase awareness of CBA requirements and prevent licensees from receiving a citation, below are the top three violations that led to a citation in the previous fiscal year. Citations are posted on the CBA website and may include an administrative fine of $100 to $5,000.

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Written by Jim Ulvog

February 16, 2018, 5:00 am at 5:00 am

Another round of disciplinary actions from California Board of Accountancy

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The firms that make up the following list were not traveling on the above highway. Image courtesy of Adobe Stock.

Starting with the newest Update report for Fall 2017 (#85), the California Board of Accountancy has stopped listing the underlying problem leading to disciplinary action. This means it only took 16 pages to list the 44 actions reported currently. It also seems the CBA is listing actions against firms and the practitioner together.

This means the cringe inducing details are not immediately visible, even though the full disciplinary reports are public records and publicly available. I didn’t bother to take the time to research the reports.

I have tallied the current batch of discipline cases. Underlying problem is inferred by me based on the comments in the newsletter. I haven’t looked up any of the cases or looked up the reg sections cited for discipline. So, with those caveats, here are my inferences of the current disciplinary actions:

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Written by Jim Ulvog

February 7, 2018, 7:45 am at 7:45 am

Free update on new and recent accounting rules from CCH

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For a summary of the accounting rules released in 2017 and the most significant new rules from 2016, 2015, and 2014, check out A Closer Look: Discussion and Analysis of Current Accounting and Audit Issues.

CCH made this update available for free to people on their mailing list. I received permission from my editor at CCH to make it available on my blog.

Click here to download the 54 page newsletter. CCH does not  have a separate landing page for the document, so that link automatically downloads the newsletter. UPDATE:  If link didn’t work for you, please try again. I reloaded the link and it is working now.

For each of the accounting rules covered, the newsletter provides:

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Written by Jim Ulvog

January 29, 2018, 7:32 am at 7:32 am

Posted in Accounting

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What can you learn from a list of common auditor mistakes?

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You might learn a few things from a list of Forty Mistakes Auditors Make. If you can identify a few ways to improve your audit approach you could save time, improve the quality of your audit, and maybe reduce your risk.

Lots of auditors are in the midst of planning their year-end audits and reviews. Now would be a really good time to think about how to do better, more efficient work.

Writing at CPA Scribo, my friend Charles Hall outlines a number of goofs made by auditors. I’ll list a few tidbits in order to encourage you to read and ponder the whole list:

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Written by Jim Ulvog

January 15, 2018, 8:18 am at 8:18 am

Highlights of common deficiencies in compilation and review engagements

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There is a six page listing of common deficiencies identified during peer reviews of complexion and review engagements described in the AICPA’s new risk alert Developments in Preparation, compilation, and Review Engagements – 2017/2018.

Here are a few paraphrased highlights of the deficiencies. I will list items that I perceive are more serious or more pervasive.

You might consider reading through the full list and mentally comparing it to how you perform review and compilation engagements to see if there’s something you are missing.

Here are some of the highlights:

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Written by Jim Ulvog

January 10, 2018, 9:26 am at 9:26 am

Updates for CPAs: going concern and location of debt issue costs

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Image courtesy of DollarPhotoClub before they merged into Adobe Stock.

Image courtesy of DollarPhotoClub before they merged into Adobe Stock.

The accelerating pace of change doesn’t slow down merely because I have multiple audits in progress plus more that just started. Here are a few articles to help keep all of us up to date on two newly effective standards:

Going concern

For a long time the professional requirements for addressing going concern issues have been located in the audit literature. Yeah, the accounting requirement was in the audit standards.  There has been an effort for several years to this guidance out of the SASs and into GAAP. Two articles show the substantial progress:

11/8/16 – Charles Hall at CPA-Scribo – It’s Time to Apply FASB’s New Going Concern Standard –  ASU 2014-15 creates a requirement in GAAP for management to assess whether there are conditions or events which raise substantial doubt about ability to continue as going concern.

This is effective for financial statements ending on or after December 15, 2016. Translation: 12/31/16 financial statements. That would be the ones you’re auditing or reviewing or compiling at the moment.

If you haven’t tuned into this new requirement, check out Mr. Hall’s article before you download the ASU for study. Hint: the new requirements on management will seem remarkably familiar.

In case you hadn’t thought about it, having a GAAP-based going concern requirement placed on management means that there is now a specific need to address going concern in a review or comp.

2/22/17 – Accounting Today – AICPA changes going concern audit standard – Now that the going concern requirements are in GAAP, the ASB has modified the rules in the audit literature.

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Written by Jim Ulvog

February 23, 2017, 9:14 am at 9:14 am

2017 Risk Alerts available

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Image is from AICPA. Used under Fair Use since, after all, I am promoting three of their products.

Image of Audit Risk Alert is from AICPA. Used under Fair Use since, after all, I am promoting three of their products.

The 2017 audit season is about to begin. Planning is well underway for all those 12/31 clients.

To help you get ready, the annual updates to AICPA risk alerts are available. Consider:

I read the risk alerts every year. They are great for reminding me of what I already knew and even better for pointing out what tidbits I had missed.

You might want to check them out in the lull before the rush of field work hits.

Written by Jim Ulvog

December 19, 2016, 7:18 am at 7:18 am

Two new SSARS documents, #22 and #23

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

There are two new SSARS pronouncements. Most likely they will not be a big deal for most accountants, but if you work in the comp or review arena, you need to know they exist and you really ought to have a vague idea what is in them.

First, a tip on staying out of trouble on nonattest services…

11/1 – Journal of Accountancy – Nonattest services quiz – A great six question quiz on nonatttest services. Take the quiz to find out how well you are doing on independence and documentation requirements. By the way, if you miss some questions you probably taking out some really serious risk in your audit practice that you didn’t even know about.

This is a great opportunity to find out what you don’t know, which can hurt you.

9/23 – Journal of Accountancy – ARSC complete clarity project with issuance of SSARS No. 22Read the rest of this entry »

Written by Jim Ulvog

November 18, 2016, 11:20 am at 11:20 am

Posted in Compilations & reviews

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“Be Prepared – A Comprehensive Peer Review Update”

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

The following article provides a superb update on recent developments in the peer review program. The article is graciously provided by the California Society of CPAs and the information described here applies in all jurisdictions across the U.S.

Because the entire article is quoted verbatim without any additional comments from me, none of the article will be placed in quotation marks.

Originally published by CalCPA (www.calcpa.org) in the October issue of California CPA magazine.

Used with written permission of the California Society of CPAs. 

 

Be Prepared – A Comprehensive Peer Review Update

By Linda McCrone

 

Peer review is a successful program that helps firms improve their quality control systems and elevate the quality of accounting and auditing engagements. The AICPA contributed the software program that tracks peer reviews and the staff that manages the program. AICPA member volunteers contribute their time to oversee the program, keep the peer review program forms current and make certain that the peer review standards remain relevant. But like any successful program, peer review must continue to evolve to keep up with events.

 

Background

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Written by Jim Ulvog

October 18, 2016, 8:54 am at 8:54 am