A few links and comments of interest to auditors. No more discussions of Mr. London or scofflaw banks for the day, so here is some accounting stuff.
6/8 – Boston Globe – The vanished grandeur of accounting – Early on in the history of accounting, the double entry stuff created accountability for the rulers and aristocrats. Did you know that once upon a time rich people who could afford to have an oil painting made of themselves would often put their ledger books into the pictures, to show they were knowledgeable about accounting? Later, paintings of high-ranking public officials would include ledger books to show they were open and accountable. Check out the article for a different and entertaining history of accounting. At one time, accounting generated huge increase in transparency and accountability.
5/1 – Re:Balance – Big Data: Can the Regulators Handle the Big Challenge to Big Audit – Big Data, the ability to access every piece of data in a huge database will transform so many things, including audit. When it is possible to run software that can access every transaction in a company’s accounting system, it won’t be necessary to audit by sampling. Mr. Peterson gives an example of a fraud team that scanned every expense reimbursement in a large company and identified specific people who were submitting fraudulent reimbursements, all of which were just below the threshold to require documentation and review. The professor suggests that if auditors don’t develop the ability to use Big Data in audits, and be allowed to do so by regulators, someone else will develop that ability and leave Big Audit behind.
5/31 – The F Student – Hold On! – If it would take you 10 seconds to explain everything you know about high-speed trading, check out this intro level article that will increase your talk time to a minute or two. Should also increase your interest so you can better pay attention next time you see a technical article.
6/12 – FEI – FASB Signals End of Extraordinary Items – Two projects on the agenda to ‘simplify’ GAAP. First is to eliminate extraordinary items. Anything otherwise qualifying for E/I would get moved back into its logical place on the income statement. Second item is inventory to be carried at lower of cost or NRV.
6/24 – Reynolds Center for Business Journalism – Detecting Corporate Fraud seminar – If you want a fraud refresher course or would like to see how journalists look for fraud, check out this great presentation.
6/25 – Reuters – After a decade, Parmalat lawsuit vs Grant Thornton in U.S. is back – Here’s the fiasco in one sentence: For an account with g/l balance equal to half of consolidated revenue and the largest asset on the balance sheet, auditors sent a cash confirm to a fake address and ticked in the faked reply. Suit in the U.S. has been revived. Here’s another reason to verify confirm addresses and think carefully during an audit: you don’t want to relive the bad audit for the next decade.