August 2014

Scott London is now in Lompoc penitentiary.

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As part of the final editing of my book, I checked the locations of Mr. London and Mr. Shaw in the federal prison system. You can look up such things at the Bureau of Prisons Inmate Locator.

Mr. Shaw is still at Taft Correctional Institute. Last time I looked, they were both at Taft.

Mr. London has been moved up the coast to Lompoc USP (United States Penitentiary). That is a medium security prison with an attached minimum security facility.  The facility is a mile or less from Lompoc, maybe 2 miles from the ocean, and is immediately adjacent to Vandenberg Air Force Base.

Mr. London’s official release date is still July 23, 2015. Mr. Shaw is scheduled for release November 28, 2014, the day after Thanksgiving.

Update:  Mr. Shaw released 11/28/14.

Newly approved SSARS will allow a new service, ‘preparation’. Will also require written & signed engagement letters.

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Update – See also:

In August, the Accounting and Review Services Committee approved the clarified SSARS. This rewrites the SSARS into the same clarified format we saw with the audit literature.

The biggest change is the introduction of a new service, called preparation, which will allow a CPA to issue financial statements without providing an accountant’s report or performing procedures on the information.

In highly condensed terms, …

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A long time ago, accounting supervisors really were slave drivers.

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You think you have a rough manager or partner that’s hard to please….

Jacob Soll explains in his book, The Reckoning: Financial Accountability and the Rise and Fall of Nations, that in ancient Athens, around 500 years B.C. accounting and auditing was an integral part of the business and political world.

There were complex accounting systems that included public audits to create accountability. There were a number of staff working for the public treasurer to keep an eye on funds. Many people, including freemen and slaves were trained in accounting. However,

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How much wealth was in the Roman treasury in 49 B.C.? How about annual tax revenue under Augustus?

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Hadn’t thought about that question too much, but when Jacob Soll mentioned it in his book, The Reckoning: Financial Accountability and the Rise and Fall of Nations, it got me thinking.

He gives the following info:

In his Natural History, Pliny states that in 49 BCE , the year Caesar crossed the Rubicon, the Roman treasury contained 17,410 pounds of gold, 22,070 pounds of silver, and in coin, 6,135,400 sesterces.

Soll, Jacob (2014-04-29). The Reckoning: Financial Accountability and the Rise and Fall of Nations (Kindle Locations 276-277). Basic Books. Kindle Edition.

I don’t think in terms of pounds of gold or silver and I don’t know what a sesterce is or what it is worth. But I do know how to search the ‘net.

I share this on my Nonprofit Update blog and cross-post it here at Attestation Update because I enjoyed it and think it might be some fun trivia for accountants and people working in the faith-based community.

By the way, Prof Soll’s book is superb. Just got started reading it and think I will find lots of little tidbits to share. More on that idea in my next post.

How much is that worth?

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Public comments on compensation for inside trading CPA partner

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There are a range of comments in public about the comp package for former KPMG partner Scott London, who is now in federal prison for insider trading. How can we reconcile those amounts?

Before my book on Mr. London goes into print, I wanted to write one more post about the salary numbers I’ve seen. Will roll this into the book. Hope to start the final, final editing, proofing, and link verification very soon.

High estimate

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Standard Chartered draws $300M fine for money laundering issues

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As mentioned yesterday, StanChart did get a $300M fine for running afoul of their 2012 agreement. Their software to monitor wires for possible violations of money laundering laws didn’t pick up on one or several million wires that should have been flagged.

In addition to the fine, the bank agreed to permanently halt US dollar settlement for about 300 high-risk clients in Hong Kong and UAE.

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More good stuff for auditors – 8/18

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A few links and comments of interest to auditors. Trained investigators can’t read when someone is lying; too-big-to-fail/jail/govern is just too big; and update on lease accounting.

6/10 – FBI – The Truth About Lying: What Investigators Need to Know – Detecting lies, especially in high stakes interviews (like a criminal investigation) is far more difficult that interviewers and investigators realize. There are complex factors behind why people react they way they do. Not telling the truth is merely one of many causes. Vast interpersonal differences create more complications.

If you try to discern truthfulness during your auditing interviews, might be worth reading the article. Since trained pros can’t do it very well, us CPAs might want to reconsider how well we do at detecting liars.

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Standard Chartered under review for money laundering issues. Again.

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Standard Chartered is in trouble again for money laundering issues.

Either I’ve been blogging long enough to see cycles repeating or the too-big-to-fail banks are getting more casual in their casual efforts to comply with US law. Or maybe I’m just suffering from confirmation bias.

Their software that is supposed to flag suspicious transactions allegedly failed to identify a million transactions that should have been reported to US authorities for review. That is according to the monitor installed to watch their compliance.

Unknown yet how many, if any, of the million suspicious wires were actually illegal.

Settlement negotiations are underway. Discussion in the air suggests a fine of $100M is possible. The bank’s chief executive has reportedly flown to New York to participate in the negotiations.

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Statistics developing for recalled peer review reports

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Last week I ran a series of five posts on the peer review reports that are being recalled.  The issue is that a pension audit is considered a must-select. When a CPA performs a pension engagement, at least one of those engagements must be selected for evaluation during the peer review.

Vague stories floating around suggest somewhere between 200 and 1,100 reports are being recalled.

At the AICPA Peer Review Conference held last week, there was a presentation on the employee benefit plan (EBP) issue identified by the Department of Labor.

The presentations during the conference can be found here. Choose the Employee Benefit Plans Presentation, in the middle of the page.

I will mention a few highlights from slides 8 through 10.

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Primer on fraud in local governments

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If you work in a local government, are in leadership there, or provide audits in that sector, you really ought to check out Charles Hall’s book, The Little Book of Local Government Fraud Prevention.

I bought & read a copy a while back and really, really want to write a review of the book, but haven’t been able to pull together my thoughts.  (Sorry Charles!) It is a good read.

Until I pull together my thoughts, just know I believe you would benefit from reading the book.

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Time to clean up our act – peer review update part 5

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This is the last in a series of posts exploring the implication of peer review reports getting withdrawn because firms did not have pension audits included in the scope of the review.

Pensions aren’t the end of the issue

There are hints in the air that the Department of Labor IG staff aren’t the only ones thinking there are firms that didn’t have must-select engagements included in their peer review. As my wild guess, I’m thinking the Department of Education will be trying to figure out some way to match A-133 reports of colleges and universities with peer review reports of their auditors. I’ll go out on a limb and guess there are other agencies thinking about that also.

If I understood comments in the peer review update webcast, the AICPA Peer Review Board is looking at ways to match to A-133 reports. Did anyone hear that differently? Please comment if you have thoughts on that idea.

Bigger issues

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Cascading consequences of your peer review report going away – peer review update part 4

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Previous  three   posts are the beginning of a discussion of consequences from having a peer review report withdrawn. Also, there has been an ongoing conversation in the comment section of each of those posts.

More background

Before we jump into more consequences, here’s additional background:  The Illinois CPA Society has good info on their Peer Review page.  It describes the AICPA/DOL project. The DOL sent  the AICPA a list of around 5,000 firms that perform ERISA audits. Then AICPA did the match to peer review reports.

Article mentions that in addition to some firms that didn’t have an EBP plan in the review, there are other firms that are not enrolled in the peer review program.

Let me say that again: the AICPA found firms that provide pension audit that are not even in the peer review program; they are getting neither an engagement review nor system review.  Since I’m making some wild guesses about consequences, those firms may have a rough time explaining themselves to their state board.  You don’t want to be in their company.

A few comments on the page about replacement reviews. There won’t be any extensions on the 90 day deadline. The page also says the replacement review must include a pension audit, so the year-end cutoff for the replacement review may have to be adjusted back in time to pick up an ERISA audit. There’s also a reminder on watching reviewer independence.

One last comment – I’m hearing more hints in the air that the number of reviews being withdrawn is in the range of 1,100.

Cascading consequences

Here’s a few more consequences to ponder of not reporting all your must-select engagements:

Wording on audit reports – Here’s where things compound faster. …

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