A few links and comments of interest to auditors. The Andersen name is back, how to classify ‘trapped cash’, government assigning audits, and The F Student (twice). Wow, am I confused. The Andersen name resurfaces, and vinyl record sales are surging. What’s next, disco?
August 2014 – The CPA Journal – Meet the Future of the Profession – Rumbi Bwerinofa-Petrozzello is one of the bloggers I follow. She writes on fraud at Figuring Financial Forensics.
She and three other young professionals were featured in the linked article in the NY state society. The four discussed their perspectives. Well worth a read.
In particular, I enjoyed the following comment from Ms. Bwerinofa:
“If we refuse to be with the thought leaders, if you have CPAs saying, ‘I don’t use social media’ or ‘I don’t do the Twitter thing,’ or ‘I don’t write,’ you are not going to last.”
I agree. Same point applies to going paperless and using tech tools that are relevant and helpful to your practice. We don’t have to use every single tech tool and social media platform that exists, but we need to be involved.
Another comment on changing your perspective on all the nifty new stuff:
“…younger people are more willing to dive right in and make mistakes. Her parents’ generation was afraid to make mistake because they used to be almost irreversible; today’s generation knows there is an “undo button.”
Make a coding or posting mistake on a paper-based lead sheet and top trial system and it will take hours to fix. Another hour or two for changing the financials and getting them through typing.
Make a mistake on an electronic worksheet system and you can change the entry and financials in a few minutes.
I’ve made mistakes in both systems; I far prefer the electronic.
Check out the article.
8/19 – The Inner Auditor (blog of Central Virginia chapter of ACFE) – All the People All of the Time – Great article by Rumbi Bwerinofa on interviewing techniques in a forensic investigation. Most of the discussion applies to auditors gathering information in a regular audit. Check it out for lots of reminders.
8/20 – Re:Balance – Government Assignment and Financing of Audits? The New York Times Offer a Poisoned Bouquet – Jim Peterson provides a devastating critique to the idea of having all audits paid by the government with auditors selected by the government. How would a federal agency allocate $114 billion dollars of work amongst 4 firms with 38,000 partners and 717,000 staff? How could an agency evaluate all the conflicts of interest, match skills, and assign the work so it could be scheduled either effectively or efficiently?
8/17 – LinkedIn – The Future of Accounting Practice Management Software – Superb brain stretcher. What software will your firm need to thrive in the near future? To stretch your thinking consider this intro:
In a new survey by bankrate.com over a third of Americans haven’t done any banking in a branch in the last six months, not counting ATM use. My generation does their banking from their mobile or laptop.
That is the world we live in. Today. Not in a few years. Today.
Here is the serious warning that applies to us as CPAs as well as to the vendors out there:
The way accounting practices operate will evolve and practice management software will have to evolve with it or their capabilities for the practice will diminish.
Lisa C. is the Managing Director of a 14 person firm. They don’t own any servers, PCs or printers. Staff provide their own Mac. All firm applications are in the cloud.
She then outlines what is her ideal of practice management software.
8/29 – Grumpy Old Accountants – “Trapped Cash” Begs for More Transparency – Prof. Catanach asks a question we all should have been asking – if a company intends to permanently keep earnings of an overseas subsidiary out of the US, are the resulting profits sitting in cash restricted and thus not properly presented as a part of ‘cash’ on the balance sheet?
Wow. Hadn’t thought about that. Such cash is required to only be used in a certain place. It is not available to pay for operating expenses of the consolidated entity as such bills come due. Seems it should have a clear, obvious separate disclosure at an absolute minimum. More likely it probably ought to be reclassified to someplace other than cash. Depending on size and nature of the sub, it might even be a non-current asset.
For five examples he provides for which the unrepatriated earnings are between 70% and 90% of total cash and securities, it looks to me like the impact of ‘trapped cash’ is qualitatively material to the financial statements.
Something to think about.
9/2 – Wall Street Journal – Tax Firm to Revive Arthur Andersen Name – Michael Rapoport explains a tax-only CPA firm in San Francisco is buying the rights to the Arthur Andersen name and will rename their firm from WTAS to Andersen Tax. The newly named firm will continue as tax-only without any audit work. The firm had $149M revenue last year and expects $200M this year. They are the 16th largest tax advisory firm in the US.