Jim Ulvog

Brief overview of new rules for audits of 12/31/21 financial statements.

Leave a Comment / Audits / By
Image courtesy of Adobe Stock.

To help auditors in the CPA community, the AIPCA peer review staff publishes PR Prompts, a newsletter with information for firms providing audits, review, compilations, and other attestation services.

The newsletter is unbranded and AICPA gives explicit permission to peer reviewers to put their logo and branding information on the newsletter. Those of us who are peer reviewers have specific permission to send it to our clients.

I will present their comments in four posts:

  • New audit standards.
  • New accounting rules effective this year.
  • New accounting rules coming into play over next few years.
  • Tips for firms in peer review program.

One section of the newsletter provides a condensed introduction to new audit standards that will be required for our upcoming year end audits.

If you are an auditor, you really need to become familiar with the whole string of SASs, from #134 through #140 before you dig into your year end engagements.

The following comments are provided to you courtesy of the AICPA.  I gratefully acknowledge their work in preparing this info and gladly share it with you. For ease of reading, I will not put all the following material in quotations.

PR Prompts – Fall 2021:

New Standards

SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended

Required implementation is right around the corner for Statement on Auditing Standards (SAS) No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements. SAS No. 134, as amended, is effective for audits of financial statements for periods ending on or after December 15, 2021, with early implementation permitted.

…

Brief overview of new rules for audits of 12/31/21 financial statements.Read More »

Number of people drawing unemployment continues to improve, but very slowly, as of the start of November 2021.

Leave a Comment / Economics / By

The number of new claims for unemployment is slowly declining.

For the week ending 11/6/21 there were 267,000 new claims. While this is encouraging progress, keep in mind the number of people who are getting laid off is still far above the average of 212,000 per week all the way back in January and February 2020. We are still seeing more people laid off every week than before the pandemic began.

Here is a recap of newly unemployed over the last several months:

…

Number of people drawing unemployment continues to improve, but very slowly, as of the start of November 2021.Read More »

Consumer Price Index increases 0.9% in October for the second time in 2021.

Economics / By

The Consumer Price Index (CPI) increased 0.9% in October 2021 after a more modest 0.4% increase in September and 0.2% in August.

The October increase matches the June increase of 0.9% and is slightly higher than April increase of 0.8%.

Diving into the components of the CPI shows the increases are broader than several months ago.

The press release from the Bureau of Labor Statistics explains:

“The monthly all items seasonally adjusted increase was broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors. The energy index rose 4.8 percent over the month, as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. The food index increased 0.9 percent as the index for food at home rose 1.0 percent. “

Warning sign as we roll into winter is fuel oil increased 12.3% in October and utility gas increased 6.6%. Keep in mind those are changes for the month, not for the year.

…

Consumer Price Index increases 0.9% in October for the second time in 2021.Read More »

Producer Price Index in October 2021 shows continuing inflation.

Leave a Comment / Economics / By

The Producer Price Index (PPI) in October 2021 continues to show unusually high and ongoing inflation. Increasing October was 0.6%, which follows a 0.5% increase in September and 0.7% increase in August.

The PPI has shown high inflation for all of 2021. The worst months were 1.2% in January, 1.0% in April, and 1.0% in July. Those extremes have not repeated for the last quarter, which is a small amount of good news.

Graph at the top of this post shows the monthly change and final demand (the total index in other words) in blue. The average of the monthly changes in green. The red line shows core change, which excludes food, energy, and trade.

The PPI was increasing around 0.4% the month until the end of 2020. Since then it has averaged 0.8% for 2021 through October. Ouch.

This index is explained by the Bureau of Labor Statistics as follows:

…

Producer Price Index in October 2021 shows continuing inflation.Read More »

Just how much money has the Federal Reserve created out of thin air and injected into the economy?

Leave a Comment / Economics, Other stuff / By

Got to wondering how much money the Fed has created out of thin air and then pumped into the economy.  The answer is a vague “bunches and bunches.”

How do I know that? Because of my reading over the last few years. I pay attention to such stories (yeah, yeah, I know – I’m weird – pray for me as you feel led). I also am aware the Fed pumped a lot of money into the economy when the pandemic started.

There have been lots of news reports commenting they have been pumping something in the range of $100 billion a month into the economy after their initial round.

As I was thinking about things the federal, state, and local government have been doing to harm the economy, got to wondering just exactly how much fiat money the Fed has been creating, out of thin air of course. Yeah, I wonder about such things.

Answer is again bunches and bunches, and is measured in trillions of dollars.

Graph above shows the amount of total assets on the Federal Reserves balance sheet since around 2003.

Wow.

…

Just how much money has the Federal Reserve created out of thin air and injected into the economy?Read More »

Even more inflation on the way.

Leave a Comment / Economics, Other stuff / By
Image courtesy of Adobe Stock.

Damage from the forced economic shutdown is being compounded by the trillions of deficit spending and lots of articles are suggesting there is more inflation on the horizon.

A few of the recent articles pointing toward higher prices in near future:

  • Supermarket billionaire expects 10% run up in food prices in near term
  • P&G raising prices.
  • Two big-time investors are seeing inflation now and expect more.
  • Pressure on car shortages may get worse due to lack of magnesium, which will drive prices higher.

Fox News – 10/18/21 – Food prices will go out “tremendously”: Billionaire supermarket owner– The president of Gristedes and D’Agostine Foods is guessing there will be something in the rate of 10% jump in food prices over the next two months. Rising prices and supply limits are working their way through the supply chain. He expects grocery stores will stop promotions and reduce the range of products they carry.

Wall Street Journal – 10/19/21 – Proctor & Gamble Uses Its capsize to Lesson Impact of Supply-Chain Mess – P&G announced it will start increasing prices of razors along with some beauty and oral care items. Previously they announced they would be increasing prices for diapers and toilet paper. Amount of increases was not announced.

…

Even more inflation on the way.Read More »

Updates on insider trading by federal judges and senior staff of Federal Reserve.

1 Comment / Fraud, Other stuff / By
Image courtesy of Adobe Stock.

Previously discussed Financial conflict of interest on the federal bench and stock trading by presidents of regional Federal Reserve Banks. Alternate headline – Is there any group of powerful people who bother to follow the rules?

The Wall Street Journal reported that 131 judges had an investment in one or many stocks of litigants who appeared in front of them.

Two presidents of regional Federal Reserve Banks were trading stocks during the tumultuous early months of the pandemic.

Two updates in the news recently. First, the situation with judges is worse than it appears. Second, restrictions have been placed on extremely senior staff of the Fed prohibiting them from owning individual stocks.

Wall Street Journal – 10/21/21 – Fed Imposes New Restrictions on Officials’ Investment Activities – The new rules will apply to the seven governors sitting on the board of the Federal Reserve, the 12 presidents of the regional Federal Reserve Banks, and an unspecified number of senior staff who work with the rate-setting committees.

…

Updates on insider trading by federal judges and senior staff of Federal Reserve.Read More »

Labor shortage about to get worse for hospitals, police and fire departments. Also any company with over 100 employees.

Leave a Comment / Other stuff, Pondering / By
Image courtesy of Adobe Stock.

As you read the following articles, keep in mind the LA County Sheriff and the Riverside County Sheriff have both said they will not enforce any vaccination mandate for their staff. In addition, the Chicago police union is in court trying to get and order to prohibit the vaccination dictat.  Officers who are not in full compliance have been pulled off patrol.

Imminent problems:

  • There are widespread firings on near-term horizon for police officers, firefighters, and hospital workers.
  • 90% of companies with over 100 employees expect to lose staff from their already understaffed organizations because of vaccination mandates.

Chronicles Magazine – 10/18/21 – The Impending Mass Firing of America’s Unvaccinated – In the midst of an existing shortage of workers and a labor force participation rate that has come close to recovering from the government-imposed recession, there is soon to be another major problem hit the economy: the pending firing of large numbers of people who refuse to get vaccinated or for whom employers refuse to provide any exemptions.

The massive hit to employment is likely to hit police, firefighters, doctors, and nurses particularly hard. The resulting, fully expected consequence will be deterioration in public services.

…

Labor shortage about to get worse for hospitals, police and fire departments. Also any company with over 100 employees.Read More »

You cannot turn an economy off, then turn it back on. Here are the results when hubris makes you think you found the magic switch. Part 3.

Leave a Comment / Economics, Other stuff, Pondering / By
Image courtesy of Adobe Stock.

The supply chain for so many of the things we buy is messed up at every step of the logistics system. Former CEO of Walmart pointed out the steps in the supply chain that are tangled up:

  • Loading ships at ports in Asia.
  • Ships are stuck in the water waiting to unload.
  • Unloading at ports in the US is another chokepoint.
  • There are not enough truck drivers.
  • Not enough labor and the various points in the distribution system inside the United States.
  • Shortage of people to put stuff on the shelves.

Essentially every stage of the distribution channel is tangled up. Biggest thing that could be done to get things moving normally would be more people to work at every step of the distribution system. Labor shortages, in other words.

This post discusses two articles:

  • California has imposed restrictions on trucking which has drastically reduced the number of trucks which can be operated in the state.
  • One article provides us a survey of a dozen other articles, each of which describes a different aspect of the supply chain disaster.

Part one of this series can be read here. Part two here.

The Last Refuge – 10/14/21 – The California Version of The Green New Deal and an October 16, 2020, EPA Settlement With Transportation is What’s Creating The Container Shipping Backlog – Working CA Ports 24/7 Will Not Help, Here’s Why – Author spent three days researching reasons for the backlog of containers here in California. Checking resources, researching details, and other research showed some surprising things.

…

You cannot turn an economy off, then turn it back on. Here are the results when hubris makes you think you found the magic switch. Part 3.Read More »

This week’s round of flaming hypocrisy from public officials.

Leave a Comment / Other stuff, Pondering / By
Image courtesy of Adobe Stock?

Without even trying to find such news reports, examples keep jumping out which show senior politicians, health officials, and sundry members of the elite caste ignoring the rules you and I must follow. The examples just don’t stop.

The most recent illustrations from the California governor, New Jersey governor, and New Jersey Attorney General are discussed below.

Following is a list of my previous discussions on the ever-expanding list of senior officials who don’t bother to follow the rules they imposed.

Another post published a moment ago asks the question whether these officials really believe the rules they dictate are even required.

California Governor

Yahoo! News – 10/9/21 – Gavin Newsom’s daughter not yet vaccinated as implement sweeping mandate – California has now imposed a mandatory requirement that all students in public and private schools be vaccinated against Covid-19. The diktat was announced for children 12 through 15 as soon as the FDA gave approval for the Pfizer medicine.

The governor has not had his daughter, who turned 12 recently, vaccinated yet. Does he lead by example? Does he comply with the requirement? Not yet.

The second reason is that she has

…

This week’s round of flaming hypocrisy from public officials.Read More »

Instead of being just flaming hypocrites, perhaps our “leaders” don’t really believe Covid restrictions are needed.

Leave a Comment / Other stuff, Pondering / By
Image courtesy of Adobe Stock.

Let’s picture a situation where politicians and public health officials believe eating seedless grapes is dangerous, will make a tremendously large number of people horribly sick, and will inevitably kill lots of people.

Let’s pretend that grape-sickness is so dangerous that even inhaling trace amounts of grape-breath from other people will make you terribly sick, with a frightening chance grape-breath will kill you.

Let’s picture said politicians and public health officials banning seedless grapes and insisting that none of us ever eat them again because they are so terribly dangerous.

Now let’s picture dozens of those politicians and public health officials being photographed and video recorded eating seedless grapes.

And breathing on each other.

In public.

With cameras rolling.

Knowing they are being recorded.

…

Instead of being just flaming hypocrites, perhaps our “leaders” don’t really believe Covid restrictions are needed.Read More »

Consumer Price Index increase for September 2021 continues strong, with 12 month inflation running at worst rate since 1990.

Leave a Comment / Economics, Pondering / By

The Consumer Price Index, or CPI, shows a 0.4% increase in September 2021 for all-items with a core increase of 0.2%.

The rate of inflation for the last 12 months is 5.43% for all items and 3.86% for core inflation without food and energy.

Graph at top of this post shows the monthly increase in the all-items index along with the core change. Graph also shows an average of the preceding 12 months for all items.

Watch the green line increase from around 0.1% up to over 0.4% for the last five months.

The trailing 12 month average is also grim. It shows:

…

Consumer Price Index increase for September 2021 continues strong, with 12 month inflation running at worst rate since 1990.Read More »

What’s likely to happen with inflation? More of it and for extended time.

Leave a Comment / Economics, Pondering / By
Rising costs and constrained shipping capacity is driving inflation and disrupting supply chain across the economy. Image courtesy of Adobe Stock.

Indicators I can see suggest inflation is going to continue at a high rate for quite some time. Here are a few of the articles I have read recently pointing towards ongoing rise in prices:

  • Rent component of CPI will increase substantially over the next year because of the way the index is calculated.
  • Shipping costs have already skyrocketed.
  • Multiple food producers are struggling with rapidly increasing costs.
  • Major food producer expects their costs go up 11% in the next year with prices they charge to go up by 4%.
  • The phrase “stagflation” is back in play. Oh joy, a possible (likely?) return to the Carter administration.

Asia Times – 8/27/21 – US rent hikes will explode consumer inflation in 2022 – Anecdotal information indicates rental prices are skyrocketing.

A friend of mine priced the apartment they are living in to help a relative who was moving into the area. Price for this exact unit is 50% more than when they signed their annual lease a number of months ago.

An acquaintance reports the price for renting a particular house went up while they were thinking about it for a day or so.

Two friends report landlords renting apartments expect six months rent in advance and some landlords renting houses are expecting a year in advance. A year.

Article mentioned above says the reports floating around in the media indicate rent hikes overall are around 10%. Yet the CPI shows only 2% increase in rent.

How can that be?

Fascinating detail of how the CPI is calculated explains the anomaly and also points towards dramatic increase in the rent component of CPI over the next year.

…

What’s likely to happen with inflation? More of it and for extended time.Read More »

You cannot turn an economy off, then turn it back on. Here are the results when hubris makes you think you found the magic switch. Part 2.

Leave a Comment / Economics, Pondering / By
Modern cargo container ship giving an idea of the amount of cargo that can be carried. Each of those containers is one semi-load on the freeway. Image courtesy of Adobe Stock.

Seems like most industries have a tangled supply chain. The entire transportation system is sorely distressed.

The elitists in federal and state governments have a staggering level of hubris. They think waving their hands, clicking on their laptops, issuing press releases will make the entire economy bend to their will. What they accomplish is willfully causing disruption in your life and in my life.

Here are merely a few of the recent articles describing the tangled impact of Covid dictats and sundry government policies:

  • Lots of cargo ships are waiting to unload off the California coast.
  • Large port operator expects disruptions to last into 2023.
  • Workers in transportation sector warn of possible system collapse.
  • Chip shortage for carmakers will last into late 2022.

Looks like it might take another 15 or 18 months to untangle the worldwide supply chain.

Wall Street Journal – 8/17/21 – Cargo Ships Are Again Idling Off Jammed Southern California Ports – Back in the middle of August the tally of cargo ships sitting off to coast of California was 37.

A tweet I saw this morning (10/9/21) from someone flying out of Long Beach indicated the individual counted 50 ships waiting to unload.

At around 10,000 containers per ship that is somewhere around 370,000 containers waiting to be unloaded back in the middle of August and is now currently somewhere in the range of half a million containers sitting off the coast.

Article says a few months ago it was only nine. Normally it is zero.

…

You cannot turn an economy off, then turn it back on. Here are the results when hubris makes you think you found the magic switch. Part 2.Read More »

You cannot turn an economy off, then turn it back on. Here are the results when hubris makes you think you found the magic switch. Part 1.

Leave a Comment / Economics, Pondering / By

Random stock outages are still common. Image courtesy of Adobe Stock.

The supply chain in most industries is tangled up somehow somewhere.

The people in federal and state governments with the staggering level of hubris to think they can wave their hands and make the entire economy do their bidding are willfully causing disruption in your life and in my life.

…

You cannot turn an economy off, then turn it back on. Here are the results when hubris makes you think you found the magic switch. Part 1.Read More »