All of the ethics rules are being restructured and redrafted. They will be put together around a conceptual framework. Although the changes are in the distant future, efforts to rewrite the code are underway right now. It would be wise for us to start paying attention.
A good place to start is an article in the June 2011 Journal of Accountancy.
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Some short scenes have been combined into a 9 minute cartoon along with an intro and extro. The first of several feature-length cartoons is available on my other blog, Once Upon Internal Control. This one discusses some creative internal controls over cash and a few ideas on how to maintain security over the offering until it is counted by the count team. More to follow!
Cartoon can be found at:
The chairman of the PCAOB, James Doty, gave a speech this week that got some attention. He pointed out that the PCAOB had found “hundreds” of audit failures amongst the 2,800 reviews the agency has conducted. Not a particularly encouraging passing rate for the big firms that work on publicly traded clients (or the mighty bold smaller ones that want to run in that world).
He suggested that auditors aren’t taking independence quite seriously enough. Mandatory firm rotation is one of several ideas he is mulling in public.
What kind of problem is the PCAOB seeing that generates these ideas?
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The entire body of auditing standards are being rewritten. All of the rewrite will go into effect with our December 31, 2012 audits. This entire project is referred to as The Clarity Project, which is producing what are called clarified standards.
There will be a lot of changes, both big and small. You would do well to start reading up on the issues. We have until we start field work early in 2013 to get up to speed. By the way, the audit report will have substantial revisions.
The June 2011 issue of the Journal of Accountancy has a great introduction:
Clarified Auditing Standards: The Quiet Revolution
I heartily recommend you read the article. Well worth your time. You can click on the Audits category in the right column of this blog for other discussions of the clarified standards.
Posted at Once Upon Internal Control: The exit interview with the reporter who was investigating reports of extravagant spending. Final cartoon in the tale of the church that did internal controls well can be found here.
All four cartoons plus the intro will be rolled into a feature cartoon.
Extensions available!!!
Just a reminder, California now has mandatory peer review. First deadline is rapidly approaching for firms whose first peer review is due July 1, 2011. This would be CPAs whose licenses end in 01 through 33.
The Cal Society has a memo on their website allowing extensions.
See announcement here.
To get an extension, a firm must: …
I have a new cartoon posted at Once Upon Internal Control showing good internal controls in a local church. The dramatization is based on a reporter calling for comment about rumors of a high-flying lifestyle.
Cartoon called: When a reporter calls, good procedures save the day. Visit the other blog for the cartoon. I will be posting cartoons there.
FASB Action Alert describing the board decision to drop the straight line amortization of “other than financing” lease liabilities is described here.
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Current plan – short term leases amortized on interest method (topic 840)Read More »
CPAs ought to start looking at social media. At the moment, a CPA is at the leading edge merely by doing anything beyond a plain web site and contact-only Linked-in page. Start blogging or effectively using twitter and you are bleeding edge. Eventually, we will all have to be in the space just to be part of the crowd.
Time to start thinking about it. Here’s an interview that talks about getting started: David Albrecht’s blog post Sheridan (MACPA) Interviews Michelle Golden
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Going Concern is a blog that’s worth reading everyday. Would be worthwhile to include it in your RSS reader. The site covers the Big 4 world from a staffer’s perspective. Lots of juicy news from the trenches. Lot’s of great accounting news.
Today’s scoop is an excel spreadsheet that lists the PwC compensation structure from new staff level through year 14 director and new partner. Includes base pay and bonus.
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John Hufnagle has this month’s update on the FASB’s thinking on how to revise lease accounting. In his post, Lease Accounting (ASC 840) – More Changes to Proposal, he explains the FASB is now thinking of requiring the interest method for amortizing other-than-financing leases (think what is currently an operating lease). That would be a change from their previous thought of allowing a straight line amortization of the liability.
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Changes to new lease accounting (topic 840)– May editionRead More »
Don’t know how to interpret this. You can figure for yourself what it means for your practice.
Looks like the prospects for new accounting grads is good.
CPATrendlines, in their article, Number of Accounting Grads Hits New High, reports:
Newly minted accountants have some of the brightest job prospects in the nation, with nearly 90 percent of accounting firms forecasting the same or increased hiring of graduates this year compared with 2010, and nearly three quarters, 71 percent, of the largest firms anticipating more hiring – an indicator of a rebounding economy.
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Hiring trends strong for new accounting graduatesRead More »
Stat data from the AICPA lists information for CPA firms sorted by size: big 4, top 100, large (21-75), medium (11-20), small (2-10), and sole practitioners. Table includes number of firms in each category, total revenue for that sector, number of professional staff in each category. This is 2009 data.
We’re All Small Firms Now, from CPATrendlines; data from AICPA.
A few tidbits of interest to me:
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Overall data on CPA firms by size including revenue and number of professionalsRead More »
I wrote an article for Bank of the West called Essentials of Internal Control. It discusses one superb internal control you should be using for cash, explains that trust is not an internal control, and offers a creative idea to improve control over cash.
A one sentence summary of internal control is at the end of this paragraph:
CPAs can talk for hours about internal control. Can the concepts in all those long presentations be made a little simpler to grasp? Let’s try to boil down all those internal control ideas to one sentence. Ready? Internal controls are the procedures you put in place so that one person cannot do something wrong and hide having done so.
The three key ideas discussed:
Please read the full article.
My article was included in this newsletter.
Future cartoons will be announced on this blog and can be seen at my other blog, Once Upon Internal Control.
Here is the cartoon discussing how to maintain dual control over the offering count, which is a place where churches typically have a struggle maintaining good procedures:
[youtube=http://www.youtube.com/watch?v=wuboFGqXAi4]
Other cartoons available at Once Upon Internal Control.