Pondering

Comments from recent continuing education classes worth repeating: “get in or get out”

If you are an auditor and that is a diagram of new audit rules, then you need to completely understand the graph. Image courtesy of Adobe Stock.

Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.

Previous posts had comments on accounting and auditing as well as peer review.

“Get in or get out”

The second speaker who discussed peer review in previous post also said that if you are doing A&A work you need to “get in or get out.”

Let me translate that…

Comments from recent continuing education classes worth repeating: accounting and auditing

Image courtesy of Adobe Stock.

To get ready for a writing project this summer, I’ve been going over my notes from some CPE conferences and classes.

Thought I’d share some of the fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs.

Auditing

The auditor’s report will be completely reworked with implementation first required for 12/31/20 reports. The statement has been issued. Check out SAS-134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements if  you want to get a head start on the overhaul to audit rules.

By the way, an omnibus standard, SAS 135, makes lots of little changes you need to know about.

An exposure draft is out which addresses audit evidence. Final document expected in late 2019.

Accounting

Memorial Day: gratitude for those who did not return

Image courtesy of Adobe Stock.

 

To family and friends of those who did not return, I humbly say:

My deepest condolences on your loss.

From someone who appreciates the price paid for the freedom I cherish everyday, please accept my thank you on behalf of your loved one who paid the price that my family and I can live free.

“Thank you” is so little, but it is all I have to give you.

 

 

“Here rests in honored glory an American soldier known but to God” Tomb of Unknown Soldier 002 – Arlington National Cemetery – 2012 by Tim Evanson is licensed under CC BY-SA 2.0

 

 

Rosecrans National Cemetery, San Diego, California. Photo by James Ulvog.

Tips on how to apologize

Sorry by HypnoArt is in the public domain (CC0 1.0)

Let’s face it, we all goof up sometimes whether by insulting a client, dropping the ball on a project, or the good ol’ engage mouth before engaging brain routine.

To repair the damage, especially in the work environment, an apology is needed.

The Journal of Accountancy on 9/25/17 offered some great suggestions on How to make a professional apology.

Here are a few of the multiple tips suggested.

The story on Silk Road, an on-line drug bazaar, shows the power of rationalization and self-deception

Cover of “American Kingpin” from Amazon. Used under fair use.

The sad tale of Ross Ulbricht and his on-line drug bazaar called Silk Road is a good study of the outer limits of how far rationalization can carry a person.

It is also a frightening illustration of Jeremiah 17:9. From the New International Version, ponder:

The heart is deceitful above all thing and beyond cure. Who can understand it?

Considering the tale of Silk Road is useful for accountants wanting to learn about the outer fringe of the internet and he investigative power of the federal government, believers who would like an illustration of the frightening level of deceit that lives in the human heart, and anyone else wanting to learn more about the dark worlds that normal people will never see.

My posts are gathered into two collections on my other blog, Outrun Change:

More explanations of virtual currencies and possible applications

bitcoin” by komersreal is licensed under CC BY 2.0

Several recent articles provide more background on Bitcoin and other blockchain tools. For your daily brain stretching:

  • Blockchain as a possible tool for fast and cheap international payments
  • China is working to restrict blockchain transactions
  • Central banks ponder issuing of their own virtual currencies
  • Tax status of blockchain transactions and the IRS is out fishing for tax evaders
  • Description of blockchain as being the internet of money, comparable to how the internet moves and stores information

8/28/17 – Journal of Accountancy – Blockchain opens new era for cross-border payments – Moving money from one country to another is time-consuming and costly. There are fees at both ends. It takes several days for the money to arrive. An error in one digit of the routing or account information means the transfer will go astray and take more time and money to locate.

Blockchain offers the opportunity to make international transfers near immediate and at a fraction of the cost.

For an illustration, picture a company paying international vendors. Or an international worker sending part of his paycheck back to his parents in his home country. Or a mission organization moving funds to its many field offices.

Another overview of blockchain technology; time to start figuring out this stuff.

Buzzword Bingo: Blockchain” by planeta is licensed under CC BY-SA 2.0

Sure does look like this blockchain technology is going to be a big deal. Might be time to start getting our minds wrapped around the concept.

For starters, check out this short overview:

[youtube=https://youtu.be/6WG7D47tGb0]

 

 

For a bit more detail:

8/4/17 – Bill Sheridan at Business Learning Institute – Block chain might remake accounting. The opportunities are huge. – Introductory article is one of the better overviews I have read. It introduces the video shown above.

One sentence description of Block chain, quoting from the article:

Suggestion for coping with massive change that could replace your job: Take full responsibility for developing new skills for yourself.

Embrace Change” by Iqbal Osman is licensed under CC BY 2.0

The rate of change we are seeing around us is massive. There are threats of automation or artificial intelligence even eating into what is called the white-collar world.

Here’s a suggestion on how you might cope with this overwhelming change:  Take on full responsibility for keeping your skills and abilities current.

8/1/17 – Stephanie Kasriel at Medium – Skill, re-skill, and re-skill again. How to keep up with the future of work. – The rate of change is accelerating and the skills needed to do work in the new economy are changing as well.

Article provides a brief summary of our education system. I will expand that with what I have learned elsewhere. Then I’ll mention a plan to dealing with this turmoil.

Things really can go terribly wrong. Do your backups work? How’s your disaster planning?

Image courtesy of Adobe Stock

Disasters can happen. Consider:

  • How will you recover if you lose your wallet?
  • How will your business recover if ransom ware encrypts your server?
  • What is your planning to survive a tornado if your business is in Oklahoma, a hurricane if you work on the east coast of Florida, or a flood if you live in low territory next to river that overflows once a decade?

Rumbi Bwerinofa-Petrozzello ponders these questions in her 7/2/17 post If Lost…Then What?

She tells of finding a wallet on the ground, walking into the adjacent restaurant looking for the owner by glancing between the patrons and the photo on the driver’s license in the wallet. No luck.

When she got home she was able to do a bit more research. She located the woman and returned the wallet.

Life hack tip: make sure you have a business card with a current phone number and email in your wallet so that if a kind-hearted person finds your lost wallet the nice person can reach you quickly.

From there she transitions to disaster recovery.  A few questions for you to ponder:

Happy Birthday America!

Silhouette of charging Union soldier. “Happy Birthday America” by Steve Corey is licensed under CC BY-ND 2.0

Two hundred forty-one years ago today marked the start of this wonderful, fantastic, heaven-blessed, messy, delightful, powerful, flawed, and glorious experiment called the United States of America which has delivered unimaginable levels of freedom to hundreds of millions of people here in the US of A and contributed massively to the freedom of hundreds and hundreds of millions more around the world.

Happy birthday America!

“4th of July” by Matthew Blouir is licensed under CC BY 2.0

If you want a really short description of this day, consider a photo of a sign on a store’s door I saw while browsing the ‘net:

Closed on July 4

in observance of

Brexit 1776

If you are looking for a brief description of the string of events which led to signing the Declaration of Independence and the follow-on events leading to full independence, …

Land of the free because of the brave

Image courtesy of Adobe Stock.

Those of us living in the United States are blessed with religious freedom, political freedom, and economic freedom because those who went before us fought for freedom.

Many of those fighting offered up their life for freedom and the offer was accepted.

I am humbled and grateful to God that some of my ancestors are included in the long list of those who fought. I am especially humbled that a great, great grand-uncle is in the list of those who died in the defense of freedom.

Because of their sacrifice, I get to enjoy this kind of freedom:

Minor updates while we wait for more news on the PCAOB leak to KPMG

Image courtesy of Adobe Stock.

There is little new information on the leak from PCAOB to KPMG since the first reports.

I’m expecting to hear a lot more, most likely after PCAOB and SEC finish their investigation. If I read this situation correctly, and if public reports are correct, there will be sanctions from SEC against some of the KPMG staff. At that point, the SEC public documents will tell us a lot more.

While we wait, here are two articles that give some general background.

4/17/17 – Francine McKenna at re:The Auditors – KPMG takes its turn with a Big 4-sized scandal – If you’ve been looking for an article with a long time horizon to survey the assorted scandals in the Big 4 world, this post will give you the deep background you want.

Leak from PCAOB to KPMG

Post describes the current information that is public on the leak of inspection engagements from someone at PCAOB to someone at KPMG. Article illustrates there still is not a lot visible in the public realm to answer all the questions that come to mind.

Ms. McKenna quotes my comment earlier on the PCAOB-KPMG leak feeling to me like a red flag of something deeper. She agrees with me.

Each firm has their own round of fiascos

All the firms have had their turn of embarrassing publicity, often with fines or undisclosed settlements.

Update on PCAOB leak to KPMG: 6 departed staff at KPMG were fired.

Image courtesy of Adobe Stock.

A minor update on the leak from a now-former PCAOB staffer to a now-former KPMG staffer giving advance notice of audits selected for inspection. Also, many questions come to my mind after thinking about this situation.

Previously mentioned this fiasco yesterday.

CFO.com provides some clarifying info from KPMG’s executive director of media relations and corporate communications:  KPMG Replaces Audit Chair in Wake of PCAOB leaks.

The KPMG representative says that KPMG discovered the issue and notified the SEC and PCAOB.

Most significant piece of new information is that the six people who left the firm were fired.

They did not resign.

Why is this significant, at least to me? In the initial reports, I saw verbs used indicating all of the following possibilities for the partner’s departure. They may have:

  • resigned (which means sorta’ kinda’ voluntary terminations), or
  • were fired (which means the firm unilaterally terminated them), or
  • departed (which doesn’t addressed which party made the termination decision; in other words could have been a summary firing, or truly voluntary, or under the proverbial threat of you-can-either-resign-or-I’ll-personally-throw-you-out-the-window).

At first read, I did not analyze which of the above options actually was in play. I put together all the reports I read and assumed (you know what that means) these were all forced resignations, as in “I think it’s time for you to resign.

Other comments by the PR person confusing me are statements that the fireable offenses were possessing the leaked information or knowing others knew about it.

Staying ahead of change in the CPA profession

We need to be ready for what’s around the curve. We will be there really soon whether we want to or not. Image courtesy of Adobe Stock.

In the short-term, looks like a shortage is emerging for experience accountants. In the longer term, the massive change surrounding us means we need to keep learning and adapting.

As CPAs, we need to keep learning new skills and focus on things computers can’t do.

 

1/30/17 – Bill Sheridan at Business Learning Institute of MACPA – Want to beat the machines? Learn to do what they can’t do – Here is a way to think about automation that you might be able to wrap your brain around – How will you adapt then 30% of the work you do is automated, done faster, quicker, cheaper, and more accurately than you can do? Not 99% of what you do, not 10%, but 30%?

I can’t get my arms around audit or tax or consulting completely going away. I just can’t picture that. However, I can imagine 30% or 40% of my work as an auditor becoming completely automated. Actually, I sort of like that idea.

Computers don’t do well at applying professional judgment, courage, empathy, flexibility, and reacting to body language.

Point of article is learn to do those things better.

1/31/17 – Bill Sheridan at Business Learning Institute of MACPA – Change is a choice. So are relevance … and your future – Each of us has a choice. We can keep doing what we are doing. Or we can decide to change and grow and learn new things.

More on the ‘tipping point’ for Big 4 firms

Image courtesy of Adobe Stock.
Image courtesy of Adobe Stock.

If you casually pay attention to what is going on in the land of Big 4, a world far, far away from most of us in the accounting world, you might have interest in two recent articles from Jim Peterson, pondering the survivability of the huge firms. I will summarize what I think are a few highlights.

2/13 – Jim Peterson at Re:Balance – If the Big Four Went “Ex-advisory” – Deja Vu? Or Worse? – Regulators don’t like the huge consulting practices in the Big 4 and the partners in the Big 4 consulting arms don’t like the constraints on their growth, opportunities, and compensation from being tied to the audit & tax practices.

Article speculates on the impact if the consulting work were to be spun off, as happened back in 1998 through 2001.