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15% increase in 8 months. Another entry for the Same-Meal-at-the-Same-Restaurant price index.

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The size of a bite which inflation is taking out of every meal is accelerating for those of us who are not living at the top of an ivory tower fortress inside the D.C. Beltway.

Got lunch from Jimmy John’s yesterday. They fix up yummy sandwiches. 

I had turkey on French bread with provolone cheese. Split a large sandwich with my dining partner.  ‘Twas delish’.

Price was $14.99.  Yeah fifteen bucks for just the sandwich, to go, so nothing for the greedy state tax machine.

Last August the exact same sandwich was $12.99. Up an even $2.00.

20th anniversary for Ulvog CPA.

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Today, January 28, 2022, marks the twentieth anniversary of the Ulvog CPA firm.

It has been a joy to serve the nonprofit community for these two decades as an independent CPA firm. Focusing on the religious nonprofit community has been a professional honor and a personal delight.

Thanks to all the organizations who have made this journey possible.

Looking forward to many more years of serving churches and ministries.

God’s blessings to you all.

All the convictions in the U.S. for Libor manipulation have now been overturned.

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After the Great Recession back in 2008, there was great hue and cry demanding that hundreds of bankers be thrown in prison, every one of them to spend the remainder of their life in a dank, dark dungeon.

Nice concept.

Has a good, solid, rewarding emotional feel. Just the thought all those horrible bankers in jail gives you a warm fuzzy feeling all over.

The only problem is for that to happen, federal prosecutors have to actually, you know, prove their case.

Little teeny, tiny problem standing in the way – – proving manipulation is difficult.

So difficult that all convictions for alleged LIBOR manipulation in the United States have now been overturned.

So much for throwing all the bankers in jail.

The core challenge is proving one specific individual committed a specific crime. A particular bank as a whole may have committed crimes, which can be proved. A department overall can be shown to have committed a crime. The challenge is to prove one specific guy over there, yeah that one, had intent to and did violate a specific criminal code.

Wall Street Journal – 1/27/22 – All US Trial Convictions and Crisis-Era LIBOR Rigging Have Now Been Overturned – Three traders from Deutsche Bank were convicted at trial in 2018 for manipulating LIBOR. The charges were wire fraud, which is exquisitely broad.

The Second Circuit Court of Appeals reversed the convictions.

Disciplinary actions from California Board of Accountancy – Fall 2021

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The California Board of Accountancy Update newsletter, issue #94 dated Fall 2021, has details of disciplinary actions with effective dates in summer and fall of 2021.

A simple lesson for all CPAs from these situations is just do your job with at least a bare minimum of competence. The firms below didn’t get in trouble because they missed some SASs or were oblivious to some new or big or recent ASU. They didn’t get in trouble because a client lost out on a contested tax position. They didn’t get in trouble because they fell a few hours short on CPE or miscounted A&A hours.

No, they had splendiferous belly-flops from the 50 meter high dive. Examples?

One of the reasons why we are seeing record setting high inflation: staggering, astronomical level of federal spending.

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The amount of money Congress has pumped into the economy in an attempt to fight the Covid pandemic is staggering. Don’t quite have enough adjectives to describe the amount of money that is forced into the economy without any corresponding increase in production.

The amount spent directly on the pandemic is more than four times the annual budget at the federal level.

This is one of the primary reasons we are seeing inflation rates running at a thirty year high.

A close cousin on the list of inflation causes is the Fed flooding the economy with liquidity.  See previous discussion: Just how much money has the Federal Reserve created out of thin air and injected into the economy?

I’ve pulled together the amount of money appropriated by Congress in 2020 and 2021 which are focused on fighting the pandemic and stimulating the economy. Here is my tally, with amount of funding in billions of dollars, date Congress passed the legislation, and name of the program:

Brief overview of peer review issues – 11/21.

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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.

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.

Topics in this post:

  • Revenue recognition: 4 top concerns noted by peer reviewers
  • Have you considered reviewer independence implications if additional services are performed for your firm?
  • Do your clients need a single audit?

PR Prompts – Fall 2021:

Revenue recognition: 4 top concerns noted by peer reviewers

To learn where challenges exist for entities and their auditors, the AICPA conducted a survey of peer reviewers, asking them to identify the areas where their firm or their peer review clients have experienced challenges in auditing revenue recognition. Over 230 peer reviewers responded to the survey to share what they’ve seen or experienced relative to the new accounting standard, FASB Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers. The biggest Topic 606-related challenges were identified as the following:

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

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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.

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.

One section of the newsletter provides background on new accounting rules that will be required in the near term:

PR Prompts – Fall 2021:

Upcoming accounting standards updates (ASUs) not-for-profits (NFPs) should be familiar with at the end of 2021

The following is a summary of FASB ASUs with initial effective dates for most NFPs beginning in calendar-year 2021 and for 2020-2021 fiscal year-ends, or with effective dates that were deferred to 2021. Also, summarized are ASUs on the horizon with effective dates for most NFPs in 2022 and later. Additional information and guidance related to a number of these ASUs can be found in this AICPA article.

Another inflation followup.

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Distressing inflation news keeps rolling in…

Multiple comments from senior federal officials indicate we are going to have inflation for a while.

Treasury Secretary Janet Yellen indicated inflation will continue into 2022.

She indicates the source of inflation is bottlenecks that have themselves generated inflation. Unstated in the article, and apparently unacknowledged by Secretary Yellen, this these bottlenecks are caused by the government shutting down the economy and in their staggering hubris thinking they can flip a switch and seamlessly open up the economy.

CNBC – 10/5/21 – Yellen sees inflation staying higher for the next several months.

Article also points out Fed chairman Powell called inflation news last week “frustrating.” I suppose so. When you think you can control the economy of the world with a few keystrokes from your laptop, such news would be quite frustrating.

Most unsettling tidbits in the article are the estimates from the Federal Open Market Committee that inflation measured by the PCE will be 3.7% in 2021. THey think it will be lower next year. I hope so.

St. Louis Fed President predicts 2.8% for the full year of 2022.

A bit more on that high inflation rate seen in August PCE.

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Few days ago we discussed the Personal Consumption Expenditure for August 2021 shows ongoing inflation.

The August number of 0.4% increase results in a year-over-year increase of 4.3%. Bad news is this is the highest increase in PCE since 1991, all the way back when Pres. Bush was in office.  That is a 30-year high in the inflation rate as measured by PCE.

Another major investigation of bank secrecy: Pandora Papers.

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Looks like there is another flood of reporting ready to appear in print on bank secrecy and hiding wealth.

This project will be called the Pandora Papers.

If you recall, a major series of reports back in the 2016 timeframe described money laundering efforts flowing through one particular law firm in Panama. You can read my comments on the coverage.

The International Consortium of Investigative Journalists (ICIJ) brought together around 600 journalists from about 150 media outlets to analyze a data leak with 2.94 TB of info. That’s terabytes, as in thousands of gigabytes.

The ICIJ kickoff summary was published on 11/3/21: Pandora Papers: An offshore data tsunami.

If you are at all interested in offshore banking, or money laundering, or the world-far-away of hiding or relocating wealth even without nefarious intent, you will want to pay attention.

Looks like there will be a lot of coverage, what with 330 politicians and 130 people on the Forbes billionaire list showing up in the data.

From a first glance, it looks like this project have as one focus the structure of banks and professionals that service this market.

Personal Consumption Expenditure for August 2021 shows ongoing inflation.

The Personal Consumption Expenditure (PCE) inflation index again shows an increase of 0.4% in August 2021 after increasing the same in July. Since December 2020 this index has shown inflation of between 0.3% and 0.6% each month.

This indicates that inflation is continuing. Good news is that inflation is slowing, declining from 0.6% in March and April, to 0.5% in May and June, to 0.4% in July and August.

Bad news is annualizing the running three month inflation rate shows between 4% and 7% since February.

Total number of people drawing state and federal unemployment is declining slowly.

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The number of people with continuing claims for unemployment in the regular state programs and Pandemic Emergency Unemployment compensation programs is volatile, showing large swings from week to week. However, the total does not seem to dropping very fast.

Since the week of 9/19/20, I have been pulling that data off the weekly press release from the Department of Labor. Current weekly report is: Unemployment insurance weekly claims.

The weekly data since then, excluding one week I missed, is: