Extraordinary change in GAAP: No more extraordinary items

Leave a Comment / Accounting /

FASB has issued ASU 2015-01, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20) – Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This eliminates the extraordinary item treatment we have known since we were in college.

The requirement to disclose unusual or infrequent items remains.

Implementation

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Extraordinary change in GAAP: No more extraordinary items Read More »

Auditors need to be incorporating the new Code of Ethics into audit work that is in planning stage right now

Leave a Comment / Audits /

I don’t have time to write a full post, so will just caution auditors that the new Code of Ethics codification went into effect on December 15, 2014. That means it is in play right now for the audit work you are planning. Will apply to engagements in the field as soon as you pack up for the client’s office.

CPA Charles Hall has a very brief into at his blog, CPA-Scribo:  New AICPA Code of Professional Conduct Effective December 15, 2014.

You need to make some changes to your engagement letters, if you haven’t already. Need to do a few other things in terms of documenting threats to independence and take a few steps to make sure you keep your independence.

If you haven’t read through the new rules to figure out the impact on your practice, now would be a really, really good time to do so. That’s a not very subtle hint, by the way, that your workpapers need be a bit different from last year.

Auditors need to be incorporating the new Code of Ethics into audit work that is in planning stage right now Read More »

Knowledge is the source of value and wealth

4 Comments / Books you might enjoy, Economics, Other stuff /

Gotta’ question for you – How much does the economy weigh?

Can’t answer?

Okay. How ‘bout this – Does much does the economy weight today versus 1950?

Before you answer, consider that I just counted 220 books on the bookshelves in my office. I currently have 195 books on my Kindle.

Now, how much does the economy weight today compared to 60 years ago?

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Knowledge is the source of value and wealthRead More »

Knowledge is the source of value and wealth Read More »

More good stuff for auditors – 1/9

Leave a Comment / Accounting, Compilations & reviews, Fraud /

A few articles for your growth. Comp and Review reports under SSARS 21 and 19. Bake-your-own net income measures. Lunch money thief gets 5 years in prison and $1.8M restitution

1/7 – CPA-Scribo – SSARS 21 Reports – Preparation, Compilation, and Review – Charles Hall has a great post providing sample reports under SSARS 21. Gives the reports under SSARS 19 for contrast. You gotta’ check it out.

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More good stuff for auditors – 1/9Read More »

More good stuff for auditors – 1/9 Read More »

What is behind the record $56 billion in bank fines in 2014?

Leave a Comment / Other stuff /

Here are a few possibilities for the record level of settlements for bank in ’14: Wrapping up the legacy issues from the financial crisis. Regulators are getting serious about pushing big banks to improve their operations. Or maybe regulators just want more money. Or maybe banks are getting worse at obeying the law.

Some articles for you to ponder:

12/30 – Wall Street Journal – For Banks, 2014 Was a Year of Big Penalties – Here’s my interpolation of the fines and legal costs for the largest banks, as presented in the article’s graph:

  • $  3B – 2009
  • $  3B – 2010
  • $23B – 2011
  • $44B – 2012
  • $46B – 2013
  • $65B – 2014

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What is behind the record $56 billion in bank fines in 2014?Read More »

What is behind the record $56 billion in bank fines in 2014? Read More »

Journalist falling for teen claiming $72M in stock market profits is object lesson for auditors

Leave a Comment / Accounting, Audits, Fraud /

How many failures in the smell test can you identify in this story, which was published by New York Magazine?

In a few years of trading*, a 17-year old* High School junior has cleared $72 million* in profits from a diverse strategy* of penny stocks*, oil futures, and mid-cap stocks. He owns a BMW and has already rented an apartment in Manhattan that his parents won’t let him live in*. He lives with his parents in the same place they’ve lived for a while*. To validate his story, a fact-checker looked at a* Chase bank statement* that shows a $72M balance*. The stock whiz now says he met with the fact-checker “for about 10 seconds” to view the one statement*.

Update, forgot this part:  After one of the interviews, he was going to an appointment with some guy who wanted to give him* a $150M investment* to start a hedge fund* the day he turns 18*.

The whole thing was a hoax.

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Journalist falling for teen claiming $72M in stock market profits is object lesson for auditorsRead More »

Journalist falling for teen claiming $72M in stock market profits is object lesson for auditors Read More »

CPE courses on SSARS 21 in development

Leave a Comment / Compilations & reviews /

I’m in the process of writing and rewriting a series of CPE courses on compilations, reviews, and preparation services. These courses will describe the changes made from SSARS #21, which is a major rewrite of the comp and review rules. 

These courses will be a major overhaul of what I wrote three years ago for CCH.

Stay tuned for more info as the courses become available.

Here’s the courses on SSARS 19 I wrote or updated:  …

CPE courses on SSARS 21 in developmentRead More »

CPE courses on SSARS 21 in development Read More »

Effective date of SSARS #21 and ideas on how to use the early implementation option

Leave a Comment / Compilations & reviews /

The effective date of each section of SSARS #21 is for financial statements for periods ending on or after December 15, 2015.

On a practical basis, for most accountants that means your clients with fiscal years ending December 31, 2015 will be the first set of reports for which you must apply SSARS 21. I have to simplify effective dates to keep them straight, so here goes:  SSARS 21 applies for 12/31/15 balance sheets.

That means you will need to apply SSARS 21 for work performed in early 2016 on 12/31/15 financials.

Early implementation allowed

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Effective date of SSARS #21 and ideas on how to use the early implementation optionRead More »

Effective date of SSARS #21 and ideas on how to use the early implementation option Read More »

“The dozy watchdogs” – Deep discussion in The Economist on the state of audit profession

1 Comment / Accounting, Audits, Fraud /

Gotta’ love the drawing of a seated Doberman with a wondering look on his face as he stares at a trail of muddy feline paw prints. Staring around helpless are three other dogs. The befuddled watchdog has a tag labeled “PwC” in case you hadn’t yet caught the point.

The previous drawing was of an overfed cat in a three-piece suit helping himself to a bag of cash from a safe as four dogs snoozed in front of the safe. Said dogs have a tag identifying each as a member of the Big 4.

If you are an auditor, you really should get a fresh cup of coffee and check out The Economist’s discussion of The dozy watchdogs. Will let you see what non-accountants think of the profession (not too much) and the job the big firms are doing (not so great).

Yeah, there is a problem

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“The dozy watchdogs” – Deep discussion in The Economist on the state of audit profession Read More »

IFRS adoption likely to stay dead

1 Comment / Accounting /

The SEC Chief Accountant had some comments in a speech today that reduces my worry that IFRS converadoption ™ may resurrect from the dead.

Check out Remarks before the 2014 AICPA National Conference on Current SEC and PCAOB Developments – The SEC Chief Accountant, James Schnurr spoke to the AICPA conference.

I don’t know how to read between the lines of a prepared speech from a senior official. My simplistic reading of the comments suggests that he has been asked to look at the IFRS issue again to see if there is any way to move forward or else close the door completely.

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IFRS adoption likely to stay deadRead More »

IFRS adoption likely to stay dead Read More »

More good stuff for auditors – 12/5

2 Comments / Accounting, Audits /

A few links and comments of interest to auditors. – The corpse of IFRS is looking more like a vampire. There are little muscle twitches, suggesting it isn’t fully dead.

12/3 – Edith Orenstein at FEI Daily – SEC Chief Accountant Has Fourth Alternative on IFRS – The Chief Accountant is considering a fourth option, following the options of 1) surrendering all standard setting authority to IFRS, 2) giving option to everyone to file with IFRS, and 3) ‘condorsement’, aka convergadoption ™ .

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More good stuff for auditors – 12/5 Read More »