As an auditor by training, I was excited to see the article on improving the confirmation process (“Better Evidence Gathering ,” April 08, page 32). The opening paragraphs rightfully acknowledged that many budgets are blown because of time spent chasing confirmation letters until the eleventh hour— usually taking four to
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Audit & assurance
Obtaining Quality Employee Benefit Plan Audit Services – The Request for Proposal
Employee benefit plan sponsors and administrators can save time selecting an audit firm and evaluating the quality of its services by writing a thorough Request for Proposal (RFP). Consider these tips offered by the AICPA Employee Benefit Plan Audit Quality Center: P Provide a brief description of the engagement. Describe
A Global Standard for Professional Ethics
EXECUTIVE SUMMARY Standard setting organizations in more than 100 countries have adopted the International Federation of Accountants’ (IFAC) Code of Ethics for Professional Accountants, while others are in the process of converging with the code. The code applies to professionals in public practice, business, academia and government. The IFAC code’s
Deepening Insolvency Not an Emerging Threat
In reading the article, “ Deepening Insolvency: An Emerging Threat,” by Kelly M. Hnatt, Esq., (Feb. 08, page 40) and the related article, “From the Defense: How to Combat a Deepening Insolvency Claim ,” by Michael E. Keyes, Esq., (Feb. 08, page 44) I was taken aback, as both articles
Rising Expectations
Recent events such as the massive trading losses at Societe Generale, the subprime lending crisis and product recalls associated with Mattel’s international toy manufacturing operations continue to shock financial markets and negatively impact shareholder value. These events have also fostered rising expectations for boards of directors to exert greater oversight
Better Evidence Gathering
Well-designed audit confirmation practices provide valuable third-party evidence that sheds light on financial statement assertions made by management. Confirmations can be an effective tool for auditors working with accounts including payables and receivables, inventory, investment securities, lines of credit and other actual or contingent liabilities. The procedures also can supply
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The PCAOB voted to adopt Auditing Standard no. 6, Evaluating Consistency of Financial Statements, and an accompanying set of amendments to
Communication Is Key
Catherine Allen et al.’s article (“Navigating the Crossroads of Control and Independence ,” Dec. 07, page 42) was an excellent article clarifying the guidance in Statement on Auditing Standards (SAS) no. 112 as it applies to private company auditors’ responsibilities of communicating internal control matters. Page 46 of the article
2007 in Review: Congressional Impact on CPA Profession
Last year, CPAs had plenty of reasons to pay attention to policymakers’ proposals. Legislation under consideration has the potential to improve tax practices, alter audit practices, and even pave the way for greater competition. AICPA VP Testifies Before Senate Panel on International Accounting Standards Last fall, the Senate Banking
Highlights
The SEC’s Committee on Improvements to Financial Reporting voted in January to support a slate of preliminary recommendations designed to make the information presented by U.S. public companies more useful to investors while reducing the complexity of the financial reporting system. The preliminary proposals included a call for
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. “We were motivated to develop and issue this alert by the auditing challenges presented by the subprime credit situation and its effects
From the Defense: How to Combat a Deepening Insolvency Claim
In 2007, I represented Grant Thornton in its challenge of a deepening insolvency claim in Minnesota. The decision by the Minnesota Court of Appeals in the case—Julia A. Christians, Trustee for the Bankruptcy Estate of Technimar Industries Inc. v. Grant Thornton LLP—could provide useful lessons for accounting firms. Technimar planned
Highlights
FASB issued Statement no. 141(R), Business Combinations , and Statement no. 160, Noncontrolling Interests in Consolidated Financial Statements . Effective for fiscal years beginning after Dec. 15, 2008, the standards are intended to improve, simplify and internationally converge accounting for business combinations and the reporting of noncontrolling interests
Deepening Insolvency: An Emerging Threat?
EXECUTIVE SUMMARY Deepening insolvency is a relatively new and developing legal theory. Courts have disagreed about whether deepening insolvency is a stand-alone tort claim or simply a basis for seeking damages related to fraud, professional malpractice or another claim. If an auditor is alleged to have “missed” an
High Court Bars Secondary Liability in Securities Case
The U.S. Supreme Court ruled in a major securities fraud case that secondary parties—essentially aiders and abettors—can’t be held liable when the companies they work with mislead investors. Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc., et al., docket no. 06-43, threatened to expand the reach of investor lawsuits beyond parties
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The letter is co-signed by CAQ Governing Board Chairman James S. Turley, chairman and CEO of Ernst & Young LLP, and
Highlights
FASB tentatively approved a one-year delay in the effective date for FIN 48, Accounting for Uncertainty in Income Taxes, for private enterprises, including not-for-profit organizations. Acting on a request from the Private Company Financial Reporting Committee for a deferral, the FASB board is seeking public comment on a
The Intersection of FIN 48 and Tax Opinions
FASB’s Interpretation no. 48, Accounting for Uncertainty in Income Taxes, has changed how enterprises recognize and measure tax benefits associated with tax positions and disclose in their financial statements uncertainties related to income tax positions. Most enterprises have found they must take a variety of steps to
CBT Too Easy? Think Again
The concerns about how easy the new CPA exam is, expressed in the letter “ CBT: Too Easy? ” ( JofA , Sept.05, page 12), are valid but unnecessary. I took the last paper and pencil exam in November 2003. The exam was very difficult, and I was able to
Risk Assessment Standards in Action
Eight standards rolled out in 2006 by the Auditing Standards Board are sparking a cultural shift for auditors. The standards—Statement on Auditing Standards nos. 104–111—are designed to enhance auditors’ responses to audit risk and materiality and encourage them to focus on areas with the greatest risk of
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How to find the right CAS clients
The key to success with CAS is selecting the best clients. Tools like ideal client profiles (ICPs), buyer personas, and even artificial intelligence can help identify the businesses that best fit each CAS practice.
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