Your interview with Robert Pozen (“Seeking Clarity,” Oct. 07, page 30) was intriguing. My first question is: Who on the JofA staff interviewed him, and why was the byline not disclosed? The most insightful question was, “How can more principles-based standards work in the U.S….?” His answer was, “No one
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Audit & assurance
Highlights
The Center for Audit Quality issued a set of white papers to address issues practitioners may encounter as a result of the “liquidity crisis” spurred by deterioration in the markets for subprime mortgages and related securities. The CAQ Professional Practice Executive Committee said firms would benefit from the
Audit All the Time
According to the Ernst & Young Global Internal Audit Survey , 44% of companies’ internal auditors have implemented a continuous auditing program to: Follow up on implemented recommendations Identify control deficiencies Monitor risks Identify potential fraud Why aren’t the other 56% of respondents using continuous auditing? The top
Navigating the Crossroads of Control and Independence
EXECUTIVE SUMMARY Statement on Auditing Standards no. 112, Communicating Internal Control Related Matters Identified in an Audit , introduced terms, definitions and guidance for identifying and evaluating control deficiencies and communicating significant deficiencies and material weaknesses. It requires an auditor to communicate in writing to a client’s
Speaking in the Public Interest
Randy G. Fletchall still remembers what attracted him to the CPA profession more than three decades ago—its focus on quietly and diligently serving clients, helping them solve challenging issues, and “getting it right,” while benefiting the public interest. “We’re not the kind of people who seek attention,” Ernst & Young’s
Banking
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. Loan-loss provisions totaled $11.4 billion in the quarter, a 75.3% increase from the year-ago period. The value of loans and leases
Highlights
Japan and the International Accounting Standards Board (IASB) agreed to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRS). The two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRS, with the remaining differences being removed on or before June 30,
Fashioning a Fraud
EXECUTIVE SUMMARY Businesses must clearly define the roles and responsibilities of employees who sign expense reports and those who process the reports. That should eliminate confusion about whether a manager’s signature means that the individual is authorizing the expenses as reasonable business expenses or signifies that the
Assessing Fraud Risk
Every organization faces some risk of fraud from within. Fraud exposure can be classified into three broad categories: asset misappropriation, corruption and fraudulent financial statements. Answering the following 15 questions is a good starting point for sizing up a company’s vulnerability to fraud and creating an action plan for lessening
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 majority of investors (56%) said SOX was a good idea; 5% said it was a bad idea; and 30% said SOX
Accounting for Uncertainty
EXECUTIVE SUMMARY FASB Interpretation no. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, sets the threshold for recognizing the benefits of tax return positions in financial statements as “more likely than not” (greater than 50%) to be sustained by a taxing authority. The effect is most
AICPA Urges Congress to Reconsider Preparer Standards
When Congress passed the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007, it contained one major tax policy change not reflected in the title. The law, which was enacted May 25, included a provision that raises the standards applicable to tax return
Eight Habits of Highly Effective Audit Committees
EXECUTIVE SUMMARY To ensure that your committee is up to its mission, you must first define the mission by drafting a strong charter that identifies audit committee functions, authority and responsibilities, along with the skills and experience its members must possess. Success is not automatic. Specify critical
Technical Education a Must for CAEs
Chief audit executives reported relatively high competency levels in the technical areas important to internal audit but said there’s still room for improvement. The top responsibilities needing improvement were: “Need to Improve” Rank General Technical Knowledge Competency 1 COSO Enterprise Risk Management Framework 3.2 2 Enterprise Risk Management 3.6 3
Highlights
The Consulting Services Executive Committee of the AICPA issued in June a new professional standard on valuation services, Statement on Standards for Valuation Services no. 1, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset. The standard provides guidelines to CPAs for developing estimates of
Highlights
The PCAOB adopted Auditing Standard no. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated With An Audit of Financial Statements, to replace Auditing Standard no. 2. The new standard is designed to increase the likelihood that material weaknesses in internal control will be
Auditing
The AICPA’s Private Companies Practice Section created an online toolkit devoted to Statement on Auditing Standards no. 112, Communication of Internal Control Related Matters Identified in an Audit. SAS 112 is effective for audits of periods ending on or after Dec. 15, 2006. The toolkit includes talking points, sample client
A Risk-Based Approach to Journal Entry Testing
EXECUTIVE SUMMARY The top-side journal entry is most susceptible to fraud by management override. It’s possible to make adjustments in subledgers, but this requires collusion with other organizational departments, which is much harder to accomplish. The most frequent types of management fraud involve fictitious or premature
IFRS: Coming to America
EXECUTIVE SUMMARY International Financial Reporting Standards (IFRS) are destined to be the lingua franca of the international accounting world. Approximately 100 countries already require, allow or are in the process of converging their national accounting standards with IFRS. FASB and the IASB have agreed to converge
Auditing
The PCAOB for a second time delayed application of Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles, to situations where firms provide tax services to a client before they become the client’s auditor. The audit independence rule, which forbids firms from providing tax services during an “audit
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