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
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Audit & assurance
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
Highlights
Eight states have introduced “no notification” legislation since early 2007 as part of an effort to implement a uniform approach to cross-state mobility through the concept of substantial equivalency. The legislation in Hawaii, Indiana, Maine, Missouri, Oklahoma, Rhode Island, Tennessee and Texas, if passed, would remove the
Mining Audit Research
This column is the first of a series that will review accounting research journals to distill practical pointers for busy CPAs. The resulting summaries offer useful suggestions practitioners can apply immediately to day-to-day activities. This installment is devoted to auditors in the field. “Audit Partner
AICPA Files Briefs in Securities and Malpractice Cases
From time to time, the AICPA’s Office of General Counsel files amicus curiae (friend of the court) briefs in matters that could affect the profession. I would like to inform you of two such recent filings. The first was to the U.S. Supreme Court; the other was
International
The International Auditing and Assurance Standards Board (IAASB) released as final its first four International Standards on Auditing (ISAs), which were redrafted as part of a comprehensive program to enhance the clarity of its standards. The IAASB, an independent board of the International Federation of Accountants, also approved amendments to
Auditing
SAS no. 114 is effective for periods beginning on or after December 15, 2006. It is summarized at http://tinyurl.com/y4pzvp and can be ordered (product no. 060709) at www.cpa2biz.com . The AICPA staff has developed an audit risk alert to aid auditors in applying SAS no. 112, Communicating Internal Control Related
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