Right Guidance = Right Choice “The Right Philanthropic Vehicle” ( JofA, July01, page 22) laid out clearly the major alternative strategies and rationale that should guide a donor’s choice. The CPA, along with the client’s trusts-and-estates attorney and a philanthropy adviser, should be part of the team that guides a
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Forensic services
Charitable Giving: Other Points to Consider
Charitable Giving: Other Points to Consider “The Right Philanthropic Vehicle” ( JofA, July01, page 22) addresses one of the fastest growing areas in financial planning. The article correctly states that a foundation can be used to fund several years of normal charitable giving. Making a substantial or extraordinarily large charitable
Not All Are Fraud Audits
Not All Are Fraud Audits “…And Nothing But the Truth: Uncovering Fraudulent Disclosures” ( JofA, July01, page 47), contains interesting recommendations—but to be used under what circumstances? The article leads one to believe the recommended procedures should be added to every audit program as standard steps. I disagree. SAS no.
On Clients and Their Files
On Clients and Their Files After reading “…And Nothing But the Truth: Uncovering Fraudulent Disclosures” ( JofA, July01, page 47), I take exception to the implications regarding clients who resist allowing auditors open access to files. The article admitted that a client has the right to refuse free access and
Accounting
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. ACCOUNTING Following its July decision to ban the pooling-of-interests method of accounting, FASB issues Statement no. 141, Business Combinations,
Research Summary 19: Detection of Fraudulent Financial Reporting
nternal auditors are responsible for pursuing perpetrators of fraud every day. They always, according to the Institute of Internal Auditors’ Standards for the Professional Practice of Internal Auditing, should be alert to the possibility of wrongdoing and have sufficient knowledge to recognize potential fraud. Researchers found company managers sometimes have
“Why Ask?” You Ask
inancial statement frauds, the bane of the auditing profession, come in different forms. But, from studying hundreds of fraud cases, we can learn a great deal that can help CPAs in detecting these illegal acts. A vital part of discovering fraud concerns the auditor’s ability to ask questions and
Research Summary 20: Trends in Audit Fees
ave audit fees increased, decreased or remained relatively steady? The question is not new—researchers have examined trends in audit fees but have restricted their studies to only a few years. This has resulted in a limited view. In our study we expanded the horizon, examining audit fee trends over an
Recovery of Embezzled Assets Half a World Away
EXECUTIVE SUMMARY THE FIRST STEP IN A FORENSIC INVESTIGATION is to gather as many details as possible about the facts of an alleged misappropriation. But CPAs need to be systematic to guard against “information overload,” which can lead to important factors being overlooked. CPAs, INVESTIGATORS AND ATTORNEYS need to develop
Irrational Ratios
inancial statements tell a story,” says accounting professor W. Steve Albrecht, “and the story should make sense.” If not, it’s possible the story is a fake. By standing far enough back from the numbers to get a good picture of the client’s business, auditors frequently can detect signs of financial
SEC Jurisdiction Over Investment Advice
EXECUTIVE SUMMARY MANY CPAs HAVE RESPONDED TO INCREASED client interest in financial products by formally offering investment advisory services. This generally requires them to register as investment advisers with either a state agency or with the SEC, based primarily on the amount of assets under management. CPAs CAN PROVIDE LIMITED
…And Nothing But the Truth: Uncovering Fraudulent Disclosures
n a perfect world, the numbers in financial statements would tell CPAs everything they need to know about a business. Numbers are precise, definable and measurable. But in reality CPAs need words, too, to tell them the whole story of an enterprise. That’s the sole purpose of the footnotes
Accounting
For news from the AICPA and state societies, visit www.cpaweb.org , which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. FASB reaffirms its restrictions on how banks can qualify for sale accounting treatment and issues a series of related questions and
Fraud
Belgian software maker Lernout & Hauspie says its Korean division faked $100 million in revenue and assigned staff to pose as customers, deceiving its auditors (ftp://ftp.lhsl.com/b ports/KoreaReport.pdf).
Ghost Goods: How to Spot Phantom Inventory
ust a hint of inventory fraud can be a frightening experience for an auditor of financial statements. Indeed, the list of freakish inventory manipulations companies have committed over the last 50 years reads like a rogue’s gallery: McKesson and Robbins, the Salad Oil Swindle, Equity Funding, ZZZZ Best, Phar-Mor.
Professional Issues
The AICPA develops a practice guide to assist members in observing FTC and SEC privacy and disclosure requirements established by the Graham-Leach-Bliley Act ( http://ftp.aicpa.org/public/download/news/ftc.doc ). The SBA presents outstanding entrepreneurship awards to two CPAs—David A. Cottrell of Anchorage, Alaska, and Margaret A. Johnsson of Chicago—recognized for their personal achievements
Banking
The FDIC chairman says a forthcoming reform proposal will address the allocation of deposit insurance costs among covered institutions, the timing of premium collections and inflation’s effect on insurance benefits ( www.fdic.gov/news/news/speeches/chairman/sp07mar01.html ).
Employee Benefits
Researchers warn that a potential Social Security shortfall and a shift from defined-benefit to defined-contribution retirement plans will put the onus on workers to ration benefits effectively throughout their retirement years ( www.ebri.org/ibex/ib232.htm ).
Financial Reporting
A FASB report de-emphasizes “new economy” considerations and recommends cooperation among national and international standard setters to improve business and financial reporting. Comments are due by July 1 ( accounting.rutgers.edu/raw/fasb/sr_new_economy.pdf ). FASB plans to issue final statements in July on business combinations and intangible assets. The new rules likely will
Auditing
New OCC guidance says the agency is not conducting “audits of the auditors” when it reviews banks’ external audits, but instead is assessing how and whether banks are meeting requirements ( www.aicpa.org/belt/notices.htm ).
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