Consolidated and combined statements: A look at some practice issues
Certain business arrangements lead financial statement preparers to question whether consolidated financial statements are required, combined financial statements are needed, or separate financial statements of affiliated entities should be prepared. The authoritative accounting technical literature guidance that is applicable in preparing consolidated or combined financial statements is in the FASB Accounting Standards Codification (FASB ASC) Topic 810, Consolidation. The focus of discussions in these materials is on some of the more frequently asked questions. (11/25/2013)
Nipping fraud in the bud: Understanding it is key to stopping it
There is a common phrase heard over and over again: "To catch a crook, get inside the mind of a crook." Make it your mission to know their method of operation - or modus operandi. It is the "how" and "why" of what criminals do best. (11/25/2013)
Chance of IRS audit increases with income level
Just what are your chances of having your income tax return audited by the IRS? It depends on how much money you make.
The average odds are approximately 1 in 100. In the latest figures released by the IRS, for tax year 2011, more than 1.4 million taxpayers were audited of 143 million tax returns filed. (11/25/2013)
Those performing review engagements face challenges
Sometimes it's obvious that practitioners face greater challenges in complying with review engagement technical literature than when complying with compilation and audit engagement technical literature requirements. (10/4/2013)
Safeguarding against expense reimbursement fraud
A close examination of employee and contractor expense reports may save more than just money. Your organization's reputation could be at risk. Plenty of public and governmental entities have been exposed in the media for lavish entertainment practices by their employees. Knowing what to look for can help you spot problems before your crisis response team is needed. (10/4/2013)
A decade later: Executives say Sarbanes-Oxley has improved fraud controls
After more than a decade of Sarbanes-Oxley governance, the increased oversight of corporate financial management is paying off when it comes to fraud controls. And, while organizations pay a bit more every year to comply, the costs are manageable, according to the 2013 Sarbanes-Oxley Compliance Survey by the Protiviti consulting firm. (10/4/2013)
New guidance: How to use the liquidation basis of accounting
Do you know when and how to apply the liquidation basis of accounting? Amendments issued by the Financial Accounting Standards Board in April 2013 serve to clarify the answer to that question. The FASB's Accounting Standards Update (ASU) 2013-07, Liquidation Basis of Accounting, amended the guidance in the FASB Accounting Standards Codification (FASB ASC) Topic 205, Presentation of Financial Statements. The guidance applies to all reporting entities, whether they are public or private companies or not-for-profit entities. The guidance also provides principles for the recognition of assets and liabilities and disclosures, as well as related financial statement presentation requirements. (6/27/2013)
Fraud Prevention Checklist: Are you doing everything you can to prevent fraud?
You may not think your business is a victim of fraud, but it could be – now or in the future. The typical organization loses 5 percent of its revenue to fraud each year. The Association of Fraud Examiners developed a checklist to help organizations learn what fraud prevention measures they should institute at their businesses, as well as to test the effectiveness of measures already in place.
Risk of social media in financial institutions being addressed
Consumer protection and compliance changes are coming for financial organizations that use social media as part of their marketing or customer relations strategies, according to the Federal Financial Institutions Examination Council (FFIEC).
New guidance will impact banks, savings associations and credit unions, as well as nonbank entities supervised by the Consumer Financial Protection Bureau and state regulators. The FFIEC says the guidance is intended to "help financial institutions understand potential consumer compliance, legal, reputation and operational risks associated with the use of social media, along with expectations for managing those risks." (6/27/2013)
Make your business better with internal audits
As the saying goes, if you're not getting better, someone else is. This rings particularly true in the current economy, with continuing fierce competition for each customer dollar. Internal audits, when implemented effectively, provide the valuable information businesses need to continually "get better." (6/3/2013)
How does a fraud exam compare with an external audit?
What's the difference between a fraud or forensic examination and a regular external audit? The initial answer is that you may need one (external audit) depending on financing requirements, and the other will be necessary when fraudulent activity is detected (fraud or forensic examination). (6/3/2013)
Audit independence: Technical and real-world implications
Take a quick glance at a dictionary, and you’ll find in•de•pen•dence; noun, the state of being independent. A bit of additional perusal leads to the understanding that someone who is independent is "not dependent," or not subject to control by others. This seemingly simple definition has led to much discussion. In fact, volumes have been written on the topic of independence as it relates to certified public accountants and their clients. (6/3/2013)
Financial statement auditing standards: Change is in the air
Don't be surprised if your auditor does some things differently when auditing your financial statements this year. The Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants issued "clarified and converged" standards in Statement on Auditing Standards No. 122 in 2011. This statement requires auditors to follow new standards for audit of financial statements for periods ending on or after Dec. 15, 2012.
New statement issued amending clarified auditing standards
The Auditing Standards Board (ASB) issued Statement on Auditing Standards No. 127 in January 2013 to amend the auditing technical literature in two areas. The amended guidance for both the audits of group financial statements and the audits of financial statements prepared using special purpose frameworks is effective on or after Dec. 15, 2012. (4/1/2013)
Private Company Council concentrates initially on four areas
The newly created Private Company Council identified four areas in December 2012 that will serve as its initial focus in working with the Financial Accounting Standards Board to improve the standards-setting process for private companies. After the identified items are discussed further, a decision will be made as to whether the projects will be added to the Private Company Council (PCC) agenda. (4/1/2013)
Proposed: Special-purpose financial reporting framework
The American Institute of CPAs released an exposure draft of the much-anticipated private company financial reporting framework on Nov. 1, 2012. As proposed, it is a self-contained special-purpose framework intended to be available for use in preparing financial statements for privately held smaller and medium-sized entities. (1/28/2013)
Valuations and independence: An increasingly difficult question for CPAs
Accountants and valuations analysts are often asked by clients to prepare a valuation of their business, but sometimes they have to pass on the work. Why? If the CPA or analyst's firm also performs audit engagements for the company, there could be what is called a lack of independence, which is required for all firms performing audits. (1/28/2013)
Watch for hidden liabilities when you're selling your company
You are ready to put out feelers for selling your company. Perhaps you have contacted your CPA to have some preliminary due diligence begun. As you prepare to finalize your asking price, issues arise that you hadn't planned on. Hidden liabilities - those unplanned nuisances that can depress the value of your company - can put a real damper on your plans. (1/28/2013)