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Audit & Assurance

Tuesday, 28 January 2020

PCAOB sheds light on CAMs

Written by Thomson Reuters

In fiscal year 2019, auditors of large public companies began to include so-called “critical audit matters” (CAMs) in their audit reports. Here are initial observations from the Public Company Accounting Oversight Board (PCAOB) about the effort that large audit firms have put into implementing the guidance for the first time.  Refresher on CAMs Auditing Standard (AS) 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, represents a major change to the brief pass-fail auditor reports that have been in place for decades. The updated guidance requires auditors to add a discussion of CAMs to the audit report...

Tuesday, 28 January 2020

AUP engagements: No written assertion, no problem

Written by Thomson Reuters

The AICPA’s Auditing Standards Board (ASB) issued a revised attestation standard in December 2019. It will give accountants more flexibility when performing agreed-upon procedures (AUP) engagements. What is an AUP engagement? An AUP engagement is a type of limited assurance engagement in which a CPA performs specific procedures on a particular “subject matter” and reports the findings without providing an opinion or conclusion...

Tuesday, 28 January 2020

6 ways reporting income taxes just got easier

Written by Thomson Reuters

The Financial Accounting Standards Board (FASB) recently issued a new accounting standard that simplifies income tax accounting requirements in six unrelated areas that are costly and complex. Here are the details.  Updated guidance In December 2019, the FASB issued the changes to remove specific technical exceptions to general principles found in Accounting Standards Codification (ASC) Topic 740, Income Taxes. These items often produce information that investors have a hard time understanding...

Tuesday, 21 January 2020

Debt classification matters to healthcare companies

Written by Thomson Reuters

In September 2019, the Financial Accounting Standards Board (FASB) issued a proposal to simplify the classification of debt. Many healthcare organizations are concerned that the proposal, if approved, would distort their financial metrics and trigger debt covenants. In early 2020, the healthcare sector will get another stab at stating their case to the FASB. First exposure draft  Initial deliberations for the debt classification project began in 2014...

Tuesday, 21 January 2020

Clarifying the credit loss standard

Written by Thomson Reuters

Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, will change the way banks and other creditors report losses from soured loans. With the implementation deadline looming for most public companies, accountants have some lingering questions about the details of the updated guidance. So, in November 2019, the Financial Accounting Standards Board (FASB) issued narrowly drawn amendments to clarify five issues...

Tuesday, 21 January 2020

More companies to be exempt from auditor attestation of financial controls

Written by Thomson Reuters

The Securities and Exchange Commission (SEC) is moving full steam ahead on plans to finalize a controversial rule that would exempt more than 500 additional companies from the auditor attestation of financial controls. This attestation is required for most public companies under Section 404(b) of the Sarbanes-Oxley Act of 2002. Several large investor groups oppose expanding the exemption.  Overview Congress passed Sarbanes-Oxley in response to scandals at Enron, WorldCom and others that cost investors approximately $85 billion...

Tuesday, 10 December 2019

Preventing and detecting elder investor exploitation

Written by Thomson Reuters

The mission of the Securities and Exchange Commission (SEC) is “to educate and empower investors so they can plan for a financially secure future.” In October, the SEC held a roundtable to help raise awareness about exploitation against a particularly vulnerable group of investors — the elderly. Older investors tend to lose more money to fraud scams and have less time to recover than younger people.    Educating the elderly about potential financial exploitation schemes is the first line of defense...

Tuesday, 10 December 2019

Measuring the fair value of equity-based awards

Written by Thomson Reuters

Cash-strapped start-ups and high growth firms often award stock options and other forms of equity-based compensation to attract and retain skilled employees. These awards can also provide incentives for employees to boost performance and add value. But there’s a downside: Accounting for these payments can be costly and complicated, especially for privately held businesses.  Here’s an overview of the existing guidance under U...

Tuesday, 10 December 2019

Simplifying the rules for reporting income taxes

Written by Thomson Reuters

For years, businesses have complained that the guidance under Accounting Standards Codification Topic 740, Income Taxes, includes many mechanical rules and exceptions. As a result, it often yields information that’s challenging for investors to understand. These complaints intensified with the sweeping changes brought forth under the Tax Cuts and Jobs Act.  On September 4, the Financial Accounting Standards Board (FASB) unanimously voted to finalize a proposal to simplify the existing rules...

Monday, 09 December 2019

Defining “materiality”

Written by Thomson Reuters

The concept of materiality is used to determine what’s important enough to be included in — and what can be omitted from — a financial statement. In late October, the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) voted to finalize a revised definition of materiality in its professional standards.  Breaking away from international standards Under current U.S...

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