The AICPA works closely with the Financial Accounting Standards Board and other accounting regulators for the mutual goal of improving financial reporting. The AICPA provides accounting guidance via audit and accounting guides and issues papers, recommends to Financial Accounting Standards Board topics worthy of standard setting, and advocates its beliefs on needed outcomes on proposed accounting standards.
Back in March, AICPA Senior Vice President Susan Coffey wrote about the dangers of providing client comfort letters. Since then, we’ve been hearing from more and more members that they are seeing a rise in requests from third parties for some sort of assurance on client accounting and tax information, or financial condition. I think Edward Karl said it best in CPAs and Comfort Letters: The New Chocolate (from the July edition/DC Currents column of The Tax Adviser) when he described them as requests for “verification, confirmation, certification, corroboration, authentication or substantiation of their clients’ financial information.” You name it, we’ve been asked to validate it. On the bright side, an increase in these requests confirms the faith, confidence and trust that business owners, decision makers and the public have in CPAs.
The AICPA Technical Hotline provides non-authoritative advice to members on matters of accounting and financial reporting, audit, attest, compilation and review service standards. This podcast, the AICPA Insights Live webcast on Nov. 22, addresses some of the more commonly asked questions over the past year in the areas of audit, attest, compilation and review engagements. Highlights include the new clarified audit standards, verification requests, supplementary information and Service Organization Controls reporting. (Email subscribers can listen to the podcast on our website).
Under the Volcker rule, ownership interests in covered funds (in other words, investments) will not be permissible and will have to be divested by 2015. Ownership interests in covered funds subject to the Volcker rule include many pooled trust preferred collateralized debt obligations, certain collateralized loan obligations and possibly Real Estate Mortgage Investment Conduits. At this conjuncture, the full scope of investments impacted is unknown.
What opportunities and challenges does the head of the AICPA foresee for the CPA profession in 2014? What were the profession’s significant achievements in 2013? Barry C. Melancon, CPA, CGMA, AICPA president and CEO, answers these questions and offers insights on how the profession will continue to adapt to today’s changing environment, addressing clients’ and employer’s needs. Citing successes with regulation, legislation, recruitment and positioning the profession for the future, Barry strongly believes CPAs will build on a solid foundation.
1. What were the AICPA’s legislative or regulatory priorities this past year and what’s in store for 2014?
We continued to have success in the advocacy area in 2013. In one significant victory for the profession and the public, the Securities and Exchange Commission exempted CPAs from registration as municipal advisers when they are providing certain accounting or attest services. We urged the SEC to exempt CPAs from the definition of municipal advisers after it had indicated that anyone performing accounting services for governments would be defined as a “municipal adviser.” It was critical that our voices be heard on this issue because such a broad definition would have made it more difficult for CPAs to serve governments and potential investors without taking on unnecessary and duplicative costs or compliance burdens.
A new standard establishing how private companies account for goodwill is not expected to cause immediate challenges for valuation specialists, but the impact could be more significant if the new rules are adopted for public companies down the road.
The standard is the work of the Private Company Council, an advisory group to the Financial Accounting Standards Board formed last year to address possible necessary changes to U.S. GAAP for non-issuers. On Nov. 25, the FASB endorsed a PCC proposal to provide alternative accounting for goodwill by private companies. Goodwill typically arises from business combinations. In financial reporting, goodwill is the residual amount remaining after the fair values of all identified assets acquired less liabilities assumed have been subtracted from the acquisition price.
Olympic athletes generally train every day – continuously monitoring their progress to make sure they're performing to the best of their abilities. Can you imagine an Olympic athlete training once a year and then trying to compete against those who kept to a strict, regimented training schedule? Like top athletes, successful businesses need to keep a constant pulse on how they're doing so they can address what's working and what needs to be tweaked – in order to always be on top of their game.
Companies can add value to their activities by utilizing Continuous Auditing and Monitoring, which is supported by tools and programs that can assist in mitigating risks and detecting fraud. Additionally, Continuous Auditing and Monitoring provides a powerful deterrent to those tempted to commit fraud, as these functions can take place frequently or continuously throughout the year.
Certainly, the primary reason service organizations undergo a Statement on Standards for Attestation Engagements 16 examination is to respond to customer demands. Although waiting until the customer asks may make good business sense, proactively undergoing the examination can offer the service organization many benefits. Yet even with the inherent benefits, the SSAE 16 examination can be difficult to sell to executive management. Here are the top five reasons those managers should choose to undergo an SSAE 16 examination.
A Charitable Remainder Trust is a split interest trust consisting of an income interest, which is paid to the donor or other beneficiary during the term of the trust, and a remainder interest, which is paid to the designated charity. The purpose of this strategy is to harbor net investment income in a tax-exempt environment while leveling income over a longer period of time to keep MAGI below the threshold amount. CRTs are especially useful when there is a large capital gain that pushes income above the threshold amount. In this podcast, Bob Keebler explores using CRTs in year-end planning strategies for your clients. Visit the AICPA PFP Section’s Post American Taxpayer Relief Act and Net Investment Income Tax Toolkit for more in-depth resources on planning in preparation for year-end.
I am honored to write to you in my first blog as the new AICPA Chairman of the Board of Directors. I truly look forward to being able to engage with you through these bimonthly posts. We have an exciting year ahead of us, a year which will focus on the quality of our work and the members of our profession.
As I begin my term as chairman, I have found myself reflecting upon my early days as a staff accountant. From the time I graduated college and began pursuing my career as a CPA, I have been surrounded by inspirational leaders who helped shape me into the man I am today. My firm, Postlethwaite & Netterville, is named after two such extraordinary role models, the late Mr. Alexander Postlethwaite (whom I never addressed by first name) and Jake Netterville, a former AICPA chairman. These great men taught me that quality service and passion are two key ingredients needed to achieve success.
If there’s one realism that has emerged since it first appeared on the leadership front more than 30 years ago, it’s that sustainability is neither a passing fad nor a fleeting priority. Time has proven that a focus on sustainability initiatives, linked to business strategy, as a top organization priority, can deliver measureable bottom-line and reputational returns far beyond initial expectations.
I meet many members throughout the year at
various AICPA conferences and their input is truly valuable. We discuss the issues
they are encountering in practice and guidance that would help them. Over the
past few years, a common question concerned whether members have “prepared”
financial statements for their clients.
Each of their scenarios has provided their
own unique set of circumstances and it has been insightful talking through how
they make judgments about whether the accountant should follow the reporting
requirements for compilation engagements. The AICPA has provided a great
deal of guidance on the topic but, with the increased use of cloud
applications, the questions just keep coming up and becoming even more complex.
Data is the next great commodity resource. The equivalent of
all the data that existed up to 2003 is now generated in two days, and 90% of
the world’s total data was created in the last two years alone. Now comes a powerful
new form of data, one that speaks the language of business. By the nature of
its format, XRBL, or eXtensible Business Reporting Language, brings transparency
to business information so investors can analyze data more easily and make
informed investment decisions.
Whether you were the auditor or the management in charge of
an audit and even if you’ve tried to forget it, I’m sure you remember your
first audit. Do you remember how long it took? A couple of hours? A few weeks?
What was it like for the audit team to get all the data together? A picnic,
right? I could be wrong, but I’m going to guess that’s not likely.
Imagine a world where it only takes 10 minutes to gather company
data. Imagine putting standards and processes in place that could provide you
with the data you need today. You may
think that’s impossible, but we’ve seen it done. Whether it is for internal
analysis, external audits, or company oversight, it is becoming increasingly
important to obtain data on demand. With
the help of the AICPA’s new, non-authoritative audit
data standards, this is now possible.
scenario: On the hunt for additional funds to jumpstart their
business, a potential client comes to you. The CEO has just visited the local
bank, but the bank manager will not agree to lend the needed funds without assurance
on the business’ ability to generate profits. Now, the potential client is at
your doorstep asking if you can provide assurance.
you say. Your firm provides assurance services that instill confidence and
assist clients in making insightful decisions. Here’s the thing: your prospect has
no background on assurance services. Where do you begin to explain?
Waste costs money. Companies lose money on wasted time, wasted effort and wasted material to the tune of millions of dollars per year.
Conversely, removing waste saves money. And when it comes to keeping things on the right side of the ledger, it's far better to keep track of money saved than money wasted.
The Lean approach, especially as refined by long practice at Toyota and other manufacturers, systematically removes waste, frees up company resources, and increases a company's chance at long-term success. Money saved through Lean transformations can go toward capturing more market share, for instance, by improving existing products or developing new products for new markets.
One of the
challenges that management and auditors face is obtaining accurate data in a
usable format following a repeatable process. That’s why the AICPA’s Assurance
Services Executive Committee’s Emerging Assurance Technologies Task
Force seeks to increase audit efficiency by developing the following voluntary,
uniform audit data
standard, general ledger standard and accounts receivable subledger standard.
These non-authoritative audit data standards present
a new way of optimizing efficiency and effectiveness in reporting and assurance
by facilitating automation and enhancements in the analysis of business
information. In addition, audit data standards identify the key information
needed for audits and provide a common framework covering:
data file definitions and technical
data field definitions and technical
supplemental questions and data validation
routines to help users better understand the data and assess its completeness
benefit from their use? A number of stakeholders, from internal and external
auditors to software vendors. Let’s discuss.
AICPA Enhances Tools to Assist CPAs with
Private company financial reporting has evolved more in the
past year or so than during the previous four decades. In June the AICPA issued
an accounting framework for smaller, owner-managed businesses that do not need
financial statements based on U.S. generally accepted accounting principles, and the Financial Accounting
Foundation’s Private Company Council has proposed alternatives within GAAP for
private entities. Both the framework and the PCC have the same goal of improving
financial reporting for private companies and both are critically important, as
private companies represent the vast majority of the businesses comprising America’s
Many owner-managed companies are small or micro in size.
They often are called Main Street businesses, mom-and-pop shops or suburbia’s
business districts. The AICPA’s Financial
Reporting Framework for Small- and Medium-Sized Entities was designed to
serve this segment. The FRF for SMEs framework presents the small business
community with an opportunity for robust and relevant financial statements that
are simplified and cost efficient when U.S. GAAP is not required as a basis of
and others in the accounting profession, think logically. We have to in
order to do our jobs. However, as the world changes, so must we – and logic
only gets you so far. Aside from logical thinking and reasoning, we also must
be creative. It's that creativity, which can often be found in your existing staff,
that can provide us with opportunities for innovation.
a look around and you'll see that the world is simply moving away from, and
beyond, how CPAs have traditionally practiced. While CPAs still give an opinion
on a set of historical financial statements, real-time technology is here to
stay. People want information now, not later – and there's a big difference in
providing one versus the other. That's where our profession, and the future of
auditing, must change. It means taking a closer look at technology, standards –
and people. I recently filmed a video
for the AICPA addressing these issues.
Are you ready for your 2013 local government audits? Cash and investments are a very important
area of disclosure in the financial statements for state and local governments,
especially for governments that report pension plans as fiduciary funds in
their financial statements. Make sure you’re up to date on these cash and
investment disclosure requirements. It’s a good idea that your clients are also
well aware of these provisions as they prepare the disclosures, as they can
help you to provide adequate audit evidence to support the material accuracies
of the disclosures being made in the footnotes relative to cash and
Here are a few important reminders about disclosures in this
Over the past 20 years, change seems to come at the
speed of light and has had a significant impact on the way businesses operate. Markets
have become global, just about every process can now be outsourced and
technology has become integrated into the DNA of every business. If anything, changes
in rules, regulations and standards have accelerated. Businesses must now
satisfy the high expectations of regulators and other stakeholders regarding
governance oversight, risk management and the detection and prevention of fraud.
All of this change means that stronger internal control practices must be
developed to help to grow, as well as protect, the organization.
Earlier today, the AICPA announced the launch of the Financial Reporting Framework for Small- and Medium-Sized Entities. This session at the 2013 Practitioners Symposium and Tech+ Conference in Partnership with the Association for Accounting Marketing Summit covers AICPA Director of Private Company Financial Reporting, Robert Durak, CPA, CGMA, as he highlights key features and benefits of the Financial Reporting Framework for SMEs, as well as important accounting topics within the FRF for SMEs. You can find more information on the framework by following #MainStFinancials. (Email subscribers: See the live blog coverage on AICPA Insights).
Sustainability’s momentum is being fueled by a large, influential and growing majority of supporters: business leaders. They recognize that sustainability-minded organizations are more committed to management checks and balances, informed decision-making and community goodwill. What follows is an organization’s reputation for greater stability, less risk and a more secure market value. Sustainability-minded organizations are among the top choices when retailers and other businesses create vendor relationships, select investment candidates and make purchase decisions.
Last week, my blog post discussed that Integrated Reporting <IR> represents an important shift in corporate reporting in which CPAs can play a key role providing consulting services, implementation or report preparation. In today’s blog, I’m drilling down into some of the key concepts of the recently released Consultation Draft of the International <IR> Framework that are important for CPAs to understand.
Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)
Not too long ago, I heard Craig M. Lewis, Director and Chief
Economist of the Securities and Exchange Commission’s Division of Risk, Strategy
and Financial Innovation, give a presentation on the SEC’s new predictive
accounting quality model, nicknamed “RoboCop”
by the trade press, which will enable the SEC to monitor and flag reports
for further review.
What makes AQM so useful, Mr. Lewis said in
an interview with Merrill Compliance Solutions, is that, by using XBRL, the
tool can be “applied broadly to the entire filer space.” Previous versions of
the tool used Compustat data, which did not include all filing companies. With
XBRL, 100 percent of filing companies will be analyzed by AQM.
Corporate reporting in the U.S. and around the world has often developed as disparate strands of reporting. Stakeholders have grown to seek more and more information in a number of different reporting vehicles, but do they really seek the details or are they trying to drive better corporate practice?
Integrated Reporting <IR> represents an evolution of corporate reporting that focuses attention on how an organization creates value in the short, medium and long term. An integrated report, a key output of Integrated Reporting, is a concise report primarily intended for investors of financial capital, although other stakeholders who have an interest in the organization’s ability to create value will also benefit from such communications.
The not-for-profit accounting and auditing landscape
has undergone significant change in recent years. In this podcast, CPA
not-for-profit experts Chris Cole, Jennifer Hoffman, Frank Jakosz and Andrew Prather discuss current NFP issues that face CPA preparers and
auditors and describe how the AICPA’s newly updated Not-for-Profit Entities
Audit and Accounting Guide can be a resource for NFPs. Discussion topics
include recent Financial Accounting Standards Board updates, changes in the NFP investment arena, revenue
recognition, gifts-in-kind valuation, and taxes and regulatory considerations. Ken Tysiac, senior editor for news with the Journal of Accountancy, moderates. [Email subscribers: Visit AICPA Insights to listen to the podcast.]
I live blogged from the AICPA's Sustainability Workshop that took place May 2 to 3 in New York City. The workshop is part of the Executive Boardroom Series from the AICPA and the Enterprise Risk Management Initiative at the Poole College of Management at North Carolina State University. Below is a replay of the entire two-day event.
Get ready to tackle some major revisions in accounting standards.
After years of consideration, the Financial Accounting Standards Board is
finalizing its approaches on three major issues: revenue recognition, leases
and financial instruments. Each of these accounting areas affects virtually all
companies in the United States no matter what their size or whether they are
public or nonpublic. And that means virtually all CPA firms are affected too.
From an advocacy standpoint, the AICPA continues
to monitor the progress of these important standards and to comment on the
exposure drafts on members’ behalf. Our goal is to help make sure the standards
are effective and can be implemented with as much ease as possible. Moreover, the
AICPA will help members understand and implement the new standards so they can
continue to provide high-quality services and comply appropriately with the
Were there warning signs of
the worldwide financial crisis and global recession?
Could the addiction to off-balance sheet accounting have been stopped?
How could contentious reporting issues have been better resolved?
From the reporting scandals
of 2001 and 2002 to the recent global financial crisis and efforts at
international convergence of accounting standards, former Financial Accounting Standards Board Chairman Robert Herz discusses critical
issues and much more in his new book, Accounting
Changes: Chronicles of Convergence, Crisis, and Complexity in Financial
Reporting. Herz tells the story from the perspective of his front row
seat on many of the major developments affecting accounting and financial
reporting during his tenure.
Herz has had a long and
distinguished career--as Chairman of FASB, a former senior partner at PricewaterhouseCoopers, a part-time member
of the International Accounting Standards Board, an author and someone
who has seen the accounting and financial reporting profession develop and grow
over the past several decades. In his book, Herz shares his experiences and
insight, including the importance of charting and setting a course to improve
standard setting when he joined the FASB, making things simpler by
rationalizing the structure of the U.S. accounting standard setting, and
reorganizing and codifying U.S. GAAP.
AICPA Insights interviewed Herz on financial reporting’s evolution and his role
Not-for-profits continue to encounter unique measurement challenges for gifts in kind. There are a variety of approaches available for not-for-profits to value GIK, which can result in large disparities between handlings by different not-for-profits and questions about the application of generally accepted accounting practices to GIK. Other issues such as identifying the applicable principle markets and the effect of nominal fees on GIK require not-for-profits to scrutinize their GIK practices to ensure GAAP is being properly applied.
Not-for-profits must measure all non-cash contributions such as items auctioned off for charity; excess or obsolete goods given to charity to help fulfill its mission; free print or web advertising space and even radio advertisement air time. However, measuring these intangible items can be challenging, as not-for-profits who receive such gifts would not otherwise purchase or sell them and not-for-profit administrators simply may not know the fair market value of these gifts or have access to valuation information.
It's no secret that an
organization's confidential information is vulnerable in today's world of electronic
storage. If you have any doubt, just ask The New York Times or The Wall
Street Journal – both of which recently reported having their computer
transferring storage and/or the processing of their data to cloud-based systems
are faced with the added complexities of how to best maintain ownership
and control data while continuing to assure customers they have controls in
place to keep data secure. How can organizations provide their stakeholders
with comfort related to this transferred information?
Control ReportsSM represent the intersection of cloud computing and
the trusted advisor role of the CPA. In 2011, the AICPA introduced three SOC
reporting options: SOC 1SM, SOC 2SM and SOC 3SM
reports, creating a great opportunity for CPAs to assert their knowledge and
capabilities related to examining and reporting on controls at service
organizations, including cloud service providers.
Everyone is being asked to do more with less in the current economy; CFOs are no different. Many are looking for ways to enhance and streamline the finance function, from transaction processing to budgeting and reporting. Automation through leveraging state of the art technology is a key component to assist in this endeavor. With advancements in business applications and cloud-based technology like Intacct, Bill.com and others, virtual work environments, mobility and instant data is the new norm.
Every few years, the issue of providing clients with comfort letters – or verification documents – rears its head among our members. Regulators or banks often look for verification that certain items within a financial statement (e.g., revenue) or a tax return (e.g., income) is "right" and they want a CPA to verify it. AICPA members have even received requests for comfort letters from adoption agencies, health insurance providers and state taxing authorities.
"We are drowning in information,
while starving for wisdom. The world henceforth will be run by synthesizers,
people able to put together the right information at the right time, think
critically about it, and make important choices wisely." --E. O. Wilson, American Scientist
my smartphone I have four different weather apps. Isn’t it amazing we live in
a world where we can find out the weather in seconds on demand? Of course,
there’s a price to pay for having so much information available at our
fingertips. On any given day, I could consult each app and they each might tell
me a different forecast for the day or week. That’s not a huge issue if the
difference is a matter of about four degrees in the summertime. I’m not sure I
can tell the difference between 74 and 78 degrees, anyway. But what about
winter? I may not be able to feel the difference between 31 and 35 degrees, but
my steep driveway can definitely convey the difference to me quite well as I
spin my wheels on black ice on my way to work in the morning.
why it’s vital that you feel confident about the information you use
day-to-day—at home and in business.
In my almost 20 years in the banking
industry, I’ve come across dozens of owners and managers of small private
companies who cringe when it comes time to prepare financial statements. That’s
because for many of them, the process is complicated, time consuming and
costly. Moreover, a number of rules they are required to follow do not deliver
financial information relevant to their businesses. These small- and
medium-sized entities have been in need of a financial reporting option that is
tailored to their circumstances and produces financial statements and
information that their bankers can use and rely upon. Now, finally, that
financial reporting framework is being made a reality.
One of my most rewarding professional
experiences has been serving on the task force that is developing the new Financial Reporting Framework for Small- and Medium-Sized Entities. What’s a SME? No standard definition exists, but the acronym is self
explanatory – small and medium size entities, which happen to make up about 20
million for-profit companies in the United States.
The Clarified Auditing Standards are now in effect. You may have heard that
“these aren’t substantive changes,” but this isn’t the case. Some of the
changes included in the new standards will affect every auditor. Based
on inquiries we’ve received during recent AICPA webinars on the Clarified
Auditing Standards, participants have identified four areas of change that may
require more attention.
One substantive change is to the auditor’s report. Headings and specific
language for each section are now required within the report. Adding headings
and the correct language to an auditor’s report, while affecting every audit,
is not difficult to do. The challenge is making sure that it gets done. If a
staff person takes last year’s report and changes only the dates, and the firm
issues that report without headings and revised wording, then the firm has
issued a deficient report. While it may require a little extra work, these
headings provide auditors a clear understanding of what additional information
is needed and where to place it in a report.
The following is an interview with AICPA President and CEO Barry Melancon, CPA, CGMA. He was asked to share his thoughts about some of the major issues and trends that will affect CPAs in 2013.
In the coming year, we will see the first efforts of the Private Company Council. What changes can CPAs and the companies they serve expect to see?
The Financial Accounting Foundation’s Private Company Council was created to address issues affecting companies that need GAAP-based financial statements. The PCC only recently began meeting, and will be weighing in on existing standards and ones in development. Private company accounting stakeholders are expecting prompt action by the PCC in modifying GAAP to bring more relevance and simplification to financial reporting.
Up until about a year ago, I had only heard that the AICPA has expert panels but I didn’t really have any idea about what they are or what they do. I was asked to staff the Health Care Expert Panel and I can tell you last year has been quite a ride!
Who Is the Health Care Expert Panel and What Is Its Mission?
The Panel consists of 13 members who represent a mixture of firm practitioners as well as preparers and users who work in the industry. They all have one thing in common—they are considered to be some of the health care industry’s “cream of the crop” and best equipped to carry out the panel’s mission to protect the public interest and address the needs of AICPA members in the areas of financial reporting (including business reporting), audit and attest services, and regulatory matters from the health care industry perspective.
Service Organization Controls reports are designed to help service organizations, organizations that operate information systems and provide information system services to other entities, build trust and confidence in their service delivery processes and controls through a report by an independent Certified Public Accountant. Each type of SOC report is designed to help service organizations meet specific user needs. This infographic explores the transition from SAS 70 to SOC reports and how they apply.
As I said previously, the key point here is to realize when this section, AU-C 600, Special Considerations--Audits of Group Financial Statements (including the Work of Component Auditors) applies. It applies not only when other auditors perform part of the audit, but whenever the financial statements include financial information of components, such as equity investees, subsidiaries or other business entities and activities that are included in the group financial statements. Even if you are the only auditor, if the financial statements include financial information that is consolidated, combined or aggregated from a separate financial accounting system, the provisions of AU-C 600 apply.
AICPA has been fielding a number of questions regarding performing and
reporting on SOC 1SM,
SOC 2 SM and SOC 3 SM engagements. Here are four
of the key queries and their answers to help you and your firm move forward in
starting a SOC practice:
you seen the CGMA
Report “Thirsty Planet”? The report expertly underscores
the need for businesses to consider social and environmental sustainability as
a means to sustain business. Ensuring that natural resources, such as water,
are safe and clean for future generations, communities and businesses to come
should be a priority for businesses.
sustainable enterprise has a clear strategy not only on how it will make money,
but also on its social and environmental impact. An organization’s ability to
create and preserve value for itself, its stakeholders and society at large,
depends on the strength of its business model;
the sustainability of the financial, social, economic and environmental
systems within which it operates; as well as on the quality of its
relationships with, and assessments and decisions by, its stakeholders. Businesses need to consider environmental and
social impacts in order to have a genuinely sustainable business that makes
money—not just because it is the right thing to do, but also because it makes
good business sense.
As a busy CPA in Business and Industry, you may not have time to seek out resources to help you in your day-to-day work. More than 33,000 CGMAs are already enjoying access to valuable benefits like innovative thought leadership reports and tools. The following is just a sample of the dozens of resources available on CGMA.org.
With only one AU section left to clarify, the Auditing Standard Board’s Clarity Project is
substantially complete. During the past year, I have been traveling around the
country talking about the 47 “AU-C” sections that have been clarified and
converged with corresponding International Standards on Auditing. Here are some
of the major points that you need to know about these standards and their
As the last
group of companies is subject to the final phase of the Securities and Exchange
Commission mandate this summer, we are reaching a major turning point for eXtensible
Business Reporting Language implementation in the U.S. Investors now have a
full data set accessible for their analyses as all information from a company’s
financial statements, as well as the notes and schedules, are individually
tagged at a detailed level. This means investors now have the ability to search
and access specific pieces of information for all public companies.
In 2010, many sectors of the U.S. economy began to improve from the Great Recession—however, small businesses lagged behind, largely as a result of having trouble raising the capital they needed in a still tenuous financial recovery.
This led to the advent of a concept called crowdfunding. Crowdfunding—inspired by crowdsourcing—describes the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organizations.
As with so many issues related to the accounting profession, opportunities to engage new clients or re-engage existing clients abound when standards are updated or changed. Such is the case with Service Organization Control Reports SM. The guidance for service auditors in the old Statement on Auditing Standards No. 70, or SAS 70, as it was known, was replaced effective June 15, 2011, by Statement of Standards for Attestation Engagement No. 16, which can give your firm and its clients a new set of standards to meet user needs.
If you haven’t already looked into this growing market for CPA services, here are some tips on how you can start a SOC practice:
In these days of continuous information, it’s essential to give people and organizations precisely the details they need to make important decisions. What never fails to cut through the clutter is information that is relevant, understandable and useful (not to mention correct). As CPAs, we often are a conduit for complex technical information, providing analysis and guidance in the process. We currently are working on two critical initiatives that bring this hallmark of our profession to life.
Many of you have seen news reports and AICPA communications about the Financial Accounting Foundation’s recent decision to create a Private Company Council. Given the serious concerns the AICPA had with FAF’s original proposal released in October 2011, I am providing additional detail as to the structural and process improvements FAF made with the new Private Company Council that enable us to support it.
The AICPA’s issue with FAF’s proposal centered on the extent of the Financial Accounting Standards Board’s influence on the planned private company body and ratification of its decisions. We and more than 7,000 stakeholders urged FAF to strengthen the original council’s independence and they responded. The final plan is more about collaboration between the PCC and the Financial Accounting Standards Board than the approach outlined in the exposure draft. Now, FASB will be asked to endorse the PCC’s recommendations rather than ratify them and generally will have a limited time frame of 60 days to do so. I would describe the process as one of negative clearance, with a high threshold for a FASB veto. And if FASB does veto the PCC’s decision, the FASB chairman has to explain why in writing – and provide suggestions for obtaining approval – and it will be made public for stakeholders to evaluate.