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  • 10/20/2021 10:44 AM | Anonymous member (Administrator)

    In an effort to assist members that are planning on doing single audits the North Dakota CPA Society has added a resource page to the member center on single audits. This site includes upcoming webinars, AICPA resources, and other recordings that can help with the single auditing process. Check it out here

  • 10/13/2021 9:43 AM | Anonymous member (Administrator)

    October 12, 2021

    By Ken Tysiac

    The AICPA Auditing Standards Board sharpened the audit profession's focus on risk-based auditing Tuesday with the release of a new standard on audit risk assessment.

    Statement on Auditing Standards (SAS) No. 145Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, is designed in the simplest terms to help auditors determine which areas pose the greatest risks of material misstatement in an audit engagement and spend more of their time performing procedures in those areas.

    One of the driving forces for developing this SAS stemmed from deficiencies in the auditor's risk assessment procedures identified by practice monitoring programs in the United States and worldwide.

    The new standard is designed to enhance the requirements and guidance for identifying and assessing the risks of material misstatement, particularly the areas of understanding the entity's system of internal control and assessing control risk.

    The standard also:

    • Includes extensive guidance regarding the use of information technology and the consideration of general IT controls;
    • Revises the definition of significant risk;
    • Includes a new requirement to separately assess inherent risk and control risk;
    • Includes new guidance on maintaining professional skepticism; and
    • Includes a new "stand-back" requirement that is intended to drive an evaluation of the completeness of the identification of significant classes of transactions, account balances, and disclosures by the auditor.

    "The auditor's risk assessment drives almost every part of the audit," AICPA Chief Auditor Jennifer Burns, CPA, said in a news release. "As a result, the evaluation of risks sits at the core of audit quality. SAS No. 145 supports the performance of quality audits by providing additional clarity and guidance in identifying and evaluating risks of material misstatement, while considering the evolving nature of business."

    Resources available to assist members as they read and consider the new standard include an At a Glance summary and an upcoming webcast at no charge to AICPA members.

    SAS No. 145 takes effect for audits of financial statements for periods ending on or after Dec. 15, 2023.

  • 10/04/2021 10:42 PM | Anonymous member (Administrator)

    The U.S. has seen historic levels of federal funding in response to the COVID-19 pandemic. Various laws, including the CARES Act and the American Rescue Plan Act of 2021 have provided billions of dollars to American businesses, state and local governments and not-for-profits. While this funding has provided relief, especially for nonprofits, it may cause complications for many recipients.

    Does your client need a single audit?

    Much of the new pandemic funding is subject to single audit rules. Not all recipients of this funding will need a single audit. However, when a non-federal entity spends $750,000 or more of federal awards in a fiscal year, a single audit is required.

    Many recipients of pandemic funding have never had a single audit before and may not know what is required. Your existing clients may need a single audit for the first time or you may begin working with new clients who have never even had a financial statement audit before. Here are some tips for you to help your clients through the evolving single audit process.

    Ask clients what funding they have received.

    Talk to your clients about what type of funding they have received from the beginning of the pandemic in 2020 to the present. In some cases, you may consider helping them review their grant agreements to identify what is needed on their end, and then on your end as the auditor. Additionally, you could email clients with news related to the funding they’ve received or update your website with the most current information. The sooner your clients know about important and relevant information, the better prepared they are and the better audit you can perform — so it is a win-win.

    Encourage your clients to be proactive and ask questions about funding they have received. For example, one controller contacted her CPA as soon as she knew her organization would receive funding. She knew this funding had stipulations but didn’t know yet that a single audit would be required. Finding out early in the process was a huge benefit.  But many organizations may be unaware of all the requirements in the funding they have received.

    Communicate openly with your clients.

    This is a time when having open lines of communication with your clients is especially important. Learning whether your clients have reviewed and truly understand the guidelines for the type of funding they received is key, as well as that they have procedures in place to comply.

    Also, clients need to know — even if they are under the $750,000 threshold — that administrative and other requirements of federal funding apply even if a single audit is not needed. For example, the funds may only be spent for certain purposes. This is an important concept for clients to understand.

    Be aware of audit quality concerns.

    Some first-time single audit clients may be concerned with audit costs because they are required to undergo an additional audit. While cost is always one consideration, in this situation, it is also important to focus on the experience of the firm to make sure they are getting the highest-quality audit possible.

    Also, as auditors, you have a duty to the public to perform high-quality audits. Single audits have a significant public interest component as they involve taxpayer dollars and federal agencies rely on them as part of their administrative responsibilities for determining compliance with the requirements of federal awards. Because of this, audit quality should always be at the forefront of every auditor’s mind.

    Because of the complexity of single audits and the necessity of specialized knowledge of their rules and compliance requirements, you should consider whether you should accept a single audit engagement if you do not have experience performing them. Perhaps you could consider performing the financial statement audit, but other options for the single audit might be to refer your clients to someone else in your organization with the appropriate experience or to another firm that specializes in single audits. Alternatively, if you have some experience but not much, you could consider engaging another firm to perform a pre-issuance review or other types of consultative assistance to help ensure a high-quality audit. You can use the AICPA’s Peer Reviewer Search tool to find an auditor to refer your clients to, or to look for consultative assistance. Additionally, the AICPA’s Governmental Audit Quality Center (GAQC) has a listing of its member firms with contact information on its Find A Member page.

    Make time for continuing education and pay attention to developments.

    Firms should ensure auditors receive the required training for all specialization areas. For example, generally accepted government auditing standards (referred to as the Yellow Book) require auditors who perform single audits to maintain their competency through CPE hours and topics listed in the 2018 Yellow Book.

    If you take on a single audit, there is single audit learning available through the North Dakota CPA Society and the AICPA, among other sources, to help you gain the fundamental knowledge you need. Regarding the new COVID-19 funding, you may want to pay close attention to any training provided by federal agencies.

    Additionally, you can access the AICPA’s GAQC website, in particular its COVID-19 Resource page, which outlines many resources. You may also want to contact other firms on their single audit and pandemic-related resources. It’s useful to speak to your peers about what they’re doing and learn from their experiences. Keeping on top of things is important.

    Looking Ahead

    The pandemic has drastically changed work in many industries, and the accounting profession is no different. The next few years will see many more single audits being performed by more public accounting firms across the country.

    Keeping up with all these changes while continuously striving to be that trusted adviser for your clients is tough. In these times, in addition to all the other tips above, it is especially important to be mindful of staff well-being. Organizations need to provide support to staff so they can remain engaged and avoid burnout. Focusing on well-being can enable staff to do their jobs better, which allows them to better serve their clients and, ultimately, contributes to enhancing audit quality.

    These are challenging times in the single audit arena for sure. But the tips above should help provide a pathway to success. 

     

  • 10/01/2021 9:28 AM | Anonymous member (Administrator)

    September 30, 2021

    By Sue Coffey, CPA, CGMA

    Sue Coffey

    Sue Coffey, CPA, CGMA, CEO–Public Accounting for AICPA & CIMA

    This is the first in an occasional series featuring Sue Coffey, CEO–Public Accounting for AICPA & CIMA, discussing trends affecting the profession.

    When I think about what makes the CPA profession special at a time of unprecedented challenges, I always come back to the fact that we are a profession of trust. It is what our credential signifies. It is what we are educated for, what we are trained for, what our profession and clients demand, and what our Code of Professional Conduct requires. As a member of the profession and a CPA, I'm proud that people come to us because of our well-earned trust.

    The pandemic proved how dedicated the profession is and put on full display clients' trust in our expertise and ability to provide calming, timely advice and service. CPAs pivoted quickly and helped clients, organizations, policymakers, and communities during a time that was incredibly challenging both professionally and personally. We were all affected by the pandemic in some way, and CPAs stood tall and took care of their clients, staff, and peers, as well as their own CPA firms, many of which are small businesses.

    While the profession as a community made a deep impact in a range of areas, I've been asked time and time again how auditors fared in a virtual environment. Just like everyone else, in the audit space, we quickly realized that the pandemic might make it difficult to perform our most fundamental service applying procedures we'd used for decades. For example, how could auditors meet their professional requirements when on-site and in-person visits were not feasible? Fortunately, the auditing standards are flexible, and practitioners figured out how to achieve audit objectives, considering many new and different risks the pandemic presented. Amid these challenges, auditors did a great job of stepping up to the plate and doing what was required to issue their audit opinions.

    I'm proud to be part of a profession that had the ability to quickly pivot and think innovatively in the spirit of supporting business and promoting public trust. I believe the efforts of our profession have had a profound impact on our country's ability to rebound so quickly.

    Focused on quality

    Switching back to the audit, the profession's commitment to integrity and competence is reflected in our Enhancing Audit Quality (EAQ) initiative, launched in 2014 as part of our ongoing commitment to improvement.

    EAQ drives high-performing audits and helps firms gain the competencies and access resources necessary to be successful. When combined with the efforts of the AICPA Auditing Standards Board, the peer review community, and our audit quality centers, financial statement users can be confident that auditing standards, guidance, and ongoing professional development promote excellence in auditing.

    This multipronged and coordinated approach in addition to significant investment by the CPA firms in audit quality is paying off. Peer reviewers are more adept at detecting issues, and required targeted remediation is leading to substantial improvement in firms.

    The investment in and adoption of technology are also having a positive impact on audit quality. More extensive use of data analytics, eventually enhanced with machine learning, enables auditors to identify and assess risk more thoroughly and deeply as well as design audit procedures that can evaluate entire populations of data. More relevant and valuable information about a business and its risks not only facilitates a high-quality audit, but also provides the business with rich information that helps it make improvements in its operations. Firms that thrive will do so because they view technology as a strategic investment, rather than as a cost of doing business. What I hear from business owners is that they expect their CPA firm to use the latest technologies and keep up with technological advancement. And we should consider this expectation an opportunity to advise and add value.

    An example of not just keeping up but innovating is our development of the Dynamic Audit Solution. Working with CPA.com and CaseWare International, we are developing a technology-based tool that reimagines the audit in a web-based environment. When it is available to the entire profession next year, auditors will have an integrated, dynamic tool that is standard-compliant and will support quality auditing.

    Updating skills

    To make full use of emerging technologies and stay abreast of the changing business landscape, it's imperative that we update our skills and adopt a constant culture of learning and relearning. Fortunately, we are a profession that is dedicated to lifelong learning.

    Deep technical and technological skills will continue to be important, but we're also seeing an increased need for greater business acumen — leadership, strategic thinking, judgment, relationship building, communication — those attributes that make businesses successful.

    When it comes to new talent, CPA firm hiring has shifted because they're looking for different skills to serve the varying needs of their clients. Every firm I speak with wants their entry-level employees to have strong, foundational accounting expertise. They also want more skills in technology, data analysis, and business processes and controls. To address these needed skills, the AICPA, in partnership with the National Association of State Boards of Accountancy, is working to evolve the CPA licensure model, including university education and the CPA Examination.

    Effective Jan. 1, 2024, we will introduce a new CPA Exam that assesses a strong foundational core of auditing, accounting, tax, and technology while allowing a CPA candidate to demonstrate deeper knowledge in one of three disciplines: tax compliance and planning; business analysis and reporting; or information systems and controls. This examination model will drive changes in education that promote students' exploration in a variety of subjects needed to service the marketplace, which in turn will attract those with a broader skill set than would normally be attracted to our profession.

    As I said earlier, I'm proud to be part of a dynamic profession that is constantly innovating, evolving, and transforming. Without this type of focus and culture, we'd be ill-equipped to keep pace with the business community. Layer on our commitment to quality and public protection, and creating an environment to attract the best and brightest, and we are well positioned to succeed. Lastly, we've generated and earned the trust of the business community and the public. "Earned" is the operative word — that comes with a commitment to our core values of integrity, objectivity, and competence. But trust is easily lost. That means we cannot ever let our guard down and must continue to strive to meet the highest standards our clients and the public expect of us.


  • 09/14/2021 8:20 AM | Anonymous member (Administrator)


    The DOL Employee Benefit Security Administration (EBSA) Office of the Chief Accountant (OCA) is planning to conduct a study to assess the quality of audit work performed by independent qualified public accountants (IQPAs) with respect to financial statement audits of employee benefit plans covered under the Employee Retirement Income Security Act of 1974 (ERISA) for the 2020 Form 5500 filing year (plan years beginning in 2020). This includes calendar year 2020 filings filed on extension by October 15, 2021. The DOL previously performed an audit quality assessment of the 2011 plan filing year and reviewed a sample of 400 audits (
    click here for the DOL 2011 assessment report).

    The EBSA OCA is in the process of developing the sample methodology of plans, and expects to make a sample selection and begin corresponding with plan administrators and IQPA firms later this year. If selected for review, the IQPA firm will be asked to provide the EBSA OCA with a full set of audit workpapers supporting the audit containing all documentation, including workpapers kept in other related files (DOL will not permit supplemental submissions).

    Auditors are reminded to be sure they have adequately documented their audits as a record of auditing procedures applied, evidence obtained, and conclusions 
    reached by the auditor in the engagement. AU-C Section 230, Audit Documentation, states that audit documentation provides evidence of the auditor's basis for a conclusion about the achievement of the overall objectives of the auditor, and evidence that the audit was planned and performed in accordance with generally accepted auditing standards (GAAS) and the applicable legal and regulatory requirements.


    The following EBPAQC resources are helpful to understand best practices and common deficiencies in ERISA EBP audits:

    Performing quality ERISA employee benefit plan audits: Firm best practices

    Includes tips for establishing effective quality control policies and procedures specific to your EBP audit practice and provides examples of best practices for each phase of the audit engagement.

    Common EBP audit deficiencies planning tool

    Describes some of the most common deficiencies noted in EBP audits by plan type with references to audit procedures in the AICPA Audit and Accounting Guide, Employee Benefit Plans and references to additional tools and resources.

    Summary of Frequent "Unacceptable, Major" Deficiencies in 2011 DOL Audit Quality Study

    Provides descriptions of the "Unacceptable, Major" findings in the 2011 DOL study in the areas of:

    • Investments
    • Notes receivable
    • Contributions received and receivable
    • Participant data, including individual participant accounts
    • Plan obligations
    • Parties in interest/prohibited transactions
    • Plan tax status
    • Commitments and contingencies
    • Administrative expenses and subsequent events
    • Plan mergers and terminating plans
    • Plan representations
    • Compliance with GAAS and GAAP
    • Compliance with DOL rules and regulations for reporting and disclosure

    Peer review findings in employee benefit plan audits


    Describes the most frequent Matters for Further Consideration (MFCs) the AICPA Peer Review team has found related to EBP audits and financial statements in peer reviews performed in 2019. The tool includes EBP MFCs related to:

    • Quality control policies and procedures
    • Engagement letters
    • Use of a specialist
    • Risk assessment
    • Internal control
    • Sampling
    • SOC 1 reports
    • Testing and documentation
    • Management representation letters
    • The auditor's communication with those charged with governance
    • Financial statements and the auditor's report
    • Defined benefit plans
    • ESOP plans
    • Multiemployer plans
    • Health & welfare plans

    The EBPAQC has many other tools and resources to help your firm perform and document a quality EBP audits.

    Click here for Practice Management resources.
    Click here for Audit Engagement resources including audit documentation tools

    The 2011 study found nearly 4 out of 10 audits contained major deficiencies. DOL referred audits with deficiencies to the applicable state board of accountancy and AICPA Ethics.

    This article was shared by the AICPA Employee Benefit Plans Audit Quality Center

  • 09/01/2021 10:15 AM | Anonymous member (Administrator)

    The Illinois CPA Society has released the results of a study they conducted on the CPA Pipeline.  For the full report go to:

    https://www.icpas.org/docs/default-source/default-document-library/information/professional-issues/2021-cpa-pipeline-report-decoding-the-decline.pdf

  • 08/11/2021 9:04 AM | Anonymous member (Administrator)

    August 10, 2021

    By Ken Tysiac

    Technical Question and Answer (TQA) guidance issued Tuesday by the AICPA addresses how a recipient should account for a Shuttered Venue Operators Grant (SVOG) or a Restaurant Revitalization Fund (RRF) grant issued under COVID-19 relief programs administered by the U.S. Small Business Administration (SBA).

    Q&A Section 5270.01 provides nonauthoritative guidance that applies to not-for-profits, which are eligible only for SVOG; and private business (for-profit) entities, which are eligible for both SVOG and RRF grants. Publicly traded entities are not eligible for either of these grants.

    SVOG and RRF grants provide federal funds to entities that were hard-hit by government shutdowns resulting from the coronavirus pandemic. Grant recipients are not required to repay the funding if funds are used for eligible uses by the dates specified by each respective grant program.

    The TQA suggests that for-profit business entities consider accounting for these grants by applying by analogy the guidance described in one of three models:

    • International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance;
    • FASB Accounting Standards Codification (ASC) 958-605, Not-for-Profit Entities — Revenue Recognition; or
    • FASB ASC 450-30, Contingencies — Gain Contingencies.

    The TQA describes each of these accounting models in further detail and provides guidance on how to select the appropriate model.

    Not-for-profit entities should account for government grants in accordance with the “contributions received” subsections of FASB ASC 958-605, according to the TQA. That model requires entities to first determine if a contribution is conditional or unconditional.

    According to the TQA, the payments received under these grants would be considered conditional contributions. Thus, contribution revenue would be recognized only to the extent that eligible expenses have been incurred at that date.


    Not-for-profits will need to evaluate their individual facts and circumstances to determine the extent to which conditions have been substantially met at a given reporting date.

    The AICPA issued the guidance because it was anticipating questions from practitioners.

    “There is no explicit guidance within U.S. GAAP on the accounting for government grants to business entities,” Yelena Mishkevich, CPA, CGMA, senior manager–Accounting Standards for the AICPA, said in a news release. “Based on our experience with the SBA’s Paycheck Protection Program, we anticipate that some audit and accounting professionals — especially those who have limited experience with government grants — will have questions. As such, we are trying to get out front and answer their questions via this TQA.”

    AICPA experts discuss the latest on the SVOG, RRF, and other small business aid programs during a virtual town hall held every other week. The webcasts, which provide CPE credit, are free to AICPA members and $39 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register. Recordings of Town Hall events are available to view for free on AICPA TV.

    The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

    AICPA members can learn more about the SVOG on the webpage “Understanding the Shuttered Venue Operators Grant Program.” AICPA members also can access a detailed summary of the RRF.

    For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking news.

  • 07/26/2021 9:06 AM | Anonymous member (Administrator)

    July 23, 2021

    By Ken Tysiac

    Some confusion was lifted last week for practitioners who perform single audits of health care entities, when the U.S. Department of Health and Human Services (HHS) clarified rules for single audits of nonfederal entities that received pandemic-related assistance from the Provider Relief Fund (PRF).

    Over the last several weeks, HHS has established in its PRF FAQs that the reporting in the PRF Reporting Portal will be based on when PRF payments were received. HHS also has clarified that PRF recipients must only use payments for eligible expenses including services rendered, and lost revenues during the period of availability (also known as the "period of performance"), as outlined in the table below:

    Provider Relief Fund period of performance table


    Information included in the newly released HHS FAQs states that nonfederal entities will include PRF expenditures and/or lost revenues in the schedule of expenditures for federal awards (SEFA) for fiscal years ending on or after June 30, 2021. The AICPA Governmental Audit Quality Center (GAQC) has confirmed with HHS that the new guidance supersedes previous guidance in the 2020 OMB Compliance Supplement Addendum that indicated PRF reporting was to begin for fiscal years ending Dec. 31, 2020, and later.

    • For a fiscal year end of June 30, 2021, and through fiscal year ends of Dec. 30, 2021, recipients are to report on the SEFA, the total expenditures and/or lost revenues from the Period 1 report submission to the PRF Reporting Portal.
    • For a fiscal year end of Dec. 31, 2021, and through fiscal year ends of June 29, 2022, recipients are to report on the SEFA, the total expenditures and/or lost revenues from both the Period 1 and Period 2 report submissions to the PRF Reporting Portal.
    • For fiscal year ends on or after June 30, 2022, SEFA reporting guidance related to Period 3 and Period 4 will be provided at a later date.

    Therefore, PRF expenditures and/or lost revenues will be excluded from the scope of single audits of nonfederal entities with fiscal years ending Dec. 31, 2020, through June 29, 2021. For those audits, PRF expenditures and/or lost revenues will not be included on the SEFA.

    Also, according to the FAQs, a nonfederal entity's SEFA reporting is linked to its report submissions to the PRF Reporting Portal. Therefore, the timing of SEFA reporting of PRF payments will be as follows:

    The GAQC also expects that the 2021 Compliance Supplement will advise that since the PRF report is to be tested as part of the reporting type of compliance requirement, auditors should consider delaying the start of the compliance audit of the PRF program until recipients have completed the PRF report.

    The GAQC still is trying to determine the impact and relevance of the above guidance on not-for-profit recipients of PRF funding and will communicate any developments as soon as they are known.

    More information on PRF implications for single audit is available in a recently issued GAQC Alert; more single audit information can be found at the GAQC website.

  • 07/23/2021 9:05 AM | Anonymous member (Administrator)

    July 21, 2021, 11:38 AM CDT

    By Laura Strickler

    WASHINGTON — The federal government has forgiven $394.6 billion in more than 4 million loans to businesses through the Paycheck Protection Program (PPP), according to new data published by a group of internal federal watchdogs.

    More than a million of those forgiven Covid relief loans were to companies with just one employee, at a cost of $12.8 billion, or an average of about $11,497 per job, according to an analysis of the data by NBC News.

    The data was released Wednesday by the Pandemic Response Accountability Committee (PRAC), a group made up of 22 inspectors general from different federal agencies that monitors all Covid relief spending for the government.

    In total, according to the data, the Small Business Administration provided 11.7 million loans nationwide totaling more than $798 billion. The most recent batch of loans was sent out on June 30, and no more money is currently available under the program.

    The top franchisees to get funds overall were General Motors franchises at $1.4 billion, according to the newly published data. Following that were McDonald's franchisees, which received $1.3 billion in funds, and Subway stores, which got $672.9 million.

    The vast majority of companies told the federal government they used the money for payroll — $776 billion out of the $798 billion disbursed. As of June 30, businesses said that PPP funding allowed them to retain 90.3 million jobs.

    On June 30, when Covid cases and unemployment had declined and vaccines were abundant, the federal government sent out $33 million in PPP loans to 62 businesses that reported they had a total of 4,469 employees.

  • 07/20/2021 9:42 AM | Anonymous member (Administrator)

    July 19, 2021

    By Ken Tysiac

    FASB issued a standard Monday that is designed to improve the board’s lease accounting rules related to a lessor’s accounting for certain leases with variable lease payments.

    Under Topic 842, Leases, a lessor may be required to recognize a selling loss at lease commencement (day-one loss) for a sales-type lease with variable payments even if the lessor expects that the arrangement will be profitable overall.

    This accounting outcome results in financial reporting that does not accurately represent the underlying economics either at lease commencement or over the lease term.

    The board addressed this issue by amending lessor lease classification requirements. A lessor now is required to classify and account for a lease with variable payments as an operating lease if:

    • The lease would have been classified as a sales-type lease or a direct financing lease; and
    • The lessor would have otherwise recognized a day-one loss.

    A day-one loss or profit is not recognized under accounting for operating leases, therefore FASB expects that the resulting financial reporting would more accurately represent the economics underlying the lease and provide better information to users of financial statements.

    — Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.


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