2013 changes - a quiz

A couple of these items relate to auditing, so test yourself....were you paying attention in 2013?
 http://journalofaccountancy.com/News/20139338.htm

Management's evaluation of internal controls

SEC and PCAOB to look closer at management's evaluation of internal controls.   Suggestion is made to "dust off" the SEC 2007 interpretive guidance in the area.    http://www.complianceweek.com/sec-ponders-management-failures-on-internal-control/article/324939/

Look at more than cost when switching auditors

this blog post emphasizes the importance of auditor independence http://blogs.wsj.com/cfo/2013/12/09/auditor-switches-may-get-closer-look/?mod=djemCFO_h

Nonaudit services and consulting

PCAOB to pick up the topic of nonaudit services and consulting to examine issues related to audits.
http://journalofaccountancy.com/News/20139220.htm

Continuous auditing and monitoring

What firms are doing and can do with continuous auditing and monitoring
http://www.aicpa.org/InterestAreas/FRC/AssuranceAdvisoryServices/DownloadableDocuments/Whitepaper_Current-State-Continuous-Auditing-Monitoring.pdf

2013 release of corrupt countries

The report of Transparency International was released - some changes since last year.  The article also contains a link to the full listing.  http://www.complianceweek.com/2013-corruption-perceptions-index-lists-most-corrupt-countries/article/323602/

Audit Partner information over time

Researchers and investors could track this information  if it is made public.  Comment letters are solicited through Feb 3.  http://journalofaccountancy.com/News/20139200.htm

Debate on naming audit partner to ensue per PCAOB proposal

See the attached article which provides discussion and context http://journalofaccountancy.com/News/20139121.htm

Audit quality problems discussed

in this post   http://grumpyoldaccountants.com/blog/2013/11/26/paper-tiger-becomes-tony-the-tiger-theyre-grrrreat

PCAOB to consider engagement partner name

being included.   This standard hearkens back to discussions in 2011  http://journalofaccountancy.com/News/20139174.htm

The roles of the audit committee

according to a report by the Center for Audit Quality  http://www.cgma.org/Magazine/News/Pages/20139127.aspx

Whistleblower record amount from SEC

at $14 million.  Recipient wishes to stay anonymous. http://www.complianceweek.com/sec-awards-whistleblower-14-million-largest-bounty-thus-far/article/314359/

In 2013, quite a few tips, from each of 50 states and many countries  http://www.complianceweek.com/sec-received-3238-whistleblower-tips-in-2013-from-all-50-states-55-foreign-countries/article/321390/

Elements PCAOB considers for quality control

remediation   http://journalofaccountancy.com/News/20139116.htm

SEC and COSO

Companies are expected to transition to the new COSO framework.   The 1992 framework is superceded mid December 2013.   In a survey taken, most internal auditors are saying the transition should not require significant changes.   http://www.complianceweek.com/sec-drops-new-hint-update-to-new-coso-framework/article/320514/

KPMG report of the "morphing" nature of fraud

This 28 page report is from international investigation of fraud, wo the real world aspects of kickbacks, bribery are discussed.  Also the trends being observed are reported.  http://www.kpmg.com/global/en/issuesandinsights/articlespublications/global-profiles-of-the-fraudster/pages/default.aspx#!

Johnson and Johnson settle up on kickbacks

and other violations http://www.nbcnews.com/business/j-j-pay-2-2b-pharma-kickback-probe-source-8C11518989#j-j-pay-2-2b-pharma-kickback-probe-source-8C11518989

Exposure draft for Compilations

Contains three proposed standards, released by the  AAICPA Accounting and Review Services Committee.    Comments are due by May 2014.   http://www.aicpa.org/Research/ExposureDrafts/CompilationReview/DownloadableDocuments/20131023a_SSARS_ED_Prep_Comp_Assoc.pdf

Auditing revenue standard

to possibly be on the horizon.   Some of this is due to the issuance of the recent effort by FASB and IASB to have a converged revenue standard slated for release in last quarter of 2013.   Thus a call for auditing standard....    http://journalofaccountancy.com/News/20138999.htm

Second report by PCAOB on internal controls

as per this article.   Links to the staff report are therein. http://journalofaccountancy.com/News/20138988.htm

Censured auditor still worked

Deloitte still used the former partner as an associate, even though he had been censured by the PCAOB.   When caught, the firm pays the fine.   http://retheauditors.com/2013/10/23/only-money%e2%80%94deloitte-pays-another-fine-and-then-moves-on/

A research piece showing audits differ

depending on the engagement partner.  The research tracked aggressive and conservative audit styles to the partner.     http://www.complianceweek.com/audits-differ-by-engagement-partner-research-says/article/317291/

PCAOB Investor Advisory Group suggests changes

to the inspection process.   Frustrations related to being able to tell if the quality control processes of firms are improving along with other suggestions are discussed.  http://www.complianceweek.com/investor-want-transparent-audit-inspection-reports/article/316877/

Trackable mass transit and insider trading

Careful about the data trail. http://www.complianceweek.com/sec-uses-data-from-defendants-metrocards-to-build-insider-trading-case/article/313233/

Firtst time for FDIC to target the auditor

FDIC and the independent auditor  http://professionalliabilitymatters.com/2013/09/26/a-first-of-its-kind-fdic-v-independent-auditor/#!

Proposal to included individual names in audit reports

The proposal is expected by PCAOB before yearend.   Stepping up disclosures is a theme of this piece, which also discusses the International Audit Assurance Standards Board's upcoming related work.   http://blogs.wsj.com/cfo/2013/09/13/auditor-reports-headed-for-new-disclosure-era/

Questions and answers on comfort letters

Or third party verification letters.   Solvency is just one item to be careful about.   This article and links therein provides guidance to accountants who are wondering about what they can do for or on behalf of their clients.

http://blog.aicpa.org/2013/08/that-comfort-letter-request-may-really-be-a-third-party-verification.html

Proposal to extend SEC statute of limitations

for fraud.   When to begin? Discovery or violation?  http://www.complianceweek.com/sen-reed-working-with-sec-to-craft-legislation-doubling-statute-of-limitations/article/307586/

Internal audit oversight

guidelines are discussed in this article.  http://www.journalofaccountancy.com/Issues/2013/Aug/20137713.htm

Blame the internal auditor

That is in part what this report on the bankrupt city of Stockton CA contains.  Some blame for an internal auditor who retired prior to the bankruptcy.   However, let's not forget that one internal auditor is part of an overall city culture.   What about tone at the top!    http://www.recordnet.com/apps/pbcs.dll/article?AID=/20130801/A_NEWS/308010320

Audit fees rise

as reported in this article, based on a sample of public and private companies.   Third straight year of reported fee increases.  http://journalofaccountancy.com/News/20138425.htm

Small companies exempt from internal control certification

pose more risk according to this source.    Increased restatement of financials for a large block of companies.   http://blogs.wsj.com/cfo/2013/07/23/audit-rule-exemptions-pose-risks/?mod=djemCFO_h

For internal auditors to succeed

in the future, check out what this survey results indicates to be necessary skills..   http://www.cgma.org/Magazine/News/Pages/20138328.aspx

Stealing jewels

This article discusses a Tiffany's exec stealing jewels over a period of time.  
http://www.businessweek.com/articles/2013-07-08/how-a-tiffanys-employee-stole-1-dot-3-million-in-jewelry

Establishing sound client acceptance procedures

is the topic of this article.  A list of procedures related to client integrity is included, along with aspects related to risk of the client.   The process of formalizing the  client acceptance is a recommended proactive approach that will serve well.    http://www.journalofaccountancy.com/Issues/2013/Jul/20137770.htm

CPA gets probation for stealing from a dementia client

Hmmmm......   Will she have consequences for her CPA license?    Iowa CPA Society Ethics Division, please look into this case.   Send a message that the public trust of the CPA profession does not tolerate this kind of example.    

http://siouxcityjournal.com/news/local/crime-and-courts/sioux-city-accountant-gets-probation/article_80e537d0-6b51-5d26-9991-726372155091.html

Andrew Fastow speaks to ACFE convention

This former Enron fraudster addressed 2500 fraud examiners.   One ironic point noted was about getting approvals to do what was done from accountants, lawyers, etc...and yet is was still fraud.   

Also interesting bit about his habit of looking at his prison id card every morning, which a picture is shown.   He was not paid for this speech (travel expenses were covered), and has given other unpaid speeches to universities.   An interesting story.      http://features.blogs.fortune.cnn.com/2013/07/01/the-confessions-of-andy-fastow/

Auditor rotation

 bill to ban PCAOB moves forward  http://blogs.wsj.com/cfo/2013/06/19/bill-to-ban-pcaob-from-forcing-auditor-rotation-advances/?mod=djem_jiewr_AC_domainid

SEC charges cross-border company in fraud

The alleged loss - millions of dollars of cash improperly reported since the company China MediaExpress went public.   Auditor resigned, and forensic accountant auditor refused to take bribe   http://www.sec.gov/news/press/2013/2013-115.htm

Ex-Enron CEO Jeff Skilling's prison sentence shortened

under an agreement with Federal prosecutors.  He could get out in 2017 with the time he has served.  http://www.usatoday.com/story/money/business/2013/06/21/ex-enron-ceo-skilling-resentenced-to-14-years/2447223/

House bill to prohibit mandatory rotation of auditors

PCAOB proposed mandatory rotation; many opposed it as noted with comment letters.   http://www.reuters.com/article/2013/06/19/us-house-sec-bills-idUSBRE95I1NS20130619

The AICPA, not surprisingly,  had a letter also in suppport of the bill and in opposition to mandatory rotation. http://www.aicpa.org/Advocacy/Issues/DownloadableDocuments/2013-6-17-MFR-Letter.pdf

SEC, fraud, CPAs

This post by Francine McKenna is rich with links that synthesize issues of interest to those interested in studying and finding fraud   http://www.forbes.com/sites/francinemckenna/2013/06/18/where-should-sec-start-a-fraud-crack-down-maybe-look-at-fake-restatements/

How new COSO framework may affect business

Three ways are mentioned   http://blog.aicpa.org/2013/06/3-ways-the-new-coso-framework-may-affect-your-business.html

The accountant who created a fashion book

This has nothing to do with auditing, but it is a nice distraction on a summer's day.  Accountants and auditors could be stylish, even in the 16th century.  Here's to defeating the dreary stereotypes!    Enjoy.  http://www.bbc.co.uk/news/magazine-22766029

Regulations extending the CPA's day

As per this article, the regs come from a variety of avenues that require compliance  http://www.journalofaccountancy.com/News/20138124.htm

An interesting site for aspiring CPAs

http://crushthecpaexam.com/

The SEC and clawbacks

A broader range for the definition of "misconduct" http://www3.cfo.com/article/2013/5/compensation_clawback-junaid-zubairi-vedder-price-304a-162m-maynard-jenkins-egregious-negligence

Steps to update internal control

as per this Journal of Accountancy article regarding the new COSO framework.  http://www.journalofaccountancy.com/News/20137983.htm

PCAOB and China protocol

for access to working papers.   As per  Paul Gillis, a  PCAOB standing advisory group and Peking University Professor reports in his blog  http://www.chinaaccountingblog.com/weblog/possible-pcaob-deal.html

Audit firms and oligopolies

In this HBS working paper, the oligopoly situation of audit firms is discussed  http://hbswk.hbs.edu/item/7177.html?wknews=04172013

KPMG resigns as auditor from Herbalife and Skechers

This is the result of a rogue audit partner (since dismissed) who shared information with others, who used it inappropriately for trading.   As a result of this news, stock in both companies was temporarily halted in trading.  Both Herbalife and Skechers are seeking new auditors and may feel pressure to get their audits complete in a timely fashion.
http://accounting.smartpros.com/x74749.xml

PCAOB undecided on naming engagement partners

This article addresses the current status of this topic that garnered many comment letters when it was first aired.   The organization may issue a new proposal... http://www.complianceweek.com/pcaob-undecided-on-naming-engagement-partners/article/289288/

Walmart ongoing bribery investigation

to lead to losses  http://accounting.smartpros.com/x74689.xml

Importance of soft skills in internal auditing

We know technical skills are important, but note the importance attributed to 7 skills of importance.  http://www.cgma.org/Magazine/News/Pages/20137573.aspx

Be careful providing comfort

This AICPA blog post addresses concerns regarding comfort letters.   http://blog.aicpa.org/2013/03/the-dangers-of-providing-client-comfort-letters.html

PCAOB to consider reorganizing the audit standards

Meeting this Tuesday to consider this topical organization approach.    http://journalofaccountancy.com/News/20137625.htm

COSO framework released May 15

The new framework has 17 principles to explain achieving effective internal control.   The 1992 framework will be considered superceded  on Dec. 15, 2014.   http://journalofaccountancy.com/News/20137619.htm

The importance of the insider in fraud situation

The 2012 Kroll Global survey of executives indicates a changing fraud environoment.  Check out some of the variables related with fraud.  839 senior executives weighed in for the survey.  http://www.accountingweb.com/article/new-report-shows-changing-fraud-environment/221374

Fraud IQ

Test your fraud IQ  http://www.journalofaccountancy.com/Issues/2013/Mar/20126774.htm

NASDAQ proposes rule about internal audit

similar to the NYSE.   If approved, companies listed on the NASDAQ must have an internal audit function.  The purpose is to provide audit committees with risk assessments.
  http://www.sec.gov./rules/sro/nasdaq/2013/34-69030.pdf

ACL workpaper video

This video (5 minutes) is a short demonstration of how ACL software can automate the internal audit report.   It shows how the risk control matrix therein helps yield findings in an SAP system.   While ACL is a for-profit company, this video highlights the use of a GAS tool in an informative way.   Allows students to see the practical aspects of the theory they have learned.  http://www.acl.com/mtccampaigns/workpapers-demo/?mtcPromotion=19423

Group Audit Standard

This article clarifies the group audit requirements as a result of the clarity standard published by the AICPA.   Terminology such as component auditor is defined as well as the responsibilities that stem from this statement.   The provisions of this standard are within AU600.   http://www.journalofaccountancy.com/Issues/2013/Mar/20126525.htm

If you had learned auditing before this change, you are most used what used to be called the "principal" auditor and "other" auditors....this is now respectively known and referred to as the "group" auditor and the "component" auditor

Follow the "why"

A novel approach to asking why in the context a contract audit situation.   Change orders....ask why, and follow it to see where it takes you.   A simple but illuminating process in an audit interview.   Thanks to the AGA newsletter for this particular article.  http://www.agacgfm.org/AGA/TOPICS/Archive/031113/perspectives_miller031113.pdf

Risk Appetite

Check out this white paper from the Institute of Risk Management that explains  about risk appetite and risk tolerance.    https://community.cgma.org/cgma/b/blog/archive/2013/03/01/betting-the-farm-what-is-your-risk-appetite.aspx

Survey of Audit Committee Members

yielded positive results in terms of the information they are getting from their auditors.   Communication is less clear on interactions with PCAOB over the inspection process results. To read this article see this link.
http://www.complianceweek.com/survey-suggests-audit-committees-get-adequate-information/article/283180/

What PCAOB has found

about problems in auditing firms  http://www.accountingweb.com/article/pcaob-gives-audit-firms-mixed-review/221228

Risk, safeguards and the film Arbitrage

Read this blog post from the Chartered Global Management Accountant and the link at the end to an array of resources on risk.   https://community.cgma.org/cgma/b/blog/archive/2013/02/27/risk-safeguards-and-arbitrage.aspx

Peer Review strengthens a firm

Read this blog post from AICPA on peer review impact   http://blog.aicpa.org/2013/02/how-peer-review-strengthened-our-firm.html

Express Scripts sues E&Y

for theft of documents  http://online.wsj.com/article/SB10001424127887324616604578306650614568108.html?mod=djem_jiewr_AC_domainid

For discussion purposes in class, consider these posed by Reviewer Linda Christiansen, Indiana University Southeast
* QUESTIONS: *
1. (*Introductory*) What are the facts of this lawsuit? Who is the
plaintiff and who are the defendants? What is the issue in the case?

2. (*Advanced*) What is a "Big Four" accounting firm? What firms are in the
Big Four? What are all the various services offered by Big Four accounting
firms? How are Big Four firms different from other accounting firms? How
are they similar?

3. (*Advanced*) How can companies protect themselves from accountants and
consultants stealing confidential information and using it for other
purposes? In what ways can accountants and accounting firms be sanctioned
for such behavior?

4. (*Advanced*) The article states that Express Scripts uses three
different firms to do auditing work, tax, and consulting. Why would a
company use different CPA firms for different tasks? On the other hand, why
would a company use one firm for several tasks? With these factors in mind,
how should firms market their array of services?

Requests for Client records

This article highlights some of the issues surrounding requests for client records.   A CPA is well advised to be informed ahead of such requests so that actions are appropriate and do not create any kind of negative exposure for various reasons.  http://www.journalofaccountancy.com/Issues/2013/Feb/20126773.htm

Due Diligence is required with increased fraud risk

in U.S. companies doing business or considering acquistions of companies in China.   Many companies are seeing China as a way to growth.   A recognition of the risks inherent when operation in a different culture including awareness of differences in the culture's norms and ways of doing business and even the way auditing is done is an important consideration when considering risks.

This article discusses the  example last month involving Caterpillar's purchase of a Mining Company and resultant disclosure of over a half billion dollars writeoff.   This article is interesting as it discusses the "red Ferrari" test.   Check it out....what doesa red Ferrari test refer to? http://uk.reuters.com/article/2013/02/10/business-us-usa-accounting-china-caterpi-idUKBRE91908Q20130210

PCAOB makes deal with Finland

to conduct joint inspections and share data.   This article includes some of the status of other countries policies with inspection reports.    http://www.accountingtoday.com/news/PCAOB-Makes-Deal-Finland-Audit-Inspections-65594-1.html

PWC 2013 guide on questions for audit committees

This 16 page document downloadable from this site highlights questions for members of the audit committee  to ask throughout the year and at yearend.  http://www.pwc.com/us/en/cfodirect/publications/corporate-governance/year-end-audit-committee-questions-2013-edition.jhtml?display=/us/en/cfodirect/publications/corporate-governance

Effective Risk Management and Control

Check out the IIA position paper on the three lines of defense. 
https://na.theiia.org/standards-guidance/recommended-guidance/Pages/The-Three-Lines-of-Defense-in-Effective-Risk-Management-and-Control.aspx

New Anti-Fraud Website

The Anti-Fraud Collaboration  website is a newly released resources.   As described on its website, the site represents the collaborative efforts of the CAQ, Financial Executives International, IIA, and the National Association of Corporate Directors organizations that actively engage in efforts to mitigate the risks of financial reporting fraud. The goal is to promote the deterrence and detection of financial reporting fraud through the development of tools and other resources targeted to the roles and responsibilities of participants across the financial reporting supply chain.  http://www.antifraudcollaboration.org/

IAASB framework to Improve audit quality

PCAOB, IAASB, and Center for Audit Quality (CAQ) looking for ways to improve audit quality.   A link to the IAASB's newly released framework is within this site, as well as a brief discussion of the PCAOB's efforts and the CAQ (AICPA).   Article is located at http://journalofaccountancy.com/News/20137239.htm

Is PCAOB applying sufficiently rigorous economic analysis

A U.S. House panel is probing whether the country's primary audit watchdog is doing enough to weigh the economic impact as it considers new regulations for the nation's auditors.  http://www.reuters.com/article/2013/01/14/us-pcaob-congress-idUSBRE90D14I20130114

Informing audit committees about PCAOB Inspection results

This article  released by the executive director and senior director of the Center for Audit Quality discusses some of the issues that emerged from the 2012 PCAOB released pronouncement about audit committees.   What can be shared, and how should the information be discussed with the committee are items included.  http://www.directorship.com/informing-audit-committees-on-pcaob-inspection-results/

COSO Chairman to step down May 31

COSO searches for a new chairman to replace Dave Landsittel who has served for the last four years.  http://journalofaccountancy.com/News/20137140.htm

Metrics CPA firms might use

about client retention.   These are 12 qualitative matters.   http://blog.aicpa.org/2013/01/the-defining-dozen-12-metrics-cpa-firms-should-track.html#sthash.G3GxiFR5.4DevgdMR.dpbs