Published today in the Journal of Accountancy by
By Stephen G. Austin, CPA; Joel Colbourn, CPA; Ane Ohm, CPA; and Don Mitchell
In addition to causing enormous disruption to health, safety, and the economy across the globe, the coronavirus pandemic has significantly altered the landscape for CPAs related to the lease accounting standard.
The changes include a potential effective date delay of FASB’s new lease accounting standard for certain entities, including private companies; a monumental increase in the number of lease modifications requested by lessees and granted by lessors; and the need for disclosures related to a company’s lease accounting decisions in the new environment.
Here’s a closer look at lease accounting amid the coronavirus pandemic.
FASB’s delay proposal
In recognition of the business disruptions caused by the new standard, FASB has voted to issue a proposal that would delay by one year the effective dates of its lease accounting standard for certain entities.… Read More
HMWC CPAs & Business Advisors’ annual “Death March” hiking adventure was completed with great success, as this year’s 41st annual event in the picturesque Big Sur region of the central California coast was the setting for partners, employees, families, friends, and clients of HMWC. The accounting firm, located in Tustin, encourages this type of team-building experience to help with the firm’s goal of creating a work environment that fosters trust, initiative, loyalty, work/life balance, and mutual employer/employee success.
The annual event is held at different locations each year and involves multi-day hiking adventures in areas of rugged natural beauty. The 2019 edition of the event included a variety of hikes totaling 15 or more miles. Participants ranged from 5 to 76 years of age.
Periodic roundup of recent and upcoming actions and activities by audit and accounting organizations throughout the world.
IASB– International Accounting Standards Board (www.ifrs.org)
- IFRS for SMEs Modules, published March 5, 2019, is a series of 35 modules developed over the past couple years to assist those interested in “learning about, applying, or reading financial statements prepared using, the IFRS for SMEs Standard. Included with each module are sections covering requirements, significant estimates and other judgments, comparison with full IFRS Standards, test your knowledge and apply your knowledge.
IFAC– International Federation of Accountants (www.ifac.org)
- International Accounting Education Standards Board (IAESB)– Exposure Draft, Proposed Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised), issued March 27, 2019, proposes “changes in key terminology, including a revised definition of the term “assurance client”; enhanced and clarified independence requirements for attestation engagements; clarification of the types of assurance engagement addressed in Part 4B; simplified guidance on assurance engagements that refers to the definitive source of explanatory material on such engagements in IAASB literature.”
Outlook for inspections and new audit report content put in place
When the PCAOB issued the Inspections Outlook for 2019in December, the term “transformation,” a word more often found in religious contexts, was used to describe the wide sweeping reassessment of the approaches for planning, conducting and reporting on the Board’s periodic examinations of audits and auditors. While some of the anticipated results will address longer range aspects, a number are to be implemented in 2019.
Following up, on March 14, 2019, the Staff Inspections Outlook for Audit Committees (Outlook) was published, spelling out the Board’s more robust intent for engagement with audit committees, along with delineation of key areas of inspection focus, as well as suggested questions audit committees may want to ask the auditors during the year.… Read More
Audit watchdog with more muscle to replace beleaguered Financial Reporting Council
The last issue of the Audit & Accounting Alert reported on the innovative, forward looking approach of the United Kingdom’s Financial Reporting Council (FRC) in tackling the challenges of financial reporting in the age of artificial intelligence. Unfortunately, the auditor watchdog role of the FRC has not fared as well in keeping pace with the rapid changes in the accounting and reporting complexities of organizations subject to its oversight.
With collapses like that of Carillion plc, the second largest construction company in the United Kingdom, in early 2018, and severe criticism of the company’s audits performed by KPMG, the government commissioned an independent review of the FRC (known as the Kingman Review) to determine what went wrong, and the appropriate actions to take.… Read More
Useful guidance for audit firms of all sizes
The Center for Audit Quality (CAQ), an AICPA affiliate, describes itself as an autonomous public policy organization dedicated to enhancing investor confidence and public trust in global capital markets by fostering, among other things, high-quality performance by public company auditors. Time and time again, polls have given high marks for the public trust of accountants in various regards. For example, a January 2019 survey taken by three international accounting bodies found a much higher trust level in accountants than in governmental tax systems. Maintaining the high confidence of the public is critical for public accountants who hold the exclusive franchise for audit reports on financial statements.
Even though the resources generated by the CAQ are specifically directed toward public company auditors, they provide beneficial insights and tools that can be helpful to private company auditors as well.… Read More
Financial Reporting Council report considers the impact
The Financial Reporting Council (FRC) is the regulator of auditors in the United Kingdom, as well as the standard setter for corporate governance. The FRC’s goal is to promote transparency and integrity in business for the investors and others who rely on company reporting.
In response to the call for improved corporate reporting, the FRC established the Financial Reporting Lab (Lab) in 2011, as a means for investors and companies to together develop pragmatic solutions. To address technology related challenges, the Lab initiated two projects. Digital Present looked at the current state of technology tools and how to best employ them. Digital Future, building on the results of Digital Present, “is designed to identify what benefits the new mediums and technologies should offer, consider which technologies might do this and how companies can make the most of the digital opportunity.”… Read More