Public Accounting Highlights

The Plain-English reports from 2010 cover accounting, financial reporting, audit, compilation, review, and other A&A topics. In this session, we’ll discuss the new leases standard for private companies and nonprofits. We’ll also examine issues, lessons learned from public company adoption and best practices on implementation. Consequences of the pandemic can be observed in many forms, including revenue reductions, supply chain disruptions, business closures, work stoppages, significant volatility in financial markets, increased exposure to credit risk, and increased costs. Many travel, hospitality, retail, entertainment, and other enterprises have experienced a serious decline in operating activity; in some instances, businesses have been forced to close temporarily and possibly permanently. It is uncertain how long these effects will persist and how widespread they will be. Any unaudited, quantitative, unrecognized subsequent events information disclosed in audited financial statements, such as optional pro forma presentations, must be clearly designated as unaudited.

The CPEA’s team of experts assist members with accounting, auditing, attest, review, and compilation needs by sharing technical advice and guidance. The CPEA’s straight-forward and clear style of writing and speaking gives practitioners the opportunity to understand the applicability of the professional literature when preparing financial statements and when auditing, reviewing, and compiling those financial statements. The Center for Plain English Accounting is the AICPA’s national A&A resource center, sponsored by the Private Companies Practice Section. Accordingly, the GASB 34 version of an MD&A is intended to bring key issues to the financial report user’s attention that will likely affect a government’s future financial health and that may not otherwise be apparent. Therefore, it should contain much of the same COVID-19–related disclosures that an SEC issuer’s MD&A should contain. Uncertainties related to COVID-19 and related market conditions may prompt entities to modify existing contracts with customers or reassess the probability that the contracted consideration will be collected.

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And, very often, they do not have access to a national office and have nowhere to turn for help or guidance. Through CPEA membership, practitioners gain national office resources without a national office. The CPEA’s team of experts assists members with their accounting, auditing, attest, review, and compilation needs by sharing technical advice and guidance in a straight-forward manner. The curtailment of operations, diminishing liquidity, and other economic hardships currently being experienced by customers and borrowers must be considered when valuing receivables for collectability and establishing allowances. Lessors in sales-type and direct financing lease arrangements should likewise follow the impairment testing guidance prescribed for financial assets in Topics 310 or 326, as applicable, when determining credit losses on lease receivables.

• The AICPA wrote, “Many private companies still need to expend significant resources to adopt the new revenue standard.” This sentiment was echoed by the AGCA, which made a similar statement to emphasize the importance of giving private companies additional time to implement the standard.
• In addition, the pandemic could cause debt covenant violations or activate subjective acceleration clauses.
• The Plain-English reports from 2019 cover accounting, financial reporting, audit, compilation, review, and other A&A topics.
• GAQC is a voluntary membership center for CPA firms and state audit organizations that perform governmental audits.
• Barnes Dennig has in-depth experience with companies in the construction, real estate, manufacturing, healthcare, technology, retail , and not-for-profit industries as well as wealth management and financial planning services.
• Is your client’s organization considered a public business entity under the new U.S.

For these and other reasons, it may be impossible to perform otherwise planned tests of controls, and all such factors should be considered for their potential effect on the risks of material misstatement, the scope of substantive testing, and—for SEC issuers—management and auditors’ reports on ICFR. One principle that pervades the issues arising from the pandemic is the use of estimates to ensure timely financial reporting. As discussed below, many of the issues will require greater-than-usual reliance on accounting estimates; due to the higher level of uncertainty, these estimates will be inherently more difficult and less reliable. The pandemic will impact the conduct of your engagements this busy season as you and your clients continue to make health and safety accommodations. CAMICO recommends that firms communicate to clients the COVID-19 related safety protocols in place and the potential implications to the planning, timing and conduct of the services your firm will render. Such a communication can be provided in a separate client letter (“Letter – Client Letter – Pandemic Implications to Firm Services”) or embedded in the engagement letter. As such a communication is organization-specific, a firm will need to tailor the communication to address the firm’s specific precautions and protocols.

Pandemic Implications On Your Engagement

The Technical Bulletin, if adopted in its present form, addresses questions raised with the GASB by its stakeholders. The Exposure Draft of the proposal clarifies the application of existing recognition requirements to resources received from certain programs established by the CARES Act. It also clarifies how existing presentation requirements apply to certain inflows of CARES Act resources and to the unplanned and additional outflows of resources incurred in response to the coronavirus disease.

Technical Hotline (for A&A inquiries)offers members free assistance concerning issues related to accounting and financial reporting, auditing and attestation, compilation, preparation and review standards. “Given the unique nature of the PPP, lenders have had many questions about how to account for these types of loans and report on their arrangements.

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Excluded from the requirement would be religious organizations, who are exempt from registering with the AG. The report, Consequences of COVID-19 Financial Reporting Considerations, was drafted by the Center for Plain English Accounting and is available at no charge. Firm Practice Management/Private Companies Practice Section supports CPA firms of all sizes by providing targeted and customizable resources and networking opportunities.

Accordingly, professional judgment should be applied to each discrete subsequent event under consideration for either recognition or disclosure, and it should be carefully documented, especially for SEC issuers, as the SEC has been known to challenge the timing of loss recognition. My topic is valuation of donated medicine in the not-for-profit community.

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This tools reviews deadline extensions for various federal agency reporting due dates that have been extended in light of COVID-19. The credit markets are highly interconnected, which can both accelerate risk transmission and facilitate risk absorption. The U.S credit markets, in size, structure and function have changed significantly since the 2008 global financial crisis. In his previous role as a vice president with the AICPA, Chuck directed the AICPA’s Audit and Attest Standards Team, which is responsible for the technical activities of the Auditing Standards Board and the Accounting and Review Services Committee. Chuck served as a member and is the former Deputy Chair of the International Audit & Assurance Standards Board and was the AICPA’s member to the Committee of Sponsoring Organizations of the Treadway Commission.

The Act increased this limitation to 50% for taxable years 2019 and 2020 with a special allocation election required for partnerships for 2019. For tax year 2020, the taxpayer may also elect to use the adjusted taxable income from 2019 to calculate this limitation. Additionally, the taxpayer may also elect out of deducting the 50% excess business interest expense for taxable years beginning in 2020 without limitation. Summary – In an effort to mitigate the negative impact that COVID-19 has had on affected Americans, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act.

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Dramatically reduced replacement costs would likely have the effect of reducing net realizable values, or for inventories carried at LIFO or on the retail method, market values (as per ASC Topic 330, “Inventory”), market demand, or even ultimate salability considerations used for inventory valuation. Management must also reconsider the effects on current uncertainties about future operations on the valuation allowance provided for any deferred tax assets. Because an evaluation of an entity’s ability to continue as a going concern is a relatively short-term consideration, center for plain english accounting it is distinctly different from an impairment consideration, which is typically a longer-term evaluation. Because of the imminence of the planned or expected liquidation, asset values reported on the liquidation basis of accounting are typically lower than those reported on the going concern basis, even after an impairment adjustment. During the pandemic, accessing client records and key personnel may present formidable risks for auditors, especially in cases where records are still maintained on paper, and auditors or client employees are required to work at home .

Type II subsequent events are those which take place after the financial statement date which are so significant that they warrant mention in the financial statements to keep those statements from being misleading. A range of financial reporting issues need careful attention during the COVID-19 pandemic. These issues are old news in the professional literature but need to be considered more intentionally. The Governmental Audit Quality Center promotes the importance of quality governmental audits and the value of such audits to purchasers of governmental audit services.

The majority of the tax relief is offered mainly through the deferment of taxes, as well as relaxing some of the limitations placed on businesses from the Tax Cuts and Jobs Act . The most significant of these changes are summarized below and are attributable to net operating losses, 163 business interest expenses and AMT credits. Summary – The Governmental Accounting Standards Board has released the proposed staff Technical Bulletin, Accounting and Financial Reporting Issues Related to the Coronavirus Aid, Relief, and Economic Security Act of 2020 and Coronavirus Diseases. The GASB is proposing the technical guidance as part of its continuing efforts to assist state and local governments during the COVID-19 pandemic. The AICPA has published a COVID-19 Related Deadline Extensions of Audited Financial Statements and Other Reports.

The accounting implications impact review, compilation and preparation of financial statement engagements. Offered exclusively to members of AICPA’s Center for Plain English Accounting, this VIP session takes a close look at a number of accounting topics such as revenue recognition and implementing the Private Company Council alternatives. In addition, the CPEA staff will drill down into specific implementation matters related to compilations and reviews, including SSARS No. 21 and the standard on preparing financial statements. Both the AICPA and the AGCA in their letters to the FASB note the immense amount of resources and time necessary to implement all of the new accounting standards, and state that private companies need more time to successfully integrate the new rules into their financial statements. The AICPA wrote, “Many private companies still need to expend significant resources to adopt the new revenue standard.” This sentiment was echoed by the AGCA, which made a similar statement to emphasize the importance of giving private companies additional time to implement the standard. The AICPA and several national accounting firms have authored illustrative guidance including sample financial statement disclosures to address the pandemic’s implications. CAMICO recommends you identify publicly traded companies in the same or similar industries with the same or comparable dynamics, access their financial statements, and harvest and modify suitable language to craft financial statement disclosures appropriate for your clients’ unique needs.

Melisa is a Certified Speaking Professional, a Certified Professional in Talent Development , and has earned the Association for Talent Development Master Trainer™ designation. Her passion for instructional design and adult learning techniques is one of the differentiators that set her apart from other CPE providers. Within the industry, Melisa serves on the FASB’s Not-for-Profit Advisory Committee , AICPA Council, and the VSCPA’s Board of Directors. She previously served on the AICPA’s Technical Issues Committee and is a past-Chair of the NCACPA’s A&A committee. Melisa also authors the AICPA’s State and Local Government Guide and serves as a SME for the Center for Plain English Accounting.

Additionally, two recent reports on private company preparedness for ASC 842 seem to prove the concerns of the AICPA and the AGCA. Deloitte reported in a recent study that only 30% of companies will adopt ASC 842 by the deadline, 44% are only partially prepared, and the remaining 33% report that they were not ready to comply. Another study done by the Center for Plain English Accounting noted that over 50% of private firms claimed they were not ready to implement all of what the new lease accounting standards entail. The Center for Plain English Accounting is the AICPA’s national A&A resource center.

• TheAICPA’s Center for Plain English Accounting is heading to Curacao with expanded on-site training courses for accountants from the Caribbean and South America.
• Online access to a valuable and ever-growing library of guidance and technical reports.
• He worked with the Private Company Financial Reporting Committee for the last six years and helped staff the recent Blue Ribbon Panel on private company accounting.
• This is an outstanding opportunity to obtain superior US technical content and practical guidance for Accountants.
• Peer Reviewserves the public interest by promoting the quality of accounting, auditing and attestation services performed by AICPA members.
• Changes in work habits and schedules may interfere with the ability to timely obtain satisfactory audit evidence by direct confirmation and may force auditors to seek alternative, sometimes less reliable, sources of audit evidence.

In this session, we’ll provide an overview of data connection, data transformation and data visualization, and discuss how these areas can be used in businesses. Auditors must seriously consider whether doing all they can in a particular situation translates into doing enough to reduce the risk of material misstatement to an acceptable level. If not, there is a scope limitation, which must be reported accordingly. In addition to revenue contracts and leases, the COVID-19 crisis may precipitate negotiated modification in other executory contracts with accounting or disclosure implications. In addition, entities will need to consider disclosing how COVID-19–related uncertainties may affect the terms of future contracts with customers, including collectability assessments and pricing. Our qualified team of accountants will handle the business accounting aspects of your business so you can focus on the day-to-day and big picture items. Everyone probably knows that charities with more than $2 million of revenue who are registered with the California Attorney General must have an audit.