Author: Jennifer Louis

Critical Audit Matters –What is Actually Being Communicated?

The Public Company Accounting Oversight Board (PCAOB) started requiring financial statement auditors of large accelerated public company filers to include “critical audit matters” in audit reports for fiscal years ending on or after June 30, 2019. All other nonexempt filers will begin including...


The Classification of Debt (Topic 740) Is Changing

In September 2019, FASB released a revised exposure draft related to a proposed accounting standard update for simplifying the classification of debt in a classified balance sheet. The new deadline for further comment is October 28, 2019. The FASB originally issued a proposed update back in 2017....


Auditors Have New Responsibilities Relating to Other Information in Annual Reports

Statements on Auditing Standards No. 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports, was issued in July 2019.  It is codified under AU-C Section 720 of the AICPA Professional Standards.  The standard applies only to a single document or...


Changed Requirements for Auditor Reporting and Performance on ERISA Plan Financial Statements

The Statement on Auditing Standards No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, was issued in July 2019. It is codified under AU-C Section 703 in the AICPA Professional Standards. The standard addresses the auditor’s...


Top Three Questions for Implementing the New Nonprofit Reporting Model

ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements for Not-for-Profit Entities, made targeted improvements to the financial reporting model. The ASU was effective for fiscal years beginning after December 15, 2017. All calendar year-end entities have adopted the...


AICPA Releases New SAS on Auditor Reporting

Statement on Auditing Standards (SAS) No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, was recently released by the AICPA’s Auditing Standards Board. The overall objective is to update the form and content of the...


An Auditor’s Responsibility for Cybersecurity Risks

Cybersecurity has rapidly become a significant risk to businesses as breaches of information may result in financial and reputational damage, diminished investor confidence, and exposure to potential regulatory fines. Cybersecurity risks and controls are within the scope of the financial statement...


Will Private Company GAAP Alternatives Soon Be Made Available to Nonprofits?

The Financial Accounting Standards Board (FASB) has proposed that two GAAP alternatives currently available only to nonpublic business entities also be made available to nonprofit organizations.   The accounting alternatives were originally codified into GAAP through ASU 2014-02 and ASU...


Accounting for Leasehold Improvements and Lease Incentives Under New Rules

Lease incentives are any payment made to, or on behalf of, a lessee to fund items that would otherwise be a lessee’s expense. This includes reimbursement for moving expenses or assumption of a lessee’s pre-existing lease.   Lease incentives reduce lease payments used for lease...


What PCAOB Inspectors Will Look for in 2019 Audits

The Public Company Accounting Oversight Board (PCAOB) issues an annual outlook on the potential focus areas for inspections of audits of issuers and broker dealers. The following areas will be emphasized in 2019: Recurring deficiencies related to auditor independence suggest that firms do not have...


Materiality – Standard Setters Revisit This Important Concept

The Financial Accounting Standards Board (FASB) recently amended Statement of Financial Accounting Concepts No. 8, Chapter 3, Qualitative Characteristics of Useful Financial Information. The Concepts Statement provides a foundation from which financial reporting standards are created.  Similarly,...


Revenue Recognition – Real Life Impacts

Accounting for revenues and the associated direct costs has caused global sweeping changes recently.  While the underlying concepts are not entirely new, the changes are having larger impacts on certain industries and are causing other companies to rethink how they do business. U.S. public...


FASB Updates Accounting for Costs of Implementing Cloud-Based Computing Arrangements

ASU 2018-05, Intangibles-Goodwill and Other: Internal-Use Software (Subtopic 350-40) relates to a customer’s accounting for costs incurred in implementing a cloud-based computing arrangement that is considered a service contract versus a software license. Previously issued ASU 2015-05 provided...


New Lease Accounting Standards Released Related to Topic 842

Two new accounting standards impacting the implementation of ASU 2016-02, that created Leases (Topic 842), were recently released.  ASU 2018-11 contains targeted improvements, and ASU 2018-10 contains codification improvements. The codification improvements affect narrow aspects of the lease...


GAO Issues Revised Yellow Book Standards…Finally!!!

Revised standards issued July 17, 2018 by the U.S. Government Accountability Office (GAO) are designed to provide a framework for high-quality governmental audits, which include audits of government entities and entities receiving government awards. Also known as the “Yellow Book,” the...


New Definition of a Business

ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business revised the definition of a business, which will reduce the number of transactions that are accounted for as “business combinations” versus “asset acquisitions”. The following are two very important...


SSARS No. 24 – New Requirements for Compilations and Reviews

The purpose of this new omnibus statement is to amend Statement on Standards for Accounting and Review Services (SSARS) in various ways, as briefly highlighted below. Adds AR-C section 100, Special Considerations – International Reporting, which addresses when an accountant is engaged to perform a...


Proposed Ethics Interpretation - Knowing Misrepresentations in the Preparation and Presentation of Information

AICPA Members in business may be involved in the preparation and presentation of information for use both internally and externally to an employing organization. This includes financial and non-financial information, such as performance reports, budgets, forecasts, tax returns, and more. Members who...


The AICPA Releases Interpretation on Dual-Audit Reporting

The Auditing Standards Board (ASB), who promulgates generally accepted auditing standards (GAAS), recently released an interpretation to help any auditor of a “nonissuer” comply with reporting requirements under both AU-C Section 700, Forming an Opinion and Reporting on Financial Statements, and...


The Latest Independence Impairment Concern – Hosting Your Client’s Data

The AICPA Code of Professional Conduct “Independence Rule” Section 1.295.143 relates to Hosting Services.  Under this newest rule, a CPA’s independence is impaired when taking responsibility for hosting an attest client’s data or records (whether hard copy or electronic).  This action is...