Extension of deadline for California firms whose first Peer Review report is due July 1, 2011

(cross-post from my other blog, Attestation Update)

Extensions available!!!

Just a reminder, California now has mandatory peer review.  First deadline is rapidly approaching for firms whose first peer review is due July 1, 2011.  This would be CPAs whose licenses end in 01 through 33. 

The Cal Society has a memo on their website allowing extensions.

See announcement here.

To get an extension, a firm must: (more…)

How could an auditor pick up any red flags to this corruption case?

I’m writing a series of posts on my other blog about a corruption indictment of officials in the city of Upland.  The focus of that series of posts is a case study for CPAs based on a live, developing situation.  Since the audience will be CPAs, I will not cross-post those discussions to this blog.  If you’re interested, the posts start here and continue here and here.

Do you really need an audit? Ask the question

Might be worth your time to ask your funders if they really need to see audited financial statements.  If the only reason you’re having an audit is to meet the requirements of a few foundations, call them to see if they still need it.  Perhaps they would be happy with reviewed financial statements.

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What will the new structure of the SASs look like after the clarity project is complete?

(cross-posted from my other blog for CPAs that stop by here.  This is the start of a 3 post series)

All of the SASs are being rewritten. All those new/revised/updated/clarified/etc documents will go into effect on the same day.

Ouch.  For us change-phobic CPAs, there is a world of change on the horizon.

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One sentence explanation of the difference between an audit and a review

I have discussed the differences between audits, reviews, and compilations here and here. Even developed a visual illustration here.  Ask any CPA and you can get a long explanation of the distinctions.

For something shorter, consult this article by Angus Loten in the Wall Street Journal, which said:

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New blog – attestationupdate.com

I started a new blog today, Attestation Update, www.attestationupdate.com. It will provide news and updates to the CPA community on audits, reviews, and compilations.  Some posts are only at the new site and some attestation posts will be left here. In the future, posts that are focused more on the CPA community will be at the new site.

Why make this change? I realized there are very two distinct audiences for my writing:  the non-profit community and CPAs. While there is a lot of overlap, particularly with the CPA firms in Southern California with whom I count as friends at the same time as competitors, the interests are very different.  Thus, two blogs.  This will allow for more focused attention by time constrained readers.  Enjoy them both!

Revenue Recognition exposure draft – Topic 605

FASB has an exposure draft out on revenue recognition.  This post is a ‘heads up’, not an overall summary.  This will be a fairly substantive rule, so if you haven’t heard about it, might be good to take a look.  The document has a great summary on the first five pages of the introduction. (more…)

What services do you want from your CPA when they look at your financial statements?

There are three different levels of service that CPAs can provide when we look at your financial statements.  We can provide a compilation, a review, or an audit.  What are the differences?  I have an article here that goes into some detail.  It is an extract from one of my books.

The following post explains the differences visually.

Visual description of the difference between audits, reviews, and compilations

Here is a visual picture that illustrates the different comfort levels someone can draw from financial statements that have been audited, reviewed, or compiled by a CPA.

Here is a picture of assurance levels from reports issues by CPAs.

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What comfort level is there from an audit, review or compilation report?

This is an explanation of the visual picture I drew in the previous post.  I will try to explain the differences between audits, reviews, and compilations with a minimal amount of the technical words we CPAs usually bring to an issue.  (more…)

Increased fair value disclosures – ASU 10-06

Fair value disclosures will increase for December 2010 financial statements.  Accounting Standards Update 2010-06, Fair Value Measurements and Disclosures (Topic 820) will require a few new items.  The two main items I see for small and medium-sized NPOs are first, disclosing transfers in & out of Level 1 & 2, and second, disaggregation of fair value disclosures. (more…)

“Nonprofit Starvation Cycle”

Stanford Social Innovation Review has a superb article on the cycle many NPOs have of starving themselves of critical infrastructure they need to be effective in their mission.

Superb summary: “The first step in the cycle is funders’ unrealistic expectations about how much it costs to run a nonprofit. At the second step, nonprofits feel pressure to conform to funders’ unrealistic expectations. At the third step, nonprofits respond to this pressure in two ways: They spend too little on overhead, and they underreport their expenditures on tax forms and in fundraising materials. (more…)