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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. Professional judgment must be applied to each discrete asset or asset group under consideration for an impairment write-down, and the basis for conclusions, especially when little or no writedown is deemed necessary, should be carefully documented. This is particularly important for issuers, since the SEC has been known to challenge the timing of impairment loss recognition (see, e.g., SEC AAER-4064). Valuation of receivables, inventories, investment securities, and deferred tax assets. Because an evaluation of an entity’s ability to continue as a going concern is a relatively short-term consideration, 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. 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.
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. Bob Durak is the director of the Center for Plain English Accounting, the American Institute of CPAs’ national accounting and auditing resource center. He has been the AICPA’s director of private company financial reporting, overseeing the development of the Financial Reporting Framework for Small- and Medium-Sized Entities and staffing the profession’s recent Blue Ribbon Panel on private company accounting. In addition, Bob staffed the Financial Accounting Standards Board’s Private Company Financial Reporting Committee. Prior to his current position, Bob was the director of the accounting and auditing publications team at the AICPA.
Under this model, unlike the FASB accounting for government grants, the funds can be recognized into other income or can be recorded as a reduction to expenses. If repayment is expected, the loan should be accounted for consistent with other debt arrangements and reported as a loan payable. If facts and circumstances change and partial or total forgiveness is obtained, the gain on extinguishment is recognized once the company is legally released as the primary obligor recording transactions of the debt. If your firm desires to keep up with evolving standards and needs written answers to technical questions, the CPEA is an excellent choice. Last week I was working with another partner to resolve a nonprofit accounting issue. (I would say who was right but I might embarrass myself.) And with it, we documented our consultation per our firm’s quality control document. Now, if the issue comes up in peer review, we have a solid answer for our position.
Groskopf has also served on the AICPA’s PCPS Technical Issues Committee, including one year as chair of its accounting subcommittee. As a client engagement partner, he brings valuable insight and extensive experience to private company accounting issues, as well as expertise in audit, review, compilation and attestation services. 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. While SSARS 21 has been around for nearly a decade, preparation, compilation and review engagements continue to be a hot topic for peer review. This course will review the performance requirements for each engagement type with practical considerations. This interactive class will help attendees focus on what they need to know to be successful. The course will also address financial reporting issues impacting SSARS engagements including revenue recognition.
Audit And Accounting Quality
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.
Also, this page will contain news about CPEA services and membership as well as upcoming member events. A recently issued report from the Center for Plain English Accounting, the AICPA’s national A&A resource center, addressing the application of the AICPA independence rules to engagements to assist attest clients. It also discusses the CPA firm’s evaluation of threats to independence and other matters. Valuation techniques prescribed by the standard are beyond the scope of this discussion, but generally involve consideration of historical and estimated future performance and conditions. This may likely entail use of valuation specialists (AU-C 620 or AS 1210). 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.
Tax Effects
The Center was established to promote the quality of employee benefit plan audits. Meanwhile, banks may elect to account and report for loans modified under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act, P.L. More information is available for this topic and the next two at aicpa.org.
Monitor and attend standards setting meetings including those of the GASB and other standards-setters as necessary. Help prepare slides and participate in webcasts, addressing the implementation of new standards and other relevant A&A topics. We take care of your job applications every time you choose Apply4Me. To ensure the most secure and best overall experience on our website we recommend the latest versions of Chrome, Edge, Firefox, or Safari. Media representatives are invited to visit the AICPA Press Center at aicpa.org/press. Thomas J. Groskopf, a nationally known authority on those topics, succeeds the late Dr. Tom Ratcliffe, founder of Plain-English Accounting, LLC, a highly regarded advisory service acquired by the AICPA last fall and expanded into the CPEA. Firms must be members of the AICPA’s Private Companies Practice Session to join the center.
Melisa F. Galasso is the founder and CEO of Galasso Learning Solutions LLC. A CPA with nearly 20 years of experience in the accounting profession, Melisa designs and facilitates courses in advanced technical accounting and auditing topics, including not-for-profit and governmental accounting. Bob Durak has been with the AICPA since 1995 and is Director at the AICPA Center for Plain English Accounting. 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.
Penalties for noncompliance with loan or grant conditions will have to be considered for accrual or disclosure when applicable. The COVID-19 pandemic has disrupted life around the world, but business, in altered fashion, goes on. Companies will have to report on their operations, financial condition, and cash flows during this crisis, and those reports will have to be audited. The author details considerations management and auditors will need to take when preparing and auditing financial statements. Center for Plain English Accountingis a technical resource helping regional and local member firms to understand and implement accounting, auditing, attest, review, compilation, preparation and QC standards. 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.
Business Interruption Insurance Recoveries
If you are already a member of CPEA, be sure to mention your CPAFMA membership when you renew to receive the 10% discount. In addition to monthly reports, the CPEA issues brief “alerts” related to the “release” of authoritative accounting and attest literature and implementation material associated with this literature.
- Accessibility may be particularly challenging for foreign operations, in view of travel restrictions.
- Therefore, extreme caution must be exercised by auditors whose clients are proposing accruing or disclosing any material expected business interruption insurance recoveries in their financial statements.
- One significant relief measure of the Act is the Paycheck Protection Program which established SBA loans that can be forgiven when certain terms and conditions geared towards employee retention are met.
- 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.
- Online access to a valuable and ever-growing library of guidance and technical reports.
- Groskopf continues as a CPA with Barnes, Dennig & Co., a regional firm with offices in Ohio and Kentucky.
Each company should consider their fact pattern, the confidence level in obtaining forgiveness, and impacts on financial statement ratios and financial covenants when making this determination. “The Center for Plain English Accounting is our Firm’s most valuable resource provided by the AICPA. Their webcasts and reports are concise, informative and provide numerous tips, examples and best practices which we have incorporated in our practice. Their on-site training and technical inquiry support is unsurpassed.
Mike G Austin Cpa
Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. When US GAAP does not provide one exclusive accounting treatment for a transaction, as is the case here, the significant accounting policies footnote should describe the accounting policy that an organization applies. It is highly recommended for you to review the applicable US GAAP provisions for these accounting models in more depth as not all nuances are covered in this high-level summary. The International Federation of Accountants and the Association of Chartered Certified Accountants are marking Climate Week in New York City by urging accountants to get more involved in climate information reporting. Practitioners need to be careful and avoid performing management responsibilities. The Firm Services/PCPS team of the AICPA is posting other new resources regularly to their PPP Resources Center.
Public accountants provide a range of services to protect the public interest – everything from auditing corporate financials to helping individuals plan their financial futures. We are committed to members’ success as they play a critical role in the global marketplace and to positioning the CPA as one of the world’s premier accounting designations. Following are key Association initiatives to advance public accounting and enhance capabilities of members. unearned revenue Prepare monthly reports on key accounting and attest topics, including new standards and guidance. FASB delayed the effective dates for the new revenue recognition and lease accounting standards for certain preparers that haven’t yet adopted them. The board also proposed delaying the effective date for its long-duration insurance contract standard. In the absence of explicit guidance, business entities have flexibility in the above options.
Subsequent Events
The AICPA’s Firm Services/PCPS team has embedded links into the matrix that connect to sample letters for various engagements and documentation, along with links to guidance that CPA firms should consider for each type of service and client relationship. GAAP for the accrual of expected lost revenues, except in the form of business interruption insurance claims receivable when realization is assured. Nevertheless, estimated future operating losses ordinarily should be disclosed to the extent reasonably possible. One needs to consider, however, whether to recognize committed costs and expenses for which, due to the effects of the economic slowdown caused by COVID-19, there may not be any matching revenues forthcoming or goods or services expected to be received in exchange. Examples of such committed costs or expenses are short-term rent or depreciation on idle facilities and benefits for furloughed employees. Proper accounting for insurance recoveries varies, depending on factors such as the nature of the claim, the amount of proceeds , and the timing of the loss and recovery. When applicable, estimated reimbursements for business interruption are generally considered gain contingencies subject to ASC , which requires that such contingencies be resolved before such a reimbursement can be recognized.
It includes practice notes, and CPEA observations, which should be useful to practitioners as they work through numerous questions and practice issues. Howard B. Levy, CPA, is an independent technical consultant with over 50 years’ auditing experience. He is a former member of the AICPA’s Auditing Standards Board, its Accounting Standards Executive Committee, and its Center for Audit Quality’s Smaller Firms Task Force. Dohrer suggests that it may be possible to delay the physical inventory count and observation to a later date (i.e., after the access restrictions have been lifted and the health risk reduced) and “roll back” the count by auditing interim sales and purchases. It will likely be impossible to predict how long this may take, and the longer this period, the more an auditor will have to rely on controls that may be difficult to test and may have become unreliable during the intervening roll-back period. Using a perpetual inventory system and periodic test counts may more readily permit rollback or roll-forward procedures, but with much of the same potential pitfalls.
Accountants | Auditors | Advisors | Business & Organizational Consultants | CPAs – Barnes Dennig is a Certified Public Accounting and consulting firm serving businesses and organizations in Ohio, Indiana, and Kentucky. We provide a variety of accounting, tax, assurance, consulting, and advisory services to help companies, not-for-profits, and high net-worth individuals optimize their financial outlook. 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.
A “white paper” that has been circulated as being the work product of an AICPA committee has been confirmed by AICPA as NOT being a recommendation of that committee. The white paper may have been developed by certain members of the committee, but the committee developed questions only and issued no formal position paper. Buy products from manufacturers or brokerage firms and distribute them to wholesale and retail clients. Perform administrative duties, such as preparing sales budgets and reports, keeping sales records, and filing expense account reports. Identify prospective customers by using business directories, following leads from existing clients, participating in organizations and clubs, and attending trade shows and conferences. Consult with clients after sales or contract signings to resolve problems and to provide ongoing support. Assist other teams within the Association as needed on subject matter knowledge and information.
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.
Aicpa
They could work with management to pull the information together, including the client’s existing accounting policies, processes, disclosures, data, and systems requirements and internal control over financial reporting. Tom Groskopf is a nationally recognized authority on accounting and auditing topics and is service line leader for Barnes, Dennig & Co., Ltd. He also serves as Technical Director for the AICPA’s Center for Plain English aicpa center for plain english accounting Accounting, a national A&A resource center for PCPS firms. Tom is a past member of the Private Company Council and is the representative from the U.S.A. on the International Financial Reporting Standards’ Small- and Medium-sized Entity Implementation Group. Tom previously served on the advisory-only FASB Private Company Financial Reporting Committee, and he served a three-year term on the AICPA’s Technical Issues Committee.
Author: Emmett Gienapp