Where Less Can Be Better We first addressed SAS 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement in our November 2021 blog. Two years later, the requirements are bearing down on us. SAS 145 is effective for audits of financial statements for periods ending on or after December 15, 2023. In other words, (for most of us) starting with our calendar year 2023 audits. Audit risk assessment has long been a bane to the small practitioner, especially those whose practice consists primarily of perhaps smaller, less complicated audits. Some practitioners expressed concern that the
Read More »Did I Hear Someone Say Risk Assessment? In 2022, the AICPA issued four new quality management standards, as follows: Statement on Quality Management Standards (SQMS) No. 1 – A Firm’s System of Quality Management; SQMS No. 2 – Engagement Quality Reviews; Statement on Auditing Standards (SAS) No. 146 – Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards; and Statement on Standards for Accounting and Review Services (SSARS) No. 26 – Quality Management for an Engagement Conducted in Accordance With Statements for Accounting and Review Services. Effective Dates. The quality management systems compliance with SQMS No.
Read More »Give Credit Where Credit is Due For the non-public, non-financial sector, it took a while for the new standard on credit losses to get here. But it’s here now and breathing down our necks with a vengeance. CECL (pronounced cecil) was issued by the FASB in 2016. For the non-financial sector, it’s somewhat of a wolf in sheep’s clothing. Not that it was intended to be that way, but it just is. So beware. It’s a peer review “gotcha” event. As the song says, “Things ain’t what they used to be.” This article will address some CECL issues in a
Read More »Brace for Impact Tech entrepreneur Mark Cuban stated in recent years that artificial intelligence (AI) will dominate the landscape of the business world, so much so that entire industries could be relegated to near obsolescence. One such industry he mentioned happens to be near and dear to our hearts: the 7,000-year-old accounting industry. After taking a few deep pulls from my handy hyperventilation bag, it got me thinking: is that truly possible? Far be it from me to spit in the face of the “experts,” but the accounting industry as a viable employment option will most decidedly not be disappearing
Read More »Living in a Material World We’ve worked with the revenue recognition standard under ASC 606, Revenue from Contracts with Customers, for a few years now. How’s it going? Pretty good? Well, now may be an excellent time to reexamine a somewhat dubious but significant area of the standard. This article will examine revenue recognition for materials cost related to a construction contract. Specifically, we will discuss critical factors that impact how a contractor who uses the cost-to-cost input method recognizes revenue associated with uninstalled materials. The FASB has an underlying concern that cost-to-cost revenue recognition could result in an overstatement
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