Urish Popeck is #AuditorProud

by Lauren Shaffer 28. September 2017 10:59
#AuditorProud day is an annual event in which auditors from all over the world share why it is they are proud to be a part of this profession. Urish Popeck & Co. is excited to be a part of this event and we want to share why it is we are passionate to be a part of the auditing profession.   “I chose to become an auditor to take advantage of the vast amount of opportunities the profession has to offer. Auditors are exposed to various types of companies and the industries in which those companies operate, giving us the chance to learn the ‘ins and outs’ of each organization we are engaged with.” – Haley Rishak, Audit Staff   There are a wide array of opportunities involved with a career as an auditor. For starters, not only is it an auditor’s responsibility to provide assurance and accountability, but as an auditor, you have the distinct privilege to affirm the trust and good governance of your clients. By gaining industry knowledge and building relationships with your clients you can communicate about issues important to them and what is best for their business.   “I became an auditor because it’s a great way to discover how companies work in all different kinds of industries.  The wealth of knowledge that you can obtain is limitless as you continue to grow throughout a career in audit.” – Nick Hendrickson, Audit Manager    Business exposure is an exciting aspect of an auditor’s career because it allows you to understand the essential inner workings of different industries. Continuously gaining more insight and detail of a business or industry from your auditing experience will make you more versatile and knowledgeable as an auditor. Because of this, there’s an immense opportunity to grow professionally as well. The Bureau of Labor Statistics projects the job outlook for accountants and auditors to increase 11% by the year 2024, which is faster than the average rate.   “The best part of being in audit is it challenges you every day with new problems to solve and requires me to utilize multiple skills from technical, interpersonal and project management.” – Mark Gibbons, Partner   Urish Popeck is proud of the work our auditors provide and is excited to embrace all opportunities, challenges, and deadlines thrown our way. Our auditors hold the highest professional standards and are responsive to any service request(s) you may have. At Urish Popeck our auditing skills also provide due diligence, transaction advisory, and other assurance and consulting services. Here at Urish Popeck, we are, #AuditorProud.
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SEC Approval Pending for AS 16

by Ken Urish 10. October 2012 13:42
Auditing Standard (AS) 16, Communications with Audit Committees, was approved recently by the PCAOB. AS 16 largely retains current guidance contained in AU 380, Communications with Audit Committees, and does not impose any new performance requirements on the auditor. Rather, for the purpose of promoting improved financial reporting, it expands and/or enhances requirements that emphasize the relevance, timeliness and quality of the communications between the auditor and the audit committee.  The goal is to better align auditing standards with the requirements of the Sarbanes-Oxley Act of 2002, so as to facilitate audit committees’ financial reporting oversight. All new auditing standards and amendments to PCAOB standards adopted by the Board are submitted to the Securities and Exchange Commission for approval. AS 16 will become effective with SEC approval, which was pending as of this writing. The new standard and related amendments, if approved by the SEC, will be effective for public company audits of fiscal periods beginning after Dec. 15, 2012. 
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Categories: Advisory

Is the PCAOB’s Consideration of Mandatory Auditor Rotation Dead?

by Harry Emerick 19. July 2012 11:00
The Public Company Accounting Oversight Board (PCAOB or Board) issued a Concept Release on Auditor Independence and Audit Firm Rotation.  The Board recently extended the comment period on the release through July 28, 2012.  Apparently the rumors of demise are greatly exaggerated.  Then again, the idea may in fact be a useful, controversial tool for the PCAOB to engage debates on other ways to improve audit quality.  The origin of the Concept Release appears to be with the investor community and other “users” of audits who, however, are not directly involved in the audit process.  Perhaps this explains why the idea of mandatory auditor rotation is such an orphan idea with no credible studies or research supporting that it would improve audit quality and a host of opponents in both government and the private sector. According to an article in Compliance Week, the U.S. House of Representatives’ (House) Financial Services Committee has threatened the Board with legislation to bar auditor rotation.  The House Banking Committee ordered the PCAOB Chairman to give up the idea.  The U.S. GAO has studied the idea of mandatory auditor rotation and concluded that the idea was not advisable and that it would significantly increase the cost of public company audits.  The AICPA issued a well thought-out comment letter on the Concept Release in which they pointed to a number of arguments against mandatory auditor rotation:  No credible research exists demonstrating that firm rotation would significantly improve audit quality; Numerous studies indicate that audit quality increases with audit firm tenure; Studies indicate fraudulent financial reporting is more likely to occur in the first three years of the auditor tenure; The disadvantages would be compounded in multi-national companies in which multiple international auditor rotation requirements (currently being considered) could result in multiple audit firms using varying auditing methodologies on a single, given audit---essentially a forced audit quality nightmare; Mandatory rotation undermines the role of the audit committee as the gatekeeper to select the audit firm that can perform the highest quality audit in the most efficient and effective manner; All right – enough piling on. In the interests of engaging debates, what are some fertile ideas to improve audit quality aside from mandatory auditor rotation?  We auditors at Urish Popeck suggest: More focused auditor education and CPE requirements relating to known drivers of audit quality such as independence, objectivity, professional skepticism, industry knowledge, audit methodologies, complex accounting and auditing issues and areas, workpaper and financial statement review and other quality control measures; Specific CPE requirements and standards for certain industry specializations (health care, banking and other regulated industries) similar to the current yellow book standards for auditors; Measures and standards to improve audit committee accounting, auditing and financial reporting competence, “360” communication and independence of Company management; More emphasis and structure to the audit committee’s role in monitoring audit quality for both internal and external audits and perhaps ensuring coordination of the two without overlap; Better definition to the role of the internal audit function reporting to and being the daily eyes and ears of the audit committee; A requirement that absent an internal audit function, the Audit Committee have at least a minimal (at least one) full time seasoned auditing staff to serve as their daily eyes and ears; Establish separate, additional, auditing and audit committee standards (clearly acknowledging a dual standard based upon the risks) for public companies that are “too big to fail”; Finally, with a nod to auditor rotation, better definition to the Audit Committee’s role as the gatekeeper in hiring and firing auditors and a presumption that they evaluate changing auditors on a periodic basis (ideally long term---say every 10 years) with it being acceptable to retain the current auditors if the committee concludes the auditors continue to do quality work.  We auditors at Urish Popeck are opposed to mandatory auditor rotation and take very seriously the challenge of delivering quality audit work tailored to our clients’ risks and needs, in an efficient and cost effective manner. With the PCAOB’s decision upcoming, please stay tuned to Urish Popeck’s blog for updates on mandatory auditor rotation or follow Urish Popeck on Twitter for breaking news. 
Categories: Advisory

Thoughts on PCAOB Oversight

by Hiller Hardie 1. February 2012 11:21
  My recent blog discussed the trend of the last several years of declining revisions of financial statements due to accounting errors or manipulations. As a member of the Accounting profession, I follow the activities of the PCAOB with interest (and often skepticism). Of particular relevance is their current slate of projects including mandatory auditor rotation, expanded audit reports and expanded roles for auditors beyond the traditional financial statements. As I focus on this, in view of the aforementioned decline in restatements, I tend to believe that we are going too far.   However, the unfolding story of Olympus and the depth and duration of the fraud perpetrated by their management paints a different picture.  The announcement that the PCAOB’s recent inspections of Big 4 firms have revealed numerous flaws in their audits is also pertinent   I am often tempted to think that the PCAOB should eventually go in to “maintenance” mode. In other words, they should allow the system to run as designed. Their actions should commence when audit failures transpire. Changes and remedies they put in place should be based on the findings from the investigations of such failures. That may ultimately prove to be naïve but at any rate now is not the time.
Categories: Advisory

New and Improved! PCAOB AU 380

by Ken Urish 23. January 2012 14:39
As a prison boss famously said to Paul Newman's character in Cool Hand Luke, "What we got here is... failure to communicate." Well, the PCAOB did not consider AU 380, it's standard on auditors' communications with audit committees, to be a failure of Cool Hand Luke proportions - but they have decided some improvements were in order. In late December 2011 the PCAOB reproposed AU 380 based on response to comments received through a comment letter process and a public roundtable. The reproposed standard is intended to improve current requirements regarding auditor communications by linking these to the related performance requirements in other auditing standards; it does not otherwise impose new performance requirements other than communications. The new proposed standard and related amendments are anticipated to be effective, subject to SEC approval, for audits of fiscal years beginning on or after December 15, 2012. Comments on this reproposal are due by February 29. Click here for access to the reproposed standard and supplemental materials.
Categories: Assurance

Watch for New Revenue Recognition Standard

by Ken Urish 27. December 2011 15:37
  As we witnessed recently in the buildup to Groupon’s IPO, the manner that revenue is recognized is a critical accounting issue. In Groupon’s case, they were forced to restate their financial statements. Revenue recognition has been the cause of audit failures and the focus of corporate abuse and fraud for many years. However, new standards, currently expected to be issued in 2012, are intended to improve the financial reporting of revenues.  Following is an update on the status of the proposed new standards. In November 2011, the Financial Accounting Standards Board (FASB) updated a measure on the financial reporting requirements for recognizing revenue from contracts with customers. The FASB, along with the International Accounting Standards Board (IASB), have made a number of changes to a joint exposure draft, first issued in June, 2010.  According to a press release, both boards have “further refined their original proposals” following review of nearly 1,000 comment letters. The boards are reviewing the proposals because of “the importance of the financial reporting of revenue to all entities and the boards’ desire to avoid unintended consequences arising from the final standard.”  The boards agree that “an entity would recognize revenue from contracts with customers when it transfers promised goods or services to the customer.”  In addition, in its 221-page proposal, the boards added guidance on how to determine when a good or service is transferred over time; simplified the proposals on warranties; simplified how an entity determines a transaction price (including collectability, time value of money and variable consideration); modified the scope of the onerous test to apply to long-term services only; added a practical expedient that permits an entity to recognize as an expense costs of obtaining a contract (if one year or less); and provided exemption from some disclosures for nonpublic entities that apply U.S. GAAP. The proposal contains 26 examples of how the revised revenue recognition requirements would work. 
Categories: Tax