Week-End: Accounting Jokes

Jokes that only accountants and auditors will love J

• What do you call a trial balance that doesn't balance? A late night.
• What do you call an accountant with an opinion? An auditor.
• A fine is a tax for doing wrong. A tax is a fine for doing well.
• Why did the accountant cross the road? Because she looked in the files and did what they did last year.
• It's accrual world.
• How can you tell when the chief accountant is getting soft? When he actually listens to marketing before saying no.
• An accountant is someone who solves a problem you didn't know you had in a way you don’t understand.

 See more at: http://www.businessinsider.com/jokes-for-accountants-2014-5

Audit News Briefing: 27 November 2015

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:

November 24, 2015

CFO Daily News

Auditors scrutinized by regulators when companies face fraud allegations

Three powerful regulatory entities were highlighted in the Internal Controls segment of CFO Daily last Tuesday (Nov 24) –

·         the Department of Justice (DOJ)

·         the Securities and Exchange Commission (SEC) and

·         the Public Company Accounting Oversight Board (PCAOB).

One of these three formidable entities could get attention whenever financial fraud allegations arise at any public company. DOJ leads the pack by receiving complaints and commencing criminal investigation. Collaboratively, the SEC carries out two federal initiatives aimed at detecting and prosecuting financial fraud:  the Financial Reporting and Audit Task Force and Operation Broken Gate. PCAOB investigations originate from several sources, including the PCAOB’s own investigations, information disclosed in SEC or other agency investigations, or other public sources.  The PCAOB has authority to investigate accounting firms and associated persons primarily to ensure compliance with professional responsibilities.

Strong compliance program determines what action or sanction may necessarily be imposed. Strong internal controls is said to be the key to enable auditors to do their jobs more effectively and efficiently.

Please follow link for details:

http://www.cfodailynews.com/auditors-scrutinized-by-regulators-when-companies-face-fraud-allegations/

November 20, 2015

Accounting Today

U.S.: CPA Pleads Guilty in Accounting Fraud Scheme

Last Wednesday (Nov 18), a New York CPA firm partner pleaded guilty to participating in a multimillion-dollar accounting fraud scheme. He performed year-end audits of the financial statements for an unidentified Florida-based cosmetics company.

“Marc Wieselthier has admitted to lying about the financial condition of a company to induce banks to lend the company millions of dollars,” said Manhattan U.S. Attorney Preet Bharara in a statement. “Relying on false information, the banks made loans that ended up defaulting with nearly $5 million still owed. Wieselthier now joins his co-conspirators in awaiting sentencing for his crime.”

Please follow link for details: http://www.accountingtoday.com/news/audit-accounting/cpa-pleads-guilty-in-accounting-fraud-scheme-76480-1.html

November 16, 2015

Accounting Today

PwC Transforms Audit Practice with Data Analytics

PricewaterhouseCoopers audit practice is becoming more sophisticated as the firm is leveraging data analytics technology. The transformation includes documentation or evidence management as well as audit process automation.

Bill Brennan, managing partner of assurance transformation at PwC – said:

·         “We’d like to think that we have been transforming the way we audit for decades, especially in light of everything that’s been going on in the marketplace, particularly with the regulatory changes that have impacted us,”

·         “Starting north of 10 years ago, we introduced to our auditors worldwide Aura. It’s basically the way we execute the documentation and where our evidence resides for our audit efforts. Aura is used by almost 100,000 people all around the world.”

·         “We automate certain processes that we’ve been doing manually for decades, maybe even a century,”

·         “The second piece is process. How can we improve the process by which we execute the audits, the approach, if you will. We have a tagline called ‘Engagement, Performance and Quality.’ It takes project management process improvement and injects it into the equation. You can have the greatest technology in the world, but if you don’t have good processes, it’s going to be useless. Then the last thing is people. How do we develop our people? How do we train them? How do we equip their skills such that they can adapt to the changes in not only the regulatory environment, but our own audit approach. How can we teach them to leverage data and analyze data in a wholesome way? You can have a great tool, but if the people are not equipped to do it, then it’s useless.”

Please follow link for details: http://www.accountingtoday.com/blogs/debits-credits/news/pwc-transforms-audit-practice-data-analytics-76435-1.html

Audit Method: Accounting Estimates

Accounting estimate as defined in ISA 540 – “An approximation of a monetary amount in the absence of a precise means of measurement. This term is used for an amount measured at fair value where there is estimation uncertainty, as well as for other amounts that require estimation. Where this ISA addresses only accounting estimates involving measurement at fair value, the term “fair value accounting estimates” is used.”

Some financial statement items cannot be measured precisely, but can only be estimated. For purposes of this discussion, such financial statement items are referred to as accounting estimates. The nature and reliability of information available to management to support the making of an accounting estimate varies widely, which thereby affects the degree of estimation uncertainty associated with accounting estimates. The degree of estimation uncertainty affects, in turn, the risks of material misstatement of accounting estimates, including their susceptibility to unintentional or intentional management bias.

Test of accounting estimates for bias

First perform a retrospective review of significant accounting estimates reflected in the financial statements of the prior year to determine whether management judgments and assumptions relating to the estimates indicate a possible bias on the part of management.

The significant accounting estimates selected for testing should include those that are based on highly sensitive assumptions or are otherwise significantly affected by judgments made by management. Consider the results of this retrospective review in evaluating the current-year estimates. If we identify a possible bias on the part of management in making prior-year accounting estimates, we should evaluate whether circumstances producing such a bias represent a risk of a material misstatement due to fraud.

Secondly, consider whether differences between estimates best supported by the audit evidence and the estimates included in the financial statements, even if they are individually reasonable, indicate a possible bias on the part of the entity's management. If so, reconsider estimates taken as a whole.

Practice

For accounting estimates (e.g., liabilities for certain employee benefits plans and legal contingencies), evaluate the reasonableness of the methods and assumptions management used to make the estimates. If management's methods and assumptions were reasonable, test the data and assumptions underlying the estimates, and re-compute the estimates. If management's methods and assumptions were not reasonable, develop an independent range of reasonable estimates and determine whether management's estimates fall within that range. 

Audit Firm: Big4 Financial Performance 2015

The Big Four firms have recently announced their results for the fiscal year 2015. PwC has retaken number one spot from Deloitte as the world’s largest firm by revenue. KPMG is yet to announce its results.

A brief overview of the performance of these firms in comparison with the previous year is as follows.

PwC

PwC has recorded a global annual revenue increase of 10% to $35.4bn (£23.34bn), which represents its strongest growth in 10 years. Consulting now accounts for more than 30% of PwC’s total revenues after growing 18% to $11.2bn during the 2015 fiscal year. This was boosted by the acquisition of Strategy& (formerly Booz & Company) in April 2014. Revenues in PwC’s auditing division grew more slowly, rising 6.2 per cent to $15.2bn in a year marred by the profit misstatement scandal at Tesco, a PwC audit client.

According to Dennis Nally, Chairman of PricewaterhouseCoopers International Limited,

“As we look at the results for the last 12 months, all of our lines of service showed really positive growth – led by Advisory which is up 18%, Tax up 7% and our Assurance business notwithstanding some really difficult competitive market pressures – up 6%.”

DELOITTE

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries.

Deloitte member firms (Deloitte) reported aggregate revenues of US$35.2 billion for the fiscal year ended 31 May 2015 (FY15), representing 7.6 percent growth in local currency terms.

EY

EY announced combined global revenues of US$28.7b for its financial year ended 30 June 2015. This represents an 11.6% increase over financial year (FY) 2014 revenues in local currency, outpacing FY14 growth (which had increased by 6.8% over FY13).

All of EY’s service lines continued to grow in FY15 ahead of their FY14 growth: Advisory grew 17.6% (vs. 14.4% growth in FY14); Assurance 8.1% (vs. 4.5% in FY14); Transaction Advisory Services (TAS) 15.5% (vs. 6.5% in FY14); and Tax 10.3% (vs. 4.3% in FY14).

In FY15, EY headcount reached 212,000 globally – an all-time high.

A graphical representation of the performance of these three firms is shown for comparison purpose.

Head Count Graph

 Revenue Graph

KPMG

KPMG is due to report its 2015 results in December. KPMG International Cooperative ("KPMG International") is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. We are presenting here KPMG’s 2014 and 2013 performance comparison.

The KPMG network delivered strong growth and recorded-high revenues of USD24.8 billion for the 2014 fiscal year, an increase of 6.3 percent in local currency terms over the prior year (2013), recording growth across Audit, Tax and Advisory.

Head Count Graph

Revenue Graph

References:

• http://www.pwc.com/gx/en/about-pwc/global-annual-review-2015/campaign-site/pwc-global-annual-review-2015.pdf
• http://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-gr15-summary-final.pdf
• http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-reports-2015-global-revenues-up-eleven-point-six-percent
• https://home.kpmg.com/xx/en/home/media/press-releases/2014/12/kpmg-delivers-strong-growth.html

i-Monday: From Amateur Photographer to Inspiration

Brandon Stanton grew up in a suburb of Atlanta. He had got degree of history from the University of Georgia. His first job was serving as a bond trader in Chicago back in 2006. After few years, he was totally sliding away off his career. He decided to try something different. He bought professional camera at first and wandered the streets to catch exquisite moments. He is now author of 3 Best Selling books.

 “Humans of New York” is an amazing story, and it’s a story that could not have happened ten years ago. Without social media, I’d probably just be a quirky amateur photographer with a hard drive full of photos. I’d be cold-calling respected publications, begging for a feature. I may have even quit by now. Instead, I’ve discovered a daily audience of nearly a million people. Or should I say they discovered me.I don’t want to “cash out” or “monetize” HONY [Humans of New York]. I like to say it publicly because I want my audience to keep me on mission. HONY print sales have raised nearly $500,000 for charity in the past six months. I want to further monetize the site for nonprofit ventures. I honestly want to “give” HONY to New York in some way”.

“I Just Have Changed the World’s Sight”, 

Brandon Stanton

Information reference: This was excerpted from the taken blog “30 Under 30” from “Times Magazine” and an online interview taken in 2013.

Picture reference: www.johnstepper.com

Week-End: Work Smart

They say you can do anything if you just work hard. Well, they’re wrong.

Here are seven tips to help you work more efficiently and more productively without expending any additional effort—here’s how to work smarter, not harder:

• Walk away - Breaks can actually make you more productive.
•  Recognize and eliminate distractions.
• Ignore low-priority items.
• Create routine habits.
• Work in chunks.
• “Multitask” - Try to fill the empty spaces with productive work.
• Work around your strengths and weaknesses.

By: Larry Alton

http://www.success.com/article/7-shortcuts-to-work-smarter-not-harder

Audit News Briefing: 19 November 2015

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:

November 18, 2015

SBWire

Global IT Spending by Audit Firms Is Expected to Reach over USD 5 Billion Dollars in Revenues by 2019: ResearchMoz

Press Release: Technavios market research analysts predict the global IT spending by audit firms will witness a steady growth face, reaching over USD 5 billion dollars in revenues by 2019. The audit market is highly concentrated and dominated by the big four firms, including Deloitte, E&Y, KPMG, and PwC. But, mandatory auditor tendering and rotation reforms by various regulators across the globe had led to the entry of several audit firms in this market. Big Four firms are slowly losing their market share as these firms further intensify the competition. Also, audit services are highly regulated and commoditized, thereby reducing differentiation opportunities for audit firms. It is leading to the increased adoption of information technology by audit firms to provide differentiation in their offerings. Please follow link for details: http://www.sbwire.com/press-releases/industry-analysis/global-it-spending-by-audit-fi/release-642397.htm?utm_source=djournal&utm_medium=feed&utm_campaign=distribution

ResearchMoz latest research report is entitled "Global IT Spending by Audit Firms 2015-2019: Industry Research, Analysis, Shares, Size, Trends, Growth, Survey, Forecast".

November 17, 2015

CivilSociety.co.uk Finance

Audit firms 'missed fundamental risks' of Kids Company model, say MPs

Bernard Jenkin MP, chair of the Public Administration and Constitutional Affairs Committee said: The auditors missed the “fundamental risk” that Kids Company operated a “high risk model” of committing almost all its funding to helping its client. This should have been “taken more seriously”. This was the major issue pointed out when MPs have criticised auditors PwC, PKF Littlejohn and Kingston Smith for not scrutinising Kids Company properly and missing key indicators during their dealings with the charity before it folded. Please follow link for details: http://www.civilsociety.co.uk/finance/news/content/20782/audit_firms_missed_fundemental_risks_at_kids_company_say_mps

November 17, 2015

MarketWatch

Big Four audit quality can differ widely — even at the same firm

Board member, Lewis H. Ferguson of the Public Company Accounting Oversight Board (PCAOB) and chair of the global public policy committee working group of the International Forum of Independent Audit Regulators (IFIAR) – at MarketWatch – recently discussed about the significant roles of PCAOB as projected by the U.S. Congress and IFIAR in determining cross-border aspects of audits.

He emphasized that: “It would be a mistake to presume that an audit firm’s inspection results in the United States necessarily speak to the quality of its global network. There can be a real difference among audit deficiency findings for the firms in the United States and what we see at their affiliates around the globe.” In conclusion, “While these inspection results are not a scorecard or a stand-alone measure of audit quality, they do reflect differences in the inspection results among audit firms and in different countries. They may well represent differences in audit quality among firms. At the least, they reflect that each firm’s global network also faces different auditing challenges.”

Please follow link for details: http://www.marketwatch.com/story/big-four-audit-quality-can-differ-widely-even-at-the-same-firm-2015-11-17