Audit quality
One of the things that we talk about around here from time to time is audit quality and how no one seems to know what that is. It's not as though people aren't trying, however, and the AICPA released a report yesterday to talk about their progress "in enhancing audit quality." Here's what Susan Coffey, the AICPA's EVP of Public Practice said:
Looking at the progress we’ve made, I am especially excited about what the profession can accomplish with newly-implemented initiatives. For example, new quality-control tools, resources and training help firms establish and maintain effective quality-control systems. Enhancements to the Peer Review Program better identify practice issues and require more targeted and timely remediation. And new industry-specific training programs focus on competency development – that is, applying knowledge and skills – and related certificate programs help highly competent auditors distinguish themselves in the marketplace.
This is all nice and well and good, but I can't help but wonder how quality is assessed and how it's communicated to stakeholders (i.e. the public). In other words, how do we know which firms have the highest quality audits? And how can we tell the difference from a firm that performs high quality audits and a firm that doesn't? Isn't that important for the public to know? As far as I can tell, the report doesn't address those issues. I still support the idea of letter grades posted in the windows of CPA firms' offices.
Non-GAAP worries
The criminal charges against two former executives of American Realty Capital Properties for manipulating custom reporting measures has people talking all sorts of crazy:
The case “sets a precedent” that the government will hold individuals accountable for manipulating financial numbers, said Dan Zitting, chief product officer at ACL. Such instances of fraud are less likely to occur if companies employ an anti-fraud monitoring system that is continuously running so no employee or executive is able to falsify numbers without raising a red flag, he said. “There’s always a footprint or a trail of footprints left in a company’s data about what really happened,” said Mr. Zitting. “When spotted, the system can flag those activities and they can be reviewed in real-time.”
Constant, real-time non-GAAP worrying done by machines?! That's like manna from heaven. Now some people will finally get some sleep.
Has Donald Trump released his tax returns?
Nope! And Mark Cuban says it's the smartest thing he's done in this campaign:
"The smartest thing he's ever done is not release them because he's created a talking point that just consumes more time so that he doesn't have to talk about anything of importance," Cuban told Business Insider in a Monday interview.
If there's one area where Donald Trump doesn't need help, it's talking about stuff that isn't important. And in the case of his tax returns, he's been talking and talking, telling everyone that he can't release them, even though everyone knows that's false, but yet he keeps repeating it like a deranged spray-orange cyborg.
IRS phone scams
It's hard to imagine what will bring an end to these IRS phone scams. Maybe FBI agents will raid a boiler room. Or maybe an asteroid slams into Earth ending civilization as we know it. Or maybe Ted Cruz will defy everyone, become President, and abolish the IRS, thus making the calls obsolete? My money is on the asteroid.
In any case, the calls are still happening, although I think most people know that they are fake and are some trying to have a little fun with it.
After playing along and offering to pay up, the resident was transferred to another man to collect. The scammer instructs the resident to stay on the phone with him and not to disconnect, telling him if he does, the IRS will take that as an indication that he’s unwilling to pay.
But when the resident hesitated even slightly during the call, the conman immediately threatened him.
“Be ready to get arrested, OK?” the caller warned.
He tells him he needs to go to the bank “right now,” then tells him to convert the cash into a “Target card.” The scammer seems to detect that he’s being had, then slings curses at the resident before telling him where he can stick his money.
Are the slinging curses and "telling him where he can stick his money" part of the script? I don't think IRS Phone Scams, Inc. is recording those calls for quality control.
And now, a word from our sponsor
A recent article by Melanie Torborg of St. Mary’s University of Minnesota, an Accountingfly University Partner, discusses sustainability accounting, noting that it’s much more than just measuring carbon emissions and conflict minerals:
How do we measure corporate activities that enhance the company or create value over time? Activities, such as the impact on the environment, customer relations, highly trained employees, or product innovation, are not always reflected in the numbers, but are valuable assets for the organization and that information should be provided to the shareholders and decision makers.
It’s been argued that current GAAP is not suitable for modern businesses. The value of things like brands and key employees are not part of the current financial reporting infrastructure even they should be. I mean, Mark Zuckerberg *is* Facebook, isn’t he? Is that reflected anywhere in FB’s financial reporting? How would you even go about figuring that out?
Some of you people who are way smarter than me might be able to figure it out. Hop to it. Financial statement users are waiting.
Previously, on Going Concern…
I wrote about how scandals hurt your résumé, even if you weren't involved. And in Open Items, a new EY manager asked about the Big 4's independence monitoring.
In other news:
- Bayer clinches Monsanto with improved $66 billion bid
- "Stock Trading Whiz Kid" to Pay $1.5 Million to Settle Stock Newsletter Fraud Charges
- H&R Block: The H Stands for “Inaccurate”
- Tucker Max in the Harvard Business Review? Tucker Max in the Harvard Business Review.
- Surrounded by polar bears.
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