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Accounting News Roundup: Big 4 China Affiliates Talking Settlement; PCAOB Looking for “Level of Precision”; PwC’s Unreliable World Cup Forecast | 06.03.14

"Big Four" China accounting units in settlement talks with U.S. SEC -filing [Reuters]
The news is that they're talking about a settlement. But not much else: "The Big Four's six-month suspension has been on hold since the January ruling because the firms opted to appeal the decision before the full five-member SEC commission. Monday's filing, which was posted on the SEC's website, marks the first time that regulators have publicly revealed they are involved in ongoing settlements talks with the firms. For years, auditors in China have declined to hand over copies of their work papers to U.S. regulators amid fears they would violate Chinese secrecy laws. They have urged the U.S. and China to work out their differences through diplomatic channels." 

IBM Avoids SEC Penalty Over Accounting of Cloud Computing [WSJ]
Just as they predicted: "
Last July, IBM disclosed that the SEC was investigating the way it reported its sales in its cloud-computing business, according to a filing detailing its second-quarter results. At the time, IBM said it was confident that the information it provided was consistently accurate, and that it reports its cloud revenue in line with generally accepted accounting principles, the most common standard used by companies in the U.S. However, after IBM disclosed the investigation, it did change the way it described its cloud revenue in subsequent earnings press releases to make the description more clear."

Deloitte Report Unveils New Theme in Audit Failures [CW]
That, "Is a control effective?" question has a name: "
[T]he audit failures called out by the PCAOB in Deloitte's 2013 inspection report presented a new buzz phrase that promises to be the theme for 2013 inspection reports for the major firm — 'level of precision.' The inspection report calls out a number of instances where Deloitte auditors failed not to identify or test controls, but instead to show that a particular control operated at a level of precision necessary to prevent or detect a material misstatement in financial statements."

Audit Quality Drives Continued Audit Relevance [AICPA Insights]
Barry Melancon writes that the AICPA is serious about enhancing audit quality. Naturally, there's an initative: "
We are committed to maintaining our profession’s excellence in a fast-changing and complex business environment. Consistent with that goal, the AICPA has launched a new Enhancing Audit Quality initiative. Sue Coffey, CPA, CGMA, the AICPA’s Senior Vice President of Public Practice & Global Alliances, is leading this comprehensive, holistic effort to look at auditing from multiple touch points, from the CPA exam and ethics enforcement to auditing and quality control standards, to learning and competency development and changes to peer review, and ultimately to a transformation of practice monitoring."

UL to offer graduate degree in accounting [DL]
Louisiana Lafayette is getting into the master's game: "
The B.I. Moody III College of Business Administration at the University of Louisiana at Lafayette will launch a master's program in accounting in the fall. 'The curriculum will provide graduates with in-depth knowledge of auditing, ethics, income tax, and financial accounting,' said Dr. Harlan Etheridge, associate professor of accounting. 'The program will offer advanced preparation for careers in public accounting, industry, government, and consulting.' "

Accounting Firms Ready Guidance for New Revenue Recognition Standards [AT]
Nancy Salisbury of EY speaks words that make accountants shudder: 
"U.S. GAAP is a hodgepodge of different pieces of guidance coming from a variety of different sources. For U.S. GAAP users, what this essentially means is that we’re going to throw out all the different pieces of literature that we have for U.S. GAAP in a couple of years. Everybody, no matter what industry you’re in, is going to follow this new single standard and that can be a big change."

Are World Cup forecasts reliable? Not if you look at PwC's 2010 index [Guardian]

Posted in ANR