Author: Adrienne Gonzalez

Adrienne is a 15-year veteran of the accounting industry, if by "veteran" you mean "vulture prowling the periphery of the profession waiting for something exciting to happen." She has been spewing vitriol on Going Concern since the site was founded in 2009. A former CPA review employee, she has sat through more FAR classes than any CPA exam candidate ever could -- even one who has failed FAR seven times -- and can still recall most of the mnemonics all these years later.

Here’s What You Need to Know About Authoritative Literature and Research on the CPA Exam

Though it doesn’t get much coverage in CPA exam study guides (for a reason, which we’ll get to later), your ability as a CPA exam candidate to tackle research on each exam section might make or break your overall performance.


When planning out the amount of time you will spend on each exam section (i.e. 45 minutes on each simulation as a general rule), you can rest easy if you save the research portion of each sim for the very end. It is believed to be worth only one point so if you can’t get to it, don’t worry about it too much. Focus on the written communications as those are worth 10 points – or one of them is, and you don’t know which one so take care of both and save the research for last only if you have the time.

As for practicing, newer CPA Review practice software already has this function built in.

If you would like to practice manually, you’ll have to take your active NTS to register for 6 months’ worth of access to the professional literature from cpa-exam.org. With this, you can search through AICPA Professional Standards and FASB Pronouncements to familiarize yourself with accounting regs, though you are still encouraged to take the tutorial CPA exam on the cpa-exam.org website as the research on its own is not exactly representative of the research function in the exam environment.

If that is not enough practice, book a 30 minute test run with Prometric to check out your testing center and the computer you’ll be using.

Anyway, don’t obsess too much over the literature. Like the tax code, a lot of your “answers” will be provided in the questions, it’s just up to you to look into what the questions are asking.

Think about it: CPAs have access to volumes of regs and standards in their careers, it is not imperative that they memorize each one. The CPA exam is meant to test your understanding of accounting fundamentals, not how well you can memorize 200 FASBs and spit them back out.

Looking for a Tax Break? Try Donating Your Erotic Artifacts to the Museum of Sex!

Using a foundation to fuel your for-profit business is never nice, especially when there is an extensive collection of BDSM memorabilia involved.

New York’s Museum of Sex does not claim to be a non-profit but it has obtained over 1,000 items donated through its tax-exempt Muse Foundation for tax deductions. Well? You wouldn’t donate your old brushed-steel bondage machine to Goodwill for the deduction now would you?


Want to help by bequeathing your great-grandma’s old pasties? There’s a handy donation link on their website that explains this bizarre relationship between for-profit museum and non-profit foundation:

The Muse Foundation of New York is a fully registered private foundation affiliated with The Museum of Sex. Its mission is to work with The Museum of Sex to preserve and make available a comprehensive collection of materials relating to the history, evolution and cultural significance of human sexuality.

That’s awesome but does the Treasury realize taxpayers can get fat deductions for contributing to this effort?

Museum founder Daniel Gluck claims that his lawyers allowed this relationship (plenty of for-profit companies have non-profit foundations that share their name) and the Museum would love for its Foundation to be, erm, profitable enough to serve its stated goal of providing underwriting art grants but that plan just hasn’t quite worked out. Yet. After more than a decade of operation. “The Muse Foundation is completely its own separate entity,” he said. “We can’t take money from the foundation and we don’t plan to. We aim to build it up into a foundation whose interests are aligned with the museum.”

Gluck told the NYT that the museum earns 70% of its income from admissions fees – nearly $17 a pop – and the remainder by selling cute Sex Museum tchotchkes in the gift shop (perhaps your dog is sexually frustrated and desperately needs a modern and arty $650 toy to hump?)

Before you ask, no the $300 bunny bondage hood is not tax deductible. But hold onto it long enough and you might just be able to get one for donating it back to the museum if Treasury still hasn’t caught on to this unique foundation/corporation relationship.

Tax Break for Erotica? A Museum Favors It [NY Times]

Just When You Thought You Knew the CPA Exam…Three Ways It Will Change in 2011

Now that we are nearing the end of the second CPA exam testing window in 2010, it’s about time to remind you (once again) that the CPA exam is scheduled for a pretty significant facelift in just two testing windows. Though we have covered it before, we thought it would be helpful to go over some of the planned changes.

Let’s meet your new CPA exam for 2011, shall we?


Changes to Content Specification Outlines – First and most significantly, the CSOs will undergo a huge overhaul. IFRS will be added – initially – to FAR and eventually international accounting standards and demonstration of an understanding of how they work will play a larger role in examination questions. Keep in mind that IFRS testing will be gradual and likely focus on the differences between IFRS and US GAAP initially until the AICPA BoE feels comfortable with candidate performance and the SEC’s procrastination on IFRS adoption. IFRS will also be tested in AUD and BEC (XBRL for one, which they have already been pre-testing for several windows) but expect a skiddish stance from the BoE in the beginning.

Audit loses 30 minutes to BEC – The reasoning behind this to allow candidates more time in BEC for written communications, which will be removed from FAR, AUD, and REG (where they currently are). Don’t bother trying to avoid written communication altogether by taking BEC this year and the other three next year, it’s an easy 10 points as long as you can write a standard business letter. You do not even have to be correct when you answer the question, you need only stay on topic and use good grammar.

International CPA exam testing is coming – Thirdly, the AICPA, NASBA and Prometric are working together to make international CPA exam testing a reality. Chances are if and when Prometric begins administering the CPA exam offshore, testing will be limited to a handful of countries (likely Japan, Dubai, and possibly India, where large numbers of Chartered Accountants tend to also seek the US CPA designation). We’ll see how this unfolds come 2011, as the AICPA would like to begin international testing with new CBT-e changes.

All in all, accounting is still accounting and the CPA exam will be exactly as it always has been: a test of your basic understanding of many broad topics that you may or may not ever encounter in your professional life. CBT-e will most likely be rolled out in pieces and subject to tweaks along the way.

The “Red Flags” Rule is Still Useless for CPAs

In more government bureaucracy news, the FTC is granting a reprieve to CPAs when it comes to a new law that deals with identity theft, one which some CPAs say is useless given professional responsibility.

The new FTC rules requires businesses to “develop and implement written identity theft prevention programs to help identify, detect and respond to patterns, practices or specific activities -– known as ‘red flags’ — that could indicate identity theft.” The problem with that, of course, is that the AICPA Code of Professional Conduct already deals with the issue of identity theft in that there is an iron-clad confidentiality rule by which all CPAs must abide. Seems simple, right?


The US District Court has ordered an FTC delay of the rule for AICPA members in public practice, says the Maryland Association of CPAs. Barry Melancon, AICPA President said in 2009 when the AICPA filed a lawsuit against the FTC, “We do not believe that there is any reasonably foreseeable risk of identity theft when CPA clients are billed for services rendered. As trusted advisors, CPAs are personally acquainted with their clients and already adhere to strict privacy requirements governing identifying information.”

Don’t take it personal, Barry, the FTC is just trying to do its job, even if that means overreaching its authority and attempting to place restrictions on professionals who already go above and beyond the intent of the FTC on a daily basis.

In the meantime – and just in case the rule cannot be delayed indefinitely (as is, implementation has been put off until June 1, 2010) – the AICPA has some guidance for CPAs on creating an identity theft prevention program. Keep in mind the new requirements, if implemented, only affect CPAs who bill their clients on a monthly or revolving basis as it is meant to place additional controls in client billing.

The American Bar Association is also fighting the rule.

Another ‘Red Flags’ delay: CPAs get 90 more days [CPA Success]

Don’t Bank on a Tax Refund Loan Next Year

JP Morgan has sent out notice to 13000 tax preparers that it plans to discontinue its refund loan operations, leaving tens of thousands of taxpayers with a snowball’s chance in hell of getting a front on money due back from the government come tax time.


This is nothing new for tax preparers. Last year, Jackson Hewitt announced that its RAL (Refund Anticipation Loan) funding was down to about 50%, meaning it could only cover half of the RALs it anticipated it would be asked to process come tax time. The problem came from Santa Barbara Bank & Trust, who funded about 75% of Jackson Hewitt’s RALs, after it was told by the Comptroller of the Currency that it had to increase its capital ratios and quick. SBBT may not have been able to buff up its capital levels but you can buff up your own by following these tips to decrease your “rebate” from Uncle Sam so you aren’t standing around waiting for Treasury to cut you a check:

Keep your exemptions in check This is the easiest, simplest, most obvious solution. If you’re waiting for a huge refund check every year, maybe it’s time to reevaluate the tax position you’ve held since you were in college.

If you’re still in a rush, e-file Sure, it’s not instant, but you’ll get your refund a lot quicker by e-filing than you will the good old fashioned snail mail way. National figures show 60% of Americans used e-file last year, leaving the USPS SOL once again.

File early Again, this seems obvious but if you want your money quicker, file at the front of the line. Americans are procrastinators so if you’re one of the first anxious little taxpayers out of the 1040 gate, chances are your refund will get processed faster.

Hey Ladies, Have You Thought About Working for BDO?

As most of us know, women are overrepresented in public accounting yet not necessarily rewarded for their hard work, dedication, and deftness in handling both career and family (for first and second years, substitute “family” for “sleeping with hot coworkers”). Knowing that, we’re thrilled to tell you that BDO has been chosen as one of the 2010 Best CPA Firms for Women by the American Society of Women Accountants and the American Woman’s Society of Certified Public Accountants. The award is an initiative of the ASWA and AWSCPA joint Accounting/MOVE project, a national research effort to measure progress and advance women at public accounting firms and corporate accounting employers.

The Accounting/MOVE project was especially impressed by BDO’s promotion of women within the firm tied directly to BDO’s training and retention initiative.


If you recall, BDO was conveniently left out of the Working Mother 100 best companies in 2009 list last year.

As a working mother AND woman myself, I find it appropriate to point out that not all women are mothers so it doesn’t necessarily mean any progress has been made on BDO’s work/life policies. It would be awfully presumptuous of everyone – and, frankly, a tad sexist – to assume as much. For some women, work/life balance simply means spending less time at work and more time hooking up with coworkers or pursuing other hobbies and activities that don’t involve dirty diapers and scrubbing crayon drawings off of the wall.

BDO Named a Best CPA Firm for Women by American Society of Women Accountants and American Woman’s Society of CPAs [Business Wire]

The IRS Would Like to Remind You That They are Not Spammers

With tax season over, scam season has begun and the IRS wants to be sure that you know they will never send you unsolicited e-mails or request identifying information about you a la PayPal scams. Because, you know, they’re helpful like that. Since many of you are waiting patiently by your mailbox (or bank statement if you E-filed for direct deposit) for your refund checks, it’s all that much more important to be on the lookout for these kinds of tricks hitting your inbox.

Protect yourself, little taxpayer, and know that the IRS is here to help make sure you don’t get scammed by unscrupulous impersonators:

The IRS does not send taxpayers unsolicited e-mails about their tax accounts, tax situations or personal tax issues. If you receive such an e-mail, most likely it’s a scam.

IRS impersonation schemes flourish during filing season. These schemes may take place via phone, fax, Internet sites, social networking sites and particularly e-mail.

Many impersonations are identity theft scams that try to trick victims into revealing personal and financial information that can be used to access their financial accounts. Some e-mail scams contain attachments or links that, when clicked, download malicous code (virus) that infects your computer or direct you to a bogus form or site posing as a genuine IRS form or Web site.

Some impersonations may be commercial Internet sites that consumers unknowingly visit, thinking they’re accessing the genuine IRS Web site, IRS.gov. However, such sites have no connection to the IRS.

IRS Spokesperson Jennifer Henrie-Brown gave us a few tips for avoiding scams and reporting sketchy e-mails to the Service to combat the spamming problem: “The IRS does not initiate taxpayer communications through e-mail and does not request detailed personal or financial information through email. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site, you should not reply. Do not open any attachments or click on any links. Doing so may download malware that can damage your computer or allow remote access to your hard drive,” she told us.

What do you do if you get one of these weird, misspelled, bad-grammar-infested fake e-mails claiming to be from the IRS? “If you receive a suspicious email claiming to be from the IRS, or Web addresses that do not begin with http://www.irs.gov, you can relay that email to IRS mailbox phishing@irs.gov. IRS can use the information URLs and links in the suspcious emails you sent to trace the hosting Web site and alert authorities to help shut down the fraudulent sites.”

Suggested reading: Online Scams that Impersonate the IRS [IRS]

(UPDATE) Friendly Reminder to TierOne Bank: Today Is the Last Day to Get Your Act Together

Catch up, we covered this on Sunday night: In a bizarre piece of auditing news released late on a Sunday night, KPMG has verbally resigned as Nebraska-based TierOne Bank’s independent auditor, withdrawn its audit opinion for 2008 and taken back its review of TierOne’s financials for the quarter ended March 31, 2009. Citing risk of material misstatement, KPMG has also warned the audit committee that TierOne’s financials are not to be relied upon by investors.


Well today is April 30th and that means TierOne has run out of time to get its shit together to please the OTS. Meanwhile, KPMG is still paddling away in the lifeboat before the ship sinks but with a week’s head start, we’re sure they’ve gotten far enough away from the scene of the crime to be entirely unaffected by the outcome, whatever it may be.

In a textbook case of he said/she said, TierOne is a little butthurt that KPMG would suddenly change its tune and bail on the bank so close to such an important deadline. Adding insult to injury, KPMG claims that TierOne destroyed a document on specific reserves required by the OTS, even though the auditors had requested the document more than once. TierOne claims that it gave the document to both the OTS and KPMG as requested. TierOne also enthusiastically states that not once did KPMG express any concerns about the bank’s condition until just before bailing on the bank and resigning from the audit.

We’ll update if the FDIC moves in later this afternoon and takes down TierOne.

UPDATE: TierOne tried to sell itself to Great Western Bank but the deal was shot down by the OTS. The $2+ billion bank is sort of just sitting there exposed in the open without an auditor and no real plan, you can pretty much guess what happens from here. Meanwhile, it was a busy Bank Fail Friday but TierOne was not among them. See you next week?

TierOne sale plan due today [Lincoln Journal Star]

All About the 4.5th Section of the CPA Exam: Ethics!

We covered Ethics before but since this is the last in our daily columns this week on the CPA exam, it’s a good way to wrap things up. Once again, if you are looking for CPA exam tips, tricks, hints or just have an idea for a topic you’d like to see addressed here, get in touch with us.

Last time we talked about the ethics exam, we suggested the following:


Speak to your state society of CPAs to find out if they offer some kind of ethics exam support. Helplines exist but you’ll never find them if you don’t look.

Because the ethics exam is open book, not timed, and allows potty breaks (unlike, say, FAR), take your time and don’t rush through it. You have more than 1.5 minutes to read through and answer the questions, take advantage of this fact.

If all else fails, try to find a lifeline. The CalCPA Education Foundation gives you a “lifeline” if you have unsuccessfully attempted their ethics exam three times.

A few more things to keep in mind:

If possible, choose the Online version of exam materials in searchable PDF form so you can search for keywords that will answer the questions. It beats flipping through a book and is often cheaper than the book version of the exam anyway.

Don’t take the ethics exam too early or you may have to take it again. If you decide to take the ethics exam before you have completed all four parts of the CPA exam, be sure you know how long your score is good for (probably a year max). You don’t want to have to take it twice so wait until you are at least 3/4 of the way through the exam or completely finished to tackle ethics.

Though review courses don’t have coursework on ethics, there are tons of resources available that consist of tips from others who have taken and passed the ethics exam. Start with the CPAnet forums, plenty of candidates and would-be CPAs have shared their experiences and many are happy to help if you have specific questions about how they did it.

Hope that helps and thanks for joining us for this week of CPA exam goodness!

You Can’t Force Convergence According to the IASB (Allegedly)

IASB member Phillippe Danjou would be happy to see convergence go well and according to schedule but like most of Europe, he’s concerned that what’s good for America may not be good for the rest of the world.

Earlier in the week, the European Central Bank said nearly the same thing, going so far as to call out FASB for its archaic fair value rules that disregard liquidity (or lack thereof) in markets.


“Can we converge on everything? What’s good for America is not always seen as being good for the rest of the world, and vice versa… Convergence is the aim. It is a very desirable goal, but you cannot force it.

“If our stakeholders say we should take slightly different solutions, we will have to accept that,” he said. “If we can’t reach a solution, we can bridge.”

This brings us right back to the question of the IASB’s independence and the announcement by the SEC that funding the IASB would be a priority moving forward. Maybe that’s the bridge to which Danjou was referring; America buying its own piece of international accounting standard influence. 20% won’t cut it, people, where did the SEC get those bribe numbers from anyway?

It looks like Plan B for accounting convergence [Reuters]