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Friday Footnotes: Where the CPAs?; Audit Relevance; Here Come the ‘Hackers’ | 1.31.2020

As Tax Season Begins, Hackers Target Tax Pros and CPAs [CPA Practice Advisor] It’s not from the “mob” or street criminals. These criminals are likely sitting behind a desk, glued to computer monitors, chugging energy drinks and developing the most effective ways to steal today’s version of gold. As you know, this bounty is data and the criminal epidemic is known as cyber-crime.

Relevance is critical to the future value of audit [Accounting Today] Audit is losing value in the eyes of our clients. It’s becoming a commodity. That decline in value corresponds to a lack of relevance. Business moves fast today, so how relevant is a set of financials for Dec. 31, 2018, that was issued on May 24, 2019? Almost half the year is gone.

Why You Don’t Need to Be an Accountant to Be a CFO [Wall Street Journal] CFOs have traditionally emerged from the accounting ranks, with reputations as masters of cost management, corporate finance strategy, accounting standards and reporting requirements. But the role has morphed to the point that accounting expertise is often no longer required.

Taxes 2020: These two groups of taxpayers face the highest audit rates [USA Today] The tax agency is auditing fewer individual taxpayers not because we’re more honest, but because the IRS is working with fewer employees. The agency’s workforce has dropped from 94,000 workers in 2010 to roughly 78,000 in the most recent fiscal year, according to IRS data.

SEC proposes simplifying disclosure requirements [Journal of Accountancy] The SEC voted to propose amendments designed to simplify and enhance certain company financial disclosures and issued guidance on key performance indicators and metrics in management’s discussion and analysis (MD&A). Item 301 (selected financial data) and Item 302 (supplementary financial data) would be eliminated from Regulation S-K under the proposal.

Las Vegas tax preparer sentenced to 40 months in prison for fraud [Las Vegas Review-Journal] A Las Vegas tax return preparer has been sentenced to 40 months in prison for tax fraud, the Internal Revenue Service announced Friday. Michael A. Sandoval performed payroll and tax preparation services for individuals and companies through a business called Nevada Financial Solutions (NFS), the agency said in a news release. “When two of Sandoval’s clients provided NFS with $471,178 in payments to be forwarded to the Internal Revenue Service (IRS) as money due for their quarterly employment taxes, Sandoval did not provide those payments to the IRS, but instead spent the funds for his personal benefit,” it said.

Can CPA firms help with new revenue recognition standard? [Compliance Week] Accounting Standards Codification 606, Revenue from Contracts with Customers, took effect for non-public entities in 2019, and accountants faced with applying this standard for the first time are encountering significant challenges. If CPA firms are asked to help their attest clients, independence issues must be considered.

Letter: Why No CPA’s on the Audit Oversight Committee? [Laguna Beach Independent] At the last City Council meeting Michele Monda spoke on the need for CPAs on the Audit Oversight Committee. This committee oversees the audit of Laguna’s $100 million budget, our tax money, but not one CPA is to be found. Currently there is a writer, Deputy Chief of Police, real estate investor, etc. City Manager John Pietig appears to believe no CPAs, qualified experts or audit experience is necessary. City Council, elected to represent and protect residents, was alarmingly silent. None of them are CPAs, and they don’t know which rocks to look under either. If you don’t know where to look, you definitely won’t find anything. That’s why training and expertise are essential to the committee. In response to Ms. Monda, the city manager defended this lack of true oversight, stating the city’s outside auditors have CPAs. Yes, but this audit firm was hand-selected by the city manager and is paid by the city, a cozy multi-year relationship. Not one CPA on city staff either. City Treasurer Laura Parisi is a CPA, but she’s not allowed any input—why?