Category: a&a

  • Evaluating “going concern” concerns

    Under U.S. Generally Accepted Accounting Principles (GAAP), financial statements are normally prepared based on the assumption that the company will continue normal business operations into the future. When liquidation is imminent, the liquidation basis of accounting may be used instead. It’s up to the company’s management to decide whether there’s a so-called “going concern” issue and […]

  • How external confirmations are used during an audit

    Auditors commonly use confirmations to verify such items as cash, accounts receivable, accounts payable, employee benefit plans and pending litigation. Under U.S. Generally Accepted Auditing Standards, an external confirmation is “a direct response to the auditor from a third party either in paper form or by electronic other means, such as through the auditor’s direct […]

  • Cyber risks: A critical part of your auditor’s risk assessment

    As businesses and not-for-profit entities increasingly rely on technology, cyberthreats are becoming more sophisticated and aggressive. Auditors must factor these threats into their risk assessments. They can also help you draft cybersecurity disclosures and brainstorm ways to mitigate your risk of an attack. Increasing risks How much does a data breach cost? The average has […]

  • Last call for lease accounting

    The updated lease accounting standard is currently in effect for private companies. After several postponements during the pandemic, the Financial Accounting Standards Board (FASB) voted unanimously to move forward with the changes. That means private companies and private not-for-profit entities that follow U.S. Generally Accepted Accounting Principles (GAAP) must adopt the new standard for fiscal […]

  • Remote auditing: A brave new world

    The pandemic has presented numerous challenges for businesses, but it also taught us how to be resilient, cost-conscious and adaptable. Over the last few years, we’ve learned that remote working arrangements offer many benefits, including reducing the time and cost of performing many tasks. Here’s how these lessons translate to the work auditors do to […]

  • How to account for collaborative agreements

    Today, many companies share research or technology to develop new products. For example, manufacturers might enter into a joint venture to conduct scientific research to design a new medical device. Or a watchdog group might work with a production company to create and distribute a documentary film. How revenue and other payments between the parties […]

  • Warning for retailers and other businesses using the LIFO method

    Recent supply shortages may cause unexpected problems for some businesses that use the last-in, first-out (LIFO) method for their inventory. Here’s an overview of what’s happening so you won’t be blindsided by the effects of so-called “LIFO liquidation.” Inventory reporting methods Retailers generally record inventory when it’s received and title transfers to the company. Then, […]

  • Consider stress testing to lower risks

    The pandemic and the ensuing economic turmoil have put tremendous stress on businesses. Many companies that appeared healthy on the surface, on their financial statements, quickly realized that they weren’t prepared for the unexpected. A so-called “stress test” of your company’s financial position and its ability to withstand a crisis can help prevent this situation […]

  • Paying tribute to auditor independence

    In the spirit of Independence Day, it’s a good time to review the rules for auditor independence. If you discover potential issues now, there’s still plenty of time to take corrective action before next year’s audit begins. Definition of independence Independence is one of the most important requirements for audit firms. It’s why investors and […]

  • Do you know the signs of financial distress in a business?

    Financial statements tell only part of the story. Investors, lenders and other stakeholders who know how to identify red flags of impending problems can protect their own financial interests. Additional due diligence may be needed to uncover these issues. For instance, stakeholders might need to talk to management, visit the company’s website and compute financial […]