Birzeit Consulting is a professional services company providing an integrated spectrum of anti fraud / corruption and internal control advisory and training services.
From our regional office in Amman-Jordan, we serve our clients in the Middle East and Africa supported by our highly qualified teams, affiliates, representations and strategic alliances. We run our global business from our head office in Tempe,AZ, USA
FASB and the International Accounting Standards Board (IASB) today unveiled a joint proposal to revamp lease accounting.
The proposal would result in a single “right-of-use” approach applied consistently to lease accounting for lessees and lessors. Among other changes, the approach would result in the liability for payments under all lease contracts within the scope of the standard and the right to use the underlying asset being included on the lessee’s balance sheet. The standard setters say the changes would improve the information available to investors and other financial statement users about the economics surrounding lease contracts.
The CPA exam is undergoing its largest overhaul since moving from paper and pencil to computers. Jan. 1, 2011, will mark the launch of what people behind the exam are calling CBT-e (Computer-Based Testing evolution).
While news of these changes is obviously important for those who plan to take the exam, accounting professors and CPAs who employ future CPAs will also need to be familiar with the new format in order to mentor candidates to increase their likelihood of passing.
The first computerized Uniform CPA Examination took place on April 5, 2004. Slightly more than five years later, in July 2009, the millionth section was administered via computer.
The exam is offered jointly by three organizations: the National Association of State Boards of Accountancy (NASBA), the AICPA and Prometric. The AICPA is responsible for developing and scoring the exam, NASBA for the National Candidate Database, and Prometric, a wholly owned subsidiary of ETS, for examination delivery at authorized test centers. The three signed an amended agreement in March that extends the agreement to 2024.
The International Accounting Standards Committee (IASC) Foundation published its second batch of training material for the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). The training material is designed to assist companies and accountants in applying the standard. The remaining material will be published in the course of this year as it is completed. The free material is available for download from go.iasb.org/smetraining.
While the SEC moves toward a 2011 vote on whether to require U.S. public companies to report using IFRS, a more compact version of the international standards is already an option, subject to state board approval, for U.S. private companies. Now there’s a free online tool to help preparers understand how that streamlined standard compares to U.S. GAAP.
The IFRS for SMEs-U.S. GAAP Comparison Wiki, available at wiki.ifrs.com, is a collaborative resource launched in January for understanding differences between the two sets of financial reporting standards. IFRS for SMEs is a simplified version of full IFRS aimed at meeting the needs of private company financial reporting users. It eliminates some of the requirements meant specifically for public entities.
The Triangle of Truth
The most basic principle of project management is known technically as the triple constraint (also dubbed the “Triangle of Truth” by consultant Dave Franz).
While the SEC moves toward a 2011 vote on whether to require U.S. public companies to report using IFRS, a more compact version of the international standards is already an option, subject to state board approval, for U.S. private companies. Now there’s a free online tool to help preparers understand how that streamlined standard compares to U.S. GAAP.
The IFRS for SMEs-U.S. GAAP Comparison Wiki, available at wiki.ifrs.com, is a collaborative resource launched in January for understanding differences between the two sets of financial reporting standards. IFRS for SMEs is a simplified version of full IFRS aimed at meeting the needs of private company financial reporting users. It eliminates some of the requirements meant specifically for public entities.
FASB and the IASB Thursday published an exposure draft, Conceptual Framework for Financial Reporting: The Reporting Entity, that is part of a joint project between the boards to develop a common and improved conceptual framework for developing future accounting standards.
The ED discusses what constitutes a reporting entity, which in different situations could be a group of entities, a single entity or only a portion of an entity.
In the article “Detecting Circular Cash Flow” (Dec. 09, page 26), I found the facts of the case study using Moxie Alloys to be extremely interesting and thought provoking. I thought the authors did a nice job explaining the exposure to a lender as well as the auditor’s risk surrounding accounts receivable (“A/R”), including red flags.
By James Schaefer, CPA, DBA and Joy V. Peluchette, DBA
MARCH 2010
Today many companies recognize the desirability as well as the requirement to have an effective system of internal control. Yet, designing and implementing a cost-effective system of internal control is a daunting, if not overwhelming, task.
One way to overcome resistance to internal control is to educate stakeholders at every level of the organization about its advantages.
Try the following quiz to test your knowledge of internal control and consider using it as a teaching tool for others in your organization.
1. Houston Helpers, a faith-based group that offers help to people in need, has hired Janet Wells, a local CPA, to train its professional staff in the basics of internal control. As Wells begins her presentation, a participant interrupts by saying, “We are not like other organizations. How can we talk about common elements of internal control when we are a faith-based service provider?”
a. The participant is correct; there are no generally accepted frameworks for internal control.
b. The participant is incorrect; there are generally accepted frameworks for internal control, regardless of industry.
2. Internal control is a process designed to provide reasonable assurance regarding the achievement of which objective?
a. Effectiveness and efficiency of operations
b. Reliability of financial reporting
c. Compliance with applicable laws and regulations
d. All of the above
3. CS Inc. has asked you to join its board of directors. Before agreeing to do so, you realize that it is important that you understand the company’s approach to Enterprise Risk Management (ERM). Which of the following is NOT true about ERM?
a. ERM is a bottom-up view of the key risks facing the organization.
b. ERM links growth, risk and return.
c. ERM aligns risk appetite and strategy.
d. ERM identifies and manages cross-enterprise risk.
For more questions and the correct answers, please click on the heading above.
What are you doing to grow your practice? How can you help your clients become more profitable? Use the following tips to redefine the services you provide clients, and look for additional opportunities to develop new revenue sources:
Conduct a self-assessment.Ask yourself what you are passionate about. Think about something you would secretly do for free and how to start getting paid for it. What’s stopping you from doing more of it? Are you not reaching the right audience? Are you not telling the people you know all the things you can do? Your clients may be seeking help from someone else for services that you could be providing.
Brand yourself.Define your role and how you relate to your clients. Are you a tax preparer? A problem-solver? Or a nagging parental figure constantly reminding clients to do their bank reconciliation?
Write an elevator speech and memorize it.What can you tell people in 15 to 30 seconds that lets them know your specific talents and would make them interested in finding out more? What sets you apart from your competitors? Make it unique, not boring. Create a few sentences that, when spoken, leave the listener asking for more. One technology consultant testing her pitch said, “I’m a geek. I break software. I test it to see where it doesn’t work and then find what works for your company.”
Address your clients’ pain points.Think about ways to woo existing clients by first listening to the problem, and then repeating it back to them and telling them how you can solve it. Provide them with best practices you’ve observed in their industry. Articulate value and show tangible results using benefit statements such as, “After we work together, you will be able to use your financial statements to make better management decisions,” or “You can feel confident that I’ll be able to help you increase your profits by 10% or more.”
Create a simplified one-page strategic plan.Concentrate on defining core values, setting short-term, mid-term and long-term goals and metrics. Set specific targets: If you want more business, does that mean a specific number of new clients or a specific dollar amount of increased revenue? Make these targets objective. Then write an action plan, implement it, and review and revise as necessary.
Help clients rethink their business.Once you’ve designed your own strategic plan, use it to offer business planning services to clients. Ask them what two or three metrics they use to manage their business. If they can’t answer you, offer to help them create those metrics. Ask them how many months’ operating expenses they have in reserve. Are they content with their current pricing strategy? How do they determine whether they have the correct staffing levels? Do they know the optimum revenue each employee should be generating? Do they have an exit strategy? Are they looking at creating an ESOP for their employees? Use terms that will sound interesting to your clients, not just to you. Talk about “financial management” instead of “accounting.”
Ask for referrals, and highlight testimonials.The majority of your business comes through referrals, but are you actively pursuing referrals? Make it a goal to call a certain number of clients each month and ask whether they know someone who might benefit from your services. If they thank you in an e-mail or even verbally, ask them if you can use it as a client testimonial on your Web site.
Charge by packages, not by the hour.The only way to make more money as an hourly consultant is to raise prices or work more hours. With package (or fee-based) pricing, as you get more efficient, you make more money (see “Pricing on Purpose: How to Implement Value Pricing in Your Firm,” JofA, June 09, page 62).
—By Alexandra DeFelice (adefelice@aicpa.org), a JofA senior editor, based on a presentation by Leslie Shiner, MBA, (lshiner@shinergroup.com) financial and management consultant and owner of San Francisco-based The ShinerGroup.
Previous attempts by Rea & Associates to develop consistent procedures didn’t always result in the most successful, efficient or effective processes. Instead, 11 offices did things 11 ways because they didn’t buy into the need for consistency in its processes. With Lean Six Sigma, the firm adopted a one-firm concept where returns would be consistently produced, while still allowing some flexibility to address staffing, structural or other nuances among the various offices. For example, some larger offices have multiple administrative staff at the end of the process while smaller offices have only one person. The end process accommodates for these staffing differences. Also, the firm developed tools called “Quick Checks”, designed to double check for common mistakes that were frequently being detected during the review process. These could be modified by office location.
We took a global look at our business tax return process, not just the preparation stage or the review stage. Using a cross functional team comprised of representatives from all levels within the organization (from Administration to Staff Accountants to Senior Managers to a Partner), the project analyzed everything from how client information was requested and received to how returns were prepared and reviewed to how they were processed, assembled and filed. Staff input was considered before the rollout began. The focus was on providing better client satisfaction at each step along the way in order to provide higher overall value.
The following are specific steps, common among many accounting firms, that Rea & Associates implemented to improve processes.
Manage the Front Door. A business client request list was revamped and a systematic process developed for receiving as much client data as possible at the first visit. The goal was to work on this initial phase in advance of busy season. The process is customizable for every client—by using names and terminology familiar to the client, it makes the information-gathering process much quicker and easier.
Maximize Workflow. Efficiency was improved by adopting common organizational standards for every workstation. For example, each desk is organized consistently so that the next person in the process knows exactly where to find or place hardcopy or electronic tax client information. The physical layout of all work areas within a building is organized for maximum efficiency—accomplished through uniform electronic and workspace organization techniques.
Reduce Bottlenecks. Time goals were developed and processes implemented to shorten cycle times. Care is taken to align the right people to the right level of work to alleviate bottlenecks. Process champions continually identify uneven flow and work together across the firm to reallocate resources and better serve clients.
Streamline Assembly. The needs of processing and assembly personnel were identified, resulting in reduced questions and rework.
Microsoft has updated one of the most important tools in the accountant’s tool kit, Microsoft Office. This article describes the features in the new versions of Excel, Word, Access, PowerPoint and Outlook that are likely to be most important to CPAs when Office 2010 is released in June.
Each module of Office 2010 has received updates to features and improved ease of use. Although many of the changes from Office 2007 are subtle, the theme is one of easier access to many common functions—with buttons consolidated into single menus and the number of steps necessary to accomplish certain tasks greatly reduced, improving productivity. If you don’t want to wait for the retail release to try out the new features, a fully functioning beta version of the software is available free from Microsoft at microsoft.com/office/2010.
This article is based on the technical preview version of Office 2010, which Microsoft provided before the public beta version was released. Although the final retail version is expected to be substantially similar to the technical preview version, keep in mind that Microsoft might make minor changes to the software before the official release date.
New guidance is available on the effect of FASB’s Accounting Standards Codification Topic 855, Subsequent Events, in compilation and review engagements.
The AICPA’s Audit and Attest Standards Team issued a new Technical Inquiry and Reply (TPA) 9150.26, “The Accountant’s Responsibilities for Subsequent Events in Compilation and Review Engagements.”
According to the TPA, FASB ASC 855, Subsequent Events, does not change the accountant’s responsibilities under AR section 100, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2), which states that an accountant performing a review engagement should inquire of members of management who have responsibility for financial and accounting matters concerning events subsequent to the date of the financial statements that could have a material effect on the financial statements.
In a compilation engagement, the accountant has no responsibility with respect to subsequent events unless he or she learns of evidence or information that a subsequent event that has a material effect on the financial statements has occurred.
When such evidence or information comes to an accountant’s attention during a compilation or review engagement, he or she should request that management consider the possible effects on the financial statements, including the adequacy of any related disclosure. If the accountant determines that a subsequent event is not appropriately accounted for in the financial statements or disclosed in the notes, he or she should follow the guidance in paragraphs .56–.58 of AR section 100 regarding departures from generally accepted accounting principles, the TPA states.
Conduct a self-assessment.