Pennsylvania CPA Journal

The First Word

Accounting & Assurance

The rules have changed for firms that perform interim reviews and year-end audits of client financial statements. Through 2009, interim reviews of nonissuers followed Statement on Standards for Accounting and Review Services (SSARS) for reviews and Statement on Auditing Standards for the year-end audit. The CPA should have sufficient knowledge of the entity's business and its internal controls since both relate to the preparation of annual and interim financial information. If the CPA is also...

Federal Tax

The questions of "if" and "when" you can use client tax return information for promotional purposes was addressed recently in the amended regulations for Internal Revenue Code (IRC) Section 7216. IRC Section 7216 prohibits disclosure or use of taxpayer tax return information, and makes the act of improperly using or disclosing client tax return information a misdemeanor, punishable by a fine up to $1,000, reimbursement of the costs of prosecution, and up to one year in prison. In addition, Pe...

Liability Lessons

Professional skepticism is a central tenet of audit work, its very spirit. Professional standards help to define due skepticism, and published commentary provides guidance as to its exercise throughout an audit plan. After all, professional skepticism requires an auditor to voice his or her doubts through a "questioning mind" and a "critical assessment of audit evidence." Perhaps most prominent is the need to corroborate management's representations. In less formal, less hierarchical organiza...

State & Local Tax

States are experiencing substantial budget shortfalls. The lengthy recession crippled the economy, resulting in companies losing money or going out of business, high unemployment, plummeting sales in the real estate market, and an overall slowdown in consumer spending. Some estimates say that 48 states faced budget shortfalls for the 2010 fiscal year totaling $194 billion, which represents an astounding 28% of overall state budgets. Thirteen states offered tax amnesty during 2009, and Pennsyl...

Business & Industry

When a company reduces or eliminates financial incentives to employees due to a general downturn in the economy or the company's own misfortune, the consequences are not good. Often, the results include increased turnover. Consider motivating employees and increasing productivity by using nonmonetary incentives. Managers still need to motivate and drive performance, so it makes sense to take advantage of inexpensive incentives that have some positive effect. Compensation plans that only link ...

Practitioners

Fraud can be perpetrated anytime and anywhere; and small businesses must deal with more than their fair share of fraudulent activity. Practitioners should continuously remind business clients of the risks. According to the Association of Certified Fraud Examiners' 2008 Report to the Nation, small businesses suffered from 66% more fraud occurrences than larger businesses. The three main types of fraud affecting small business clients will be billing, skimming, and check tampering. There are ma...

Government/Not-for-Profit

The objective of service efforts and accomplishments (SEA) reporting is to assist citizens, elected officials, and other interested parties in evaluating the performance of state and local governments. SEA reporting provides more information about a government's performance than traditional financial statements. Recently, the Government Accounting Standards Board (GASB) issued a proposal for a conceptual framework, philosophy, and guidelines to develop higher quality SEA reports. This column ...

Litigation Support

Most of you involved in the tax preparation season are interviewing clients, reviewing source documents, reconciling bank statements, allocating income and expenses by jurisdiction, and basically being busier than you care to be. Your time, patience, and careful ear can uncover indications that your client may have become an unwitting victim of fraud. The best way to help your clients is not to robotically accept piles of receipts for processing; rather, it is to listen. What you hear in a qu...

Education

Accounting students and faculty members interested in research now have an incredible resource. The Financial Accounting Standards Board's GAAP codification is a readily available, single official source of authoritative US GAAP. Faculty who assign papers on technical topics in intermediate and advanced accounting or auditing courses will find that students will be able to access the search features of the codification with ease. The codification is standardized in a hierarchical structure of...

Build Your Nonprofit Up, Even When Things Look Down

Stories of struggling businesses and growing individual needs are omnipresent. The housing and investment markets collapsed. Unemployment ballooned to long-forgotten levels. Bank credit seized up and became increasingly difficult to obtain. These factors, among others, contributed to a 31.4% increase in US business bankruptcies through the third quarter of 2009 as compared to the same period from the prior year, according to The Administrative Office of the US Courts. Nonprofit organizations ...

Watching the Watchers: A Close Look at Pcaob After Five Years

A lack of confidence in financial reporting, perceptions of conflicts of interests on auditor independence, and unsound corporate governance relating to massive audit failures directed the federal government to impose stricter oversight regulation. PCAOB started its first inspections of registered public accounting firms in 2004, and what follows is an overview of the inspection process and a presentation of what the accounting industry has learned. The fundamental objective of inspections is...

Master the Art of Career Growth

Regardless of the discipline, the specific career paths, and the training regimens that accompany them, professional growth follows a few basic and universal truths. Many people are aware of these truths, but few remember to incorporate them into the pursuit of excellence in their chosen fields. Ten thousand hours, or five years of practice, are needed to gain proficiency in any discipline. So, have an end goal and work aggressively to achieve it, but "keep your eyes on the road" and embrace ...

Legislative News

With the economy sputtering and state revenues lagging $250 million behind projections as of Jan 31, 2010, budget and tax matters will once again dominate the legislative landscape in Pennsylvania. The debates over the 2010-2011 state budget -- the legislatures only must-do piece of legislation -- could be a repeat of last years, with the added fuel of election-year histrionics. The need for new or recurring revenues, otherwise known as taxes, will undoubtedly be on the negotiating table to h...

Committee Update

Kevin Mitchell, PICPA president, appointed a Diversity Committee in the fall of 2009 to increase PICPA's commitment to, and connectivity with, diversity. One of the foremost goals at the Diversity Committee is to develop a comprehensive and strategic framework to facilitate the adoption of diversity initiatives being implemented by CPA firms and other organizations, such as AICPA. Through current programs, such as PICPA's CPA -- Passport to Opportunity for high school students and the PICPA S...

Cpa-Pac Contributors

2010 Nominations Report

Volunteers in Action

PICPA volunteers experience personal growth from the many opportunities available to them. This article presents highlights of some members' recent PICPA volunteer experiences. The members are: 1. Natalie T. Brown, Auditor, FirstEnergy Corp, 2. William L. Brown, Individual Practitioner Shareholder and Sales Manager, Precision Feedscrews Inc, 3. Elizabeth Kidd, Director of Financial Services, St. Benedict Education Center Adjunct Professor, Gannon University, 4. James J. Newhard, Individual Pr...

Member Recognitions

Image Enhancement

The 2009 Consumer Financial Literacy Survey, conducted on behalf of the National Foundation for Credit Counseling, found that one-third of adults over 18 report no savings, but more than 20% are now saving more than they were a year earlier because of the economic climate. A study by Charles Schwab and CFO Research Services finds that 66 percent of human resources staff and finance executives at large companies believe that broader financial education at work is more important than it was one...

Cpe Highlights

You have submitted your CPA license renewal application online to the Pennsylvania State Board of Accountancy, and a new reporting period has begun. Due to the changes in the renewal process -- transitioning to an electronic renewal system and no longer requiring all continuing professional education courses to be listed individually -- the State Board is increasing the audit population from 5% of licensees to 10%. The State Board only accepts credits from sponsors approved by the National As...

Picpa Members Do the Heavy Lifting

When AICPA has a grassroots initiative, it turns to PICPA and its membership to get the work done. Three times, AICPA asked PICPA members to reach out to Pennsylvania legislators in the House of Representatives to express opinions about various bills and specific provisions. Self-regulation through the peer review process and the enforcement of the Code of Professional Conduct is vital to the CPA profession. AICPA develops the standards and offers state societies the opportunity to administer...