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Tax

Virtual Tax Audits via Your PC Coming Soon

The only thing worse than tax preparation is the dreaded process of getting a Tax Audits and it could soon take place over a computer screen

The only thing worse than tax preparation in Miami is the dreaded process of getting a Tax Audits and it could soon take place over a computer screen in the comfort of your living room. Better hire a CPA to sit on the couch next to you.

Virtual Tax Audits

CPA’s advises clients in what could be an indication of things to come. Income tax preparation VieraCPA states the IRS launched a pilot program at the end of last year that allows taxpayers to use two-way video conferencing for assistance with tax questions and problems. Tax preparation business having been using this for consultation purposes for year, the IRS has caught on.

The Taxpayer Advocate Service, an independent watchdog arm of the IRS, is already calling for the agency to expand to virtual audits notes VieraCPA a Income tax preparation. The IRS says it needs to evaluate the success of the pilot program before making a decision.

Income tax preparation CPA’s notes theVirtual Tax Audits pilot program is currently being tested in 12 locations, where taxpayers needing assistance can log into a computer enabled with video-conferencing. They can then talk to an IRS agent who pops up on the screen to discuss whatever issues they’re having — whether it’s tax preparation or help with a tax form or a question about a refund.

TAS is also piloting a virtual assistance program. And VieraCPA stated that the tax preparation business and Certified Tax Preparer that this technology has the potential to “radically transform” the current audit process — eventually allowing taxpayers and tax preparers to use their personal computers to video conference with an IRS examiner.

To schedule an Virtual Tax Audits with an Income tax preparation or its client, the IRS would send a taxpayer a sign-in code so they could then log in to the meeting from a home or office computer. Documents could be transmitted by simply scanning them with a computer’s built-in camera notes Tax preparation business or a Certified Tax Preparer.

This could one day replace the need for correspondence audits, which are the letters the IRS currently sends taxpayers in the mail asking questions or requesting more information and their Income tax preparation Miami responding.

To save costs, the IRS has become increasingly reliant on correspondence audits instead of summoning taxpayers for in-person meetings says VieraCPA an Income tax preparation. But TAS says that these Virtual Tax Audits receive fewer responses and that many of the taxpayers dealt with these audits don’t understand how they work, default on payments and get hit with penalties.

Plus, with correspondence audits a specific representative typically isn’t assigned to a case, leaving many taxpayers without a point person to ask questions or to contact with concerns.

Virtual audits could eliminate the confusing paperwork and recreate a face-to-face meeting via computer. Tax preparation business or a Certified Tax Preparer Miami agree it would be easier to explain complex situations.

Doing this would also help taxpayers better understand why they are being audited and what additional information is needed, said Viera. It would also help the IRS obtain the accurate information it needs and help the agency view taxpayers as more than just tax returns.

The IRS’s virtual assistance pilot program is scheduled to continue through the 2012 filing season and end in May. Office locations include Colorado Springs, Colo., Fresno, Calif. and Utica, N.Y.

Once the program is completed, the IRS will evaluate its performance. So far, it said the pilot has allowed it “to maximize our current resources, by expanding hours of service in remote locations and balancing the workload in high-traffic areas.” But it wouldn’t say whether it is considering using this same technology for audits.

“The initial focus of Virtual Tax Audits delivery is on taxpayer service. We’re still in the middle of the pilot and still assessing the results,” the IRS said in a statement. “It’s premature to speculate about future steps.”

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Tax

Accountant Miami 7 Reasons the IRS Will Audit You

Accountant Miami warn a simple math mistake will trigger a tax audit

Accountant Miami know that filing taxes is on par with going to the dentist or arguing with the DMV. It’s tedious, time-consuming and potentially expensive. As if fumbling with confusing numbers and complex forms weren’t “taxing enough, submitting your 1040 is even more stressful when you’re worried about an audit.

Understand, there’s nothing inherently sinister about a tax audit. A tax audit is simply the Internal Revenue Service double-checking your numbers to make sure there aren’t any discrepancies, according to Accountant Miami Gustavo A. Viera CPA. If you’re being a good little taxpayer and telling the truth, the whole truth and nothing but the truth, you need not worry. However, people who are consciously cheating the system do have reason to be concerned.

The IRS conducts tax audits to minimize the “tax gap,” or the difference between what the IRS is owed and what the IRS actually receives. Sometimes audits are random, but the IRS often selects taxpayers based on suspicious activity. As a general rule of thumb, we’d advise against subterfuge. But for those of you worried about an audit this tax season, here are seven of the biggest red flags likely to land you in the hot seat, according to Accountant Miami Gustavo A. Viera CPA.

  1. Making errors

When the IRS starts investigating, “oopsy” isn’t going to cut it. Don’t make mistakes. This applies to anyone and everyone who needs to file taxes. Don’t accidentally write a 3 instead of an 8. Don’t get distracted and forget to include that final zero. Mistakes happen, but make sure you double- and triple-check your numbers if you’re doing your own taxes. You’ll be hit with fines regardless of whether your mistake was intentional. If you’re math is a little shaky, using an automated program or tax professional can help you avoid unfortunate errors. Remember, the IRS has an eye for funny business. Supply the correct information, and you should have no complications.

2. Failing to include a 1099 or additional income

Easy way to score a tax audit? Don’t report part of your income. The IRS will be on you like buzzards on a gut wagon. Always include your 1099. Let’s say, for example, you’re employed part time herding cattle for Farmer Jeppe and pick up a little extra cash writing articles for a sheep-shearing publication on a freelance basis. You may be tempted to only submit the W-2 from your cattle work and keep the freelance writing wages on your 1099 under wraps. Well, guess what? The IRS already knows about wages listed on your 1099. It’s only a matter of time before they discover your omission. Report all of your income, including money from bonds, stocks, interest-yielding accounts and the like.

3. Claiming too many charitable donations

If you made significant contributions to charity in 2012, you’re eligible for some well-deserved deductions. Most taxpayers who itemize deductions claim charitable deductions at an average of 3% of their income. This bit of advice is common sense: don’t report false donations. If you don’t have the proper documentation to prove the validity of your contribution, don’t claim it. Pretty simple. Claiming $10,000 in charitable deductions on your $40,000 salary is likely to raise some eyebrows.

4. Reporting too many losses on a Schedule C

This one is for the self-employed. If you are your own boss, you might be tempted to hide income by filing personal expenses as business losses. But before you write off your new ski boots as a business expense, consider the suspicion too many reported losses can arouse. The IRS may begin wonder how your business is staying afloat.

5. Claiming too many business expenses.

Along the same lines as reporting too many losses is reporting too many expenses. Anyone who needed to make a purchase to perform work duties in 2012 should know what can and cannot be deducted. To be eligible for a deduction, purchases must be 1) ordinary and 2) necessary to your line of work. A professional artist could claim paint and paintbrushes because such items meet both requirements. A lawyer who paints for fun and does not turn a profit couldn’t claim art supplies as a deduction. The question to ask is: was the purchase absolutely necessary to performing my work duties? Transportation to the office and computer hardware are great examples of typical deductions. Making too many business claims will definitely raise a red flag. As long your expenses are justified, you’re all right. But if you’re making claims you shouldn’t, watch out.

6. Claiming a home office deduction

Home office deductions are rife with fraud. As an Accountant Miami I discourage clients from even taking it. Saving a couple if hundred dollars could cost you thousands in Accountant fees to defend the deduction. It may be tempting to give yourself undeserved deductions for expenses that don’t technically qualify. The IRS narrowly defines the home office deduction as reserved for people who use part of their home “exclusively and regularly for your trade or business.” That means a home office can qualify if you use it for work and work only. Occasionally answering e-mails on your laptop in front of your 72″ flat screen TV doesn’t qualify your living room as a deductible office space. Only claim a home office deduction if you have set off a section of your home strictly for business purposes. Be honest when you report expenses and measurements.

7. Using nice, neat, round numbers

In all likelihood, the numbers on your 1040 and supporting documents will not be in simple, clean intervals of $100. When making your calculations, be precise and avoid making estimations. If you’re a photographer claiming a new lens as a business expense, it probably did not cost $500. If purchased new, it might have been $499.95 or even $495. An even $500 is somewhat unlikely, and the IRS may ask for proof.

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Accounting

Miami Accountants Secret Online Tool

QuickBooks Online is the bridge for Miami Accountants today’s featured between their world and their clients.

In the accounting profession, there are Miami Accountants and there are “I-Count-Its” (say it out loud to get it). There are those who are working diligently to be advisors and consultants to their clients and there are others who excel at balancing and counting what historically happened. Both are very much needed and both can be very successful in their careers. But no matter which end (or middle) of the spectrum you fall, your clients need you to embrace some bits of the world they live in. It’s simpler than ever to build bridges between worlds and the time is NOW to make it happen before your peers do it for you.

Miami Accountants world is cloud-based (cloud = internet). Our clients are embracing technology faster than we are. They are looking for every way they can have faster access to information by using mobile devices and integrated applications. They are depending on more reliability in their data with less effort to put it together.

We must raise the bar of our profession to at least visit their world from time to time. They are searching for our stamp of approval of their methods. They don’t want to leave us behind. But how can we be part of their world if we don’t even know the language they’re speaking? The way we live has proven successful and we work really hard to keep it that way. No one can deny how hard we work! But what if a few new tactics could make living in our world a little easier, help us visit and understand our clients’ world, and merge our efforts to save time for everyone?

QuickBooks Online Accountant is today’s featured “bridge between worlds.” Give this FREE online application a try! It provides Miami Accountants tools to manage all of your online clients from one login screen (no more keeping track of everyone else’s passwords). You can do as much (data entry, reconciliations, etc.) or as little (pulling reports) as you need in each client’s file – oh – and it’s anytime, anywhere access so you can fit it flexibly into your world! I spend a lot of time helping my clients find a solution that works for them. And it is more and more often QuickBooks Online. It is quite different from the QuickBooks programs we are used to, but it is easy to learn and our clients feel more at home in it.

Our World

Gustavo A Viera, CPA are Miami Accountants, and where I call home. The world we live in is similar to most small/midsize CPA firms. Our firm provides Audit, Tax, and Advisory services to our clients and has done so for 40 years now. As part of our advisory services, we have a team of QuickBooks ProAdvisors who have spent the past 15 years becoming the experts locally and recognized nationally. I have been in this world for 7 of those years and find it fascinating, challenging, and very rewarding.

Just over 4 years ago, I was introduced to my first QuickBooks Online client. We had a lot of cleanup and catch-up to do with them as we assisted them in their accounting needs. I picked it up easily and thanks to this loyal client, we have watched it grow into a wonderful product that I can offer to anyone I talk to. My favorite features as an accountant are:

  • Anytime, anywhere access – I was able to continue helping this client despite having two children over the years and being out of the office for a time
  • Overall intuitive user interface – it just makes sense (as does QuickBooks Desktop), but things work as they logically should instead of learning the backdoor workaround to help clients
  • Online banking download – the interface to code downloaded transactions has recently been updated and it is really slick. I think it’s far superior to QuickBooks Desktop versions.
  • No file maintenance – Intuit is maintaining and backing up the file. The file is always secure and there is never data corruption.
  • Think of your world. What do you love about it? Where do you find disconnects in the way you live versus the ways your clients live? How much is it costing you to be unaware of the tools your clients want you to be using?

Their World

Here are five aspects of their world that make QuickBooks Online Accountant a very logical and effective bridge to bring more benefits to your client service. Maybe you can even get a few eyebrow raises from your clients who are surprised and think it’s awesome that you’re in their world! And your accounting practice will grow because the benefit is not only on the client’s side.

#1: Anytime, anywhere access

Miami Accountants and our clients are accessing information at their fingertips anytime, anywhere. They want to work when they’re sitting in the doctor’s office or waiting for a plane flight. In their world, the benefits of the cloud greatly outweigh the costs for purchasing devices and subscriptions to access their information.

If we want to be a place where they are excited to spend their money, we need to offer benefits that cater to their world. They can find QuickBooks Online with or without us (we prefer with us, right?). But when we tell them they can give us free access to their file, they are excited to get us involved. They have immediate access to the work we’ve done for them, which prompts them to be excited to pay us. Then they ask us to provide more services, which grows our practice.

#2: Continuous improvements

Our clients are using applications on their devices that are constantly improving, through competition and/or in-product enhancements. They purchase a product and expect to receive the benefits of future developments as part of the cost.

Intuit is continuously investing a lot of resources to make QuickBooks Online better, providing enhancements as often as possible. When you help your clients work on QuickBooks Online, you are providing the environment that they find the most value in. And that makes them feel that you are more valuable.

Also, QuickBooks Online Accountant – the interface you are using to access their data – is also constantly being improved. More information is being added; a better interface and user experience was recently developed; and when a new accounting tool (discussed later) is available, it’s there for our benefit at no additional cost.

#3: Technical Support on demand

Clients mess things up; their dogs eat their homework; and someone may be blamed for something they didn’t do. While they’re screaming HELP inside, they often just ask their phone the frustrating question and get an answer right away.

With QuickBooks Online Accountant, you can be their technical support on demand. They will value your services when you can respond right away without the hassle of transferring files back and forth. Or, Intuit has a great QuickBooks online technical support that is chat-based, email-based, or phone-based according to the client’s preference. You can use it too. It’s relaxing to know that you have resources you can turn to if the client needs are beyond your current expertise.

#4: Accounting fix-its

Their world is evolving to let them do the work instead of paying the professionals to do it for them. Embrace it. Train them on the things they can do for themselves. And then set in motion a monthly or quarterly review to check their work. They will value your services more.

There are additional accounting tools available in QuickBooks Online Accountant that will help you complete clean-up tasks and provide powerful support to your clients. Intuit’s website lists the tools currently available.

#5: Integrated Applications

Many people are outsourcing accounting services work – not necessarily to people, but more often to software. They are using specific-need software for the different aspects of their business and then expecting the accounting to be taken care of for them. QuickBooks Desktop has paved the way for this expectation and QuickBooks Online is no exception. Many successful developers have tailored their software so that QuickBooks Online is updated in real-time with information readily available anytime, anywhere.

Being more involved in their world by using QuickBooks Online Accountant is just one way we can be more successful as Miami Accountants. Our clients will involve us as citizens of their world (i.e. members of their team) when we display efforts and expertise of the world they live in.

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Accounting

Audit Firms Face Common Problems Worldwide

The International Forum of Independent Audit Regulators has released a global survey of audit firms inspection findings

They have identified some of the most common problems that regulators have identified at audit firms around the world during their inspections. The report is the first global survey tying together the findings of the U.S. Public Company Accounting Oversight Board with its counterparts in other parts of the world. The survey was designed to identify the level of inspection activity among IFIAR audit firms members and common findings from their inspections of audits of public companies. The survey also responds to a request from the Financial Stability Board to provide details of findings from the inspections of audits of major financial institutions.

The survey asked members to report findings from their inspections of audit engagements where they had noted deficiencies in specific areas, but did not seek information on instances where the audit firms had met the required professional standards. The regulators reported findings that were significant matters where the auditor did not perform sufficient work to meet the applicable auditing standards and other related requirements.

The survey identified some common findings in a number of areas. The largest number of inspection findings in audits of public companies occurred in the areas of fair value measurements, internal control testing, and engagement quality control reviews.

In addition, inspections of audit firms of major financial institutions revealed that the largest number of common inspection findings occurred in the areas of internal control testing, valuation of investments and securities, and audit of allowance for loan losses and loan impairments.

The survey results also include four areas that have been discussed by IFIAR with representatives from the six largest audit firm networks since 2010: professional skepticism, group audits, revenue recognition, and the role of the engagement quality control reviewer.

“Audit firms need to do more to improve the consistency of performance on individual audit engagements”

Remediating the inspection findings and determining the possible root causes underlying these findings,” said IFIAR chair Paul George, who is also executive director of conduct at the U.K.’s Financial Reporting Council.

IFIAR members plan to continue to inspect the public company audit firms, including major financial institutions, and work closely with the audit firms in their jurisdictions to improve audit quality. Members also intend to continue to follow-up with the audit firms to evaluate and monitor the audit firms’ remedial actions in response to their respective inspection findings. In addition, IFIAR will continue to work with the leadership of the six largest international audit firms networks to discuss inspection findings and the firms’ strategies and actions to improve audit quality.

“IFIAR’s goal is to conduct periodic surveys to measure changes in these findings with the goal of allowing members to identify those areas that need improvement and to share experiences about what practices seem to be most effective in reducing audit deficiencies,” said  IFIAR vice-chair and PCAOB board member Lewis Ferguson.

The survey focused primarily on IFIAR members’ inspections of audit firms that are members of the six largest international audit firm networks and includes issues identified by 22 IFIAR members’ inspections of audit engagements for 961 public companies at 98 audit firms; 10 members’ inspections of audit engagements for 108 major financial institutions at 28 audit firms; and 23 members’ inspections of 109 audit firms’ internal quality control systems.

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Business Trends

Accountants in Miami

Find Certified Accountants in Miami!

Selecting the best Accountants in Miami for your business can mean the difference between success, mediocre performance, and even failure. Since the numbers “behind” your business are an important tool in setting the right path for your future, Understanding those numbers can make or break your business.

Many who don’t have a strong accounting background view all Accountants in Miami as being equal, but that is not the case. A well qualified accountant is equipped with the knowledge and experience to make a critical difference in many parts of your business including Tax Planning, Business Consulting, Personal Finance Advice, and Networking.

You want an Accountants in Miami who offers more than crunched numbers. Your Accountants in Miami will develop a detailed knowledge of you, your business and your numbers. Always remember, once you’ve chosen an accountant, it can be time consuming and costly to make a change.

Today’s business and personal Accountants offer more than crunched numbers. Call our Accountants in Miami today at 786-250-4450 and we will be glad to sit down with you for a free evaluation of your accounting and planning needs. We are experienced Accountants in Miami serving the Miami Florida and surrounding area.

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Business Trends

Miami CPA’s

The primary functions Miami CPA’s is to provide accounting, audit, tax and Medicare Cost Reporting Services

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Accounting

Proposed revisions clarify responsibilities for Accountants in Miami

Proposed revisions clarify responsibilities for Accountants in Miami

In accordance with recently proposed revisions to professional standards, Accountants in Miami who prepare financial statements for clients would consider that a nonattest bookkeeping services in Miami and would no longer be required to perform a compilation service with respect to those financial statements unless engaged to do so.

The changes, proposed in June by two AICPA committees, would require Accountants in Miami who prepare financial statements, but are not engaged to perform a compilation, review, or audit, to request that management include a label or notation that makes clear that the financial statements were not compiled, reviewed, or audited. Alternatively, Accountant in Miami can attach a disclaimer to the financial statements to indicate when they have not been compiled, reviewed, or audited.

It is anticipated that the proposed changes would have minimal impact on CPAs who prepare financial statements for their clients, except with regard to the requirements to perform a compilation service, which will undergo significant revision under the proposal.

In accordance with current rules, a Accountants in Miami who prepares and presents financial statements to a client or third party must also perform the compilation service, whether or not the client has engaged the Accountant in Miami for the compilation.

The proposed standard would dictate that CPAs who prepare financial statements would perform a compilation only if they are engaged by their client to do so. The compilation would be a “read and report” service separate from the preparation. Once engaged to perform a compilation service, the CPA would read the financial statements to see if there are obvious mistakes or flaws, and then issue an accountant’s compilation report on the financial statements.

This change is contained in a proposed Statement on Standards for Accounting and Review Services (SSARS) exposed for public comment by the AICPA Accounting and Review Services Committee (ARSC). ARSC has also exposed for public comment a proposed standard that addresses the accountant’s association with financial statements that the accountant has not compiled, reviewed, or audited.

The proposal that would make preparing financial statements and performing certain bookkeeping services Miami nonattest services is contained in an exposure draft issued June 29 by the AICPA Professional Ethics Executive Committee (PEEC), the technical committee charged with interpreting and enforcing the AICPA Code of Professional Conduct. The nonattest services would be subject to the provisions of an AICPA professional standard on independence. The standard is Interpretation No. 101-3, “Performance of Nonattest Services,” under Rule 101, Independence (AICPA, Professional Standards, ET sec. 101 par. 05).

This proposed change would harmonize the ethical standards with the views of some Accountants in Miami who already consider the financial statement preparation to be a nonattest bookkeeping service in Miami. The proposal also would conform the standards to the revised independence standard issued in August 2011 by the U.S. Government Accountability Office (GAO), which indicates that financial statement preparation is not part of the audit service.

Specifically, the GAO’s revised standard includes a provision stating that nonattest bookkeeping service Miami, such as preparation of financial statements, cash-to-accrual conversions, and reconciliations, would be considered nonattest services, not routine services related to the performance of an audit. This standard is inconsistent with a nonauthoritative frequently asked question (FAQ) published by the Professional Ethics Division.

In this FAQ, the division took the position that preparing financial statements as part of an attest engagement would not be considered a nonattest service, provided the client’s records are substantially complete and current in order to conduct the attest engagement on those books and records. The FAQ further stated that if the member performed a service to bring those books and records current or complete, the service would be considered outside the scope of the normal attest engagement and, therefore, a Accountants in Miami subject to the requirements of Interpretation No. 101-3.

PEEC reconsidered the position taken in the FAQ and agreed to conform to the GAO position.

Interpretation No. 101-3 has been under review since November 2009, when PEEC learned of confusion and diversity in practice related to a provision within the interpretation that concluded independence would be impaired if a member established or maintained internal controls for a client. PEEC was advised that some members believed this provision prohibited certain activities for an attest client, such as preparing financial statements or reconciling accounts, because under the Committee of Sponsoring Organizations of the Treadway Commission’s Internal Control—Integrated Framework, such activities could be viewed as part of the system of internal control over financial reporting.

This belief conflicted with PEEC’s intention on how the provision governing establishing or maintaining internal controls should be applied. PEEC intended that the establishing-or-maintaining-of-internal-controls provision should apply to situations whereby the member, in effect, manages the internal audit activities of the client or situations when the member accepts responsibility for designing, implementing, or maintaining internal controls for his or her clients. PEEC believed its intention was supported by the fact that 101-3 provides that independence can be maintained when CPAs assist clients with performing bookkeeping services, including financial statement preparation, and reconciling a client bank account when certain safeguards are in place.

At its meeting in May, PEEC approved two sets of revisions to 101-3. One set of revisions was previously exposed for comment and will take effect on Aug. 31, 2012. The second set of revisions appears in an omnibus ED from the Professional Ethics Division dated June 29, 2012. The revisions that are effective Aug. 31 include clarification that independence would be impaired if members accept responsibility for designing, implementing, or maintaining controls for a client but would not impair independence if members perform certain nonattest services, including Accountants in Miami services such as preparation of financial statements or preparing account reconciliations, provided certain safeguards are in place.

IMPACT ON THE AUDITING, REVIEW, AND COMPILATION STANDARDS

Current auditing, review, and compilation standards permit the Accountants in Miami to prepare or draft financial statements, in whole or part, as part of the attest engagement:

Auditing standards (paragraph .03 of AU section 110, Responsibilities and Functions of the Independent Auditor [AICPA, Professional Standards]) state that the independent auditor may make suggestions about the form or content of the financial statements or draft them, in whole or in part, based on the information from management during the performance of the audit.

Review standards are silent with respect to preparation of financial statements, but it is understood that accountants often prepare financial statements as part of a typical review engagement.

Compilation standards (paragraph .01 of AR section 80, Compilation of Financial Statements [AICPA, Professional Standards]) state that the Accountants in Miami is required to comply with the provisions of AR section 80 whenever he or she is engaged to report on compiled financial statements or submits financial statements to a client or third parties. Paragraph .04 of AR section 60, Framework for Performing and Reporting on Compilation and Review Engagements (AICPA, Professional Standards), defines submission of financial statements as presenting to management financial statements the accountant has prepared.

Because any financial statement preparation or drafting would be considered a nonattest service under the PEEC proposal, clarifications to these standards will be necessary. The audit and review standards can be easily clarified by including a footnote or other language that states that the provisions of 101-3 apply when the auditor or accountant prepares financial statements. But the compilation standards will require more extensive revision, which is addressed in the proposed SSARS exposed by ARSC.

As a result of the PEEC and ARSC revisions, an engagement to prepare financial statements would be a nonattest service and not subject to the compilation standard. To make clear the accountant’s responsibility when the accountant is engaged to prepare financial statements but is not engaged to perform a compilation engagement, ARSC has also exposed for public comment an additional proposed standard. That proposal addresses the accountant’s responsibilities when he or she is associated with financial statements that have not been compiled, reviewed, or audited. That proposed standard would require certain legends, notations, or disclaimer language be placed on or with the financial statements when the accountant prepares financial statements but has not compiled, reviewed, or audited the financial statements. This association standard is in response to a public interest concern that anyone using financial statements that have been prepared, in whole or part, by a Accountants in Miami understands that those financial statements have been prepared without audit, review, or compilation.

The proposed association standard would be effective for unaudited financial statements with which the accountant is associated on or after Dec. 15, 2014. The proposed revisions to the compilation standard would be effective for compilations of financial statements for periods ending on or after Dec. 15, 2014.

The proposed effective date of the revisions to Interpretation No. 101-3 would be two years from the date when the revision is published in the JofA. Early implementation of the proposed revisions to 101-3 and the new SSARSs would be permitted so that accountants can implement the revised standards simultaneously.

EXECUTIVE SUMMARY

Recently proposed revisions to professional standards would require CPAs who prepare financial statements for clients to consider that service a nonattest bookkeeping service Miami. The CPAs would no longer be required to perform a compilation service with respect to those financial statements unless specifically engaged to do so. The proposed changes would consider all financial statement preparation to be a nonattest service, regardless of whether the accountant also is engaged to compile, review, or audit the financial statements.

CPAs who prepare financial statements would perform a compilation only if they are engaged by their client to do so in accordance with the proposed standard. The compilation would be a “read and report” service separate from the preparation of the financial statements. Once engaged to perform a compilation service, the Accountants in Miami would read the financial statements to see if there are obvious mistakes or flaws, and then issue an accountant’s compilation report on the financial statements.

The changes proposed would harmonize the professional standards with the views of some practitioners who already consider the financial statement preparation to be a nonattest service, and would conform the standards to corresponding U.S. Government Accountability Office (GAO) literature.

Proposed changes include a standard addressing the accountant’s association with financial statements that he or she has not compiled, reviewed, or audited. The proposal would require Accountants in Miami who prepare financial statements, but are not engaged to perform a compilation, review, or audit engagement, to request that management include a label or notation that makes clear that the financial statements were not audited, reviewed, or compiled. Alternatively, CPAs can attach a disclaimer to the financial statements to indicate when they have not compiled, reviewed, or audited the financial statements.

The proposed changes are expected to have minimal impact on CPAs who prepare financial statements for their clients, except with regard to the requirement to perform a compilation service, which would be revised significantly under the proposal.

 

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Accounting

New Financial Audit Standard Encourages More Talking

New Financial Audit Standard Encourages Oversight

The Public Company Accounting Oversight Board on Financial Audit (PCAOB) today approved a standard on how to help auditors and audit committees communicate better. While Auditing Standard No. 16 (dubbed Communication with Audit Committees) still has to be approved by the Securities and Exchange Commission, the formal adoption of the rule shows the importance the PCAOB is placing on the need for better communication to improve the transparency and integrity of financial reporting by U.S. companies.

Requiring better financial audit communication is expected to help smooth out any wrinkles that might arise in advance of a company’s financial-reporting cycle. It is to the benefit of a company and its financial audit committee to hear upfront about concerns that might spring up over applying new accounting standards or about any unusual financial transactions that are outside of the normal course of business rather than when a company is about to release its earnings. It’s really putting them companies on notice that there’s a risk around financial reporting that we see emerging here.”

Under the new Financial Audit Standard, an auditor would also be required to ask a company what plans it has to mitigate a particular issue before formulating his or her conclusion, which would mark a change from current practice. “This significantly puts the audit committee into the equation and consideration of what the auditor is doing.

The auditor would also have to tell the audit committee about significant risks he or she may have identified and update the audit committee about changes he or she may have to the overall strategy of the audit. If any departure from a standard auditor report is necessary, that would also have to be shared with the audit committee.

Some audit committees may find the new communication process more helpful than others. “Audit-committee members who have had backgrounds as CFOs [and] former auditors really know what information they want and what to ask for, but other audit-committee members may not. This in a way is leveling the playing field so that everyone would get the same type of information.

The PCAOB does not have jurisdiction over corporate audit committees; instead, it would only oversee the way auditors will have to communicate with it going forward. If adopted by the SEC, AS 16 would go into effect for public-company audits of fiscal periods beginning after December 15, 2012.

The new Financial Audit standard became a priority at the board because of a perceived need to improve transparency in the entire audit process, from the development of company financial statements to the deliberations of audit committees to PCAOB inspections. PCAOB board member Jay Hanson notes that the oversight body should share as much as possible about its insights into public-company auditing. It’s clear that at least some audit-committee members are doing an outstanding job, exactly what the Sarbanes-Oxley Act envisioned, and I think part of our job is to help other audit-committee members to get to that high level. Sarbanes-Oxley requires that the audit committee be independent of company management.

The board originally proposed the standard in March 2010, and then worked on a revision at the end of 2011. AS 16 also builds on previous interim PCAOB standards that became effective in 1989, including AU Section 380, the first “Communication with Audit Committees,” and AU Section 310, called the “Appointment of the Independent Auditor.”

The new standard focuses on “communication with the audit committee, not necessarily information sent to the audit committee. “We’re mindful of this standard potentially becoming just another checklist or boilerplate exercise of going through a list of requirements. We heard from commentators who didn’t want that and we’ve been responsive to those comments.

One criticism of AS 16 lies in letting auditors communicate orally with audit committees, instead of just requiring written documentation. Despite the oral presentations, however, the auditor would still have to document what would have been in the report.

The cost to adopt the new standard, however, remains a low concern. The PCAOB says communication between auditors and audit committees can be scaled up or down to fit the size of a company.