GASB issued Statement No. 101, Compensated Absences, and updated the recognition and
Accounting and Auditing for CPAs
Understanding accounting and auditing is key to becoming an outstanding CPA. There's no way around it. If you want to be a great accountant or auditor, you have to keep up with the ever-changing accounting and auditing landscape. And believe me, it's always changing.
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Being an excellent accountant or auditor requires knowledge in:
Accounting
Accounting standards primarily come from the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). Other types of reporting frameworks include cash-basis, modified-cash basis, tax-basis, contractual, and regulatory. An accounting framework is used to create financial statements. The selection of the reporting framework is based on legal and regulatory requirements we well as the needs of users.
Once financial statements are created, they may be subject to attest procedures performed by a third-party CPA or CPA firm. Possibilities include a compilation engagement, a review engagement or an audit.
Many accountants are not auditors, but some are.
Auditing
Auditing is the inspection of accounting records, usually financial statements, by a third party CPA or CPA firm. The standards for auditing U.S. entities primarily come from the Association of International Certified Professional Accountants (AICPA) and are called Statements on Auditing Standards (SASs). Additionally, the AICPA provides attestation standards in the form of Statements on Standards for Attestation Engagments (SSAEs). Whether the SASs or SSAEs are used, the accountant--as an independent third party--uses these standards to add credibility to the information by rendering a opinion or report about the subject matter.
Auditors must understand accounting and audit standards.
Below are articles I've published to help you improve your accounting and auditing skills.
Accounting Articles
Below are articles about FASB and GASB standards.
Nonprofit Financial Statements Video Overview
Nonprofit financial statements are unique and can be confusing to understand. The
Journal Entries Made Easy: New Book
Journal Entries Made Easy, an Introduction to Accounting is my new book
Eight Types of Accounting Journal Entries
In this article, I provide eight different types of accounting journal entries.
Understanding the Chart of Accounts: A Fundamental Guide
Finance and Operating Leases: Lessees
Most CPAs grapple with leases from the lessee’s point of view, so
How to Understand the New Lease Accounting Standard
Do you need help in understanding the new lease accounting standard? This
Changes in Leases and the Leasing Industry
The Leasing Industry will Change In my last lease post, we saw
Three Steps to Correct Cash Flow Statement Errors
Do you struggle with creating cash flow statements? Would you like to
GASB 87 Lease Accounting
Are you looking for GASB 87 lease accounting information? Are you a
Cash Overdrafts: Negative Cash Accounting
How should you account for cash overdrafts (also called negative cash balances)
PPP and EIDL Accounting Solutions
Are you wondering about PPP and EIDL accounting? Well, you've come to
ASU 2016-01 – Accounting for Equity Securities
Are you aware of the coming changes in accounting for equity securities
Debt Covenant Violations: How to Report
How does a debt covenant violation affect the presentation of debt on
Financial Statement References
What financial statement references are required at the bottom of financial statement
Understanding the New Nonprofit Accounting Standard
Are you ready to implement FASB’s new nonprofit accounting standard? Back in
ASU 2018-17: A VIEry Good Gift from FASB
It's time for another change to VIE accounting! The variable interest entity (VIE) considerations
Going Concern Accounting and Auditing
Are you preparing financial statements and wondering whether you need to include
Simplifying the Measurement of Inventory
Are you up to speed on ASU 2015-11 Simplifying the Measurement of
Do Loan Guarantees Create Liabilities?
Can a loan guarantees create liabilities that go on the balance sheet
Debt Issuance Costs: New Parking Place
Debt issuance costs have a new parking place. For some time now,
How to Solve Accounting Problems Quickly
Do you ever need to solve accounting problems quickly? I often hear
GASB 63 and 65: Deferred Outflows, Inflows
GASB 63 and 65 provide guidance regarding deferred outflows and inflows in
Auditing Articles
Below are articles about auditing and attesation standards.
Demystifying Group Audits: Key Definitions and Requirements
SAS No. 149, Special Considerations — Audits of Group Financial Statements (Including the
Payment Fraud Tests: Five Powerful Ideas
Are you looking for payment fraud tests? Ways to detect fraudulent payments
Audit Mistakes: Seven Deadly Sins
Seven deadly audit sins can destroy you. These audit mistakes kill your
Internal Control Reporting When There are No Issues
In this post, I provide an overview of the internal control reporting
Tips for Communicating with a Predecessor Auditor
Communicating with a predecessor auditor can be trying. Even so, audit standards
Client Acceptance: How to Do It Right
Client acceptance and continuance may be the most critical step in an
Single Audit Overview: In Five Minutes
Here’s a Single Audit overview in five minutes. This video provides an
Test of Controls: When is It Required?
Most auditors don’t perform a test of controls? But should they? Below
Auditing Payroll: A Step by Step Guide
Auditing payroll is a critical skill. Today I explain how. While payroll
When is a Gift a Bribe?
When is a gift a bribe?Vendors often give sporting event tickets to
Understand Engagement Quality Reviews and Monitoring and Remediation
The new quality management standards include (1) engagement quality reviews and (2)
AICPA Quality Management: Why You Need to Start Now
All firms performing any engagement in an accounting and auditing practice must comply
Audit or Tax, Which is the Better Job?
Should you work in tax or audit?If you're near graduation, you may
Get a Grip on Journal Entry Testing: AU-C 240
Journal entry testing is required in all audits. Why? The use of
SAS 143, Auditing Accounting Estimates
In this article, I explain SAS 143, Auditing Accounting Estimates and Related Disclosures, a
Are You Over Auditing and Wasting Time?
Are you over auditing? In this article, I explain how you can
Segregation of Duties: How to Overcome
Segregation of duties is key to reducing fraud. But smaller entities may
Unpaid Fees and Attest Independence
Unpaid fees can impair your independence in attest engagements. This article explains
Internal Control Weakness Reporting
Auditors often fail to capture and communicate internal control weaknesses, even though
Understanding Unmodified and Modified Audit Opinions
In this post, you’ll gain an understanding of unmodified and modified audit
Auditing Equity: Why and How Guide
Auditing equity is easy, until it’s not. Auditing equity is usually one
Audit Lessons from a Brain Tumor
Did you know you can learn audit lessons from a brain tumor?
Auditing Debt: The Why and How Guide
What are the keys to auditing debt?While auditing debt can be simple,
Auditing Investments: A Guide
Auditing investments is important, especially when an auditee has large balances. Below
Auditing Receivables & Revenues: A Guide
Today we take a look at auditing receivables and revenues. Revenues are
Auditing Cash: The Why and How Guide
Auditing cash tends to be straightforward. We usually just obtain the bank
Preliminary Analytical Procedures
Preliminary analytical procedures are used to identify material misstatements in financial statements.
SSAE 19: Agreed-Upon Procedures Engagements
On December 19, 2019, the AICPA released SSAE 19, Agreed-Upon Procedures Engagements.
Significant Risks in Audits of Financial Statements
Peer reviews find that many CPA firms don't identify significant risks in
Auditing Accounts Payable and Expenses
Accounts payable is usually one of the more important audit areas. Why?
Control Risk: Financial Statement Audits
Control risk continues to create confusion in audits. Some auditors assess control
SAS 145: New Risk Assessment Standard
Statement on Auditing Standards No. 145 (SAS 145), Understanding the Entity and Its
Related Party Transactions: Fraud
Related party transactions can be a means to fraudulent financial reporting. Yet,
Work Paper Mistakes: A List of 40 Common Errors
How to Identify and Manage Audit Stakeholders
Project Management in Audits: Key to Profit
On the first day of your audit, you’re confident you’ll deliver your
Fake Bank Confirmation Responses: $6 Million Theft
The Western District of North Carolina U.S. Attorney’s Office issued a press
Inherent Risk: How to Understand
Do you know how to assess inherent risk? Knowing when this risk
Audit Documentation: Peer Review Finding
Peer reviewers are saying, “If it’s not documented, it’s not done.” Why?
Audit Risk Assessment: The Why and the How
Today we look at one of most misunderstood parts of auditing: audit
Auditing for Fraud: The Why and How
Auditing for fraud is important, but some auditors ignore this duty. Even
Substantive Analytical Procedures: Power Up
Are you using substantive analytical procedures in your audits? Many auditors rely
When are SOC Reports Needed by an External Auditor?
Service organization control (SOC) reports are often necessary to understand outsourced accounting
Audit Planning: Develop Your Audit Plan and Strategy
This article teaches you how to develop your audit plan and strategy.
Relevant Assertions in Financial Statement Audits
In this article, I address audit assertions and why they are critical
Use of a Specialist: How to Document
As an auditor, you often use the work of specialists such as
Unpredictable Audit Procedures
In this article I explain how you can use unpredictable audit procedures.
Seven Excuses for Unnecessary Audit Work Papers
Unnecessary audit work papers create clutter and potential legal problems. I see
Management Override of Internal Controls
Management can override internal controls, resulting in fraudulent financial reporting. Below I
Audit Materiality and Performance Materiality
Want to perform your audits correctly but with less time? Then understand
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The Why and How of Auditing
Auditing Made Easy
Learn auditing from client acceptance to audit opinion issuance!
