Financial Reporting And Auditing Implications Of The Covid

center for plain english accounting

The CPEA’s team of experts assists members with their accounting, auditing, attest, review, and compilation needs by sharing technical advice and guidance in a straight-forward manner. The events or conditions that give rise to substantial doubt as to an entity’s ability to continue as a going concern need not have occurred before the balance sheet date; they may have occurred in the subsequent period. Such an assessment and conclusion may require the preparation of a management forecast that is based on assumptions judged to be reasonable and therefore sufficiently reliable for this purpose even if not examined by the auditor. In the event substantial doubt was present before the financial statements are issued, even if adequately alleviated by management’s plans, certain disclosures about going concern uncertainty are required by U.S. From financial literacy to public policy issues and peer review transparency to audit committee effectiveness, the AICPA works to ensure that the public remains confident in the integrity, objectivity, competence and professionalism of CPAs. Offered exclusively to members of AICPA’s Center for Plain English Accounting, this VIP session takes a close look at a number of accounting topics such as revenue recognition and implementing the Private Company Council alternatives.

Access to webcasts on hot A&A issues qualifying for a total of 16 NASBA-certified CPE credits annually. Below I provide you with a review of the CPEA and whether the annual dues are worthwhile.

center for plain english accounting

The AICPA developed additional recommendations for CPAs to assist clients as they navigate the Paycheck Protection Program . Meanwhile, banks may elect to account and report for loans modified under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act, P.L. Would continue to record the proceeds from the loan as a liability until either the loan is partly or wholly forgiven and the debtor has been legally released or the debtor pays off the loan. Accounting for the concessions as if no changes to the lease contract were made. In that case, a lessor would increase its lease receivable, and a lessee would increase its accounts payable as receivables/payments accrue.

Professional Insights

More than ever, CPAs need help navigating new and complex accounting issues. The American Institute of CPAs Center for Plain English Accounting provides an essential resource for CPAs in local and regional firms.

center for plain english accounting

Melisa Galasso is the founder and CEO of Galasso Learning Solutions LLC. A CPA with nearly 20 years of experience in the accounting profession, Melisa designs and facilitates courses in advanced technical accounting and auditing topics, including not-for-profit and governmental accounting. She also supports essential professional development, audit level training, and train the trainer efforts. Melisa is a Certified Speaking Professional, a Certified Professional in Talent Development , and has earned the Association for Talent Development Master Trainer™ designation. Her passion for instructional design and adult learning techniques is one of the differentiators that set her apart from other CPE providers. Within the industry, Melisa serves on the FASB’s Not-for-Profit Advisory Committee , AICPA Council, and the VSCPA’s Board of Directors.

What Are Management Responsibilities?

We will also cover other relevant standards and discuss GASB 95 and its impact on effective dates. The course will close with a review of GASB’s Technical Bulletin, Accounting and Financial Reporting Issues Related to the Coronavirus Aid, Relief, and Economic Security Act of 2020 and Coronavirus Diseases, as well as GASB’s Toolbox for entities to consider the impact of COVID on financial reporting. Mark Koziel is Executive Vice President Firm Services for the American Institute of CPAs. Mark leads the Private Companies Practice Section , Firm Relationship Management, Small Firms, Diversity & Inclusion, Young Member Initiatives, Technical Hotline and Center for Plain English Accounting.

Alternatively, the entity might sustain a “material adverse change” that triggers a subjective acceleration clause. Such an event will require debt reclassification or obtaining a waiver from the lender.

(I would say who was right but I might embarrass myself.) And with it, we documented our consultation per our firm’s quality control document. Now, if the issue comes up in peer review, we have a solid answer for our position. GAAP for the accrual of expected lost revenues, except in the form of business interruption insurance claims receivable when realization is assured. Nevertheless, estimated future operating losses ordinarily should be disclosed to the extent reasonably possible. One needs to consider, however, whether to recognize committed costs and expenses for which, due to the effects of the economic slowdown caused by COVID-19, there may not be any matching revenues forthcoming or goods or services expected to be received in exchange. Examples of such committed costs or expenses are short-term rent or depreciation on idle facilities and benefits for furloughed employees. Proper accounting for insurance recoveries varies, depending on factors such as the nature of the claim, the amount of proceeds , and the timing of the loss and recovery.

About Aicpa

In its income statement, a lessor would continue to recognize income, and a lessee would continue to recognize expense during the deferral period. The Maryland Association of CPAs’ core mission is to help members connect in https://xero-accounting.net/ strategic ways, protect their professional interests, and achieve in their careers. To ensure the most secure and best overall experience on our website we recommend the latest versions of Chrome, Edge, Firefox, or Safari.

IMTA is for CPAs who offer assurance services and information management support for their clients, helping them to build skills and provide business insight through IT. FVS provides members and ABV, CFF and CEIV credential holders with an array of resources, tools and information about forensic accounting and business valuation services. PFP supports CPAs who provide estate, tax, retirement, risk management and investment planning advice center for plain english accounting with tools, information and guidance. Enhancing Audit Qualityis a comprehensive initiative to drive higher audit quality that helps accounting firms continue to meet the needs of a complex business environment. Together, we will lead the most influential body of professional accountants and create the future of the global accounting profession. Ability to perform research using a variety of resources covering both audit and attest topics.

The Center for Plain English Accounting is the AICPA’s national accounting and auditing resource center, sponsored by the AICPA Private Companies Practice Section. The CPEA’s team of experts assists members with their accounting, auditing, attest, review, and compilation needs by sharing technical advice and guidance in a straightforward manner, available at aicpa.org. There will likely be many interrelated financial reporting and auditing implications of the coronavirus (COVID-19) pandemic and its impact on economic activity. Numerous articles have already been published on the subject; a selection of materials appears in theExhibit. This article is intended only to help identify possible audit scope limitations and other issues, and make such judgments.

Cpa Network Launches New Website

The members of the CPEA team will share practical advice and insights about implementing recent accounting, auditing, compilation, and review standards, as well as address other A&A issues. The discounted price for annual full membership is $1,530, which provides CPEA access and services to all members of the firm. In the association field of the application, put CPAFMA and the staff will verify your CPAFMA membership and apply the discount. If you are already a member of CPEA, be sure to mention your CPAFMA membership when you renew to receive the 10% discount. The CPA Journal is a publication of the New York State Society of CPAs, and is internationally recognized as an outstanding, technical-refereed publication for accounting practitioners, educators, and other financial professionals all over the globe. Edited by CPAs for CPAs, it aims to provide accounting and other financial professionals with the information and analysis they need to succeed in today’s business environment. It is likely that a business slowdown, shutdown, staff furlough, or other decline in operating activity subsequent to year-end will cause an entity to violate a debt coverage ratio or other covenant or requirement of a loan agreement, such as late issuance of audited financial statements.

  • As discussed below, many of the issues will require greater-than-usual reliance on accounting estimates; due to the higher level of uncertainty, these estimates will be inherently more difficult and less reliable.
  • Prior to joining the AICPA, Kristy was the controller for Engender Health, an international nonprofit organization focused on women’s reproductive health.
  • That rate applies to a corporation’s taxable income, but corporate dividends are also subject to tax.
  • In its income statement, a lessor would continue to recognize income, and a lessee would continue to recognize expense during the deferral period.
  • You have opportunities to innovate and collaborate in a leading organization that impacts individuals and businesses.
  • The CPEA’s straight-forward and clear style of writing and speaking gives practitioners the opportunity to understand the applicability of the professional literature when preparing financial statements and when auditing, reviewing and compiling those financial statements.

Auditors are reminded that the longer the subsequent period is extended beyond the norm, for example, due to COVID-19, the greater the risk of material misstatement with respect to subsequent events. Therefore, auditors’ subsequent events review procedures will need to be more extensive and robust.

Aicpa Cpexpress: Unlimited Online Access To 600+ Cpe Credit Hours

Peer Reviewserves the public interest by promoting the quality of accounting, auditing and attestation services performed by AICPA members. Through responses to technical inquiries, reports, alerts, webcasts, and training sessions, the CPEA’s team of experts provide A&A support by describing “how to do” what you “need to do” in implementing the authoritative literature. When we see legislative developments affecting the accounting profession, we speak up with a collective voice and advocate on your behalf. Our advocacy partners are state CPA societies and other professional organizations, as we inform and educate federal, state and local policymakers regarding key issues. The curtailment of operations, diminishing liquidity, and other economic hardships currently being experienced by customers and borrowers must be considered when valuing receivables for collectability and establishing allowances. Lessors in sales-type and direct financing lease arrangements should likewise follow the impairment testing guidance prescribed for financial assets in Topics 310 or 326, as applicable, when determining credit losses on lease receivables.

National office experience, or other similar experience in either creating and presenting content on accounting matters as well as significant experience researching accounting/assurance issues. Groskopf also serves on the International Financial Reporting Standards’ Small- and Medium-sized Entity Implementation Group and is a member of the Xavier University Accounting Department’s Board of Executive Advisors. He served as a member of the FASB’s Private Company Financial Reporting Committee . In addition, he has served on the AICPA’s Private Companies Practice Section Technical Issues Committee, including one year as chair of its accounting subcommittee and on the Ohio Society of Certified Public Accountant’s Audit and Accounting Committee. CPA Firm Management Association has partnered with the AICPA to enhance our firms’ A&A practices, by negotiating a special discounted fee for membership in the Center for Plain English Accounting . For the last thirty years, I have primarily audited governments, nonprofits, and small businesses. Auditors must seriously consider whether doing all they can in a particular situation translates into doing enough to reduce the risk of material misstatement to an acceptable level.

  • Keeping a watchful eye for additional guidance on common accounting issues can help financial statement preparers continue to arrive at the right answers as they strive to accurately tell their organizations’ stories during these difficult times.
  • Therefore, auditors’ subsequent events review procedures will need to be more extensive and robust.
  • She previously served on the AICPA’s Technical Issues Committee and is a past-Chair of the NCACPA’s A&A committee.
  • Coordinate with staff of the PCPS Executive Committee on accounting matters and assist with presenting at their meetings as requested on technical issues.
  • When a single-point estimate relates to a loss contingency, its additional maximum exposure to loss should be disclosed if possible.
  • Chuck served as a member and is the former Deputy Chair of the International Audit & Assurance Standards Board and was the AICPA’s member to the Committee of Sponsoring Organizations of the Treadway Commission.

Though practitioners are closely involved with their client’s financial statements by virtue of performing audits, reviews, and compilations, the ultimate responsibility for financial reporting, including the underlying books and records, rests with management. The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination and offers specialty credentials for CPAs who concentrate on personal financial planning; fraud and forensics; business valuation; and information technology.

Implementing Lease Accounting

FASB also deferred the effective date for adopting its lease accounting standard for private companies. ASC Topic 842, Leases, is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Although it is not mandatory to make this standard effective now, consider advising those clients that benefited from the delay in adopting the revenue recognition standard adopt both simultaneously. This honor recognizes Tom’s leadership of the Center for Plain English Accounting, a key program of the American Institute of Certified Public Accountants. During his tenure at CPEA, Tom has traveled the country to more than 150 CPA firms to explain in “Plain English” difficult technical accounting and auditing standards including the new Revenue and Lease Accounting standards.

Nearly forty were provided more than 16 hours of CPE either in-person or online. Those in-person spent additional time networking while at Maumee Bay Lodge & Conference Center near Toledo. In addition, the AICPA’s Center for Plain English Accounting issued a special report on issues related to CPA involvement in small business loans under the PPP. This report covers independence, conflicts of interest, and contingent fee issues.

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