<br />
Embracing<br />
Ethics<br />
And<br />
Morality<br />
<br />
An Analytic Essay for the<br />
Accounting Profession<br />
<br />
<br />
Plus<br />
· CEOs, CFOs, and Fraud<br />
· Valuing Private Company Stock<br />
· What Investors Want from Audit Reports<br />
<br />
<br />
CONTENTS<br />
<br />
january 2012<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
22 Accounting & Auditing<br />
Auditing<br />
What Do Investors Want from the Standard Audit Report?:<br />
Results of a Survey of Investors Conducted<br />
by the PCAOB's Investor Advisory Group<br />
<a title="The CPA Journal - January 2012 page 1" href="http://viewer.zmags.com/publication/6f4690a9?page=1">EmbracingEthicsAndMoralityAn Analytic Essay </a> EmbracingEthicsAndMoralityAn Analytic Essay <a title="The CPA Journal - January 2012 page 2" href="http://viewer.zmags.com/publication/6f4690a9?page=2"></a> <a title="The CPA Journal - January 2012 page 3" href="http://viewer.zmags.com/publication/6f4690a9?page=3"></a> <a title="The CPA Journal - January 2012 page 4" href="http://viewer.zmags.com/publication/6f4690a9?page=4">CONTENTSjanuary 2012 </a> CONTENTSjanuary 2012 <a title="The CPA Journal - January 2012 page 5" href="http://viewer.zmags.com/publication/6f4690a9?page=5">vol. LXXXII/no. 16PERSPECTIVES16IN FOCUS</a> vol. LXXXII/no. 16PERSPECTIVES16IN FOCUS<a title="The CPA Journal - January 2012 page 6" href="http://viewer.zmags.com/publication/6f4690a9?page=6"> PublisherJOANNE S. BARRY Ar</a> PublisherJOANNE S. BARRY Ar<a title="The CPA Journal - January 2012 page 7" href="http://viewer.zmags.com/publication/6f4690a9?page=7">FAE 2012 Web Eventsfoundation for accounting</a> FAE 2012 Web Eventsfoundation for accounting<a title="The CPA Journal - January 2012 page 8" href="http://viewer.zmags.com/publication/6f4690a9?page=8">PERSPECTIVESviewpointTaming the Too-Big-t</a> PERSPECTIVESviewpointTaming the Too-Big-t<a title="The CPA Journal - January 2012 page 9" href="http://viewer.zmags.com/publication/6f4690a9?page=9">publisher's column A Fresh Look atOur</a> publisher's column A Fresh Look atOur<a title="The CPA Journal - January 2012 page 10" href="http://viewer.zmags.com/publication/6f4690a9?page=10">(Continued from page 6)lem of sustaining behemot</a> (Continued from page 6)lem of sustaining behemot<a title="The CPA Journal - January 2012 page 11" href="http://viewer.zmags.com/publication/6f4690a9?page=11">with how to cushion its megabanks fromexcessive </a> with how to cushion its megabanks fromexcessive <a title="The CPA Journal - January 2012 page 12" href="http://viewer.zmags.com/publication/6f4690a9?page=12">City Federal Reserve Bank, Tom Hoenig,who is now</a> City Federal Reserve Bank, Tom Hoenig,who is now<a title="The CPA Journal - January 2012 page 13" href="http://viewer.zmags.com/publication/6f4690a9?page=13">ble, conduct its operations in a manner that… mi</a> ble, conduct its operations in a manner that… mi<a title="The CPA Journal - January 2012 page 14" href="http://viewer.zmags.com/publication/6f4690a9?page=14">subjective, qualitative auditor disclosure.The c</a> subjective, qualitative auditor disclosure.The c<a title="The CPA Journal - January 2012 page 15" href="http://viewer.zmags.com/publication/6f4690a9?page=15">proposal appears to be a request for aseparate, </a> proposal appears to be a request for aseparate, <a title="The CPA Journal - January 2012 page 16" href="http://viewer.zmags.com/publication/6f4690a9?page=16">enhancing communication to investors.” Isincerel</a> enhancing communication to investors.” Isincerel<a title="The CPA Journal - January 2012 page 17" href="http://viewer.zmags.com/publication/6f4690a9?page=17">are also concerned with compliance with allappli</a> are also concerned with compliance with allappli<a title="The CPA Journal - January 2012 page 18" href="http://viewer.zmags.com/publication/6f4690a9?page=18">InFocusEmbracingEthicsAndAn Analytic Es</a> InFocusEmbracingEthicsAndAn Analytic Es<a title="The CPA Journal - January 2012 page 19" href="http://viewer.zmags.com/publication/6f4690a9?page=19"> I </a> I <a title="The CPA Journal - January 2012 page 20" href="http://viewer.zmags.com/publication/6f4690a9?page=20">Culture: Lessons Learned from ArthurAndersen,” A</a> Culture: Lessons Learned from ArthurAndersen,” A<a title="The CPA Journal - January 2012 page 21" href="http://viewer.zmags.com/publication/6f4690a9?page=21"> As a result, students later enter the pro-fe</a> As a result, students later enter the pro-fe<a title="The CPA Journal - January 2012 page 22" href="http://viewer.zmags.com/publication/6f4690a9?page=22">Most large companies and professionalgroups, suc</a> Most large companies and professionalgroups, suc<a title="The CPA Journal - January 2012 page 23" href="http://viewer.zmags.com/publication/6f4690a9?page=23">its members peaking at level four—doingwhat is r</a> its members peaking at level four—doingwhat is r<a title="The CPA Journal - January 2012 page 24" href="http://viewer.zmags.com/publication/6f4690a9?page=24">ACCOUNTING & AUDITINGauditing</a> ACCOUNTING & AUDITINGauditing<a title="The CPA Journal - January 2012 page 25" href="http://viewer.zmags.com/publication/6f4690a9?page=25">(which states that the auditor believes thatthe </a> (which states that the auditor believes thatthe <a title="The CPA Journal - January 2012 page 26" href="http://viewer.zmags.com/publication/6f4690a9?page=26">sidering, the authors sought to make rec-ommenda</a> sidering, the authors sought to make rec-ommenda<a title="The CPA Journal - January 2012 page 27" href="http://viewer.zmags.com/publication/6f4690a9?page=27">respondents. The opinion of those infavor of exp</a> respondents. The opinion of those infavor of exp<a title="The CPA Journal - January 2012 page 28" href="http://viewer.zmags.com/publication/6f4690a9?page=28"> Sensitivity analyses performed by theengageme</a> Sensitivity analyses performed by theengageme<a title="The CPA Journal - January 2012 page 29" href="http://viewer.zmags.com/publication/6f4690a9?page=29">audit adjustments discussed with manage-ment (39</a> audit adjustments discussed with manage-ment (39<a title="The CPA Journal - January 2012 page 30" href="http://viewer.zmags.com/publication/6f4690a9?page=30">standing this fact, respondents generallyfavored</a> standing this fact, respondents generallyfavored<a title="The CPA Journal - January 2012 page 31" href="http://viewer.zmags.com/publication/6f4690a9?page=31"></a> <a title="The CPA Journal - January 2012 page 32" href="http://viewer.zmags.com/publication/6f4690a9?page=32">ACCOUNTING & AUDITINGaccounting </a> ACCOUNTING & AUDITINGaccounting <a title="The CPA Journal - January 2012 page 33" href="http://viewer.zmags.com/publication/6f4690a9?page=33">become zero, some arbitrary period with-in a ran</a> become zero, some arbitrary period with-in a ran<a title="The CPA Journal - January 2012 page 34" href="http://viewer.zmags.com/publication/6f4690a9?page=34"> EXHIBIT 1Accounting for Goodwill </a> EXHIBIT 1Accounting for Goodwill <a title="The CPA Journal - January 2012 page 35" href="http://viewer.zmags.com/publication/6f4690a9?page=35">ment, including: 1) modifying the guidanceon usi</a> ment, including: 1) modifying the guidanceon usi<a title="The CPA Journal - January 2012 page 36" href="http://viewer.zmags.com/publication/6f4690a9?page=36">ACCOUNTING & AUDITINGinternational acc</a> ACCOUNTING & AUDITINGinternational acc<a title="The CPA Journal - January 2012 page 37" href="http://viewer.zmags.com/publication/6f4690a9?page=37"> The study examined a sample of litiga-tion-re</a> The study examined a sample of litiga-tion-re<a title="The CPA Journal - January 2012 page 38" href="http://viewer.zmags.com/publication/6f4690a9?page=38">inate disclosure. Thus, many respondentsbelieve </a> inate disclosure. Thus, many respondentsbelieve <a title="The CPA Journal - January 2012 page 39" href="http://viewer.zmags.com/publication/6f4690a9?page=39">between U.S. GAAP and the short-termconvergence </a> between U.S. GAAP and the short-termconvergence <a title="The CPA Journal - January 2012 page 40" href="http://viewer.zmags.com/publication/6f4690a9?page=40"> Some commentators also note that, becauset</a> Some commentators also note that, becauset<a title="The CPA Journal - January 2012 page 41" href="http://viewer.zmags.com/publication/6f4690a9?page=41">small businesses in complying with theproposed c</a> small businesses in complying with theproposed c<a title="The CPA Journal - January 2012 page 42" href="http://viewer.zmags.com/publication/6f4690a9?page=42">TAXATIONtax policyProspects for U.S. Co</a> TAXATIONtax policyProspects for U.S. Co<a title="The CPA Journal - January 2012 page 43" href="http://viewer.zmags.com/publication/6f4690a9?page=43">rates. For example, depending upon thespecific d</a> rates. For example, depending upon thespecific d<a title="The CPA Journal - January 2012 page 44" href="http://viewer.zmags.com/publication/6f4690a9?page=44"> EXHIBIT 1Taxatio</a> EXHIBIT 1Taxatio<a title="The CPA Journal - January 2012 page 45" href="http://viewer.zmags.com/publication/6f4690a9?page=45"> EXHIBIT 1Taxatio</a> EXHIBIT 1Taxatio<a title="The CPA Journal - January 2012 page 46" href="http://viewer.zmags.com/publication/6f4690a9?page=46">(Continued from page 41)deferral plays a major r</a> (Continued from page 41)deferral plays a major r<a title="The CPA Journal - January 2012 page 47" href="http://viewer.zmags.com/publication/6f4690a9?page=47"> Exhibit 3 summarizes the impact ofdeferral on </a> Exhibit 3 summarizes the impact ofdeferral on <a title="The CPA Journal - January 2012 page 48" href="http://viewer.zmags.com/publication/6f4690a9?page=48">FINANCEbusiness valuation</a> FINANCEbusiness valuation<a title="The CPA Journal - January 2012 page 49" href="http://viewer.zmags.com/publication/6f4690a9?page=49">to structure stock sales that benefit thecompany</a> to structure stock sales that benefit thecompany<a title="The CPA Journal - January 2012 page 50" href="http://viewer.zmags.com/publication/6f4690a9?page=50">8% ÷ (1 – tax rate) = the pretax rate. Thecorres</a> 8% ÷ (1 – tax rate) = the pretax rate. Thecorres<a title="The CPA Journal - January 2012 page 51" href="http://viewer.zmags.com/publication/6f4690a9?page=51"> The company is either relatively newor has e</a> The company is either relatively newor has e<a title="The CPA Journal - January 2012 page 52" href="http://viewer.zmags.com/publication/6f4690a9?page=52"> The age, investment, retirement, orestate pl</a> The age, investment, retirement, orestate pl<a title="The CPA Journal - January 2012 page 53" href="http://viewer.zmags.com/publication/6f4690a9?page=53">(such as discount rates and capitalizationrates)</a> (such as discount rates and capitalizationrates)<a title="The CPA Journal - January 2012 page 54" href="http://viewer.zmags.com/publication/6f4690a9?page=54">nize the cash transfer as an ESOP contri-bution </a> nize the cash transfer as an ESOP contri-bution <a title="The CPA Journal - January 2012 page 55" href="http://viewer.zmags.com/publication/6f4690a9?page=55">or supplier, an intellectual property licen-sor </a> or supplier, an intellectual property licen-sor <a title="The CPA Journal - January 2012 page 56" href="http://viewer.zmags.com/publication/6f4690a9?page=56">to an ESOP stock purchase transaction, ascompare</a> to an ESOP stock purchase transaction, ascompare<a title="The CPA Journal - January 2012 page 57" href="http://viewer.zmags.com/publication/6f4690a9?page=57">indenture, or other contract. In contrast, anESO</a> indenture, or other contract. In contrast, anESO<a title="The CPA Journal - January 2012 page 58" href="http://viewer.zmags.com/publication/6f4690a9?page=58">MANAGEMENTcpa consultant Wha</a> MANAGEMENTcpa consultant Wha<a title="The CPA Journal - January 2012 page 59" href="http://viewer.zmags.com/publication/6f4690a9?page=59">thereby minimizing total quality costs (pre-vent</a> thereby minimizing total quality costs (pre-vent<a title="The CPA Journal - January 2012 page 60" href="http://viewer.zmags.com/publication/6f4690a9?page=60"> The quality mission statement could beorganiz</a> The quality mission statement could beorganiz<a title="The CPA Journal - January 2012 page 61" href="http://viewer.zmags.com/publication/6f4690a9?page=61">defect rate for departments 1 and 3, whichis app</a> defect rate for departments 1 and 3, whichis app<a title="The CPA Journal - January 2012 page 62" href="http://viewer.zmags.com/publication/6f4690a9?page=62">the ISO does not issue ISO 9001 certifi-cation. </a> the ISO does not issue ISO 9001 certifi-cation. <a title="The CPA Journal - January 2012 page 63" href="http://viewer.zmags.com/publication/6f4690a9?page=63">certain best practices in achieving andmaintaini</a> certain best practices in achieving andmaintaini<a title="The CPA Journal - January 2012 page 64" href="http://viewer.zmags.com/publication/6f4690a9?page=64">RESPONSIBILITIES & LEADERSHIPfraud</a> RESPONSIBILITIES & LEADERSHIPfraud<a title="The CPA Journal - January 2012 page 65" href="http://viewer.zmags.com/publication/6f4690a9?page=65"> The second study, “Report to theNations: 2010 </a> The second study, “Report to theNations: 2010 <a title="The CPA Journal - January 2012 page 66" href="http://viewer.zmags.com/publication/6f4690a9?page=66">EXHIBITSelected Recent Research Related to CEOs,</a> EXHIBITSelected Recent Research Related to CEOs,<a title="The CPA Journal - January 2012 page 67" href="http://viewer.zmags.com/publication/6f4690a9?page=67">tendencies toward narcissism, especiallywhen com</a> tendencies toward narcissism, especiallywhen com<a title="The CPA Journal - January 2012 page 68" href="http://viewer.zmags.com/publication/6f4690a9?page=68">TECHNOLOGYthe cpa & the computer </a> TECHNOLOGYthe cpa & the computer <a title="The CPA Journal - January 2012 page 69" href="http://viewer.zmags.com/publication/6f4690a9?page=69">brings a number of significant risks that haveve</a> brings a number of significant risks that haveve<a title="The CPA Journal - January 2012 page 70" href="http://viewer.zmags.com/publication/6f4690a9?page=70">taining data of different companies, whilesuch c</a> taining data of different companies, whilesuch c<a title="The CPA Journal - January 2012 page 71" href="http://viewer.zmags.com/publication/6f4690a9?page=71">Influence of Cloud Computing on Audits The em</a> Influence of Cloud Computing on Audits The em<a title="The CPA Journal - January 2012 page 72" href="http://viewer.zmags.com/publication/6f4690a9?page=72">tices used to deliver services. This reportis in</a> tices used to deliver services. This reportis in<a title="The CPA Journal - January 2012 page 73" href="http://viewer.zmags.com/publication/6f4690a9?page=73">JANUARY 2012 / THE CPA JOURNAL </a> JANUARY 2012 / THE CPA JOURNAL <a title="The CPA Journal - January 2012 page 74" href="http://viewer.zmags.com/publication/6f4690a9?page=74">TECHNOLOGYwhat to bookmark Website of </a> TECHNOLOGYwhat to bookmark Website of <a title="The CPA Journal - January 2012 page 75" href="http://viewer.zmags.com/publication/6f4690a9?page=75">organizations could meet demand in 2011.Even mor</a> organizations could meet demand in 2011.Even mor<a title="The CPA Journal - January 2012 page 76" href="http://viewer.zmags.com/publication/6f4690a9?page=76">CLASSIFIEDMARKETPLACEPROFESSIONAL OPPORTUNITY l </a> CLASSIFIEDMARKETPLACEPROFESSIONAL OPPORTUNITY l <a title="The CPA Journal - January 2012 page 77" href="http://viewer.zmags.com/publication/6f4690a9?page=77">Goldstein Lieberman & Company LLC one ofthe reg</a> Goldstein Lieberman & Company LLC one ofthe reg<a title="The CPA Journal - January 2012 page 78" href="http://viewer.zmags.com/publication/6f4690a9?page=78">SALES TAX, AUDITS, APPEALS,& CONSULTATIONS. Expe</a> SALES TAX, AUDITS, APPEALS,& CONSULTATIONS. Expe<a title="The CPA Journal - January 2012 page 79" href="http://viewer.zmags.com/publication/6f4690a9?page=79">PROFESSIONAL CONDUCTEXPERTPROFESSIONAL CONDUC</a> PROFESSIONAL CONDUCTEXPERTPROFESSIONAL CONDUC<a title="The CPA Journal - January 2012 page 80" href="http://viewer.zmags.com/publication/6f4690a9?page=80"> </a> <a title="The CPA Journal - January 2012 page 81" href="http://viewer.zmags.com/publication/6f4690a9?page=81">ECONOMIC & MARKET DATAmonthly upd</a> ECONOMIC & MARKET DATAmonthly upd<a title="The CPA Journal - January 2012 page 82" href="http://viewer.zmags.com/publication/6f4690a9?page=82">EDITORIALa message from the editor-in-c</a> EDITORIALa message from the editor-in-c<a title="The CPA Journal - January 2012 page 83" href="http://viewer.zmags.com/publication/6f4690a9?page=83"></a> <a title="The CPA Journal - January 2012 page 84" href="http://viewer.zmags.com/publication/6f4690a9?page=84"></a>