If you are visually impaired or blind, you can visit the PDF version by Pressing CONTROL + ALT + 4
<br /> www.cpaj.com February 2014<br /> Achieving<br /> Excellence<br /> in Financial Reporting and Auditing<br /> IN FOCUS INTERVIEWS<br /> Leslie F. Seidman<br /> Cynthia M. Fornelli<br /> +<br /> Analysis of PCAOB Inspections<br /> Standards Overload<br /> SEC Focus on Fraud<br /> <br /> <br /> CONTENTS<br /> february 2014<br /> 6 PERSPECTIVES 16 IN FOCUS <br /> 6 Perspectives<br /> SEC Comment Letter Trends<br /> Publisher’s Column: Succession:<br /> A Process, Not a Plan<br /> Correction<br /> Should the Accounting Profession Embrace<br /> Mandatory Audit Firm Rotation?<br /> A Reference for Audits of Single Financial<br /> Statements and Specific Elements, Accounts, or<br /> Items of a Financial Statement<br /> <a title="The CPA Journal - February 2014 page 1" href="http://viewer.zmags.com/publication/73a0f1e9?page=1"> www.cpaj.com February 2014 Achieving Ex</a> <a title="The CPA Journal - February 2014 page 2" href="http://viewer.zmags.com/publication/73a0f1e9?page=2"> </a> <a title="The CPA Journal - February 2014 page 3" href="http://viewer.zmags.com/publication/73a0f1e9?page=3"> </a> <a title="The CPA Journal - February 2014 page 4" href="http://viewer.zmags.com/publication/73a0f1e9?page=4"> CONTENTS february 2014 6 PERSPECTIVES 16 IN F</a> <a title="The CPA Journal - February 2014 page 5" href="http://viewer.zmags.com/publication/73a0f1e9?page=5"> vol. LXXXIV/no. 2 32 ESSENTIALS 56 ESSEN</a> <a title="The CPA Journal - February 2014 page 6" href="http://viewer.zmags.com/publication/73a0f1e9?page=6"> Not Yet a Member? Well, You’re Missing Out! </a> <a title="The CPA Journal - February 2014 page 7" href="http://viewer.zmags.com/publication/73a0f1e9?page=7"> FAE 2014 CPE </a> <a title="The CPA Journal - February 2014 page 8" href="http://viewer.zmags.com/publication/73a0f1e9?page=8"> PERSPECTIVES sec practice SEC Comment Let</a> <a title="The CPA Journal - February 2014 page 9" href="http://viewer.zmags.com/publication/73a0f1e9?page=9"> publisher’s column Succession: A Process, N</a> <a title="The CPA Journal - February 2014 page 10" href="http://viewer.zmags.com/publication/73a0f1e9?page=10"> (Continued from page 6) surrounding permanent rei</a> <a title="The CPA Journal - February 2014 page 11" href="http://viewer.zmags.com/publication/73a0f1e9?page=11"> cant unobservable inputs they use in deter- minin</a> <a title="The CPA Journal - February 2014 page 12" href="http://viewer.zmags.com/publication/73a0f1e9?page=12"> the estimated selling price for each was determin</a> <a title="The CPA Journal - February 2014 page 13" href="http://viewer.zmags.com/publication/73a0f1e9?page=13"> viewpoint Should the Accounting Profession E</a> <a title="The CPA Journal - February 2014 page 14" href="http://viewer.zmags.com/publication/73a0f1e9?page=14"> Numerous articles have been published on audit</a> <a title="The CPA Journal - February 2014 page 15" href="http://viewer.zmags.com/publication/73a0f1e9?page=15"> auditing A Reference for Audits of Single F</a> <a title="The CPA Journal - February 2014 page 16" href="http://viewer.zmags.com/publication/73a0f1e9?page=16"> Emphasis-of-Matter or Other-Matter Paragraphs </a> <a title="The CPA Journal - February 2014 page 17" href="http://viewer.zmags.com/publication/73a0f1e9?page=17"> note that describes the basis of the presenta- ti</a> <a title="The CPA Journal - February 2014 page 18" href="http://viewer.zmags.com/publication/73a0f1e9?page=18"> In Focus Enhancing Financial Repor</a> <a title="The CPA Journal - February 2014 page 19" href="http://viewer.zmags.com/publication/73a0f1e9?page=19"> Interviewith An Leslie F. Seidman Former FASB </a> <a title="The CPA Journal - February 2014 page 20" href="http://viewer.zmags.com/publication/73a0f1e9?page=20"> Seidman is now applying her standards- settin</a> <a title="The CPA Journal - February 2014 page 21" href="http://viewer.zmags.com/publication/73a0f1e9?page=21"> Seidman: You mentioned that the new chairman, </a> <a title="The CPA Journal - February 2014 page 22" href="http://viewer.zmags.com/publication/73a0f1e9?page=22"> setters and the regulators have projects underway</a> <a title="The CPA Journal - February 2014 page 23" href="http://viewer.zmags.com/publication/73a0f1e9?page=23"> ing a new kind of GAAP. In fact, there already ar</a> <a title="The CPA Journal - February 2014 page 24" href="http://viewer.zmags.com/publication/73a0f1e9?page=24"> whole process until we have exactly the same word</a> <a title="The CPA Journal - February 2014 page 25" href="http://viewer.zmags.com/publication/73a0f1e9?page=25"> unintended consequences with this approach. For e</a> <a title="The CPA Journal - February 2014 page 26" href="http://viewer.zmags.com/publication/73a0f1e9?page=26"> In Focus Improving Audit Quality</a> <a title="The CPA Journal - February 2014 page 27" href="http://viewer.zmags.com/publication/73a0f1e9?page=27"> Interviewith An Cynthia M. Fornelli Executive </a> <a title="The CPA Journal - February 2014 page 28" href="http://viewer.zmags.com/publication/73a0f1e9?page=28"> Fornelli, a member of the Washington, D.C., ba</a> <a title="The CPA Journal - February 2014 page 29" href="http://viewer.zmags.com/publication/73a0f1e9?page=29"> room, and so we work very closely with the Americ</a> <a title="The CPA Journal - February 2014 page 30" href="http://viewer.zmags.com/publication/73a0f1e9?page=30"> Over the last three years, we’ve asked, ‘Who d</a> <a title="The CPA Journal - February 2014 page 31" href="http://viewer.zmags.com/publication/73a0f1e9?page=31"> in time based on that particular audit committee.</a> <a title="The CPA Journal - February 2014 page 32" href="http://viewer.zmags.com/publication/73a0f1e9?page=32"> Mandatory Audit Firm Rotation CPAJ: Does the C</a> <a title="The CPA Journal - February 2014 page 33" href="http://viewer.zmags.com/publication/73a0f1e9?page=33"> announced its project, looking at what audit qual</a> <a title="The CPA Journal - February 2014 page 34" href="http://viewer.zmags.com/publication/73a0f1e9?page=34"> ACCOUNTING & AUDITING auditing </a> <a title="The CPA Journal - February 2014 page 35" href="http://viewer.zmags.com/publication/73a0f1e9?page=35"> The traits of triennial CPA firms cited for QC</a> <a title="The CPA Journal - February 2014 page 36" href="http://viewer.zmags.com/publication/73a0f1e9?page=36"> 705 inspection reports of triennial firms that sa</a> <a title="The CPA Journal - February 2014 page 37" href="http://viewer.zmags.com/publication/73a0f1e9?page=37"> criticisms deal with deficiencies in audit perfor</a> <a title="The CPA Journal - February 2014 page 38" href="http://viewer.zmags.com/publication/73a0f1e9?page=38"> deficient controls related to auditor com- munica</a> <a title="The CPA Journal - February 2014 page 39" href="http://viewer.zmags.com/publication/73a0f1e9?page=39"> ed to audit tests twice—once in their first inspe</a> <a title="The CPA Journal - February 2014 page 40" href="http://viewer.zmags.com/publication/73a0f1e9?page=40"> EXAMPLES OF OTHER QUALITY CONTROL (QC) CRITICISMS</a> <a title="The CPA Journal - February 2014 page 41" href="http://viewer.zmags.com/publication/73a0f1e9?page=41"> EXHIBIT 3 Traits of CPA Firms across PCAOB Inspec</a> <a title="The CPA Journal - February 2014 page 42" href="http://viewer.zmags.com/publication/73a0f1e9?page=42"> Analysis of Traits of Inspected Firms The auth</a> <a title="The CPA Journal - February 2014 page 43" href="http://viewer.zmags.com/publication/73a0f1e9?page=43"> </a> <a title="The CPA Journal - February 2014 page 44" href="http://viewer.zmags.com/publication/73a0f1e9?page=44"> ACCOUNTING & AUDITING standards se</a> <a title="The CPA Journal - February 2014 page 45" href="http://viewer.zmags.com/publication/73a0f1e9?page=45"> The underlying issue is a disagreement between</a> <a title="The CPA Journal - February 2014 page 46" href="http://viewer.zmags.com/publication/73a0f1e9?page=46"> damental regulatory measurement), where- as IFRS </a> <a title="The CPA Journal - February 2014 page 47" href="http://viewer.zmags.com/publication/73a0f1e9?page=47"> On November 12, 2013, FASB direct- ed its staf</a> <a title="The CPA Journal - February 2014 page 48" href="http://viewer.zmags.com/publication/73a0f1e9?page=48"> basis, by factors such as user needs. For example</a> <a title="The CPA Journal - February 2014 page 49" href="http://viewer.zmags.com/publication/73a0f1e9?page=49"> The Purpose of Financial Reporting In an effor</a> <a title="The CPA Journal - February 2014 page 50" href="http://viewer.zmags.com/publication/73a0f1e9?page=50"> TAXATION state & local taxation Planning fo</a> <a title="The CPA Journal - February 2014 page 51" href="http://viewer.zmags.com/publication/73a0f1e9?page=51"> individual or corporation” (see NJAC 18:26-1.1). </a> <a title="The CPA Journal - February 2014 page 52" href="http://viewer.zmags.com/publication/73a0f1e9?page=52"> are payable to one or more named benefi- ciaries,</a> <a title="The CPA Journal - February 2014 page 53" href="http://viewer.zmags.com/publication/73a0f1e9?page=53"> years of death to be added back. This was done to</a> <a title="The CPA Journal - February 2014 page 54" href="http://viewer.zmags.com/publication/73a0f1e9?page=54"> FINANCE retirement planning Developing Strat</a> <a title="The CPA Journal - February 2014 page 55" href="http://viewer.zmags.com/publication/73a0f1e9?page=55"> The maximum 401(k) deferral for 2014 is $17,5</a> <a title="The CPA Journal - February 2014 page 56" href="http://viewer.zmags.com/publication/73a0f1e9?page=56"> non–highly compensated employees pensated and n</a> <a title="The CPA Journal - February 2014 page 57" href="http://viewer.zmags.com/publication/73a0f1e9?page=57"> </a> <a title="The CPA Journal - February 2014 page 58" href="http://viewer.zmags.com/publication/73a0f1e9?page=58"> MANAGEMENT practice management </a> <a title="The CPA Journal - February 2014 page 59" href="http://viewer.zmags.com/publication/73a0f1e9?page=59"> also dominate this group of larger firms, though </a> <a title="The CPA Journal - February 2014 page 60" href="http://viewer.zmags.com/publication/73a0f1e9?page=60"> lected. The primary billing method used by sole p</a> <a title="The CPA Journal - February 2014 page 61" href="http://viewer.zmags.com/publication/73a0f1e9?page=61"> receivable as a percentage of net fees than their</a> <a title="The CPA Journal - February 2014 page 62" href="http://viewer.zmags.com/publication/73a0f1e9?page=62"> increasing total compensated hours. Second, the b</a> <a title="The CPA Journal - February 2014 page 63" href="http://viewer.zmags.com/publication/73a0f1e9?page=63"> RESPONSIBILITIES & LEADERSHIP reg</a> <a title="The CPA Journal - February 2014 page 64" href="http://viewer.zmags.com/publication/73a0f1e9?page=64"> law rather than federal statute regulates the pro</a> <a title="The CPA Journal - February 2014 page 65" href="http://viewer.zmags.com/publication/73a0f1e9?page=65"> Later in the same decade, the AICPA establishe</a> <a title="The CPA Journal - February 2014 page 66" href="http://viewer.zmags.com/publication/73a0f1e9?page=66"> EXHIBIT Experience Requirements by Jurisdiction </a> <a title="The CPA Journal - February 2014 page 67" href="http://viewer.zmags.com/publication/73a0f1e9?page=67"> ment needed to enter the profession. Candidates m</a> <a title="The CPA Journal - February 2014 page 68" href="http://viewer.zmags.com/publication/73a0f1e9?page=68"> One additional area of difference between juris</a> <a title="The CPA Journal - February 2014 page 69" href="http://viewer.zmags.com/publication/73a0f1e9?page=69"> requirement relevant to the type of work the acco</a> <a title="The CPA Journal - February 2014 page 70" href="http://viewer.zmags.com/publication/73a0f1e9?page=70"> TECHNOLOGY electronic reporting </a> <a title="The CPA Journal - February 2014 page 71" href="http://viewer.zmags.com/publication/73a0f1e9?page=71"> ‘Robocop’ Against Fraud,” Feb. 13, 2013). XBRL ta</a> <a title="The CPA Journal - February 2014 page 72" href="http://viewer.zmags.com/publication/73a0f1e9?page=72"> estimated warranty expense from current- period m</a> <a title="The CPA Journal - February 2014 page 73" href="http://viewer.zmags.com/publication/73a0f1e9?page=73"> allows discretionary accrual factors to be part o</a> <a title="The CPA Journal - February 2014 page 74" href="http://viewer.zmags.com/publication/73a0f1e9?page=74"> cretionary accruals for both understatement and o</a> <a title="The CPA Journal - February 2014 page 75" href="http://viewer.zmags.com/publication/73a0f1e9?page=75"> TECHNOLOGY what to bookmark Website of the M</a> <a title="The CPA Journal - February 2014 page 76" href="http://viewer.zmags.com/publication/73a0f1e9?page=76"> CLASSIFIEDMARKETPLACE PROFESSIONAL OPPORTUNITY l</a> <a title="The CPA Journal - February 2014 page 77" href="http://viewer.zmags.com/publication/73a0f1e9?page=77"> CLASSIFIED Lowe</a> <a title="The CPA Journal - February 2014 page 78" href="http://viewer.zmags.com/publication/73a0f1e9?page=78"> CLASSIFIED SALES TAX, AUDITS, APPEALS, & CONSULTA</a> <a title="The CPA Journal - February 2014 page 79" href="http://viewer.zmags.com/publication/73a0f1e9?page=79"> CLASSIFIED </a> <a title="The CPA Journal - February 2014 page 80" href="http://viewer.zmags.com/publication/73a0f1e9?page=80"> CLASSIFIED Ad</a> <a title="The CPA Journal - February 2014 page 81" href="http://viewer.zmags.com/publication/73a0f1e9?page=81"> ECONOMIC & MARKET DATA monthly u</a> <a title="The CPA Journal - February 2014 page 82" href="http://viewer.zmags.com/publication/73a0f1e9?page=82"> EDITORIAL a message from the editor-in-chief </a> <a title="The CPA Journal - February 2014 page 83" href="http://viewer.zmags.com/publication/73a0f1e9?page=83"> </a> <a title="The CPA Journal - February 2014 page 84" href="http://viewer.zmags.com/publication/73a0f1e9?page=84"> </a>