Accounting & Audit
Timely, accurate financial information is essential to running a successful business. There are a number of accounting methods you can use to record and track your business’s financial performance. Here’s an overview of cash, tax and accrual basis accounting to help you choose a method that’s appropriate for your situation. Cash basis Often startups and…
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What do you do with your financial statements when your auditor delivers them? Resist the temptation to just file them away — they’re more than an exercise in compliance. With a little finagling, you can calculate key financial ratios from line items in your company’s financial statements. These metrics provide insight into historical trends, potential…
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Although nonprofits may be exempt from income tax, they still have financial and accounting requirements. This includes projecting budgets and monitoring the results, preparing financial statements and collecting payroll taxes. Accounting processes can become inefficient over time if you don’t monitor them. Here are some suggestions of procedures your organization should review regularly. Invoicing and…
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The updated accounting standard for leases, released back in 2016, is finally taking effect this year for all organizations, including nonprofits, that haven’t already adopted it. You might be surprised at how many “leases” you have under the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) — whether for real…
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An interesting tool called Benford’s Law can be effective in detecting fraud. But it also can be used during external auditing procedures to test journal entries for unusual numeric patterns. Here’s what you should know about this statistical technique, including its potential limitations. Random data sets According to Benford’s Law, in sets of random data,…
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Your CPA offers a wide menu of services. One flexible offering, known as an “agreed-upon procedures” engagement, provides limited assurance on a specific aspect of an organization’s financial or nonfinancial information. What’s covered? Agreed-upon procedures can cover various items. For example, a CPA could provide a statement about the reliability of a company’s accounts receivable,…
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Auditing standards require financial statement auditors to identify and assess the risks of material misstatement due to fraud — and to determine overall and specific responses to those risks. Here’s why face-to-face meetings are essential when assessing these risks. Audit inquiries Fraud-related questions are a critical part of the audit process. The AICPA requires auditors…
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Risks abound in today’s uncertain marketplace. Nearly two-thirds of senior finance leaders said that the volume and complexity of corporate risks have changed “mostly” or “extensively” in the past five years, according to a new report published by the American Institute of Certified Public Accountants (AICPA) and North Carolina State University. Surprisingly, this report, 2022…
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Under U.S. Generally Accepted Accounting Principles (GAAP), financial statements are normally prepared based on the assumption that the company will continue normal business operations into the future. When liquidation is imminent, the liquidation basis of accounting may be used instead. It’s up to the company’s management to decide whether there’s a so-called “going concern” issue and…
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The pandemic has presented numerous challenges for businesses, but it also taught us how to be resilient, cost-conscious and adaptable. Over the last few years, we’ve learned that remote working arrangements offer many benefits, including reducing the time and cost of performing many tasks. Here’s how these lessons translate to the work auditors do to…
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