January 2013 Newsletter

January 7, 2013

Bethe walking the dogs

Bethe walking the dogs on a splendid winter day at Cushman lakes.

President's Message

Paved with good intentions? The Scoop on New Year’s Resolutions…

For me, usually half the fun is thinking about what my resolutions should be rather than actually accomplishing them, I think I love the idea of changing much more than the effort it takes to make a change. Let’s face it - our resolutions frequently involve doing something that is “good for us” or “self improving” that we really didn’t want to do in the first place or we would already be doing it.

According to an informal web scan on resolution related articles and studies, it appears about 40% of all people in the United States make resolutions…and somewhere between 8% and 10% actually keep them.  Of the 40% or so of people that make resolutions, only about half even try to keep them, and of that half, the chart below shows how long they are kept:

chart

When I look at the chart above and ponder my own mixed successes and failures.  I can only wonder how many successes (the 46%) are from the resolutions that involved something those folks wanted to do in the first place (finally take that dream vacation, buy the new car, learn to ski etc.) rather than self improvement.  Would it be safer to say that about 8% of all resolutions don’t involve self improvement?

So with the odds stacked against you and the sure knowledge that most will fail in keeping true to their resolutions what is the point in trying?  Why do we subject ourselves to the trauma year after year?  How can we be a part of the 20% that implement change or the lucky 8-10% that are still sticking to it 6 months later?

Some people say it is all about willpower, but according to my research you have about as much willpower as you think you have.  In other words – if you want it, if you believe you can and will do it, you will follow through on your resolutions.  Willpower is not a finite resource you can use up; rather it is a state of mind.  (Deep down this comes as no surprise to me, even though I have played the lack of willpower card myself).

Should we all take the easy way out and have no resolutions? Make only easy to keep or desirable resolutions (eat more ice cream, exercise less, spend more money)?  Never! We are accountants!  We know how to plan, to measure, and to evaluate.  We love details!  Most of my research shows that well thought out, planned resolutions have a much better chance of success.  (You have to wonder how many of the successful 8% were accountants).

Tips for success include:                                                  

  • Be specific, develop steps you are going to take to accomplish a change….”trying harder” does not count as specific.  Keep it simple and realistic.
  • Growth is contagious- surround yourself with positive people and talk about your resolutions.  Go public- tell your family and friends about your resolution and how you plan to keep it. Maybe even Facebook your goals and your progress.
  • Understand the chances of failure and plan what to do about it.  Think ahead to how things could go wrong and how to avoid or deal with it when it does.  Just thinking about your resolutions regularly and the benefits to achieving them will help you develop your willpower and is a positive affirmation that can influence brain function.
  • If you have big goals or large changes, set up baby steps or sub goals to measure progress. Don’t bite off too much at once.
  • Plan rewards for yourself if you stick to your plan and follow through with them.
  • Remember- willpower is as strong as you think it is - keep believing you can accomplish your goals.

As for me, my resolutions for the New Year are simple, small, and realistic. In the selfish interest of promoting my own follow through I will share a couple with you here.

I want to become a better dirt bike rider and have plans in place on how to find more time and locations to develop this new hobby this summer. (This is my easy one - frankly, at my level, getting better is not a struggle, I can only go up from here).

I want to have a healthier tax season – in terms of what I eat, the amount of sleep I get, and the hours of exercise or other R & R I have per week. I have some good plans, have shared this goal with my family, and am very optimistic I can say no to the family sized bags of Ruffles chips that become my weekly diet staple.

I hope you all enjoyed a wonderful Christmas and a fabulous New Years.  I wish you all success in your resolutions and hope my tips may help you be part of the 8% that make it.  If you have no resolutions it is not too late to start planning.  Best wishes!

Recent AICPA Activities to Promote Awareness about the Federal Debt

In light of the AICPA’s ongoing commitment to call attention to the financial sustainability and fiscal health of our country, I want to update you on recent developments and to call your attention to resources available for your use in helping to spread the word on this critical issue. 

  • On November 9, the AICPA Board adopted a resolution underscoring the need to put America on a better economic path and supporting two non-partisan efforts, the Campaign to Fix the Debt and the Comeback America Initiative.  Please visit the Campaign to Fix the Debt website and consider signing its petition asking Congress to act now and renew the economic strength of our country. 
  • We have sent out a brief survey to about 30,000 members asking for their thoughts on the effect of the federal deficit on our country’s future and its potential impact on individuals, business and government.  Results of this survey will be used in our outreach efforts to help raise awareness of the financial crisis our country is facing and to share the CPA profession’s perspective on this issue.  Please consider completing this survey.  All responses are anonymous and confidential. 
  •  The AICPA has signed onto an open letter from America’s business leaders calling on President Obama and Congress to fix the unsustainable national debt and develop a plan for long-term economic growth.  This letter, sponsored by Fix the Debt, will appear in Roll Call and Politico, publications targeted to Capitol Hill policy makers.
  •  After the US Federal Government’s financial statements are released in early January 2013, we will update What’s at Stake? A CPA’s Insights into the Federal Government’s Finances.  Featuring Greg Anton, this video offers guidance for policy makers and the public on how the US government’s financial statements can be used for greater understanding of the nation’s fiscal health. 
  •  We are also working on ways to make government operations more efficient and income tax laws more administrable.  To support this effort, our tax division has been actively providing information on tax simplification and reform ideas along with ramifications for consideration during the expected 2013 tax debates.   To learn more, please visit the Tax Reform webpage.

These presentations from the AICPA governing Council 2012 meetings provide additional background and information:

Please consider sharing this information with your colleagues, clients, family and friends.  We will keep you updated on the results of our outreach efforts in this area and welcome your feedback.

Thank you.

Barry C. Melancon, CPA, CGMA

First global survey of audit inspection findings

IFIAR, the International Forum of Independent Audit Regulators, today releases the first global survey of audit inspection findings bringing together issues identified by IFIAR Members located around the world. The survey was designed to identify the level of inspection activity among IFIAR Members and common findings for Members’ inspections of audits of public companies. The survey also responds to a request from the Financial Stability Board to provide details of findings from the inspections of audits of major financial institutions.

The survey asked Members to report findings from their inspections of audit engagements where Members had noted deficiencies in specific areas; it did not seek information regarding instances where auditors had met the required professional standards. Members reported findings that were significant matters where the auditor did not perform sufficient work to meet the applicable auditing standards and other related requirements.

In the last several years, Member updates at the IFIAR plenary meetings on the results of their inspections of audit firms have included a number of common inspection findings across different jurisdictions. Certain inspection findings also have been identified by Members repeatedly from year to year. The survey focused primarily on Members’ inspections of audit firms that are members of the six largest international audit firm networks and includes issues identified by:

Twenty-two IFIAR Members’ inspections of audit engagements for 961 public companies at 98 audit firms;

Ten Members’ inspections of audit engagements for 108 major financial institutions at 28 audit firms; and

Twenty-three Members’ inspections of 109 audit firms’ internal quality control systems;

The survey identifies common audit findings among Members in a number of areas. For example, the survey results indicate that the largest number of inspection findings in audits of public companies occurred in the following areas: fair value measurements; internal control testing; and engagement quality control reviews.

Additionally, inspections of audits of major financial institutions revealed that the largest number of common inspection findings occurred in the following areas: internal control testing; valuation of investments and securities; and audit of allowance for loan losses and loan impairments.

The survey results also include four areas that have been discussed by IFIAR with representatives from the six largest audit firm networks since 2010: professional skepticism, group audits, revenue recognition, and the role of the engagement quality control reviewer.

Paul George, IFIAR Chair and Executive Director of Conduct at the UK’s Financial Reporting Council, said:

"Audit firms need to do more to improve the consistency of performance on individual audit engagements, including remediating the inspection findings and determining the possible root causes underlying these findings."

IFIAR Members will continue to inspect the public company audit engagements, including major financial institutions, and work closely with the audit firms in their jurisdictions to improve audit quality. Members also will continue to follow-up with the audit firms to evaluate and monitor the audit firms’ remedial actions in response to their respective inspection findings. In addition, IFIAR will continue to work with the leadership of the six largest international audit firm networks to discuss inspection findings and the firms’ strategies and actions to improve audit quality.

Lewis Ferguson, IFIAR Vice-Chair and Board Member at the U.S. Public Company Accounting Oversight, said:

"IFIAR’s goal is to conduct periodic surveys to measure changes in these findings with the goal of allowing Members to identify those areas that need improvement and to share experiences about what practices seem to be most effective in reducing audit deficiencies."

The information in this report may be of use to audit firms, audit regulators, other regulators, policy makers and standard-setters in their efforts to improve audit quality. It also may be of use to investors and audit committees as an indicator of the current status of inspections of auditors of public companies, including financial institutions in jurisdictions around the world.

To read IFIAR’s 2012 Summary Report of Inspection Findings, please click here.

For further information about this report, please contact:

The IFIAR Chairman – Paul George, Director of Conduct at the Financial Reporting Council in the United Kingdom, on +44 (0)20 7492 2300 or by e‐ail to Jon Hooper, (j.hooper@frc.org.uk).

The IFIAR Vice‐hairman – Lewis Ferguson, Board Member of the US Public Company Accounting Oversight Board, on +1 202 207 9100 or by e-mail to Bella Rivshin, (rivshinb@pcaobus.org).

 

 

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