US Accounting and Auditing Technical Excellence November 2011

Transcription

1 US Accounting and Auditing Technical Excellence November 2011

2 Kickoff

3 Agenda and timing Course US 500-1: Kickoff and State of the Profession US 500-2: Auditing Financial Instrument Valuation and Disclosures US 500-3: Preparing for Changes Fair Value Measurement Duration 50 minutes 90 minutes 55 minutes US 500-4: Preparing for Changes Financial Instruments 30 minutes US 500-5: Impairments of Goodwill and Intangibles 60 minutes US 500-6: Preparing for Changes Revenue Recognition 30 minutes US 500-7: Preparing for Changes Leasing US 500-8: Stock Compensation 30 minutes 45 minutes 3

4 US Technical Excellence Agenda Introduction: Agenda & Objectives Course CAOB Inspections of DTTL Member Firms everaging Standards to Drive Audit Quality PCAOB Risk Assessment Standards Engagement Team Based Learning U.S. AAM vs. DTTL AAM A Refresher Inspection Findings and Internal Control Methodology Changes Tools for the Job Understanding the Perspective of an Experienced Reviewer Closing 4

5 Logistics Breaks: Hoy a las Acceder a los s sólo durante los Breaks/Lunch Celulares en Vibrar o Silence Mode PLEASE!!!! Cena Grupal para los invitados en el Restaurant Madam Tusan hoy a las Mañana el curso lo dictaremos en la SALA INKA IV & V Breaks de Mañana: y Mañana el almuerzo es en la SALA NAZCA a las Al final del seminario se les entregará el material del facilitador a quienes replicarán este curso en sus paises y un certificado de asistencia a todos los participantes (importante firmar las planillas de asistencia) 5

6 Program objectives Identify critical updates in the profession that will impact audit planning and must be incorporated in C-suite conversations. Identify and describe audit requirements for testing fair value of financial instruments. Apply proper audit methodology for testing financial instrument valuation. Identify resources available to assist in auditing fair value measurement of financial instruments. Identify the accounting issues that must be evaluated when stock compensation awards have been modified. Discuss key issues related to changes in pensions and post-employment benefits. Identify key resources for engagement teams related to modifications of stock comp and employee benefits plans. Identify and describe changes to the goodwill impairment guidance. Identify and describe changes to fair value measurement, revenue recognition, leasing, and financial instruments. Discuss professional judgment and professional skepticism issues to consider when applying updated standards. 6

7 Roles and responsibilities Facilitator: Present material in an interesting and engaging way. Ask questions and encourage discussion. Ensure that we stay on schedule. Provide coaching and mentoring to help participants succeed. Participants: Be proactive. Ask questions. Actively and courteously participate in discussions. Use activities and case studies as opportunities to apply the practical aspects of new guidance. Take responsibility for your own learning. 7

8 Audit Alert icon 8

9 Questions? 9

10 State of the Profession

11 Module 1: Introduction

12 Agenda Introduction Panel videos and discussions SEC Services Accounting Standards & Communications Professional Practice Network (PPN) Audit Group Accounting Consultation Course wrap-up 12

13 Objectives Identify current and future issues impacting the profession and firm discussed by: o SEC Services o Accounting Standards and Communications o PPN Audit Group o Accounting Consultation Discuss these issues from your perspective as a manager and relative to your audit engagements. 13

14 Module 2: Panel videos and discussions

15 Video #1: Christine Davine, SEC Services National Director SEC Services topics: Changes in SEC review process Most frequent areas of SEC comment, including loss contingencies and foreign income taxes Click here to play Christine Davine s video 15

16 Video #1: SEC Services discussion questions SEC Review process: The Division of Corporate Finance of the SEC is required to review all public companies at least once every three years The SEC is now not only focusing on the Filed periodic reports but they are listening to analysts, earnings calls, press releases and websites. The SEC is issuing comments when such information is NOT consistent with the information included in the FILED reports. Focused areas : Loss contingencies; income taxes (foreign income taxes). It is advisable to read the annual firm publication on SEC comment letters with a detailed analysis of SEC Comments including Industry insights. 16

17 Video #1: SEC Services discussion questions One of the most recent areas of frequent SEC comment is loss contingencies. The SEC staff raises comments when a company does not disclose an estimate for a possible loss or range of loss or states that such an estimate could not be made when there is a reasonable possibility that realized losses would exceed amounts accrued. Our clients must respond to these comment letters, which can be a time sensitive and time consuming process. Discuss the focus on loss contingencies (ASC 450 [FAS 5]), one of the most frequent areas of SEC comment. a.have you seen your clients make changes to their disclosures around contingencies as a result of this focus by the SEC staff? b.has it changed the discussions you, or others on your team, have with the company s legal department? c.has it changed the discussions you have around the content of legal letters received from external counsel? 17

18 Video #2: Bob Uhl, Accounting Standards & Communications National Director Financial reporting standard setting topics: Convergence projects (revenue recognition, leasing and financial instruments) SEC staff paper on a possible method for incorporating IFRSs in the US FASB proposal for assessing goodwill impairment Setting accounting standards for private companies Click here to play Bob Uhl s video 18

19 Video #2: Accounting Standards & Communications Discussion questions Discuss the future SEC decision on whether, at a specified date in the near future, that generally accepted accounting principles to be applied by public companies in the U.S. will be International Financial Reporting Standards (IFRS) or that U.S. GAAP will incorporate IFRS This is one of the most significant decisions in the history of setting accounting standards in the U.S. a.what does this mean for me professionally? b.what are potential client concerns and process issues that we should prepare for? c.be aware that the new accounting standards will have less detail guidance than we are used to in the US GAAP and will require more JUDGMENT. Thus preparers and auditors should be prepared for the need for more bases for their conclusions, more consultation, and more documentation to support a position. 19

20 Video #3: Larry Koch, PPN Audit Group National Director Auditing topics: Developments affecting auditor s report Other PCAOB activities and initiatives International Matters Mandatory auditor rotation Audits of broker-dealers Completion of the AICPA s Clarity Project Click here to play Larry Koch s video 20

21 Video #3: Audit Discussion questions Discuss your own experiences using work being done by auditors in other jurisdictions (including other DTTL member firms and non DTTL auditors.) a.are you familiar with the requirements of PCAOB AU 543 and the new requirements for group audits (ISA 600 which became effective last year? What specific procedures do you plan to perform so that you understand and address findings of component auditors? b.do you believe that your audit plans are adequate from the perspective of appropriately considering work done by component auditors, particularly those in foreign jurisdictions? (i.e., in terms of requirements for the group auditor to understand component auditors and to be sufficiently involved in the work being done by component auditors, including understanding their findings, evaluating the sufficiency of their work and appropriate documentation.) Explain your reasoning. c.do you believe that there is a need for you to revisit the professional standards and our firm s guidance to reassess whether your audit plans are appropriate? Explain your reasoning. d.what is required from an audit documentation perspective? 21

22 Video #3: Other matters a. Auditors report: 1. Auditor s Discussion and Analysis section 2. Required and expanded use of emphasis paragraphs 3. Reporting on information outside the FS 4. Clarification of certain language in the current report KEY TAKE AWAY: INCREMENTAL AUDIT PROCEDURES WILL BE REQUIRED TO SUPPORT THE NEW REPORTING Separately the PCAOB has been exploring the idea of having the auditors sign reports in his or her own name a. PCAOB oversight of Multi-National audits (lack of access) b. Mandatory Auditors Rotation c. AICPA is very close to completing the redrafting of all its Auditing Standards to converge them with ISAs issued by IAASB. The NEW US GAAS for Private Companies will be effective for calendar year ends in

23 Video #4: Doug Barton, Accounting Consultation National Director Accounting consultation topics: Trends Deloitte consultation policy Interactions with SEC staff PCAOB s belief that Deloitte does not have a culture that encourages consultation Click here to play Doug Barton s video 23

24 Video #4 Accounting Consultation Discussion questions The PCAOB has expressed concern that appropriate and effective consultation may not occur when necessary, and that Deloitte does not appear to have a culture that encourages meaningful consultation in which the parties reach a mutual conclusion. Discuss the following: a.do you agree with the PCAOB that as a firm we do not have a culture that encourages consultation? Explain your reasoning. b.can you identify any recent changes to Deloitte consultation policies that are responsive to these concerns? c.what can we do within our own engagement teams to drive a culture of consultation? d.what are the challenges with driving more audit-related consultations? Do we need to do something different? 24

25 Video #4 Accounting Consultation: KEY TAKE AWAYS Changes to G 345 del US AAM (US Specific topic) Consultation implies Mutual Conclusion (old policy concurrence ) Mandatory Consultation with the EQCR: 1. Material issues (complex, unfamiliar, difficult or contentious) 2. Accounting estimates for which a valuation assertion is a significant risk 3. Significant unusual transactions Keep in mind that based on our US Firm policies for a significant unusual transaction in which the ROMM is a Significant Risk it is Mandatory required to consult with a partner or director that has national clearing authority (G 345 B: All national PPD have National Clearing Authority). 25

26 Module 3: Course wrap-up

27 Panel discussion issues Key learning points Have a better understanding of issues occurring in: o SEC Services o Financial reporting standard setting o Audit o Consultation Have a plan for responding to these issues. 27

28 Questions? 28