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Returning Value Blog

How External Confirmations Are Used During an Audit

Posted by Aaron K. Waller, CPA on Aug 08, 2022

Auditors commonly use confirmations to verify such items as cash, accounts receivable, accounts payable, employee benefit plans, and pending litigation. Under U.S. Generally Accepted Auditing Standards, an external confirmation is “a direct response to the auditor from a third party either in paper form or by electronic other means, such as through the auditor’s direct access to information held by a third party.”

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Evaluating "Going Concern" Concerns

Posted by Melissa Motley, CPA on Aug 01, 2022

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.

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Remote Auditing: A Brave New World

Posted by Aaron K. Waller, CPA on Jul 19, 2022

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 prepare your company’s financial statements.

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Does Your Nonprofit Need an Audit?

Posted by Lesley L. Price, CPA on Feb 25, 2022

The regulations on nonprofit auditing vary from state to state. There are federal laws that mandate audits for certain nonprofits too. First and foremost, you should educate yourself on the laws in your state and investigate whether you are legally required to undergo an audit. For example, the federal government requires that any nonprofit receiving above a certain amount in federal funding undergo a yearly audit. But again, there are still state regulations you have to adhere to even if the federal law doesn't apply to you. So, what does an audit actually entail?

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Take Your Financial Statements to the Next Level.

Posted by Aaron K. Waller, CPA on Feb 22, 2022

Spring is the time of year that calendar-year-end businesses issue financial statements and prepare tax returns. This year, take your financial data beyond compliance. Here’s how financial statements can be used to be proactive, not reactive, to changes in the marketplace.

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Audit Disclosures: Why the Fine Print Is Important

Posted by Melissa Motley, CPA on Feb 17, 2022

Footnotes appear at the end of a company’s audited financial statements. These disclosures provide insight into account balances, accounting practices, and potential risk factors — knowledge that’s vital to making well-informed lending and investing decisions. Here are examples of key risk factors that you might unearth by reading between the lines in a company’s footnotes.

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Preparations vs. Compilations

Posted by Aaron K. Waller, CPA on Jan 26, 2022

Your business needs financial statements so management can monitor performance, attract investment capital and borrow money from a bank or other lender. But not all financial statements are created equal. Audited statements are considered the “gold standard” in financial reporting. While public companies are required to issue audited statements, smaller, privately-held organizations have options. CPAs provide three other types of financial statements, which, in order of descending level of diligence, are: reviews, compilations, and preparations.

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How to Assess Fraud Risks Today

Posted by Aaron K. Waller, CPA on Nov 18, 2021

Auditing standards require external auditors to consider potential fraud risks by watching out for conditions that provide the opportunity to commit fraud. Unfortunately, conditions during the COVID-19 pandemic may have increased your company’s fraud risks. For example, more employees may be working remotely than ever before. And some workers may be experiencing personal financial distress — due to reduced hours, decreased buying power, or the loss of a spouse’s income — that could cause them to engage in dishonest behaviors.

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FASB Offers Practical Expedient for Private Companies That Issue Share-Based Awards

Posted by Melissa Motley, CPA on Nov 09, 2021

On October 25, the Financial Accounting Standards Board (FASB) issued a simpler accounting option that will enable private companies to more easily measure certain types of shares they provide to both employees and nonemployees as part of compensation awards. Here are the details.

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10 Financial Statement Areas to Watch for COVID-Related Effects

Posted by Melissa Motley, CPA on Oct 14, 2021

The COVID-19 pandemic is still adversely affecting many businesses and not-for-profit organizations, but the effects vary, depending on the nature of operations and geographic location. Has your organization factored the effects of the pandemic into its financial statements? You might not have considered this question since last year if your organization prepares statements that comply with U.S. Generally Accepted Accounting Principles only at year-end.

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