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Exam Code: BEC Practice test 2022 by Killexams.com team
BEC CPA Business Environment and Concepts

Business Environment and concept section is treated as one of the most challenging exams because of its extensive material and it deals with business and economic concepts. The CPA BEC section will help you to move one step further in business knowledge and help them apply the knowledge in real-world scenarios.

Business Environment and concepts covers:

Business environment in general, and its core concepts.
Foundational grounding in accounting and are exposed to underlying reasons for accounting implications Financial management information technology, and business strategies in addition to accounting concepts.
Economic concepts, financial management, information systems and communications, strategic planning and operations management. Testing to determine different business strategies with their knowledge in strategic planning and market risks.
Making financial decisions, forecasting trends in the market, and understanding internets implication in business.

Topic Percentage
Corporate Governance 16% – 20%
Economic Concepts and Analysis 16% – 20%
Financial Management 19% – 23%
Information Systems and Communications 15% – 19%
Strategic Planning 10% – 14%
Operations Management 12% – 16%

BEC1 Business Environment and Concepts (BEC)
BEC2 Section introduction
BEC6 Summary blueprint
BEC7 Area I — Corporate Governance
BEC9 Area II — Economic Concepts and Analysis
BEC11 Area III — Financial Management
BEC13 Area IV — Information Technology
BEC16 Area V — Operations Management

The Business Environment and Concepts (BEC) section of the Uniform CPA Examination (the Exam) tests knowledge and skills that a newly licensed CPA must demonstrate when performing:
• Audit, attest, accounting and review services
• Financial reporting
• Tax preparation
• Other professional responsibilities in their role as certified public accountants
The content areas tested under the BEC section of the test encompass five diverse subject areas. These content areas are corporate governance, economic concepts and analysis, financial management, information technology and operations management. Reference materials relevant to the BEC section of the Exam are included under References at the conclusion of this introduction.
Content organization and tasks
The BEC section blueprint is organized by content AREA, content GROUP and content TOPIC. Each group or subject includes one or more representative TASKS that a newly licensed CPA may be expected to complete when performing audit, attest, accounting and review services, financial reporting, tax preparation or other professional responsibilities.
The tasks in the blueprint are representative. They are not intended to be (nor should they be viewed as) an all-inclusive list of tasks that may be tested in the BEC section of the Exam. Additionally, it should be noted that the number of tasks associated with a particular content group or subject is not indicative of the extent such content group, subject or related skill level will be assessed on the Exam. Similarly, examples provided within the task statements should not be viewed as all-inclusive.

Area II of the BEC section blueprint covers several Topics related to Economic Concepts and Analysis, including the following:
• Knowledge of economic concepts and analysis that would demonstrate an understanding of the impact of business cycles on an entitys industry or business operation
• Determining market influences on the business environment, such as globalization
• Determining the business reasons for, and the underlying economic substance of, transactions and their accounting implications
• Understanding financial risks and the methods for mitigating the impact of these risks
Area III of the BEC section blueprint covers several Topics related to Financial Management, including the following: • Assessing the factors influencing a companys capital structure, such as risk, leverage, cost of capital, growth rate, profitability, asset structure and loan covenants
• Calculating metrics associated with the components of working capital, such as current ratio, quick ratio, cash conversion cycle, turnover ratios
• Determining the impact of business decisions on working capital
• Understanding commonly used financial valuation and decision models and applying that knowledge to assess assumptions, calculate the value of assets and compare investment alternatives Area IV of the BEC section blueprint covers several Topics related to Information Technology (IT), including the following:
• Understanding the role of IT and systems, including the use of data in supporting business decisions.
• Identifying IT-related risks associated with an entitys information systems and processes, such as processing integrity, protection of information and system availability, including those risks introduced by the relationships with third-parties.
• Identifying application and IT general control activities, whether manual, IT dependent or automated, that are responsive to IT-related risks, such as access and authorization controls, system implementation testing and incident response plans.
Area V of the BEC section blueprint covers several Topics related to Operations Management, including the following:
• Understanding business operations and use of quality control initiatives and performance measures to Boost operations
• Application of cost accounting concepts and use of variance analysis techniques
• Utilizing budgeting and forecasting techniques to monitor progress and enhance accountability
The test focuses on testing higher order skills. Based on the nature of the task, each representative task in the BEC section blueprint is assigned a skill level.
BEC section considerations related to the skill levels are discussed below.
• Remembering and Understanding is tested in all five areas of the BEC section.
Remembering and understanding tasks focus on the knowledge necessary to demonstrate an understanding of the general business environment and business concepts, such as those involving enterprise risk management.
• Application is also tested in all five areas of the BEC section. Application tasks focus on general Topics such as those found in the subjects of economics and information technology, and the day-to-day financial management tasks that newly licensed CPAs perform, such as those involving calculations involving ratios, valuation and budgeting.
• Analysis skills, tested in Areas II, III and V involve tasks that require a higher level of analysis and interpretation. These tasks, such as comparing investment alternatives using calculations of financial metrics, financial modeling, forecasting and projection, frequently require newly licensed CPAs to gather evidence to support inferences.
The representative tasks combine both the applicable content knowledge and the skills required in the context of the work that a newly licensed CPA would reasonably be expected to perform. The BEC section does not test any content at the Evaluation skill level as newly licensed CPAs are not expected to demonstrate that level of skill in regards to the BEC content.
References — Business Environment and Concepts • The Committee of Sponsoring Organizations of the Treadway Commission (COSO):
– Internal Control – Integrated Framework
– Enterprise Risk Management – Integrating with Strategy and Performance
– COSO-issued application material, thought papers and guides related to the above frameworks
• Sarbanes-Oxley Act of 2002:
– Title III, Corporate Responsibility
– Title IV, Enhanced Financial Disclosures
– Title VIII, Corporate and Criminal Fraud Accountability
– Title IX, White-Collar Crime Penalty Enhancements
– Title XI, Corporate Fraud Accountability
• Current business periodicals
• Current textbooks on:
– Accounting Information Systems
– Budgeting and Measurement
– Corporate Governance
– Economics
– Enterprise Risk Management
– Finance
– Management
– Management Information Systems
– Managerial Accounting
– Production Operations

CPA Business Environment and Concepts
AICPA Environment exam
Killexams : AICPA Environment test - BingNews https://killexams.com/pass4sure/exam-detail/BEC Search results Killexams : AICPA Environment test - BingNews https://killexams.com/pass4sure/exam-detail/BEC https://killexams.com/exam_list/AICPA Killexams : Revamped CPA test will bring big changes

The American Institute of CPAs and the National Association of State Boards of Accountancy are laying the groundwork for a major overhaul of the CPA test that will see material being rearranged and moving to new sections, while emphasizing more technology skills.

The AICPA released an exposure draft earlier this month previewing the proposed changes for the 2024 test and asking for feedback (see story). The AICPA and NASBA have been working together on a CPA Evolution initiative as a way to modernize the accounting licensure model and make it more relevant for today’s skills. They also hope to attract more young people to the accounting profession, which has seen a drop in recent years in accounting students and CPA candidates, as firms compete with other industries that are dealing with staff shortages during the so-called “Great Resignation” sparked by the pandemic.

The proposed changes may not come as a big surprise to those who have been closely following the CPA Evolution initiative and the model curriculum already proposed by the AICPA and NASBA. But for those who haven’t been monitoring the developments, they bear watching and accountants should weigh in with their comments.

“I think they did a good job of signaling where the exposure drafts were going to go,” said Angie Brown, senior director of product management at Becker, a provider of educational courses for the CPA exam. “It confirmed some things that were in the model curriculum they released last June and the conversations that they’ve had as they moved toward this release date. I wasn’t surprised, but I was very pleased by what we’ve seen in the blueprint. There had been some signaling in the model curriculum last year and even in the survey they did late last summer of the different interested parties and partners regarding where they were thinking things would go between the old and the new exams.”

One of the major changes will expand the number of test sections from four to six. “They’ve taken into account the fact that there’s a lot being tested on the current four exams, and what they’re showing in the blueprint is they’re taking the current four exams and essentially divvying up the content between six, with some new additions in tax and then a lot of new things in the ISC Information Systems and Controls discipline exam,” said Brown. “In many ways, they’re reapportioning and maybe rightsizing the different content being tested across all of the tests, which is great news for test candidates if it doesn’t change that much between this exposure draft and the final.”

The AICPA and NASBA wanted the test to test more for technology skills, as software has become an essential part of being an accountant, with greater demand in the job market for skills like data analytics. Critical thinking is also an important part of being a CPA, especially when it comes to auditing and exercising professional skepticism. 

“They definitely are making sure that technology is being properly covered across all of these six sections, and every section of the new test does have some level of technology components,” said Brown. “They’ve talked about the way technology and data analytics weave through the profession. They certainly let us know for several years that is coming, especially with the changes they made to the audit blueprint. On July 1 of last year, they issued a new audit blueprint that had additional technology topics. Then the model curriculum really spread data analytics and critical thinking across all the test sections.”

With the increased number of test sections, some material is moving from one of the current required core sections, such the Financial Accounting and Reporting (FAR) part, to a newer one like Business Analytics and Reporting (BAR) that’s more optional. 

“Although there are those new technology elements, there’s not really a whole lot else that’s new,” said Brown. “They told us for a long time that more technology testing was coming, but otherwise they’re taking the current FAR test and splitting out the Topics to go into the new BAR exam, which is the Business Analytics and Reporting exam. FAR has been kind of a hurdle for candidates. There’s a lot to study, and candidates feel overwhelmed when they prepare for the FAR exam. The fact that they’re rightsizing it and moving some of the content, especially content that’s really only applicable to those who are going to focus their careers in those areas, will make the FAR test — which is core accounting and needs to be passed by every student — more manageable for candidates. I think that’s really great news.”

As accounting firms find themselves under the microscope for audit failures and test cheating, the revamped CPA test will continue to include ethics questions. “We haven’t lost any ethics coverage, so there are still ethics Topics being covered in audit [AUD] and REG [Taxation and Regulation],” said Brown. “Those are the areas where we mostly focus on ethics topics, and that’s still true, so no change there.”

One related change that may be surprising, though, involves an increased emphasis on business law. “They did increase the weight of business law, which is different from ethics, in the REG exam, which will still be a core exam, and will still focus on tax Topics as well as business law,” said Brown. “They’re proposing that the weight they assign to the business law portion of the REG test will go up. Right now it’s 10 to 20%, and on the new exam, they’re proposing 15 to 25%. That wasn’t necessarily something that we saw coming, especially because they signaled a couple of years ago with the prior practice analysis that they might possibly pull business law from the CPA exam. Obviously they haven’t done that, and it does seem like they’re putting a little bit more emphasis on it. It doesn’t really change the core Topics being covered. It’s just that there are probably going to be a few more questions on business law on the REG test than maybe in the past.”

The new test may make the profession more attractive to younger people who may have been discouraged by previous test changes. The AICPA trends report from 2021 found accounting graduates trended downward in the 2019–20 academic year, with decreases of 2.8% and 8.4% at the bachelor’s and master’s levels, respectively. The number of new CPA test candidates entering the CPA pipeline declined in 2020 due to short-term closings and the various restrictions at Prometric test centers, with overall COVID concerns carrying forward into 2021. While new CPA test candidates decreased less than 0.5% between 2018 and 2019, there was a 17% decrease between 2019 and 2020, though there was a 6% increase between 2020 and 2021.

“We are all very concerned about the CPA pipeline,” said Brown. “If the new test as outlined by CPA Evolution appeared to be harder, then that could be a difficult message to share with candidates and wouldn’t appeal to the young professionals we want to bring into the profession. They are rightsizing some of the sections and taking content out of FAR, which every candidate has to take, and moving that to BAR, and taking some of the content that’s currently tested on the REG test and moving that more advanced tax content to the TCP [Tax Compliance and Planning] exam, which is the discipline test that you would take only if you really thought that tax was going to be your professional goal. The fact that they’re moving the more difficult Topics to the discipline exams and making the core test more manageable for candidates could appeal to the candidate population.”

That could reverse some of the recent trends in the CPA candidate numbers. “We saw numbers come down after the 2017 test launch, which was the last really big test change,” said Brown. “There was a perception at that time that the test had become harder, because they added higher-order skills. That seems to have impacted the perception of the difficulty of the CPA exam. But this shift — making the core exams more focused on what every newly licensed CPA needs to know and moving to the additional exams the Topics that really aren’t necessary for everyone — is a great message. I’m hoping that is attractive to candidates and that they perceive this move as a positive direction.”

While some of the advanced tax Topics are moving from the REG to the TCP section, and some of the advanced accounting and reporting Topics are shifting from FAR to BAR, the audit section of the test isn’t changing as much.

“The AUD exam, which will be a core test when the new CPA test launches, will be very similar to the audit test today,” said Brown. “We’re actually not seeing content moving from the current audit test to the more advanced test within the audit lineup, which is ISC, the Information Systems and Controls exam. Interestingly, with REG and FAR becoming demonstrably simpler because content is moving to the disciplines, audit stays the same. Now, that’s not a bad thing because the audit content has been pretty manageable.”

However, some content is moving from the Business Environment and Concepts (BEC) section to the ISC exam, in part to test for SOC (service-oriented controls) audits. 

“The ISC exam, the Information Systems and Controls, is really going to be almost wholly a new exam,” said Brown. “There are some Topics in the current BEC exam, things like business process and controls, and IT basics that will move from the current BEC test to the ISC exam, but everything else on that test is going to be new. There is going to be a new emphasis on IT audits, especially SOC engagements. Today SOC engagements are tested from the perspective of an auditor’s use of SOC reports in a normal financial statement audit as a tool for assessing controls. That emphasis on SOC engagements in the current audit will stay the same, but the new ISC test is going to have a major portion on how you perform a SOC examination engagement. That’s never been tested on the CPA test before, in the same way that some of the key IT auditing and technology content that comes under ISC has never been tested on the CPA test before. That test really is mostly new across the six core discipline structures under CPA Evolution.”

The revamped test has not yet been finalized, but it’s expected to launch in time for 2024. Its impact on the job market for accountants and the skills they bring to their jobs probably won’t be apparent for several years.

“It will be interesting to see how many candidates choose the ISC discipline exam, given that the content on it is so new and not necessarily traditional, if you think of traditional accounting being things like audit and tax,” said Brown. “It just goes to show the AICPA’s desire to demonstrate that accountants really do understand technology, and the increasing place of technology and technology-related audits in the profession.”

Fri, 22 Jul 2022 11:01:00 -0500 en text/html https://www.accountingtoday.com/news/revamped-cpa-exam-will-bring-big-changes
Killexams : More Companies Obtaining Independent Assurance on Sustainability Data, According to Global Study by IFAC, AICPA & CIMA

NEW YORK--(BUSINESS WIRE)--Aug 1, 2022--

The number of global companies obtaining independent assurance on their environmental, social and governance (ESG) information increased from 51% to 58% in 2020, compared to the previous year, according to new data from the International Federation of Accountants (IFAC), American Institute of CPAs (AICPA) and Chartered Institute of Management Accountants (CIMA), the latter two of which represent the unified voice of the Association of International Certified Professional Accountants.

The 2020 information released today is an update to the accounting bodies’ inaugural study last year that examined global trends in both sustainability-related reporting and its assurance. This latest update offers the first benchmark of progress relative to the original data. A follow-up study that incorporates 2021 information is expected to be released at a later date.

When it comes to ESG assurance, 82% of engagements were limited in scope in 2020, essentially the same as in 2019 (83%). Some 61% of assurance engagements were performed by audit firms on a global basis, a slight decline from the previous year (63%). Jurisdictions with some of the highest rates of assurance performed by professional accountants include Australia, France, Italy, Germany and Spain. In other countries, including South Korea, the United Kingdom and the United States, most assurance engagements are conducted by service providers outside of the accountancy profession. Professional accountants have high professional standards, including independence, and are subject to regulatory oversight, which is critical in this space.

On the reporting side, the study found 92% of global companies provided some ESG data to investors, either through integrated, annual or standalone reports. The use of, or reference to, Sustainability Accounting Standards Board (SASB) standards more than doubled in 2020. This is important because new disclosure proposals from the International Sustainability Standards Board (ISSB) include and build upon SASB standards. (SASB’s parent organization, the Value Reporting Foundation, will consolidate into the IFRS Foundation on Aug. 1, 2022, to support the work of the ISSB.)

“It’s encouraging to see continued high levels of reporting on sustainability information and an overall increase in assurance globally,” said IFAC CEO Kevin Dancey. “But our research tells us that 80% of companies are using multiple frameworks or standards, which results in data that is not consistent, comparable or decision-useful for investors, stakeholders or society at large. Sustainability reporting and assurance will only reach its full potential when it is based on a harmonized global system led by the International Sustainability Standards Board’s comprehensive baseline of disclosure.”

The 2020 study data also shows 89% of companies presented at least some information in each of four categories: greenhouse gasses, other environmental factors, social and governance. Yet only 43% provided assurance for all four categories. The most common area for independent assurance was greenhouse gases (95%).

Seventy percent of global companies that engaged a professional accounting firm to perform the ESG assurance engagement chose the firm that audits their financial statements.

“High-quality reporting requires high-quality assurance,” said Susan S. Coffey, CPA, CGMA, AICPA & CIMA’s CEO of public accounting. “Auditors already have a holistic view of a company’s risk profile, structure and processes, so it makes sense for that firm to also engage in ESG assurance. Professionally qualified and licensed accountants have the requisite expertise, objectivity, integrity and commitment to professional standards that are essential for instilling trust in ESG reporting.”

About the Study

IFAC and AICPA & CIMA partnered with Audit Analytics to understand the state of play involving environmental, social, and governance (ESG) reporting and assurance practices on a global basis. The inaugural version of the study was published last year. This latest update reviewed data from 1,400 global companies from the G20 nations plus Hong Kong S.A.R., China and Singapore. The full methodology is referenced within the study.

About IFAC

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

About the Association of International Certified Professional Accountants, and AICPA & CIMA

The Association of International Certified Professional Accountants (the Association), representing AICPA & CIMA, advances the global accounting and finance profession through its work on behalf of 689,000 AICPA and CIMA members, students and engaged professionals in 196 countries and territories. Together, we are the worldwide leader on public and management accounting issues through advocacy, support for the CPA license and specialized credentials, professional education and thought leadership. We build trust by empowering our members and engaged professionals with the knowledge and opportunities to be leaders in broadening prosperity for a more inclusive, sustainable and resilient future.

The American Institute of CPAs (AICPA), the world’s largest member association representing the CPA profession, sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It also develops and grades the Uniform CPA Examination and builds the pipeline of future talent for the public accounting profession.

The Chartered Institute of Management Accountants (CIMA) is the world’s leading and largest professional body of management accountants. CIMA works closely with employers and sponsors leading-edge research, constantly updating its professional qualification and professional experience requirements to ensure it remains the employer’s choice when recruiting financially trained business leaders.

View source version on businesswire.com:https://www.businesswire.com/news/home/20220801005286/en/

CONTACT: Media:Jennifer DiClerico

IFAC

212.286.9344

jenniferdiclerico@ifac.orgJeff May

AICPA & CIMA

212.596.6122

jeffrey.may@aicpa-cima.com

KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: BANKING ACCOUNTING PROFESSIONAL SERVICES FINANCE

SOURCE: The Association of International Certified Professional Accountants

Copyright Business Wire 2022.

PUB: 08/01/2022 08:04 AM/DISC: 08/01/2022 08:04 AM

http://www.businesswire.com/news/home/20220801005286/en

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Killexams : SEC chair Gensler calls for stronger audit rules on SOX anniversary

Securities and Exchange Commission Chair Gary Gensler commemorated the 20th anniversary of the passage of the Sarbanes-Oxley Act while calling for strict new independence standards for auditing firms from the Public Company Accounting Oversight Board.

Speaking Wednesday during a webinar co-hosted by the Center for Audit Quality, Gensler discussed how he worked as a senior advisor to the late Senate Banking Committee Chair Paul Sarbanes, D-Maryland, when the legislation was passed nearly two decades ago on July 30, 2022. One of the main provisions of Sarbanes-Oxley was the establishment of the PCAOB to regulate auditing firms in the wake of the accounting scandals of the early 2000s involving companies like Enron and WorldCom. However, he believes the PCAOB has been too slow to update the accounting profession’s old auditing standards, which were set by the American Institute of CPAs.

“First, the Enron crisis revealed a key problem: the quality of auditing standards,” said Gensler. “Candidly, the relationships between issuers and auditors, between standard-setters and auditing firms, were too clubby. It matters who sets the standards. It matters who ‘audits the auditors.’ Auditing standards were set by the AICPA, a professional association. The profession was writing its own rules. That’s an inherent conflict. Additionally, auditing firms were tasked with ‘inspecting’ each other. Naturally, such inspections had conflicts, failing to identify serious shortcomings in auditor independence and audit quality.”

To correct those shortcomings, Sarbanes-Oxley Act established the PCAOB, an independently funded board under the regulatory oversight of the SEC, Gensler noted. “The PCAOB is tasked with setting enhanced auditing standards,” he said. “For practical purposes, Congress permitted the then-new PCAOB to carry over existing AICPA standards on an interim basis. The expectation was that the board would produce a more appropriate set of standards going forward. Historically, though, the PCAOB has been too slow to update auditing standards. Twenty years later, most of those interim standards remain.”

gensler-gary-sec-caq-event.jpg

Securities and Exchange Commission chair Gary Gensler, speaking at Center for Audit Quality event commemorating 20th anniversary of Sarbanes-Oxley Act

Gensler moved to replace four of the five PCAOB board members after he took office last year, and in May of this year, the PCAOB announced that it plans to update almost all of the remaining interim standards. “I look forward to these critical auditing standard updates,” said Gensler. “While they have their work cut out for them, I believe that Chair Erica Williams and the board can live up to Congress’s original vision with respect to standard-setting. I hope we can make some progress before Sarbanes-Oxley can legally drink.”

One standard that he would like to see change is the PCAOB’s auditor independence rules, which haven’t solved conflicts with audit firms’ consulting practices. “Another problem the Enron crisis revealed was weak auditor independence,” said Gensler. “In many cases, including Enron, audit firms had lucrative consulting engagements with the companies they were auditing. Thus, Sarbanes-Oxley directed the SEC to take steps to create a stronger barrier between auditors and other parts of their firms’ business when dealing with audit clients, with some exceptions. A number of firms spun out their consulting businesses in the days shortly before and after Sarbanes-Oxley. Over the past 20 years, however, many of these firms went on to rebuild them again. PCAOB inspections continue to identify independence — and lack of professional skepticism — as perennial problem areas.”

He noted that advisory practices at the Big Four auditing firms have not only grown but also become more complex. “Given the growth in the size and complexity of non-audit services, it is important that audit firms maintain a culture of ethics and integrity — placing the highest priority on auditor independence throughout the firm, not just in the audit practice,” said Gensler.

He has asked the PCAOB to consider adding updates for auditor independence standards to its agenda. “We may need to take a fresh look at the SEC’s auditor independence rules as well,” he added. “In the meantime, I encourage firms to review and enhance their independence protocols with respect to their auditing and consulting practices.”

Gensler was asked by moderator Rob Schmidt, a reporter with the Capitol Account newsletter on Substack, about more details on the new independence standards.

“I’ve asked staff and I’ve certainly asked the PCAOB,” Gensler replied. “There’s an auditor independence standard at the PCAOB, and then there’s a rule at the Securities and Exchange Commission, and they work together. I’ve asked both to consider what would be appropriate here and if the PCAOB in addition to what they laid out earlier this spring thinks that it would be appropriate to address and update the auditor independence standards.”

Gensler pointed to the impact from SOX on the Financial Accounting Standards Board and suggested he would like to see more standards developed there as well. “The Enron crisis revealed problems in accounting standard-setting,” he said. “In response, the Sarbanes-Oxley Act provided that the accounting standards-setter, the Financial Accounting Standards Board, would have secure, independent funding. Previously, FASB had to fundraise for itself — often from the very issuers for which it was setting standards. As a result, this created conflicts of interest that witnesses agreed had made FASB slow to adopt new standards and reluctant to tackle controversial topics. Again, Sarbanes-Oxley sought to create greater distance between standard-setters and industry.”

Schmidt asked whether FASB should move faster on setting standards related to environmental, social and governance reporting and cryptocurrency.

“Whether it’s for the Securities and Exchange Commission, the Public Company Accounting Oversight Board or FASB, as markets are changing at a quicker pace than when I started in finance four decades ago, technology is changing more rapidly, and we’ve got international competitors in the capital markets that aren’t going to just leave us at the top,” said Gensler. “So it’s important for the agenda, whether it’s at the Securities and Exchange Commission or the Financial Accounting Standards Board, that they act on issues, taking into consideration public comment in a thoughtful but expeditious manner with some sense of urgency when new matters arise, whether it’s around new technologies or new business models.”

PCAOB inspections

Gensler also wants the PCAOB to take a tougher stance on inspections, especially in light of a recent scandal at Ernst & Young involving cheating on the ethics portion of the CPA exam.

“Inspections, investigations and enforcement are critical components of instilling trust in our capital markets,” he said. “Under the current leadership, the PCAOB has a chance to reinvigorate its enforcement program. The work to Boost auditing standards, coupled with rigorous enforcement of auditor’s professional and ethical requirements, is essential for investor protection. ... Accounting and auditing cases also are an important focus of the SEC’s enforcement program. We recently charged Ernst & Young LLP with cheating by its auditors (on Certified Public Accountant ethics exams, no less!) and with withholding evidence of this misconduct in our investigation. This action underscores the importance for accounting firms of fulfilling their gatekeeper functions in the spirit and letter of Sarbanes-Oxley.”

Gensler discussed the PCAOB’s ongoing efforts to get access to inspect auditing firms in China and Hong Kong, and how the SEC could be forced to delist Chinese companies whose shares trade on U.S. markets in accordance with the Holding Foreign Companies Accountable Act of 2020. 

“This bill, which unanimously passed the Senate, went to the president’s desk in December 2020, a couple of days after we lost Sen. Sarbanes,” said Gensler. “Going forward, will our markets include Chinese issuers? That still is up to our counterparts in China. It depends on whether they are willing to comply with the requirements of U.S. law to be able to remain in the U.S. markets.”

The SEC and the PCAOB have been negotiating with Chinese authorities on an agreement for years, but the delisting threat has accelerated those talks.

“We are not willing to have PCAOB inspectors sent to China and Hong Kong unless there is an agreement on a framework allowing the PCAOB to inspect and investigate audit firms completely," said Gensler. "Any framework would need to bring specificity and accountability to fulfilling the goals of the HFCAA. Make no mistake, though: The proof will be in the pudding. While important, any framework is merely a step in the process. In light of the time required to conduct these inspections — as well as to fulfill quarantine requirements — a statement of protocol would need to be signed very soon if the inspections have any chance to be completed by the end of this year. This could be particularly important as Congress is considering accelerating the HFCAA’s timeline from three years to two years.”

Deloitte and CAQ

Later in the webinar, Deloitte U.S. CEO Joe Ucuzoglu discussed how firms like his have responded to Sarbanes-Oxley and its independence requirements, but he seemed to resist new rulemaking.

“You had strict scope-of-services prohibitions and I think Sarbanes-Oxley got this right,” he said. “It banned firms from performing a whole host of consultative services that could compromise the objectivity and impartiality of the auditor. There are circumstances that come up from time to time where a firm doesn’t meet that standard, where a firm violates it. There should be consequences, and those consequences should be severe. But let’s not confuse that with the rule being problematic. Then you have an independent regulator, the PCAOB. And as someone who has personally been inspected by the PCAOB, I can tell you the veracity of that process and the conduct they expect to see when they come in and inspect our work. Lots of professionals in different industries have potential conflicts. You want to make sure you have the systems and incentives in place to combat those conflicts. That’s really the enduring legacy of Sarbanes-Oxley.”

CAQ CEO Julie Bell Lindsay recalled an event the center hosted a decade ago to commemorate the 10-year anniversary of SOX in which former Senators Sarbanes and Michael Oxley, R-Ohio, spoke. “They talked about how no framework is going to eliminate all bad actors,” she said. “There’s always going to be bad actors out there. But from their perspective, had another Enron or WorldCom happened, the answer 10 years ago was no, and the answer 10 years later is still no. But that does not mean we can take our foot off the pedal and not be vigilant. I think if you look at the fact that there’s been no other Enron or WorldCom —  and you can look at other indices like restatement levels and PCAOB deficiency levels are all trending down — but I want to stress that there always needs to be a focus on audit quality.”

Wed, 27 Jul 2022 12:49:00 -0500 en text/html https://www.accountingtoday.com/news/sec-chair-gensler-calls-for-stronger-audit-rules-on-sox-anniversary
Killexams : CPAJ News Briefs: FASB, AICPA, PCAOB

FASB News

Improvement to supplier Finance Program Disclosure Rule is Credit Positive, Moody’s Says

FASB’s recent decision to make changes to the disclosure of supplier finance program obligations, also known as reverse factoring, “is a much-needed improvement, as there is currently a lack of explicit guidance,” Moody’s Investors Service noted in an accounting spotlight. This comes as credit rating agencies like Moody’s, as well as other analysts and investors, have asked FASB, to increase the disclosure of qualitative and quantitative information about supplier finance programs. The Big Four CPA firms also requested the board tackle aspects of the accounting and disclosure of the programs. FASB first issued an exposure draft in December 2021, and on July 20, 2022, decided to adopt revisions to existing rules. The updated standard, which requires companies to disclose specified “key terms,” will be issued in the fall. Companies that use reverse factoring must start to disclose the extra information, including payment terms, starting from January 1, 2023. “The expediency of this standard’s effective date is credit positive and a significant win for investors currently struggling to use existing financial statements to understand if supplier finance programs present liquidity risks,” according to Moody’s Sector Comment published on July 25, 2022. It was written by David Gonzales, vice president–senior accounting analyst, who is a member of the FASB’s Financial Accounting Standards Advisory Council, and Alastair Drake, senior vice president–senior accounting analyst.

AICPA News

Auditing Standards Board Votes to Issue Updated Compliance Audits Standard

The AICPA’s Auditing Standards Board (ASB) voted to issue a final standard related to compliance audits during a meeting on July 19. This project was intended to makes changes to AU-C section 935, “Compliance Audits,” to update the appendix following revisions to other auditing standards, including on audit evidence and risk assessment. Thus, the ASB made conforming changes. Statement on Auditing Standards (SAS) 148, Amendment to AU-C Section 935, amends SAS 117, Compliance Audits. SAS 142, Audit Evidence (AU-C section 500), was issued in July 2020. SAS 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (AU-C section 315), was issued in Oct. 2021. The amendment to the appendix related to AU-C section 501, “Audit Evidence—Specific Considerations for Selected Items,” becomes effective for compliance audits for fiscal periods ending on or after Dec. 15, 2022, in order to align with the effective date of SAS 142. All other amendments in SAS 148 are effective for compliance audits for fiscal periods ending on or after December 15, 2023, according to Ahava Goldman, associate director for audit and attest standards with the Association of International Certified Professional Accountants. “The ASB will more fully consider the comments received on the exposure draft at its October 2022 meeting,” Goldman noted.

PCAOB News

PCAOB to Consider Adding Audit Quality Indicator Project to Agenda

Following requests by it investor advisors, the PCAOB is considering picking back up an old project that got shelved several years ago due to resistance from audit firms (and, to a lesser extent, audit committees). The project in question is the development of audit quality indicators (AQI) as part of a broader effort to Boost audit quality. “I really appreciate this question from Lynn [Turner]. Many of our stakeholders, as you know, have indicated that audit quality indicator is of great interest to them, and we are looking into options for adding a standard-setting project or research project related to AQIs to our agenda, and I hope to provide an update very soon,” PCAOB Chair Erica Williams said at a July 28 event commemorating the 20th anniversary of the Sarbanes-Oxley Act of 2002, which created the audit regulatory board to better oversee the auditing profession following contemporaneous accounting scandals at Enron, WorldCom, and others. Over the years, members of the board’s Investor Advisory Group had pressed the PCAOB to move ahead with the stalled project. Now, with new leadership at the board, AQIs might become a reality.

Thu, 04 Aug 2022 06:12:00 -0500 Thomson Reuters Checkpoint en-US text/html https://www.cpajournal.com/2022/08/04/cpaj-news-briefs-fasb-aicpa-pcaob-4/
Killexams : Talage Successfully Completes SOC2, Type II Audit

Press release content from Business Wire. The AP news staff was not involved in its creation.

RENO, Nev.--(BUSINESS WIRE)--Jul 28, 2022--

Talage, a Submissions Management Platform (or SMP) for commercial insurance, today announced that they have successfully completed a System and Organization Controls (SOC) 2 Type II audit, performed by Sensiba San Filippo, LLP (SSF).

Developed by the American Institute of Certified Public Accountants (AICPA), the SOC 2 information security standard is an audit report on the examination of controls relevant to the trust services criteria categories covering security, availability, processing integrity, confidentiality, and privacy.

Talage is committed to providing a secure environment for our customers and successful completion of this audit shows that,” said Adam Kiefer, CEO, and co-founder of Talage. “Having successfully completed the audit will make it easier to work with new insurers and other customers who require tougher security.”

A SOC 2 Type II report describes a service organization’s systems and whether the design of specified controls meets the relevant trust services categories and assesses the effectiveness of those controls over a specified period of time. Talage’s SOC 2 Type II report did not have any noted exceptions and therefore was issued with a “clean” audit opinion from SSF.

For more information about Talage, please visit the company’s website at www.talageins.com.

About Talage

Talage is an API-driven submission management platform (SMP) for commercial insurance. With 30+ carrier integrations, Talage’s SMP offers hubs for all players and is an industry-wide solution. The SMP includes features that facilitate a better customer experience, help increase revenue, and deliver improved efficiency. Talage is the S i MP le solution.

View source version on businesswire.com:https://www.businesswire.com/news/home/20220728005019/en/

CONTACT: Katy Kelly,

Director of Marketing, Talage

833-482-5243

PR@talageins.com

KEYWORD: NEVADA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: PROFESSIONAL SERVICES DATA MANAGEMENT SECURITY TECHNOLOGY INSURANCE SOFTWARE

SOURCE: Talage

Copyright Business Wire 2022.

PUB: 07/28/2022 08:00 AM/DISC: 07/28/2022 08:02 AM

http://www.businesswire.com/news/home/20220728005019/en

Thu, 28 Jul 2022 00:02:00 -0500 en text/html https://apnews.com/press-release/business-wire/reno-7da81dba47154b60947ea835fa1157fd
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