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The tumultuous and unpredictable environment of latest years has resulted in increased stress for CPA firms and their clients. While uncertainty has been the norm, one constant remains: When people lose money, they often look for someone to blame, and CPAs can get caught in the cross hairs.

This article examines the types of claims asserted against CPA firms in the AICPA Professional Liability Insurance Program in 2021 and predicts what future claims may arise.


The chart "2021 Claims by Area of Practice," below, reflects the volume of professional liability claims asserted against CPA firms in the AICPA Professional Liability Insurance Program in 2021, the majority of which stem from tax services. While tax claims are more frequent, they are typically not severe or costly in terms of defense costs and indemnity payments. Higher-severity tax claims include those involving aggressive tax strategies such as syndicated conservation easements, U.S. filing obligations related to foreign financial assets, estate and gift tax returns, and state and local nexus issues. Areas of practice and allegations that also typically result in high-severity claims include audit services, fiduciary services, and claims asserting the CPA firm failed to detect a theft or fraud, irrespective of the service rendered.


Current claim trends

The leading cause of loss for tax claims asserted in 2021 was a filing error (see the chart "Tax Services Claims Asserted in 2021 by Cause of Loss," below). In prior years, the leading cause of loss was the provision of incorrect advice or failure to advise. However, due to the multiple changes in 2019 and 2020 return filing deadlines, the increase in this claim assertion is not surprising.

Consider this claim asserted in 2021:

A CPA firm was engaged to prepare a client's individual income tax return and returns for its businesses. The partner indicated that all returns would be extended but got busy and failed to timely file the individual extension. The client was assessed a failure-to-pay penalty of $20,000, the IRS denied the penalty abatement request, and the client demanded payment of the penalty and interest.

Future considerations

The timing of claims related to tax services may lag longer than what is customarily anticipated. Why? The IRS continues to work through its massive correspondence backlog, including requests for penalty and interest abatement. Moreover, the flurry of changes to filing dates, legislation enacted immediately preceding and during tax season, and new services requested of tax advisers have increased the potential for error and, consequently, claims against CPA firms.

Additionally, the IRS has been aggressively pursuing abusive tax-avoidance schemes. IRS settlements related to these schemes have been significant and have led to expensive claims against CPA firms.


Current claim trends

Similar to prior years, the primary causes of loss related to audit and attest services claims include a failure to detect a misstatement or disclosure error and a failure to detect a theft or fraud (see the chart "Audit and Attest Services Claims Asserted in 2021 by Cause of Loss," below). What is different from prior years' claim data is which party asserted these claims. In 2021, over half of the audit and attest services claims were instituted by third parties, primarily lenders or sureties.

Consider this claim asserted in 2021:

A CPA firm had a long-term financial institution audit client. The client discovered that one of its employees embezzled funds by misusing the company credit card and manipulating bank records. The client performed an investigation, determined that $2 million was stolen, and submitted a claim to its fidelity insurer. The fidelity insurer brought a claim against the CPA firm, asserting that the firm's audit failures allowed the fraud to perpetuate.

Future considerations

The volume of 2021 audit and attest services claims decreased by nearly 50% compared with 2020. While this may seem like a cause for celebration, such may not be representative of future loss experience. Courts were closed or only partially open in 2020 and 2021. Stimulus funds kept many businesses afloat during tenuous economic times. Therefore, we may see an uptick in claims once courts are operating at full capacity and when the economic dust settles.

Another trend in claims — particularly those related to audit services — has been the increase in damages asserted when a claim is made. Class action lawsuits and "nuclear" verdicts, whereby juries award an exceptionally high figure that is disproportionate to the real damages, have become commonplace, fueled in part by an increase in litigation funding, whereby a third party funds a lawsuit in exchange for a share of any award.


Current claim trends

Consulting services claims comprised 9% of all claims asserted in 2021. This percentage may sound insignificant. However, compared with 2020, consulting claim volume is up 50%, an unsurprising trend as more firms expand their service offerings beyond the traditional audit and tax.

Consider this claim asserted in 2021:

A CPA firm was engaged to provide bill payment, cash management, tax preparation, and tax planning services to a wealthy couple and the adult children from the wife's first marriage. After the wife died, a separate investment account solely in the husband's name was revealed. The wife's children brought a claim against the firm alleging that the engagement partner helped the husband create and fund the separate account, thus diminishing the amount of the wife's assets inherited by her children.

Future considerations

Claims related to consulting services will likely continue to increase as this area of practice grows and CPAs lean further into the role of trusted business adviser. Why? Claim history has demonstrated that the more services a CPA firm delivers to a client, the more likely that the CPA firm may be blamed for a client's losses and, consequently, face a claim.

Sarah Beckett Ference, CPA, is a risk control director at CNA. For more information about this article, please contact specialtyriskcontrol@cna.com.

Continental Casualty Company, one of the CNA insurance companies, is the underwriter of the AICPA Professional Liability Insurance Program. Aon Insurance Services, the National Program Administrator for the AICPA Professional Liability Program, is available at 800-221-3023 or visit cpai.com.

This article provides information, rather than advice or opinion. It is accurate to the best of the author's knowledge as of the article date. This article should not be viewed as a substitute for recommendations of a retained professional. Such consultation is recommended in applying this material in any particular factual situations.

Examples are for illustrative purposes only and not intended to establish any standards of care, serve as legal advice, or acknowledge any given factual situation is covered under any CNA insurance policy. The relevant insurance policy provides real terms, coverages, amounts, conditions, and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice.

Sun, 31 Jul 2022 21:00:00 -0500 text/html https://www.journalofaccountancy.com/issues/2022/aug/malpractice-claims-2021-future-predictions.html
Killexams : CPAJ News Briefs: FASB, AICPA, PCAOB


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

FASB’s latest decision to make changes to the disclosure of provider 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 provider 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 provider 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.


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 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 Strengthen 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 : Wealth.com Sets New Standard for Security in Digital Estate Planning

Read on to learn about the team at wealth.com's experience and expertise with data security and why achieving this type of security accreditation is paramount to Wealth's mission to modernize estate planning.

PHOENIX (PRWEB) August 09, 2022

Wealth Inc. (wealth.com), the most comprehensive digital estate planning platform, announced today that it achieved SOC 2 Type II compliance in accordance with American Institute of Certified Public Accountants (AICPA) standards for SOC for Service Organizations also known as SSAE 18. Achieving this standard with an unqualified opinion serves as third-party industry validation that Wealth provides enterprise-level security for customer's data secured in their digital estate planning software.

Wealth is now the only digital estate planning platform to obtain a SOC 2 Type II certification.

"With decades of experience in data security working with some of the most prominent global financial institutions, our team at Wealth has put data protection at the forefront of everything we do, as evidenced by our SOC2 Type II certification." said Peter Shirley, CTO at Wealth.
Achieving SOC 2 Type II compliance, which is more rigorous and time-intensive than standard SOC 2 Type I compliance, sets Wealth apart as the only digital estate planning platform with this level of security accreditation.

"Security is paramount for us, we understand our responsibility for keeping customer data safe. The SOC 2 Type II audit process demonstrates our commitment to meeting the most rigorous security, availability and confidentiality standards in the industry. It verifies that wealth.com's security controls are in accordance with the AICPA Trust Services Principles and Criteria." said Rafael Loureiro, CEO at Wealth.

Wealth was audited by http://www.prescientassurance.com/Prescient Assurance, a leader in security and compliance attestation for B2B, SAAS companies worldwide. Prescient Assurance is a registered public accounting in the US and Canada and provides risk management and assurance services which includes but is not limited to SOC 2, PCI, ISO, NIST, GDPR, CCPA, HIPAA, and CSA STAR. For more information about Prescient Assurance, you may reach out to them at info@prescientassurance.com.

The SOC 2 Type II audit report and the associated accreditation demonstrates to Wealth's current and future members that Wealth manages their data with the highest standard of security and compliance.

About Wealth
Rigorous data security standards and third-party auditing is standard practice for the founders of Wealth, experts in data security and fraud prevention, who sold their previous company Emailage to LexisNexis®.
Wealth.com is a digital estate planning platform designed by experts in trust and estate law. It is available to customers directly throughout the United States as well two key tailored segments:

  • For employers to offer the Wealth platform as an employee benefit
  • For Fiduciaries to offer their clients the Wealth platform


Media Contact: Lucas Miller

For the original version on PRWeb visit: https://www.prweb.com/releases/2022/MM/prweb18834732.htm

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Tue, 09 Aug 2022 09:15:00 -0500 text/html https://www.benzinga.com/pressreleases/22/08/p28426673/wealth-com-sets-new-standard-for-security-in-digital-estate-planning
Killexams : PCAOB plans tougher audit regulation on 20th anniversary of SOX

The chair of the Public Company Accounting Oversight Board, Erica Williams, said Thursday that the PCAOB is working on updated auditing standards and stricter enforcement and audit firm inspections, a day after Securities and Exchange Commission Chair Gary Gensler urged the PCAOB to act faster on new standards.

Williams spoke during an online event hosted by the Council of Institutional Investors to commemorate the 20th anniversary of the Sarbanes-Oxley Act, which established the PCAOB. Williams took over as chair in January after she was appointed by Gensler. He pointed out during another online webinar Wednesday that the PCAOB had updated relatively few of the industry-written auditing standards it inherited from the American Institute of CPAs two decades ago (see story).

The board has appointed four new members in the past year since Gensler moved to replace the majority of the five-member board. Williams pointed out that the PCAOB has already begun working on modernizing its standards.

“Today’s board has identified three key areas where we plan to further the PCAOB’s investor-protection mission: modernizing our standards, enhancing our inspections, and strengthening our enforcement,” she said. “High standards are the foundation for high-quality audits. That’s why earlier this year, the board announced one of the most ambitious standard-setting agendas in the PCAOB’s history. Just six months into my term, we are already actively working to update more than 25 standards within eight standard-setting projects, and we are just getting started.”

She noted that when the PCAOB was first getting off the ground in 2003, it adopted existing standards that had been set by the auditing profession on what was intended to be an interim basis.


Public Company Accounting Oversight Board chair Erica Williams

“Twenty years later, far too many of those interim standards remain unchanged,” she added. “But the world has changed since 2003. And our standards must adapt to keep up with developments in auditing and the capital markets. Our current short-term and mid-term projects will address more than half of the remaining interim standards from 2003, and we don’t intend to stop there.”

Gensler pointed out Wednesday that the PCAOB has been slow to update the standards over the years and he emphasized the need for updated standards on auditor independence. “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.”

Williams acknowledged that Gensler has made updating these standards a priority, and said she was grateful for his support of the PCAOB’s agenda. In June, the PCAOB adopted a set of amendments designed to strengthen requirements that apply to audits involving multiple auditing firms. 

Accounting Today asked Williams to respond to Gensler’s comments. “This new board, which has been in place for six months, has been working very diligently and has already updated a set of standards related to other auditors,” she said. “We have this ambitious agenda that we are moving forward, I believe, at a good pace, and I believe Chair Gensler's comments related to the past 20 years. But again, we are looking forward to this ambitious agenda that we’ve set. We agree that auditor independence is a critical issue. It is on our standard-setting agenda, as I mentioned, so we could take a look at the best way to ensure that our standards promote the highest ethical behavior and independence.”

She told CII general counsel Jeff Mahoney more about some of the standards that are on the agenda. “Our standard-setting agenda is one of the most ambitious in the organization's history, and it includes eight active projects: quality control, noncompliance with laws and regulations, and updates to our attestation standards, going concern, confirmations, substantive analytical procedures, fraud, and updates to our independence and ethics standards,” said Williams. “But that really doesn't tell the whole story. Each of the projects that I just mentioned actually contain multiple individual standards that we intend to update.”

She noted that the quality control project alone has 11 different standards that the PCAOB is considering replacing or significantly amending. Williams added that the board is actively engaging with investors and investor advocates about other standard-setting and rule-making projects to advance and it has a research agenda that includes data technology and audit evidence projects. “That is also going to help to inform additional actions we may take in standard setting,” she said.

The PCAOB recently reestablished two outside advisory groups — the Investor Advisory Group and a new Standards and Emerging Issues Advisory Group — to elevate the voice of investors, and hired its first-ever investor advocate, Williams noted.

Enforcement and inspections

The PCAOB has also been working to make its enforcement and inspections tougher.

“We will not hesitate to hold wrongdoers accountable for breaking the rules,” said Williams. “We are just about halfway through the first year of this new board. Already we’ve more than doubled our average penalties against individuals compared to the last five years. This includes the largest money penalty ever imposed on an individual in a settled case. At the same time, we’ve increased our average penalties against firms by more than 65%. In the past five years, the PCAOB assessed penalties against individuals less than half of the time and firms only about 86% of the time. This year it’s 100%. We are also pursuing enforcement actions involving certain types of violations for the first time. And we are taking steps to proactively seek out wrongdoing by increasing the use of sweeps against firms where there may be a violation of our standards or rules. Those who break the rules should know that the PCAOB means business.”

The board has also been in talks with Chinese authorities on opening up inspections of firms in mainland China and Hong Kong. 

“The PCAOB has completed inspections in 55 countries. But China has continued to block our access,” said Williams. “The U.S. Congress sent a strong message with the passage of the Holding Foreign Companies Accountable Act: access to the U.S. capital markets is a privilege, not a right. The PCAOB will follow U.S. law, and the law is clear that we must have complete access to audit work papers of any firm we choose to inspect or investigate — no loopholes and no exceptions. While we will continue working with the People's Republic of China authorities to reach an agreement that meets our mandate under U.S. law, it’s critical to remember that an agreement is just the first step. Our team must be able to go to China and test whether what’s written on paper works in practice. Time is of the essence.”

Lynn Turner, a former chief accountant at the SEC, asked Williams about why no Chinese companies have yet been deregistered by the PCAOB for not allowing access to PCAOB inspectors.

“We are very focused right now on trying to comply with the Holding Foreign Companies Accountable Act,” said Williams. “I completely agree with Lynn that access to the U.S. capital markets is a privilege and not a right. What we are doing actively is trying to work with the PRC to reach an agreement that meets our mandates under the HFCAA. But we aren’t going to stop there and we will be prepared to make a determination if we are not able to inspect and investigate completely under the HFCAA. And then after making our determination under the HFCAA, then the SEC will have the opportunity to potentially delist and that could impact on nearly 200 companies. But we are taking our responsibility very seriously and the HFCAA has finally given us a tool to bring the Chinese to the table, to actually help us to try to potentially reach an agreement. Whether we reach an agreement is premature right now, but we are continuing to talk to them.”

Turner also asked Williams why an earlier project on audit quality indicators wasn’t on the agenda released by the new board.

“Many of our stakeholders ... have indicated that audit quality indicators are of great interest to them, and we are looking into options for adding a standard-setting project or research project related to AQI to our agenda, and I hope to provide an update very soon,” Williams explained. “I want to reiterate that our focus is on performance standards such as quality control standards, and that will also directly affect the quality of work performed by the auditor as well as the firm’s quality control system. Of course, while focusing on those areas is important for the benefit of investors because they directly drive audit quality, we are actively considering what additional information investors may need for them to be able to assess the quality of audits.”


Turner was also asked about what the PCAOB is doing to Strengthen diversity in its ranks and in the audit profession in general.

“That is a huge area of focus for this board and for me personally, as the first person of color and first woman to chair the PCAOB and to be part of what is the most diverse PCAOB board in the history of the organization,” Williams responded. “I want to let everyone know that we are very focused on diversity and inclusion. One of the things that we have done is that recently we have announced scholarships for 250 students to pursue degrees in accounting through our PCAOB scholarship program. The large majority of those scholarships do go to students who are underrepresented in the accounting profession. And those scholarships are going to make careers in auditing possible for the best and brightest students, no matter their backgrounds. We’ve also prioritized diversity in our hiring and we are additionally increasing the diversity and inclusion program internally for our staff through affinity groups, diversity councils and the like. Diversity and inclusion are critical. I think it’s very important for the regulators to reflect the diversity of the investors that we serve to protect, and the PCAOB, as the most diverse board in the history of the organization, does just that.”

Sarbanes-Oxley legacy

Williams also discussed the impact of Sarbanes-Oxley on the audit profession after scandals in the early 2000s involving companies like Enron led to the establishment of the PCAOB. She pointed to academic studies that have found PCAOB inspections Strengthen audit quality, both in the U.S. and in other countries where the board has inspection access.

“Evidence shows that increase in audit quality has boosted investor confidence in the credibility of financial reporting,” she said . “A study published in the Review of Financial Studies compared the market response to earnings announcements and 10-k filings before and after the PCAOB’s existence. The study found both stronger stock price reactions and higher trading volume following the creation of the PCAOB — indicating investors have more confidence acting on the information they receive from financial reporting, knowing that the PCAOB is on the case.”

Even some plaintiff attorneys who have sued auditing firms agree that Sarbanes-Oxley has helped, but they still see room for improvement in audit regulation. 

“I largely think Sarbanes-Oxley has been a really effective piece of legislation and regulatory reform, which is an odd thing to say these days, but it came at a time when government was working a little bit more effectively,” said Laura Posner, a partner at the law firm Cohen Millstein in New York, who recently won a $35 million settlement in a class action she led against KPMG, where the plaintiffs alleged that the Big Four firm perpetuated a massive fraud by signing off on Miller Energy's $480 million valuation of its Alaskan oil reserve assets. “But I think it was a necessary reform at a time when the markets were really roiled by what happened with Enron, WorldCom, Adelphia and Global Crossing. We had a lot of major scandals that really rocked investor confidence in the markets, and I think Sarbanes-Oxley went a long way toward bringing back investor confidence in the markets.” 

She cited the establishment of the PCAOB as an important factor. “It was conceptually really important that there was an real cop on the beat, theoretically, and that there would be some independent oversight for the accounting industry,” Posner told Accounting Today in an interview. “That was important, although the PCAOB has not been without its own scandals, particularly most recently. Although it’s correlation, not causation, we’ve seen a significant reduction in the number of restatements that come out of public companies, but also the size of those restatements. We’re not seeing these mega-earth-shattering restatements like we did during that era, and I think that has been largely very beneficial, both for corporations but more importantly for the investors in those corporations.”

Thu, 28 Jul 2022 11:32:00 -0500 en text/html https://www.accountingtoday.com/news/pcaob-plans-tougher-audit-regulation-on-20th-anniversary-of-sox
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.”


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 latest 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 Strengthen 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 : Pacific West Bank Announces Jason Wessling as Bank President

WEST LINN, Ore., Aug. 9, 2022 /PRNewswire/ -- Pacific West Bank PWBO today announced that Jason Wessling has been promoted to Bank President subject to regulatory approval. Jason will also continue as the Bank's Chief Financial Officer and will join the Banks Board of Directors.

"Jason was the first executive recruited after the capital raise in 2018. At that time, the Bank had roughly $90.0 million in assets. Since then, under Jason's leadership as CFO the Bank has grown to $300 million, a milestone the Bank celebrated in July. The Bank recognized Jason's leadership contribution in October of 2020 by naming him the Bank's first Executive Vice President. His accomplishments were magnified during the following two years and were a significant determinant to the Bank's 3x growth during a time of unprecedented economic challenge," Terry Peterson the Bank's Chief Executive Officer.

"The Portland Business community honored Jason's leadership and successes by naming him CFO of the year by the Portland Business Journal in 2021. Jason demonstrates the Bank's culture of relationship banking by focusing on the growth of each relationship the Bank has with the community, businesses, non-profits, and the amazing team of Bankers at PWB," said Ed Kawasaki Board Chairman of the Bank.

Before joining Pacific West Bank, Jason was an executive at Premier Community Bank as its Chief Financial Officer with prior experience with Moss Adams, a public accounting firm as a specialist within the Financial Institutions practice. Jason is a CPA in the State of Oregon and is a member of the Oregon Society of CPAs and the AICPA.   

About Pacific West Bank: Information about the Bank's stock is available through the over-the-counter marketplace at www.otcmarkets.com (symbol PWBO).

Pacific West Bank was formed in 2004 by Portland businesspeople to deliver loan and deposit product solutions through experienced and professional bankers to businesses, nonprofits, professionals, and individuals. The Bank serves the greater Portland Metro area with offices strategically located in Downtown Portland, Lake Oswego, and West Linn.

Media Contact:
Terry A. Peterson
Chief Executive Officer
(503) 905-2217

Certain statements in this release may be deemed to be "forward-looking statements." Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause real results to differ materially from those contained in any forward-looking statement.

View original content to download multimedia:https://www.prnewswire.com/news-releases/pacific-west-bank-announces-jason-wessling-as-bank-president-301602759.html

SOURCE Pacific West Bank

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Tue, 09 Aug 2022 08:15:00 -0500 text/html https://www.benzinga.com/pressreleases/22/08/n28425420/pacific-west-bank-announces-jason-wessling-as-bank-president
Killexams : Christus physician recognized as Texas Super Doctors Rising Star

CHRISTUS Trinity Clinic (CTC) is proud to announce that Pranav Bhatt, MD, MPH was recognized as one of the 2022 Texas Super Doctors Rising Stars, a prestigious list published annually by Texas Monthly magazine. 
This is Dr. Bhatt’s second consecutive year to be selected for this distinguished honor and the 11th year the award-winning magazine has put the spotlight on Texas physicians who are going above and beyond in their careers after being fully licensed and in practice for 10 years or less. Only 2.5% of all physicians with those criteria in Texas make the yearly Rising Stars list. 
Dr. Bhatt is a family medicine physician providing primary care services to Southeast Texans at CHRISTUS Trinity Clinic. Dr. Bhatt attended medical school in India before completing his residency in family medicine in Toledo, Ohio. He joined the CHRISTUS Health family in 2017. 
“It’s truly humbling to be chosen not just once, but twice, to be highlighted among this distinguished group of Rising Stars physicians,” said Dr. Bhatt. “It is and has always been my mission to provide compassionate and excellent care to all my patients. I am also honored that my fellow physicians recognize that and have confidence in me to continue living that mission.” 
The yearly selection for Rising Stars is a rigorous, multi-step process that aims to identify health care providers who have attained a high degree of peer recognition and professional achievement. Doctors are encouraged to nominate fellow physicians. 
“We are so incredibly proud of Dr. Bhatt, who is more than deserving of this distinct honor that puts him among the top young physicians in all of the Lone Star State,” said Kelly Cady, CHRISTUS Trinity Clinic Vice President of Physician Practice Operations in Southeast Texas. “Dr. Bhatt is a living example of what we as the CHRISTUS Trinity Clinic strive to recruit and embed in the communities we serve. We are committed to continuing providing top-level care to the people of Southeast Texas.” 
Readers who are interested in learning more about Dr. Bhatt or would like to make an appointment can visit

Wendi Christian, CPA, CISA, CITP, CGMA, MSA has been named president of the 2022-2023 national board of directors for the Accounting & Financial Women’s Alliance (AFWA).  She is a member of the Virtual Chapter in Groves. 
“AFWA is such an integral organization that promotes and advances women both professionally and personally.  I feel honored to have the opportunity to be a part of its leadership,” said Christian, who is a VP of Accounting at 5Point Credit Union in Nederland. One of the largest independent credit unions in Southeast Texas, 5Point Credit Union has been serving local communities since 1935.  
An AFWA member since 2000, Christian has served on the San Antonio Chapter board as president and various other board positions, been a member of the AFWA National Board since 2015 and on the Executive Committee since 2017.  Christian is also a member of Texas Society of CPAs, ISACA and AICPA. 
AFWA promotes and advances education, career development and leadership in the professions of finance and accounting. The Foundation of AFWA provides academic and professional credential scholarships to members and non-members since 2004. For more information about AFWA, visit

Thousands of members of the Benevolent and Protective Order of Elks and guests gathered in Atlanta, Ga., in early July for the BPO Elks National Convention. During the convention, Teresa Blevins of Beaumont, was installed as District Deputy for the BPO Elks for lodges in the East District of the Texas Elks State Association and will serve a one-year term.

The BPO Elks is one of the premier patriotic and charitable organizations in the United States. Each year, the Order donates more than $375 million in cash, goods and services to the needy, students, people with disabilities, active-duty members of the armed forces and their families, veterans and their families, and charitable organizations. In the 154 years since the Order’s founding, the BPO Elks has made charitable donations totaling approximately $12 billion.

As part of the Elks’ ongoing commitment to help students achieve their goals, the Elks National Foundation awards annual college scholarships worth a total of more than $4.5 million to students across the country. To help local lodges make positive changes in their communities, the Elks National Foundation’s Community Investments Program provides local Elks lodges with nearly $16 million to help them build stronger communities.
Through the Elks National Veterans Service Commission, Elks provide direct service to veterans at more than 350 VA medical centers, state veterans homes, and clinics; use grants to provide veterans with food, supplies, and support; and provide beds, supplies, and emergency assistance to veterans experiencing homelessness.

Do you have a news item like this that your customers or clients need to hear about? A new manager or owner, a major change in your operations? Send it to Opinions@BeaumontEnterprise.com so we can spread the word!

Fri, 05 Aug 2022 19:46:00 -0500 en-US text/html https://www.chron.com/business/article/Christus-physician-recognized-as-Texas-Super-17352118.php 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



jenniferdiclerico@ifac.orgJeff May






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


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