Episode 5 – Compilation Engagements Using SSARS 21

Here are the basics to using the new compilation standard

This week we look at how compilation engagements have changed from SSARS 19 to SSARS 21. We also discuss what compilation engagement elements have not changed. We conclude by providing an overview of the objectives and requirements of the new compilation standard.

An overview of the podcast is as follows:

  • What are the key changes in compilation engagements?
  • What has not changed?
  • What are the objectives of a compilation?
  • What procedures must be performed?

Episode 4 – Questions and Answers for the New SSARS 21 Preparation of Financial Statements Standard

Here are answers to your most pressing AR-C 70 questions

CPAs have had many questions about the use of AR-70, Preparation of Financial Statements. Those questions include:

When is the standard applicable?

What work papers must I retain?

Is an engagement letter required?

What should the preparation report look like?

Should I include a disclaimer page?

How do I communicate departures from the applicable basis of accounting?

Can I add supplementary information?

Can AR-C 70 be used in reference to prescribed forms?

Today we answer your most pressing questions about using the SSARS 21 preparation standard.

A List of Online Resources for CPAs

Looking for answers to common questions asked by CPAs?

Here’s a list of online resources that I commonly use:

 

Picture courtesy of DollarPhotoClub.com

Picture courtesy of DollarPhotoClub.com

Your Online References

What other online resources do you use as a CPA? Leave a comment.

Why Confirming the Receipt of a Message is Important

Do you ever send a message and not receive one back (though you expected one)? How does it make you feel? Conversely, do you sometimes receive a message acknowledging the receipt of your communication. Feel any different?

Picture courtesy of DollarPhotoClub.com

Picture courtesy of DollarPhotoClub.com

Appropriately responding to messages does two things:

  1. Reduces confusion
  2. Demonstrates respect

Sometimes we don’t acknowledge the receipt of a message because the sender did not request a response. Even without the request, it is a good practice to let the sender know you received the communication, and, if necessary, that you know what to do. Even a short text or email that says, “received your message,” is helpful.

What if you are copied on an email asking that a task be performed? Should you contact the main addressee? To avoid confusion, it is often  wise to contact the other person that received the email to clarify who is going to perform the task. Then let the original sender know who is performing the task and when it will be completed.

Independence and Nonattest Services

Maintaining independence while providing nonattest services

The AICPA Code of Conduct requires that clients accept responsibility for nonattest services if attest services are also provided. Why? If the client has no one to assume responsibility (for the nonattest work), then the auditor may be performing management responsibilities and may possibly impair his independence.

The client should appoint someone with appropriate skill, knowledge, and experience (sometimes referred to as SKE) to oversee nonattest services provided by the public accounting firm. The CPA firm should document their consideration of independence — usually done in the enagagement letter. Document the nonattest services to be provided and the client personnel that will oversee the work.

AICPA independence

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How to Create Energy that Sustains You

Gaining strength during stressful times

So you are in the middle of your busy season and you are wondering how you will get it all done. Right?

One thing is for sure: Without energy, nothing happens. As Jim Loehr and Tony Swartz say in The Power of Full Engagement: Energy, not time, is the fundamental currency of high performance.

Picture is courtesy of DollarPhotoClub.com

Picture is courtesy of DollarPhotoClub.com

I started my career in 1984. It was a time when CPA firm partners would demand that you put your head down and never look up (and if you did, you might get whacked). The thought was that young staff were inexhaustible. After all, we had our youth.

But after being in public accounting for over thirty years, I have found that such an outlook is not only unwise, it is counterproductive. Sometimes in squeezing out “one more job,” we implode.

So should we work hard? Absolutely. But we should also recover if we are to perform at our highest levels.

When Do You Need Recovery?

Here are a few signs that you worked too long, and you need recovery:

  • You stare at a financial statement page for several minutes before you realize you are in a daze (not reading, just staring)
  • You can’t stay focused (your mind keeps wondering)
  • You are working with a sense of dread rather than joy
  • You are too stressed to sleep at night
  • You find yourself increasingly rude to your spouse, friends, coworkers
  • You reach for too much caffeine, or worse, alcohol, to get you through the day
  • You feel like a robot
  • You are often short of breath
  • You have a sense of drowning

The body needs balance, and when it doesn’t get it, strange things start to happen. And when this work style–working without recovery–becomes habitual, we lose our vitality and health. Our production begins to decline rather than increase.

How Do You Recover?

Picture is courtesy of DollarPhoto.com

Picture is courtesy of DollarPhoto.com

Here are disciplines that will enable you to excel during your busy season.

  1. Take breaks – Working ten to twelve hours a day (and eating at your desk)–without breaks–is a sure way to deplete yourself. You need to work and recover, work and recover, work and recover — not work, work, work. The recovery can be as simple as taking five minutes to stand and stretch, but you need to move periodically away from your desk. If possible, go outside and walk for five to ten minutes (a couple of times a day). Recovery can be a simple phone call to a family member to tell her (or him) that you love them. Some professionals use the Pomodoro technique to move in and out of their work. There’s even an app for that. It may seem counterproductive to take breaks, but it’s not — as long as we don’t abuse the break time. Remember the purpose of the short break is to recover. For those of you that are runners, you know that Jeff Galloway teaches the same art in running: run and mix in walks (recovery). And many who use Jeff’s technique have found they can run farther and faster.
  2. Exercising – Run, walk, or do some exercise on a consistent basis. I was a smoker in college and–as a way to help me kick the habit–I started running. That was thirty-seven years ago. Today I am fifty-seven, and I still either run or walk at least three times a week. I find that running helps me the most. When I consistently run, I think more clearly and don’t drag late in the day. When I don’t run, I notice my thinking becomes cloudy, and I become moody. When I’m on my routine (run three times a week, at least, two miles a run), I even notice that I have bursts of energy in the middle of the afternoon, something that never happens when I am not exercising.
  3. Drink water – Staying hydrated throughout the day will keep you humming late in the day. I have put a water dispenser in my office, so I don’t have to worry about going to the store to buy bottled water. The cost of the water container (and water that they bring to my office) is about $25 per month — worth every penny.
  4. Sleep – I have read a great deal about how much sleep I need each night. And it seems the consensus is a minimum of 7.5 to 8.0 hours per night. I know this: when I get consistent sleep, I perform better. I have a routine each evening of winding things down about 9:30 and being in bed about 10:00 p.m. so I can rise at 6:00 a.m. (so I can write blog posts like this one). Going back to exercising for a moment, if you work your body hard, you will sleep better. I have noticed the farther I run, the harder I sleep that night. Also, if I am in bed for more than fifteen to twenty minutes without going to sleep, I get up and take melatonin — this helps me fall asleep.
  5. Eating well – Another method of recovery is eating. Not too much, but enough to provide energy. I eat a healthy breakfast each morning, a light lunch, and dinner. Then about mid-morning and mid-afternoon, I snack (usually nuts or fruit). If you’ve ever watched Tiger Woods play golf, you’ve seen him munching on a banana or energy bar during the middle of a round — he’s feeding his body to maintain energy. Eating too much at one time will throw your body’s metabolism out of balance, so a steady intake (balance) is what we need.
  6. Coffee – Coffee in moderation can stimulate your thinking and mood, at least, it does for me. I drink a cup first thing in the morning (I turn my coffee maker on as I’m waiting on my computer to boot). Then I have another cup just after lunch. Too much coffee will drain you of energy. Rather than reaching for another cup, take a short walk, drink more water.
  7. Music – If possible listen to good music while you work. I find that I am more productive with music playing quietly in the background.

Call to Action

Try one or all of these and stay at it. Habit is the key. You may find in the initial days of change that you’ll desire to revert to your old habits, but as you continue, the new way of working will become normal. Then you’ll find new energy for the tasks at hand. Have a great day.

Getting Someone to Give You a Estimate

Have you ever asked a client for an estimate–as in a ballpark number–and he responds, “I have no idea,” but you suspect that he does at least have some idea.

Picture is courtesy of DollarPhotoClub.com

Picture is courtesy of DollarPhotoClub.com

For instance, you’re talking with the revenue director of a December year-end client and you need an estimate of April revenues. So you ask, “What do you think your April sales were?” and your client says, “Oh the revenue numbers change so much, I don’t know.” You are in a hurry, so you don’t have time for the director to look the number up.

What can you do?

Try this: Throw a number out there (or a range of numbers).

For example: “Do you think the April revenues were more than $150,000?”

Most of the time, a question of this nature will elicit a response. Now the client is likely to respond with something like, “No, it was less than that.” My next question is, “so maybe around $125,000 to $135,000?” The client’s response might be, “well yes, that’s probably in the neighborhood.”

Now you have your number.

It may not be a perfect estimate, but at least you have some idea–and that’s all you wanted.