The author of a new book on the Financial Accounting Standards Boards recently released GAAP Codification said CPA firms could be exposed to litigation risks unless they deploy the new codification rapidly.
This is a sleeper issue that may not become fully apparent to some accounting firms until they are deep into their busy audit season in the first quarter of 2010, said Dr. Barry Jay Epstein, CPA, lead author of the recently released accounting book, Wiley GAAP Codification Enhanced. Now is the best time to update audit files so that firms are ASC-compliant, which will obviate criticisms in routine peer reviews and possibly also in future adversary proceedings.
Epstein, a consulting and litigation partner with the Chicago-based accounting firm Russell Novak & Co. LLP, recommended that accounting firms take the following five steps now to conform to the Accounting Standards Codification:
1. Assign a partner or other senior-level CPA within the firm to oversee ASC adoption;
2. Train all accountants and support staff in the use of the restructured professional literature;
3. Implement a thorough review of all files to identify references, such as technical memoranda supporting audit positions taken, that require updates;
4. Determine appropriate treatment for compliance with FASB Statement No. 168, which implemented the ASC; and,
5. Document the actions taken by the firm.
Accounting for leases under FASB Statement 13, which has been in place since November 1976, is just one example of a widely used accounting standard. Effective for interim and annual periods ending after Sept. 15, 2009, this and thousands of other U.S. GAAP pronouncements are now reorganized into a single source organized by topic and subject.
Accounting firms that are slow to adopt these new standards face a loss of credibility and may be subject to future charges of accountant malpractice.
For more information about Epsteins book, Wiley GAAP Codification Enhanced, visit http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470498285.html.
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