Audit and Reporting Standards

Dennis Gardiner, CPA, Managing Partner

Our audit staff have been busy addressing many of the new standards that are now effective, or will be soon.  The big reporting standard has been FASB ASC 842 Lease Accounting.  You should all be aware by now of the requirement that leases longer than 12 months be recorded as assets and liabilities on your balance sheet.  This became effective for December 2022 audits and later.  Reach out to us if you are still looking for a solution to your lease accounting needs.

Another significant one is FASB ASC 326 Financial Instruments-Credit Losses.  The new accounting standard introducing the current expected credit loss, or CECL, methodology for estimating allowances for credit losses. CECL becomes effective for federally insured credit unions for financial reporting years beginning after December 15, 2022. 

The new audit standards (SAS 142 – 149) we are addressing relate to:

• appropriate audit evidence being obtained
• estimates and related disclosures, estimation uncertainty and potential management bias
• management using the work of a specialist in developing accounting estimates, and evaluating their work specialist
• risks of material misstatement, in particular the areas of understanding the entity’s system of internal control and assessing control risk
• responsibilities of the engagement partner 
• the auditor’s inquiries of a predecessor auditor about matters that will assist the auditor in determining whether to accept the engagement
• compliance audits
• group audits (when you have joint ventures, subsidiaries)

These will impact your upcoming and future audits.  Like yours, there is never a dull moment in our business.  We are constantly learning new rules, regulations, and ways to do our audit and tax services.