The Pandemic appears to be ending… now what? – Dennis Gardiner, Managing Partner, CPA
We’ve all been affected by COVID-19, either personally or in our businesses, and it was a long year for us all to endure. COVID-19 has had a significant impact on many areas affecting our business, both what we do, and how we do it. Some of these impacts are merely deferrals, others are perhaps a permanent change. Let’s start by looking at our audits, the reporting and auditing standards.
GAAP
COVID-19 caused the Financial Accounting Standards Board (FASB) to delay the effective date of Topic 842 Leases for private companies and private not-for-profit entities to fiscal years beginning after December 15, 2021. This means it will be first effective for December 31, 2022 closes. We will be continuing the discussions and preparation with you over the next year. A few other accounting standards will become effective for December 31, 2022 closes, few, if any of our clients will need to worry about these.
+ ASU 2020-01-Clarifying the Interactions Between Topics related to Investments and Derivatives and Hedging
+ ASU 2019-12-Income Taxes (Topic 740)
GAAS
COVID-19 caused the AICPA’s Auditing Standards Board to defer the effective dates of several standards that were to be in place for December 31, 2020 audits to December 31, 2021. A suite of the standards, SAS Nos. 134 – 140 were included in this deferral. These standards have been grouped to be implemented together, primarily to accommodate the amendments to the auditor reporting model (opinion). You will begin to see the effect of these in our engagement letters issued for December 31, 2021 audits, and later periods.
Additional standards issued are not effective until future audits, including the following:
+ SAS 142 Audit Evidence – effective December 31, 2022
+ SAS 143 Auditing Accounting Estimates and Related Disclosures – effective December 31, 2023
+ SAS 144 Use of Specialists and External Information Sources
Hybrid work environment
Our firm will be continuing to offer a hybrid work environment for our staff. What that looks like is not fully vetted at this point. For now, in slower times, our staff may choose to work wherever, with expectations to work from the office 1-2 days a week. Our busy audit and tax times will dictate necessary changes to this flexibility. And, of course, our client’s comfort-level, or ability, to have your audits done remotely will drive how much time we spend onsite. We anticipate spending considerably more time onsite this year than last year, but intend to leverage ours, and your investments in technology to cut down how much. We will visit with you individually to ensure efficient and effective audits are conducted, surpassing everyone’s expectations.
Other topics to bring to your attention:
Cybersecurity – We went through a very extensive cybersecurity audit of all our systems, and our providers systems. We were pleased with what we learned and are working on addressing the few concerns raised. We have partnered with a third party to bring this service to our clients as well. Expect a webinar in the next few weeks introducing that firm and the cybersecurity audit process. We encourage all of our clients to take a serious look into their systems and vulnerability, including training of staff. Reach out to Ryan Taylor to learn more: [email protected].
Artificial Intelligence (AI) – We are in the beginning phases of the use of artificial intelligence in our audit process and we plan on using AI in many of your audits this coming season. To get the best information, we will be asking for prior years, along with your current year files to process, which we will use for risk assessment and analytical procedures. We are excited to introduce this to more audits and will visit with you as it is used.
Peer Group Comparisons – For many years, we had a tremendous database of information that allowed us to make peer group comparisons, but we sadly didn’t keep it up to date. However, we have recently been working on pulling this database out of the moth balls to begin rebuilding it. We have always been able to put together useful comparisons when our clients have reached out–particularly with the number of similar companies we work with across the seven Midwest states. But this will be a re-fashioned product, with useful ratios and percentages to allow for more relevant comparisons. I envision this being a report included with your final audit-related letters.
Team Members - Lastly, I want to acknowledge our team members. As noted later in this newsletter, Ryan Taylor joins those of us with over twenty years with the firm. That brings the number to nine, with two more attaining this in the next year–not bad for a firm of 40 individuals. I am proud to work with such a dedicated group. Even better, we have a great staff that enjoy working with us, and our clients, who are our next generation of leaders. We have had very little turnover and are proud to be able to have this group providing services to our clients.