Be aware: New laws are here; Although regulations related to these laws are still in the proposal stage, the laws became effective Jan. 1, 2003. (News & Trends).Documentation Audit documentation must be retained for seven or more years. And all firms, whether hey serve public or private companies, must have written retention and destruction policies for audit documentation. The new law also establishes a rebut-table presumption. Beginning Jan. 1, 2003, you must supply and retain work papers that would allow any reviewer with relevant knowledge and experience (but having no previous experience with the engagement) to understand the audit. If such papers are not in the engagement file and there is a dispute, the burden of proof shifts to the CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. to show .hat the appropriate work was performed. f the papers are not there, it is presumed hat the auditor did not do the work. Auditor Cooling-Off Period An interval of time during which no action of a specific type can be taken by either side in a dispute. An automatic delay in certain jurisdictions, apart from ordinary court delays, between the time when Divorce papers are filed and the divorce hearing takes place. CPAs in a position of significant audit responsibility for an SEC client are prohibited from assuming a responsible position with the client for one year after they performed the client's audit. This law may be superceded by the Sarbanes-Oxley Act See SOX. and prohibits anyone working on the audit from becoming the executive officer, controller, CFO See Chief Financial Officer. , chief accounting officer or the equivalent with the client for one year. Discipline The definition of a "reportable event" has changed. Beginning Jan. 1, 2003, CPAs must report any of the following events to the CBA See Capital Builder Account. within 30 days. These events will be published for public review: * Restatement of a financial statement by the audit client of a CPA; * Civil settlement or arbitration award against a CPA relating to the practice of public accounting of $30,000 or more; * Receipt of a notice to a CPA of the initiation of an SEC investigation; * Any SEC notice to a licensee requesting a "Wells Submission"; * An investigation by the Public Company Accounting Oversight Board The Public Company Accounting Oversight Board (or PCAOB) (sometimes called "Peekaboo") is a private-sector, non-profit corporation created by the Sarbanes-Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. ; and * Any civil judgment alleging dishonesty; fraud; gross negligence An indifference to, and a blatant violation of, a legal duty with respect to the rights of others. Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or ; negligence; breach of fiduciary duty; publication or dissemination of false, fraudulent or materially misleading financial statements; embezzlement embezzlement, wrongful use, for one's own selfish ends, of the property of another when that property has been legally entrusted to one. Such an act was not larceny at common law because larceny was committed only when property was acquired by a "felonious taking," i. ; theft; or misappropriation misappropriation n. the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate, or by any of funds. Also, discipline standards have been lowered from gross negligence to multiple acts of negligence that indicate a lack of competence to practice public accountancy or to operate a bookkeeping practice. Commissions The new law modified the commission statutes for CPAs by prohibit the sale of services or products for a commission to existing audit and review clients and the officers or directors of those clients or client-sponsored retirement plans. However, the officers and directors of small businesses (under $10 million in revenue or under 100 employees) and nonprofits are exempted. School District Audits The law requires mandatory six-year rotation of audit partners in school district audit firms; adherence to GAO Yellow Book standards for school district consulting; state controller quality reviews of those firms that perform school district audits; and that the state controller develop a list of school district audit firms. Non-CPA Ownership The new law requires firms with non-CPA owners give notice to clients that non-CPA owners may participate in providing or performing client services. |
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