Monthly Archives: June 2012

Can I audit Kevin Bacon?

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At the A&A conference last week a speaker suggested that we use the ‘six degrees’ model for a guide to independence. She suggested at least 3 degrees were required.

I agree. Under current independence guidelines we can audit the company where our brother-in-law is the CEO.  Under the ethics guidance, we cannot audit any company were an immediate family member is a part of management.  Our sister would be immediate family, but our brother-in-law would not.

Now, if our brother-in-law also owned shares and they lived in a community property state, then we would be out…….

I think most of us agree that we should not consider ourselves independent of a company controlled by our in-law. Remember we must be independent in appearance as well as fact.

Sister would be one degree, brother-in-law two….I agree with three idea.

 

 

 

AICPA SME effort – too many cooks?

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The Financial Accounting Foundation (FAF) is the parent organization for the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). In recent years FASB has occupied itself with the modification of U.S. generally accepted accounting principles (GAAP), more closely aligning them with International Financial Reporting Standards (IFRS). IFRS rules are set by an “international” standards setting body based in Brussels, the aptly named International Accounting Standards Board (IASB). To be fair, the IASB has been working to harmonize their standards with U.S. GAAP as well.

The convergence of U.S. GAAP and IFRS is believed by many as a worthy pursuit leading to the development of a single set of global standards. I won’t spend a lot of time on this, but the idea is more a lofty ideal than a practical goal. IFRS proponents often use as support for their system claims that the rest of world has adopted these “international” standards, without mentioning that most countries make modifications to assuage local special interests as they adopt. Continue reading →