AICPA Warns Against Overconfidence, Updates Digital Assets Auditing Guidance

The AICPA has updated last year’s guidance on auditing digital assets.

The new material, contained in Accounting for and Auditing of Digital Assets, is based on professional literature and experience from members of the AICPA Digital Assets Working Group and AICPA staff, and is specific to U.S. generally accepted auditing standards (GAAS). Digital assets are digital records on a distributed ledger that use cryptography for verification and security.

“This non-authoritative guidance goes a long way in helping auditors consider the potential risks unique to the digital assets ecosystem and the skillsets needed to conclude whether to accept or continue an engagement,” says Susan S. Coffey, AICPA executive vice president.

The practice aid provides auditors with information to consider when accepting or continuing audit engagements that involve digital assets. CPA firms should assess:

  • The current industry expertise and understanding of digital assets.
  • Management’s competencies and capabilities to maintain the entity’s books and records and secure its assets.
  • The client’s integrity and commitment to compliance with laws and regulations and its overall business strategy and the role the entity serves or intends to serve within the digital assets ecosystem.

“Overconfidence in the digital assets ecosystem is a real risk,” says Amy Steele, chair of Digital Assets Working Group. Steele is also an audit and assurance partner at Deloitte & Touche. “This Practice Aid is a great step at highlighting some of the unique challenges and considerations for auditors seeking to perform audits in this ecosystem.”

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AICPA Offers Student Hardship Grants

Undergraduate and graduate accounting students who have suffered monetarily due to the COVID-19 pandemic can apply for education grants under a new program introduced by the AICPA. Funded by the AICPA Foundation, the grants provide $2,000 to up to 25 students experiencing extenuating circumstances, such as loss of job or internship, to cover education-related expenses.

To be eligible, students must be enrolled full time in an accredited business and/or accounting program for the 2020-2021 academic school year and have completed at least 30 semester hours (or equivalent) of college coursework, including at least six hours in accounting. Applicants must provide student copies of their college transcripts, a copy of their resume, documentation of their financial hardship and a statement about how the hardship affected their future studies and plans to obtain CPA licensure.

“The coronavirus pandemic has caused financial hardship for many Americans, including college students,” says AICPA Foundation president Ernie Almonte. “We know many students are struggling to cover the cost of their education. The Foundation is committed to supporting these students as they complete their education and enter the profession.”

Scholarship applications will be accepted from July 1 to Aug. 31.

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MPs Take Slow, Safe Approach to Reopening Offices With Dozens of Data Points to Consider

As firm professionals have adjusted – first to the shock of the pandemic and then to working from home – another anxiety-ridden shift is beginning as states slowly allow returning to work.

Firm leaders interviewed by IPA are in no rush to unlock the doors. They are giving staff the option to come back when they are comfortable to do so, while weighing the risks of reopening and consulting guidance from numerous sources: their own HR experts, legal counsel, and state and federal health officials. Some are contacting vendors to conduct temperature checks, hiring sanitation crews and planning for social-distancing safeguards that were unimaginable even a few months ago.

Here are some of their comments:

  • A survey of staff by Miami-based MBAF, an IPA 100 firm, shows close to half are so concerned about their health that they want to continue to work from home at least through the summer. To avoid staff from working too close together when the office reopens, about 40% of the 30,000 square feet will have to remain unoccupied, says MP Tony Argiz.
  • Lou Grassi, MP of New York-based Grassi, says the IPA 100 firm won’t push employees to come back to the office immediately. Staff were invited to return starting June 15, with plans to sanitize offices weekly and implement six-foot distancing and other precautions. Grassi says staff will be encouraged to give feedback. “If there’s something about this that doesn’t make sense, we need to know.”
  • At Atlanta-based Aprio, an IPA 100 firm, Larry Sheftel, vice president of human resources, says the firm has contacted vendors about on-site temperature checks, and he expects far more remote working than pre-pandemic times. He says firm leaders are well aware that many staff will likely feel nervous about coming back. “Things may not really approach normal until the fall.”

Remote work under an extended lockdown has its own stresses and many will welcome their cubicle like an old friend, but even so, employees who walked out the door in March are different people now.

Todd Nordstrom, author, public speaker and coach, writes that some will be fearful of their health; some will be grateful for the care and concern they’ve been shown; some will be raring to move forward; others will be thinking that work isn’t as important as they once believed.

“We must realize that we don’t yet understand the emotional impact this pandemic has created in the hearts and minds of employees. And, we’ll never know unless we ask,” Nordstrom says in Forbes magazine.

Here are some of the considerations, compiled from legal and business publications:

  • Remember that at a bare minimum, follow guidance from the Centers for Disease Control, World Health Organization, Occupational Safety and Health Administration, and state and local governments. Rules are constantly changing and may not be consistent.
  • Create a re-entry task force to write interim policies until the pandemic is over, including disciplinary actions for violations of policies, including frequent hand washing, sanitizing frequently touched surfaces, wearing masks, maintaining social distancing and the like. Even-handed, consistent and thoughtful are the watchwords here. Don’t wing it, the National Law Review
  • Ask employees whether they have been exposed, have a sick person at home, or are experiencing COVID-19 symptoms, such as cough, shortness of breath, chills, muscle pain, sore throat, or loss of taste and smell.
  • Supply paper towels instead of hand dryers because the jets can disperse virus particles, the Harvard Business Review reported. Disable water fountains and ice machines. Close common areas altogether rather than enforce social distancing.
  • Make a plan for notifying employees if they have been in contact (within 6 feet) of a coworker who has tested positive. Attorneys say the infected staffer should not be named; otherwise employers are in violation of federal privacy laws.
  • Think about how to approach concerns from employees about actions of their coworkers who congregate in crowds outside work.
  • Review time-off policies, including sick leave, and revamp business continuity plans to deal with the next crisis.

“It will be a fragile environment, so you want to be really deliberate and consistent in how you approach things,” says Kent Lambert, managing shareholder in the New Orleans office of Baker Donelson, on the legal news website “Try to be responsible and fair and even-handed and put safety first. If you approach things in that way, you’ll be in good shape.

Other resources:

CPA Exam Goes Year-Round

AICPA, NASBA and Prometric announced the launch of year-round testing for the Uniform CPA Examination. Intended to provide greater candidate flexibility and convenience, the new continuous testing model features more than 75 additional testing dates available throughout the year, replacing quarterly testing windows that allowed candidates to sit only during specified dates. Under the continuous testing model, scores will be released on a rolling basis.

“Continuous testing has been a goal for some time, and it comes in direct response to feedback from CPA exam candidates and their desire to test more frequently throughout the year,” says NASBA EVP and COO Colleen Conrad.

The 55 U.S. Boards of Accountancy have endorsed continuous testing model, and CPA exam candidates are encouraged to refer to the NASBA’s Continuous Testing Status Map to track the status of states with continuous testing for updates. Prometric reports that 3,465 test events have already been scheduled between Sept. 11-30, a previous blackout period, signifying increased flexibility and frequency in candidate testing.

Candidates can visit the AICPA CPA Exam Score Release page or follow NASBA on social media for updates and more information about continuous testing.

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AICPA Lauds Latest PPP Proposal

Encouraging Congress to pass legislation that requires the Small Business Administration (SBA) to certify and provide free online access to PPP loan forgiveness calculators, the AICPA announced its support for the Calculate PPP Forgiveness Act of 2020.

The Calculate PPP Forgiveness Act states that the SBA, in coordination with the Department of the Treasury, must provide or certify a loan forgiveness calculator that is easily accessible by the public, available online and at no cost. The calculator must allow a lender or recipient of a PPP loan to estimate the amount of that loan’s forgiveness and help the lender or recipient complete an application to request forgiveness for a covered loan.

Based on existing PPP guidance and additional recommendations, the AICPA in May shared its version of a PPP loan forgiveness calculator with the Treasury Department and SBA. The association believes such a tool will help clear up questions surrounding loan forgiveness that have plagued PPP implementation among small businesses.

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AICPA Tax Members Split on Sticking with July 15 Filing Deadline

As the extended July 15 deadline for filing approaches, the AICPA recently reached out to its tax section members to find out whether they think they’ll be ready in a few weeks or whether they believe the IRS should consider delaying the deadline once again. While the majority of the more than 1,000 commenters said they would be ready and able to file returns or extensions for their clients by the July 15 due date, many wanted the IRS to move the due date to October 15 or later.

Among those advocating for a firm July 15 deadline, many expressed concern that clients would simply procrastinate if given more time, with some arguing about the inconvenience of tax returns hanging over their heads for almost the entire year if the date gets postponed again. On the other side of the divide, proponents of another extension said that many of their clients are in bad shape due to the pandemic and a later date would help them meet their obligations, while others noted that clients have been more focused on keeping themselves and their families safe, with things like work and taxes coming in a distant second place.

In the end, citing both the importance of providing certainty for clients in the context of having a target date that needs to be met and the practical concern of federal and state extensions not necessarily lining up, the AICPA’s Tax Executive Committee indicated that it will not advocate for another delay of the deadline at this time.

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The 411 on AI

Given the growing buzz surrounding the potential of artificial intelligence (AI) to disrupt some of the traditional areas of the profession, the AICPA has teamed up with Chartered Professional Accountants of Canada (CPA Canada) to release two new white papers exploring the evolving role of AI in auditing.

The first paper, A CPA’s Introduction to AI: From Algorithms to Deep Learning, What You Need to Know, acts as a foundational resource for auditors seeking information on what AI is, how it works and what it can do. The second, The Data-Driven Audit: How Automation and AI are Changing the Audit and the Role of the Auditor, shows how AI will directly affect assurance engagements by taking over repetitive tasks, improving efficiency and assessing vast pools of data.

“Like all sophisticated technology, artificial intelligence carries great potential,” says Amy Pawlicki, AICPA’s vice president of assurance and advisory innovation. “CPAs are already playing a key role in harnessing and maximizing AI’s benefits in the public interest, and those who are knowledgeable about AI and how to get the most out of it will increasingly be in great demand.”

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AICPA CEO: Helping Businesses Recover Involves Taking Some Risks

Just as health care professionals work on the front lines of the COVID-19 pandemic, CPA firms are the financial first responders, helping their clients recover economically.

More than any other profession, accountants are best positioned to serve as trusted advisors to the 6 million small “Main Street” businesses battered by the economic downturn caused by the COVID-19 shutdowns, says AICPA CEO Barry Melancon.

Melancon, speaking May 20 at the virtual AICPA Spring Council meeting, says accountants will play a critical role in bringing back an economy that in April saw consumer confidence plummet by one of the largest one-month drops ever. GDP dropped 4.8% in the first quarter and more than 40 million are unemployed.

As passionate debates flare on the fairness, or unfairness, of reopening plans, Melancon says, “It’s our job as a profession to not be bogged down by that.” Focus on helping clients take some risks in developing new business models and avoid being “ultra-conservative.” He adds that accounting is a profession that “strives to get it right,” but it’s also a profession that “gravitates to the technical” and can become paralyzed by the details.

“Our real value and our real message going forward is that trusted advisor role,” he says. “I think we will see that the most valuable employees in firms, and the most valuable people in finance, are going to be the ones that can focus at that level.”

He adds, “How well we do that, I believe more than anything else, will drive how well we help the economy to recover.”

Melancon discussed the numerous ways accounting professionals can succeed in an uncertain economic environment. One way is by retaining staff, and he says that in his many discussions with firm leaders, he has seen a passion for maintaining the workforce, keeping commitments to hire in the fall and to continue internship programs, even if they’re virtual.

Keeping talented professionals will be key to helping small business clients, who are being hit disproportionately in this crisis, as are small CPA firms. The reverse was true in the 2008 recession, which heavily impacted large companies and large firms. Firms with diverse client bases will fare better than others, he says.

Business opportunities for firms include helping clients with Payroll Protection Program (PPP) forgiveness, tax deductibility of PPP spending, business valuations, forensics, tax planning, new state regulations and extended tax deadlines. Additionally, firms can consider business continuity (“not a traditional sweet spot”), business transformation, forecasting and scenario planning, supply chain management and workforce planning. Consulting skills will be at a premium.

The “new normal” will certainly be different and will offer opportunities. For example, Melancon says, members of Congress are talking about legislation requiring annual audit of or assurance over of emergency stockpiles.

“We are on the front lines – not just for the next day, not for the next month, but for a series of months into the next year – as to how this economy is going to recover. Never before have our skill sets been more needed, has our attitude been more appreciated and our outcomes more expected than they are today.” – Barry Melancon.

New CPA Website Domains Available Beginning July 1

CPA firms looking to use a new .cpa website domain can begin doing so as of July 1. The AICPA was awarded the top-level designation this month to allow firms to ensure visitors that such a site is confirmed to be affiliated with the CPA profession.

The .cpa extension will be “restricted” meaning that anyone utilizing .cpa will have to be vetted and verified, as opposed to .com extensions that are largely unrestricted. With so many .com domains given out freely, hackers can more easily and anonymously create “lookalike” websites and email addresses with slightly different .com names to lure unsuspecting visitors.

To move to the CPA restricted domain, a firm will transition from using its current .com address to a .cpa address, allowing it to take advantage of future security protocols for top-level domains. In addition, the AICPA will vet and only authorize proven CPA entities, helping firms to avoid “cybersquatters” that reserve the most common .com names to try and sell them at a premium. Firms can continue to hold their .com domain and forward emails/web queries to their new .cpa domain as long as they keep their registration current.

The cost to reserve a .cpa domain is approximately $195, and more information is available at

AICPA Survey Sees Bleak Profit and Sales Outlook Ahead

As the full scope of the economic swath cut by the COVID-19 pandemic begins to emerge, a new survey of CEOs, CFOs, controllers and other CPAs in U.S. companies paints an ugly picture of the road ahead.

Only 20% of respondents in the second-quarter AICPA Economic Outlook Survey expressed optimism about the overall outlook for the U.S. economy over the coming year, down from 61% in the first quarter and now at its lowest level since late 2011. Meanwhile, as companies have cut their profit and sales outlooks in response to pandemic-related impacts, executives now expect revenue to contract by 5% over the next 12 months (down from an anticipated 4.3% growth rate last quarter) and profit to drop by 5.5% (down from an anticipated 3.3% growth rate). In addition, while less than 8% of business executives said their companies had made downward adjustments to their forecasts in light of the pandemic in the first-quarter survey, 81% had done so this time.

Adding to the parade of dire news, the percentage of U.S. executives expressing optimism about their own company’s prospects over the next 12 months fell from 66% to 30%, quarter over quarter, while respondents who said they expect their organizations to expand in the coming year dropped from 64% last quarter to 24%. In terms of top pandemic-specific concerns, respondents cited customer demand/ability to pay, the safety of employees and cash, financing and capital challenges.

“Not surprisingly, this quarter’s survey documents the severe impact the pandemic has had on the outlook for U.S. businesses,” says Ash Noah, AICPA managing director of CGMA learning, education and development. “Moving forward, the reopening or ramping up phases in different states will be critical but the rise of liquidity concerns and the uncertain social and economic environment, including potential second-wave infections and prospects of additional layoffs, continue to present an extremely challenging environment for businesses.”

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