Ask any accountant this year what your business should know, what new standards and rules are in place that will likely affect how you file and adapt to financial regulations, and Tristate accountants come back with anumber of observations:

“No company will be exempted from having internal controls,” notes Bob Taylor, managing partner at Grant Thornton LLP. “But what’s going on in the profession is the profession is trying to go more from being completely rules based to being more prescriptive about every business situation.”

Look for more “customized” audit processes that stress that the accounting team must develop a detailed knowledge of any given business’ missions and strategies. You can expect that the days of cookie-cutter audit procedures and, ugh, checklists are over.
 
A WORD ABOUT OUTSOURCING

Suffice it to say that the use of e-commerce, especially when it comes to the outsourcing of corporate operations to overseas, has drastically altered the way that companies operate - as well as the risks they face.

Two words, most importantly, come into play: “Auditor evidence.” In short, accountants are under new pressures to understand internal processes in the same way they were once expected to doublecheck an account balance, prepare financial statements or put the stamp of authority on the status of inventory.

Let’s put this in English. It’s quite possible, given these new scenarios, that auditors may suggest to you, the CEO, that the status quo that has existed for years may just not cut it anymore.
 
SUITE LOGIC

Richard L. Berge, audit partner at BKD, LLP, refers to the “Risk Assessment Suite”: That is, to say, the Statements on Auditing Standards Nos. 104-111.

“The Risk Assessment Suite represents a significant strengthening of auditing standards designed to improve the quality and effectiveness of audits,” observes Berge. “The Suite’s primary objective is to enhance the auditor’s ability to identify and respond to risks of material mis-statement present in a specific audit in a particular period.”

What’s a material mis-statement, you might inquire? “One that is material if it is probable that the judgment of reasonable person relying on financial statements would be changed or influenced by an omission or mis-statement of accounting information in the statements and related disclosures.” Material mis-statements, in short, are caused by error or fraud.

No, management of any given firm is not given a free pass on their responsibility to detect fraud and error. But now, accountants have new tests to pass.

Fair market value comes into play, as well. New measurements define fair value as a market-based measurement, says Tim Downard of Grant Thornton LLP.

“This requires expanded disclosures about fair value measurements.”
 
WHAT ABOUT FEES?

Will such new responsibilities and workloads for auditors be passed on to clients in the way of fees. Well, now, what do you think? “Audit fees will increase,” says Berge simply. Auditors are being required to gain more intimate knowledge of companies and their structures, and facing increasing potential challenges if they fail to identify risk. This said, there is good news for your firm: An auditor who is on a mission to identify the truth is probably a better ally for you, the chief executive, than an auditor who shrugs his shoulders and issues a rubber stamp.
 
CONSIDER ESTATE PLANNING

Just like Uncle Joe once worried about estate planning and the condition of his will, CEOs can ponder the intricacies of passing their companies on to the next generation - or balance out the various benefits of leaving their firms to charity.

While 80 percent of John Q. Public considers “wills” the way of passing on the money gained in a lifetime, Marc C. Littlecott - director of planned giving for The Salvation Army - points to the unique areas of gift taxes and estate planning in the business sense. “It’s a very undeveloped area,” say Littlecott of the intricate, and customized, plans that can be formulated.

Littlecott suggests a sit-down with a certified planner such as himself to develop a logical business plan.