the impact of the financial crisis on accounting & other professions
DESCRIPTION
The Impact of the Financial Crisis on Accounting & Other Professions. The Round-Up…. MODERATOR: John Iannotti, Esq ., Vice President, Everest Reinsurance Company PANELISTS: Debra A. Cutler, CPA, CFF, CFE , Shareholder, Debra A. Cutler CPA, P.C. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/1.jpg)
2010 PLUS International Conference
The Impact of the Financial Crisis on Accounting
& Other Professions
![Page 2: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/2.jpg)
2010 PLUS International Conference
The Round-Up…
MODERATOR:• John Iannotti, Esq., Vice President, Everest Reinsurance
Company
PANELISTS:• Debra A. Cutler, CPA, CFF, CFE, Shareholder, Debra
A. Cutler CPA, P.C.
• Mary Pat Joyce, Esq., RPLU, ASLI, Managing Director, Markel Corporation
• Jay Moroney, Esq., President, Lemme Insurance Group, Inc.
• H. Steven Vogel, Esq., Partner, Wilson Elser Moskowitz Edelman & Dicker LLP
![Page 3: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/3.jpg)
2010 PLUS International Conference
Before and After
September 2008
September 2010 Results
Congress Republican Democrat Tea Party
DJIA 11,516 10,600 Rigged game?
Gold $871 an ounce$1,276 an
ounceHard Assets in
favor
Prime Rate 5.00% 3.25% Refinance?
CD Rates2.94%
one year CD1.23%
one year CD Bond Bubble?
![Page 4: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/4.jpg)
2010 PLUS International Conference
Before and After (cont’d)
September 2008
September 2010
Poverty Line 13.2% or 39M 14.3% or 45MPoverty
threshold: family of four $21,756
Unemployment 6.2% 9.6% Foreclosures
Avg. Home Sale Price $290,300 $235,300
Decline in net worth
Bank Failures 30 in 2008 140 in 2009Balance sheet
issues
![Page 5: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/5.jpg)
2010 PLUS International Conference
Legislation Post-Crisis
Legislation Purpose Cost2008 Stimulus Act Tax rebates, incentives to
stimulate investment$152B
TARP Stabilize system with cash infusions, purchase of distressed debt
$700B
Housing Recovery Act Insure $300B in mortgages; loans to those facing foreclosure
$800B
Housing Tax Act of 2008 Tax credit for home purchases
American Recovery Act 2009 Stimulate job creation $787B
![Page 6: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/6.jpg)
2010 PLUS International Conference
Legislation Post-Crisis (cont’d)
Legislation Purpose Cost
American Recovery Act 2009 Stimulate job creation $787B
Helping Families Save Homes Act 2009
Help avoid foreclosure
Cash for Clunkers 2009 Incentives to buy new cars through rebates
$2.877B
Unemployment Compensation Act 2009
Extra 13 weeks unemployment
Restore Employment Act 2010
Tax incentives to hire
Health Care Act of 2010 Affordable Health Care $562B
Dodd Frank Reform Bill 2010 Financial Regulatory Reform $5B
TOTAL COST A lot of money
![Page 7: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/7.jpg)
2010 PLUS International Conference
Lawyers Post Crisis
• Sub-Prime Victims
• Ponzi Scheme Victims
![Page 8: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/8.jpg)
2010 PLUS International Conference
Real Estate Professional Post Crisis
• Depressed Housing Market
• Increasing number of bank-owned properties (REOs), short sales and auctions
• Mortgage Fraud on the rise
![Page 9: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/9.jpg)
2010 PLUS International Conference
Who is at Risk??
• Real Estate Agents - Dabbling in REOs, short sales and auctions; cutting back on insurance coverage; engaging in ancillary services
• Real Estate Appraisers & Mortgage Brokers - Claims for overvaluation, misrepresentation and fraud
• Title Agents/Abstractors - Overturned foreclosures, clouded title and missed liens
• Notaries/Closers-Fraud and Robo-signing backlash
![Page 10: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/10.jpg)
2010 PLUS International Conference
Accountants Post-crisis
• Madoff Victims
• Petters Victims
• Rothstein
• Dreier
• Stanford
![Page 11: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/11.jpg)
2010 PLUS International Conference
• Auditors or Professional Advisors of Madoff, et al Investor Stand a Good Chance of Becoming a Defendant
• Auditors for the numerous feeder funds that invested all or a portion of their investors’ monies with Madoff. Likely to face lawsuits from their fund clients and their clients’ investors
• CPAs and Lawyers that served as Trustees and Personal Representatives of estates and foundations that invested with Madoff
Who Is At Risk??
![Page 12: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/12.jpg)
2010 PLUS International Conference
Financial Reporting & Auditing Post Crisis
• FASB 168 “Accounting Standards Codification” Effective for financial statements issued for
interim and annual periods ending afterSeptember 15, 2009
• Changes in State Regulations
• Risk Assessment –Economic Conditions Auditing in High Risk Environments
![Page 13: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/13.jpg)
2010 PLUS International Conference
Auditor’s Reports• Scope limitations
Inability of obtain sufficient appropriate audit evidence
• Emphasis of a Matter Not required but may reduce liability exposure
• Going Concern Qualifications Business bankruptcy filings are on the rise 8%
increase for 12 month period ending June 30, 20101
1www.uscourts.gov/bankruptcystatistics
Financial Reporting & Auditing Post Crisis
![Page 14: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/14.jpg)
2010 PLUS International Conference
1The effective date for periods ending on or after Dec. 15, 2010. Early application is prohibited, with one exception.
Financial Reporting & Auditing Post Crisis
1. Engagement Letters – All SSARS engagements Requirement – written communication regarding the
services to be performed
2. Materiality – Review engagements A discussion of materiality
3. Lack of independence – Compilation engagement May include a description in the accountant’s compilation
report
SSARS 19 Compilation and Review Engagements1
![Page 15: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/15.jpg)
2010 PLUS International Conference
1The effective date for periods ending on or after Dec. 15, 2010. Early application is prohibited, with one exception.
Financial Reporting & Auditing Post Crisis
4. Review Evidence Introduction of new term
5. Enhanced documentation requirements for compilation and review engagements
SSARS 19 Compilation and Review Engagements1
![Page 16: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/16.jpg)
2010 PLUS International Conference
Dodd Frank Reform and Effect on CPAs
• Act adopted in response to Economic Crisis • Intended to create financial stability• Better protect consumers• Compliance of Client’s• Amendments to SOX-Exemption of 404(b)• Exempt from Consumer Financial Protection
Bureau (except ancillary services) • PCAOB creation of a program through which
it can monitor auditors of nonpublic broker-dealers
![Page 17: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/17.jpg)
2010 PLUS International Conference
Impact of Bank Failures on Accountants
• Large number of potential claims submitted by Accountants who provided services to failed community banks
• What should underwriters look for in this new claim environment?
![Page 18: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/18.jpg)
2010 PLUS International Conference
Other Updates Affecting CPAs
• International Financial Reporting Standards (IFRS)• IRS- Disclosure of Uncertain Tax Positions (UTPs)
For the 2010 tax year, the disclosure on Schedule UTP will be applicable for taxpayers where the company or a related party issued audited financial statements meeting certain criteria
• IRS Preparer Registration (PTIN Regulations)• Private Company Financial Reporting -Blue Ribbon Panel
Recommendations- October 2010 new model of GAAP- exceptions for private
companies new standard-setting board; people with private
company experience should set those standards
![Page 19: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/19.jpg)
2010 PLUS International Conference
Final Thoughts
![Page 20: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/20.jpg)
2010 PLUS International Conference
Questions&
Answers
![Page 21: The Impact of the Financial Crisis on Accounting & Other Professions](https://reader035.vdocuments.mx/reader035/viewer/2022062800/5681417c550346895dad6bdc/html5/thumbnails/21.jpg)
2010 PLUS International Conference
Many Thanks To…
• John Iannotti
• Debra A. Cutler
• Mary Pat Joyce
• Jay Moroney
• H. Steven Vogel