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CAQ Snapshot: May 2018

Thursday, May 24, 2018

New Course Added to Anti-Fraud Collaboration’s Self-Study Program 

Building on its successful 2017 webcast—“What Is Your Role? When Accounting Policy Meets ICFR”—the Anti-Fraud Collaboration has added a new course to its online self-study program for corporate ethics training. Housed on the learning platform of the American Institute of CPAs (AICPA), the course can be taken free of charge and with the potential of earning two continuing professional education (CPE) credits. 

The new course explores steps that companies can take to fashion effective policies related to accounting and internal control over financial reporting (ICFR), both of which are key for stemming fraud and reducing the number of financial restatements. Like its companion courses in the self-study program, this offering is suitable for accountants, financial executives, directors, external and internal auditors, and other members of the financial reporting supply chain.

The Center for Audit Quality (CAQ) is a founding member—along with Financial Executives International (FEI), the National Association of Corporate Directors (NACD), and The Institute of Internal Auditors (IIA)—of the Anti-Fraud Collaboration. Since 2010, the collaboration has promoted the deterrence and detection of financial reporting fraud through the development of thought leadership, awareness programs, educational opportunities, and related resources.

New SEC Infographics Illustrate the Structure of Financial Reporting 

To enhance investor understanding of America’s system of financial reporting, the Office of the Chief Accountant at the US Securities and Exchange Commission (SEC) has released a new set of infographics. One is a blueprint, offered in both complex and simplified versions, illustrating how key players interconnect in the financial reporting process. A segment chart depicts the variations in financial reporting requirements in three different market segments: domestic issuers, foreign private issuers, and private companies. For further explanation of these new resources, see the SEC’s explanatory video, which features SEC Chief Accountant Wesley Bricker.

Two CAQ-Supported Research Projects Published in Academic Journals

Since 2009, the CAQ’s Research Advisory Board (RAB) has awarded 35 grants for independent academic research projects. Many of these RAB-supported projects have been accepted for publication in top academic journals, including two papers this spring.

The first paper, “Coordination and Communication Challenges in Global Group Audits,” is the work of Denise Hanes Downey, Assistant Professor in the Department of Accounting at Villanova University, and Jean C. Bedard, the Timothy B. Harbert Professor of Accountancy at Bentley University. Downey and Bedard’s research can be found in Auditing: A Journal of Practice & Theory.

The second paper, “Grounding the Professional Skepticism Construct in Mindset and Attitude Theory: A Way Forward,” was authored by Christine J. Nolder, Assistant Professor of Accounting at Suffolk University, and Kathryn Kadous, the Schaefer Chaired Professor of Accounting and the Director and Associate Dean of the PhD program at Emory University’s Goizueta Business School. Their paper appears in Accounting, Organizations and Society.

CAQ Highlights Endurance of Capital Markets and Auditing

Integral to the endurance of US capital markets is “embracing change and continuous improvement,” wrote CAQ Executive Director Cindy Fornelli in a May 2018 LinkedIn Influencercommentary. Fornelli quoted Harvey J. Goldschmid, a former commissioner at the US Securities and Exchange Commission and CAQ Governing Board member, who observed that “the great strength of the US system has been its ability to reform and heal itself.” Fornelli cited key chapters in US market endurance, including the establishment of foundational securities laws in the 1930s and the landmark passage of the Sarbanes-Oxley Act of 2002.

Fornelli’s LinkedIn post was part of the CAQ’s monthlong focus in May 2018 on the theme of “endurance” and how the public company auditing profession supports the lasting strength of US markets and investor confidence. The CAQ’s theme for June will be “global citizenship.” Follow along and join the conversation on social media using #BuildingaBedrock.

Fornelli: “Talk to Your Auditors about Cybersecurity”

Communication about cybersecurity is critical between and among boards of directors, company management, external auditors, and internal auditors, said CAQ Executive Director Cindy Fornelli in a post for the NACD Board Leaders’ Blog. Drawing from the CAQ’s April 2018 tool, Cybersecurity Risk Management Oversight: A Tool for Board Members, Fornelli called attention to two key areas that corporate directors can and should discuss with external auditors: (1) how the financial statement auditor considers cybersecurity risk, and (2) how CPA firms can assist boards in cyber risk oversight. 

Regarding the latter, Fornelli pointed to the AICPA’s cybersecurity risk management reporting framework. The voluntary framework, she noted, “enables CPAs to examine and report on management-prepared cybersecurity information, thereby boosting the confidence that stakeholders place on a company’s initiatives.”

Want to Educate the Next Generation of Auditors? 

Check Out the ADS Program

Administered by the AICPA Foundation, the Accounting Doctoral Scholars (ADS) Program has since 2008 addressed the growing demand for qualified accounting faculty by helping CPAs with audit and tax experience transition into academia and the classroom. The ADS Program is now accepting applications until September 8. Chosen scholars will receive up to $40,000 in addition to university-supported funding. Learn more andapply to become an ADS scholar here.

Join the CAQ at These Upcoming Events 

Webinar: Putting Cyber Risk in Context
June 6; Online

This free June 6 webinar will explore the roles of finance, legal, audit, security, and risk management in solving the cyber risk communication gap. Joel White, Senior Director of Internal Audit, Risk, & Compliance at AICPA, will join a panel of experts to break down the best cyber risk metrics to facilitate executive-level discussions and debate which stakeholders should have a seat at the table. Register now.

International Corporate Governance Network (ICGN) Annual Conference
June 25–28; Milan, Italy

We look forward to seeing our international investor and governance colleagues at ICGN’s Annual Conference. At 3:30 p.m. on June 26, the CAQ’s Cindy Fornelli will moderate a discussion, “Fiduciary Duty in Challenging Times,” with Adrienne Monley, Head of European Stewardship at Vanguard; Alison Schneider, Director of Responsible Investment at AIMCo; Cornelia Ritz Bossicard, Director at Valora Holding AG and Ferguson Finance; and Marina Brogi, Director at Salini Impregilo and Banco Desio e della Brianza.

Future of Corporate Reporting
July 10; New York, New York

Join us at the Future of Corporate Reporting conference, where the topic is driving brand value and attracting investors. The CAQ’s Catherine Ide, Managing Director of Professional Practice and Member Services, will moderate the session “Cybersecurity Reporting: A Collaborative Approach to Cybersecurity Risk Management Disclosure” at 12:10 p.m.

Webcast: Non-GAAP Measures—What Do They Say about Fraud Risk?
July 18; Online 

At this free Anti-Fraud Collaboration webcast in July, an expert panel will share actionable recommendations that organizations can implement to deter fraud and misconduct. Moderated by the CAQ’s Cindy Fornelli, the webcast will feature Phil Billington, VP-Internal Audit at HCA; Heather Dixon, VP, Controller and Chief Accounting Officer of AETNA; Keith Higgins, Chair of the Securities and Governance Practice at Ropes & Gray LLP and former Director of the Division of Corporate Finance at the SEC; and Serena Wolfe, Partner, Global Real Estate, Hospitality, and Construction Assurance Leader at EY. The webcast offers the chance to earn 1.5 CPE credits.