Presentation on theme: "2010 PLUS International Conference The Impact of the Financial Crisis on Accounting & Other Professions."— Presentation transcript:
2010 PLUS International Conference The Impact of the Financial Crisis on Accounting & Other Professions
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
2010 PLUS International Conference Before and After September 2008 September 2010 Results CongressRepublicanDemocratTea Party DJIA11,51610,600Rigged game? Gold$871 an ounce $1,276 an ounce Hard Assets in favor Prime Rate5.00%3.25%Refinance? CD Rates 2.94% one year CD 1.23% one year CD Bond Bubble?
2010 PLUS International Conference Before and After (cont’d) September 2008 September 2010 Poverty Line13.2% or 39M14.3% or 45M Poverty threshold: family of four $21,756 Unemployment6.2%9.6%Foreclosures Avg. Home Sale Price $290,300$235,300 Decline in net worth Bank Failures30 in 2008140 in 2009 Balance sheet issues
2010 PLUS International Conference Legislation Post-Crisis LegislationPurposeCost 2008 Stimulus ActTax rebates, incentives to stimulate investment $152B TARPStabilize system with cash infusions, purchase of distressed debt $700B Housing Recovery ActInsure $300B in mortgages; loans to those facing foreclosure $800B Housing Tax Act of 2008Tax credit for home purchases American Recovery Act 2009Stimulate job creation$787B
2010 PLUS International Conference Legislation Post-Crisis (cont’d) LegislationPurposeCost American Recovery Act 2009Stimulate job creation$787B Helping Families Save Homes Act 2009 Help avoid foreclosure Cash for Clunkers 2009Incentives 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 2010Affordable Health Care$562B Dodd Frank Reform Bill 2010Financial Regulatory Reform$5B TOTAL COSTA lot of money
2010 PLUS International Conference Lawyers Post Crisis Sub-Prime Victims Ponzi Scheme Victims
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
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
2010 PLUS International Conference Accountants Post-crisis Madoff Victims Petters Victims Rothstein Dreier Stanford
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??
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 after September 15, 2009 Changes in State Regulations Risk Assessment –Economic Conditions Auditing in High Risk Environments
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, 2010 1 1 www.uscourts.gov/bankruptcystatistics Financial Reporting & Auditing Post Crisis
2010 PLUS International Conference 1 The 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 Engagements 1
2010 PLUS International Conference 1 The 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 Engagements 1
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
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?
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
2010 PLUS International Conference Final Thoughts
2010 PLUS International Conference Questions & Answers
2010 PLUS International Conference Many Thanks To… John Iannotti Debra A. Cutler Mary Pat Joyce Jay Moroney H. Steven Vogel