Updates for the 2019 Government Entities Title

Check out the updates and enhancements to the 2019 Government Entities title. It will be available for CCH ProSystem fx Knowledge Coach customers in June 2019.

This title is designed to help auditors efficiently and effectively perform:

  • Financial statement audits
  • When applicable, audits of internal control over financial reporting of governmental entities – in accordance with audit standards generally accepted in the United States of America (U.S. GAAS) and generally accepted government auditing standards (GAGAS)

Standard Updates for Governmental Entities 

The 2019 tools are current with:

  • AICPA Statement on Auditing Standards (SAS) No. 133, Auditor Involvement with Exempt Offering Documents
  • Revised AICPA Code of Professional Conduct (Code)
  • ET Section 1.295, Nonattest Services
  • GASB-90, Majority Equity Interests – an Amendment of GASB Statements No. 14 and No. 61

Notably, the U.S. Government Accountability Office (GAO) recently released the 2018 version of the yellowbook (GAGAS).  This 2018 revision takes effect for audits of financial statements for periods ending on or after June 30, 2020. Also, early implementation is not permitted. Therefore,

  • The 2019 edition of Knowledge-Based AuditsTM of Governmental Entities has not been updated for these revisions
  • Practice alerts have been added, though

The new requirements will be incorporated in a future edition of this title.

2019 Government Entities Title – What’s New

With that said, here are the updates and enhancements to the 2019 title:

  • Tailoring Questions were added for consistency with other titles, including:
    • Does the auditor intend to test the operating effectiveness of internal controls over financial reporting?
    • Does the audit plan include using audit evidence about the operating effectiveness of controls obtained in previous audits?
    • What audit areas, applicable to the engagement, will you be performing tests of the operating effectiveness of controls?
      • These tailoring questions create the same show/hide of columns, regarding testing of the operating effectiveness of internal controls, that are created in other titles – such as the Commercial title. Please note, “The AICPA Audit and Accounting Guides for State and Local Governments (Updated as of March 1, 2018), paragraph 4.89 states, “In some cases, an auditor may determine that performing only substantive procedures is appropriate. However, the auditor often will determine that a combined audit approach using both tests of the operating effectiveness of controls and substantive procedures is an effective audit approach.”
        • See KCO-001 2019 Governmental Entities Overview for Knowledge Coach Users and KCO-003 Answer Effects for the Engagement-Level Tailoring Questions Workpaper for further information on the show/hide of these tailoring questions.
  • Multiple areas within the Audit Programs are reorganized to increase efficiency and improve workflow
  • Instructions and procedures throughout the toolset improve the workflow

What’s New – continued

  • Activity-level control forms are updated with sub-processes and activity-level control objectives, throughout all KBA-403 series workpapers
  • Links to TeamMate Analytics, throughout the AUD-800 series programs, assists auditors with analytical procedures beneficial in the audit process
  • Reorganized columns in the workpapers documenting internal controls (KBA-400s) improves the workflow and addresses questions customers have raised in the past
    • Refer to KCO-001 for more descriptive changes and roll forward considerations
  • Comments table in AUD-100 Engagement-Level Tailoring Questions now documents any information you want to capture related to tailoring
  • Example planned response to Management Override of Controls in KBA-502, which flows to the AUD-800 series. This can be modified in the risk pane for the Financial Statement Level Risk of Management Override of Controls and should be modified by the user based on the specific audit
  • Tips for the new proposed statements on auditing standards and new finalized FASB standards, including Omnibus Statement Auditing Standards, 2019
  • Updates to the benchmark/rule of thumb percentage table in KBA-301 Worksheet, so users will be able to document a separate benchmark and rule of thumb percentage not used in the KBA methodology
  • Updated audit program name for AUD-809 to Payroll, Pensions, OPEB, Related Liabilities, and Deferred Inflows of Resources
  • New workpapers, including:
    • AUD-910 Audit Program: Specific Element, Account or Item of a Financial Statement in Accordance with AU-C 805
    • COR-912 Management Letter Comments – Illustration
    • RPT-926A Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards (Opinion on the Financial Statements, as a Whole, Disclaimed; Material Weaknesses and Significant Deficiencies Identified; and Reportable Instances of Noncompliance and Other Matters Identified)

Tips to Improve Realizations & Client Service 

Obviously, increasing your realizations and improving your client service are critical to maximizing efficiencies. After all, a healthy bottom line and improved client service are both important. With that in mind, consider these three tips:

  1. When you roll-forward your prior year engagements, make sure you get the latest content updates. Also, make sure you keep your responses, where it makes sense. Then, simply review for changes.
    • Coach allows updating to the latest content at any time, while keeping your answers and customizations. Given these points, take advantage of the saved time and start your planning!
  2. Tailor your audit programs in direct response to the client’s risk, to avoid over and under auditing. Additionally, doing so gives you the ‘best bang for your buck’ with your audit procedures.
    • By design, Knowledge Coach easily ties risks to audit procedures. As a result, the audits that firms deliver are higher quality and more efficient. Not surprisingly, these firms also have happier clients.
  3. Give yourself a head start by reducing your client’s PBC list by approximately twenty-five percent through technology.
    • Accelerator requests all the data needed from your client’s general ledger, accounts payable and accounts receivable sub-ledger. Then, it transforms that data into the most commonly used workpapers, including access to the detailed transactions. Afterword, the auditor can see anomalies or risky transactions more quickly by running analytics with TeamMate Analytics. What you gain is:
      • More answers at your fingertips
      • A more informed view of your client at the beginning of each engagement
      • Insights for planning a higher quality audit

Wolters Kluwer’s Integrated Audit Approach 

In summary, these solutions comprise Wolters Kluwer’s Integrated Audit Approach. This approach seamlessly unites CCH Audit AcceleratorCCH ProSystem fx EngagementTeamMate AnalyticsCCH ProSystem fx Knowledge Coach, and CCH Accounting Research Manager. Moreover, the Knowledge-Based Audit Methodology is essential to why this approach delivers higher quality audits while improving productivity through process improvement.

Ultimately, the Integrated Audit Approach keeps you prepared for changes to auditing, peer review, and regulatory standards. In other words, it helps you stay ahead of your competition. In fact, the combination of solutions helps firms maximize realizations and increase audit quality to ensure peer review readiness. Therefore, if you have not seen these solutions in action, it is worth your time to do so. Hence, consider attending a complimentary demo at a time that fits your schedule.

Finally, take a moment to subscribe to our Audit Intelligence (AI) Spotlights monthly newsletter. From it, you will learn about audit news, whitepapers, webinars and more – delivered straight to your inbox.

AUTHOR

Kurt Pitts

Kurt Pitts is a Senior Business Analyst at Wolters Kluwer Tax and Accounting North America. Kurt participates in design and development of CCH® ProSystem fx® Knowledge Coach. Kurt also works with internal teams, editorial and customers to provide new features and industry titles for CCH® ProSystem fx® Knowledge Coach. Prior to joining Wolters Kluwer in 2014, Kurt was a CPA with a top Southeast Regional Accounting Firm and has a Bachelor’s Degree in Accounting from Georgia Southwestern State University.

All stories by: Kurt Pitts