AICPA News: July 2020

“The tools many auditors rely on today for employee benefit plan audits are inefficient, requiring manual data entry, redundant processes and outdated, on-premise technology,” said Erik Asgeirsson, president and CEO of CPA.com, the business and technology arm of the AICPA. “We’ve seen how modern, cloud-based solutions have transformed client accounting services, and OnPoint EBP brings many of the same elements of efficiency and quality to limited scope EBP audits.”

Technology and evolving standards are transforming the way audits are being conducted. The AICPA has been a leader in this area, particularly in its work to define and develop the audit of the future through projects such as the Dynamic Audit Solution (DAS). The AICPA has committed significant resources over the last six years to promote and improve the quality of audit engagements through the Enhancing Audit Quality initiative, a data-driven program to improve auditors’ performance through guidance, peer review and other measures.More information at: https://www.cpa.com/onpoint-ebp.

Association Asks IRS for Guidance on Excess Business Losses

In a letter to the Department of the Treasury and the Internal Revenue Service (IRS), the AICPA has requested additional guidance and relief regarding Internal Revenue Code section 461(l)* as enacted under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The CARES Act amended section 461(l) of the Tax Cuts and Jobs Act (TCJA), which imposed on each applicable taxpayer a limitation on the deductible loss related to a trade or business in the taxable year in which the loss is incurred, also known as the excess business loss.

The excess business loss is defined as the aggregate deductions for the taxable year attributable to trades or businesses of a taxpayer over the aggregate gross income or gain for the taxable year, plus $250,000 ($500,000 for a married filing joint return). Any disallowed loss becomes a net operating loss carryover to the next subsequent year.

Learn more at: https://cpapracticeadvisor.com/21143487

New AI White Papers for CPAs Explore Evolving Role in the Audit

With Artificial Intelligence (AI) increasingly impacting business and auditors, Chartered Professional Accountants of Canada (CPA Canada) and the AICPA have partnered to produce two new white papers on the topic. 

The two publications, A CPA’s Introduction to AI: From Algorithms to Deep Learning, What You Need to Know and The Data-Driven Audit: How Automation and AI are Changing the Audit and the Role of the Auditor, are aimed at audit professionals and others seeking information on how AI will evolve the role of the auditor as well as the audit itself. They also explore the change in mindset required for auditors to meet the challenges and take advantage of the opportunities that come with the introduction of AI.

“CPAs will not be replaced by AI, but we need to be prepared to evolve along with it,” said Gord Beal, CPA, Vice President, Research, Guidance and Support at CPA Canada. “The use of AI will require human insights to maximize its benefits and oversight to ensure it is used ethically. As professional accountants, we are uniquely prepared to thrive and provide value in an AI-enhanced workplace.”

A CPA’s Introduction to AI is exactly that – an overview that will be a foundational resource for auditors seeking information on what AI is, how it works and what it can do. Today, AI is already at the heart of everything from machine learning and facial recognition technology to the voice-activated virtual assistant increasingly deployed in our homes. AI’s future impact will affect organizations of all types and sizes around the world.

The Data-Driven Audit shows how AI will directly affect assurance engagements by taking over repetitive tasks, improving efficiency and assessing vast pools of data. However, understanding, explaining and creating value from that data will increasingly be the role of CPAs drawing on their skills, knowledge, ethics and professional judgment. The uses for AI in audit will be varied and auditors will need to consider how to best use the technology now to prepare for the future. As spreadsheets were for their professional predecessors, AI promises to be a key tool for auditors.

Both papers are available free of charge on the AICPA website: https://tinyurl.com/y7a5jf35