Fortner Bayens, P.C. Banking Letter - May 2019 Edition

The PCAOB is Implementing a Change to the Auditor's Report 

Anthony P. Gasbarro

In an industry that revolves around money management, auditors and clients need to collaborate to establish a successful relationship free of any misunderstanding. The PCAOB’s (Public Company Accounting Oversight Board) solution is the AS 3101 report which requires auditors to develop a more effective way of presenting critical information to investors. These standards were released in 2017, and auditing firms are given two years to adjust their reports accordingly. The auditors’ duty is to plan and execute an appropriate audit by reviewing reasonable evidence ensuring there are no material misstatements publicized in management’s financial statements. Auditors will now be duty bound to communicate:

  • Their years of service since performing the audit,
  • Acknowledgment of crucial matters, and
  • Revamping the audit report to better assist the clients understanding the key factors pertaining to their audit. 

To read more, click here.

IRS Expands Retirement Plan Determination Letter Program

Philip J. Schuyler, CPA

The IRS has decided to expand a program that allows retirement plans to receive determination letters.  Revenue Procedure 2019-20 details the expansion in two specific areas for which retirement plans sponsors can request determination letters, including:

  1. Designed statutory hybrid plans (e.g., cash balance and pension equity plans) and 
  2. Certain individually designed merged plans.  

To read more, click here.

Cybersecurity Controls Review 

Alyssa L. Reeves, MIS, CISSP, CISA, CEH

As many of you know, in light of the increasing volume and sophistication of cyber threats, the Federal Financial Institutions Examination Council (FFIEC) developed the Cybersecurity Assessment Tool which is designed to evaluate both the Inherent Risk Profile and Cybersecurity Maturity of financial institutions.  The Assessment incorporates cybersecurity-related principles from the FFIEC Information Technology (IT) Examination Handbook and regulatory guidance, and concepts from other industry standards, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework. This is an excellent tool for institutions, but as many of you have found, it can be very time consuming and difficult to properly evaluate the cybersecurity-related controls to determine the current Cybersecurity Maturity level.  

To read more, click here.

Former S Corporation Distribution Rules 

Mark J. Corey, CPA, JD

There has been a code section on the books for some time that allows a former S Corporation to make distributions out of their S Corporation Accumulated Adjustments Account (AAA) during what is called the post-termination transition period.  This is the period after the termination of a corporation’s election to be an S Corporation.  This rule was put in place to allow former S Corporations to make tax free distributions out of AAA for a period of one year after the termination of the S-election.  This was important because absent this rule there was no way to extract the basis from the S Corporation activity that is represented in the AAA account. 

To read more, click here.