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Audit Report Delivery, Compliance, and More for the Credit Union Eco-system

Audited financials are critical today, especially for the credit union-CPA firm-regulator eco-system. In an era of increasing fraud and cyber-risk, how these sensitive documents are exchanged and delivered has never been more important.

At the recent conference on credit unions, I presented on audit report delivery, compliance, and more for the Credit Union Eco-system. Here are some key points discussed during the session:

Evolution of CPA professional audit report delivery

Firms (and their clients) have evolved their audit practices, and one area that has evolved tremendously is the delivery of the completed audit report to clients. These important reports are each the result of an extensive audit effort and how they’re delivered is part of the audit engagement and reflects upon the firm itself.

Audit Report Delivery, Compliance, and More for the Credit Union Eco-system 1

Why evolve? Why do firms change what worked OK for years? Here are some key reasons to evolve your audit report delivery:

If you’ve worked at a firm (or been an audit client) for any period of time, these stages of “evolution” should look familiar. Many of the firms we spoke with at the conference shared that their firm is simultaneously at 3 or more early stages of the evolutionary scale!

  1. Speed and Efficiency
  2. Differentiation
  3. Risk
    • Fraud
    • Cybersecurity
    • Compliance/Guidance
      • Independence
      • Withdrawal Due Diligence
      • Regulator Requirements
    • Reputation
  4. Adding Value
  5. Quality Control

The quality control-responsible partners at the event were particularly focused on ways to reduce risk. Firm leaders on the other hand confirmed their interest in increasing speed and efficiency, finding new ways to add value for financial institution audit clients.

The fact that innovations were so unevenly adopted within their firms, and even with the audit department, was definitely an area for improvement. Environment-specific evolution it seems is not limited to the Galapagos Islands.

The financial institutions and regulators in attendance were also fixated on risk, but more so related to compliance (e.g. National Credit Union Administration (NCUA) compliance), and the risk of financial statement-related fraud respectively.

Regulators and lenders are key users of audited financial statements and their concerns were justified considering these current market drivers:

Audit Report Delivery, Compliance, and More for the Credit Union Eco-system 2

Leveraging the latest evolution of audit report delivery

Next up was how to address current and longstanding challenges around audit report delivery and exchange through a private company clearinghouse designed for CPA firms, private businesses, and recipients of audited financials. These recipient users want to ensure the quality of the data they’re receiving is accurate, thorough, the most current available, and is from an authenticated source. Finally, as we’re living in a digital world, they would like to be able to request and receive it efficiently.

We provided an up-close look at RIVIO Clearinghouse, the online platform designed to meet the need for accurate, source-verified financial information exchange between CPA firms, credit unions (and other private businesses), and third-party users of audited financial and other types of financial documents.

Shawn Martin, Product Sales Manager for RIVIO and assurance solutions at CPA.com, detailed the specific RIVIO workflow for credit union audit reports for each group in attendance:

  • CPA Firms
  • Credit Unions
  • NCUA Examiners

With the change in NCUA policy regarding annual submission of audit reports, seeing the entire process from the perspective of each user type was illuminating for the audience, especially the ease of issuing reports and responding to document requests.

Audit Report Delivery, Compliance, and More for the Credit Union Eco-system 3

Figure 1: View of the workflow process from the NCUA examiner’s perspective

Mr. Martin also showed how the platform enables one-step withdrawals/recalls for firms and for credit unions, and the equally simple restatements/reissues. This addresses a longstanding due diligence/compliance issue for firms and clients alike.

Audit Report Delivery, Compliance, and More for the Credit Union Eco-system 4

The session concluded by showing how the clearinghouse solution enabled delivery throughout the eco-system while also increasing quality control through a standardized process for audit report delivery and complete reporting on all document exchange activities.

Audit Report Delivery, Compliance, and More for the Credit Union Eco-system 5

Figure 2: View of the audit report workflow, including multi-recipient delivery

If you’d like to go further into these topics, you can watch our recent on-demand webinar, Credit Union Audit Reports: Insights, Compliance, and Innovations for All, or visit RIVIO.com to learn more.

Follow RIVIO on Twitter at @RIVIO_CH

About the Author:

Steven A. Menges RIVIO Clearinghouse Product Lead, CPA.com

A business-to-business (B2B) innovator and products executive with 20 years’ progressive experience, Steven Menges is a frequent industry author and speaker on enterprise computing, data analytics, managed service providers (MSPs), IT Security, regulatory compliance, EdTech, and buyer’s journey-based engagement.

3 Staffing Insights for CPA Firms, Credit Unions, Banks and More

During a recent presentation for the firm-credit union-banker-regulator audience, an important topic that cuts across all the organizations today − staffing, or more specifically, challenges with finding and retaining quality staff – was discussed in detail.

New research by the American Institute of CPAsshows staff recruitment remains the top issue for most CPA firms, while risk management and compliance regarding privacy and data security are rising challenges.

“Finding qualified staff” was the No. 1 issue for every firm-sized segment except sole practitioners, according to the 2019 PCPS CPA Firm Top Issues Survey; that matches the topline results from 2017, the last time the survey was conducted.

2019 PCPS CPA Firm Top Issues

When we start to consider areas for improvement for firms today, finding and retaining qualified staff is rightly top of mind. Staffing issues for credit unions, banks and other private businesses and organizations are ever-present as well.

There’s a generational element for all employers that you’ll need to embrace (or be caught unprepared):

  • Generation Z, born after 1996, is already here. 61M in the US and the first wave have graduated college already.
  • Millennials will comprise the majority of the workforce in 2025. That’s just 5 years from now.
  • Generation X workers begin retirement in 2030, and thanks to credit unions, in many cases they will retire or semi-retire because they’ve planned well, saved, and CAN retire.

Here’s a shocking finding from a new survey whose findings were just published in Harvard Business Review:

“About half of millennials, and 75% of Gen Zers, have left a job because of mental-health reasons.”

Credit unions (and smaller CPA firms) face another staffing risk: senior management and the C-suite. According to an article in Credit Union Times from 2012, the majority of the CEOs at credit unions with more than $100 million in assets are likely to retire in the next 10 years, so while this isn’t a new issue, it has been and is still a big issue.

While most credit unions have a succession plan prepared for their CEOs, less have one for other senior executives, and these are positions that can be much harder to fill. If you elevate an executive to CEO, who will replace them as CFO, Chief Lending officer, etc.? The AICPA PCPS study also listed succession planning as a top 5 issue for smaller firms, so this cuts across industries as well. These are real issues with big consequences if not addressed.

Attracting, developing and retaining talent is an immediate, short-term and longer-term priority for this entire eco-system, including firms and credit unions. How big of an issue is retaining staff? Over 40 million people now quit their job each year in the U.S. according to the Bureau of Labor Statistics. That is a 25% increase over just 5 years ago. A not-so-unrelated pair of statistics to note are:

  • Just 32% of U.S. workers are “engaged” in their jobs
  • Engaged employees are 59% less likely to seek out a new job in the next 12 months

Employee engagement is the real insight here.

A major initiative at leading organizations is now to create a positive work environment for new staff. From our discussions with firms and other organizations, we’re hearing that this often includes quickly getting new staff involved in what they consider to be meaningful, or at least interesting work. Preferably, that involves some type of interaction with clients (or “members” for the credit union folks). Having them working with innovative technology that facilitates member or customer interaction can be an ideal way to get new staff engaged quickly.

Many newer staff are digital natives, so they can get up to speed very fast and can bring insights as to incorporating new technology more effectively. Take advantage of that! Also consider asking a sampling of them what types of work would they find more engaging and valuable.

NOTE: If you’d like to hear more about CPA firm staffing issues and innovative ways to address them quickly, check out this key webinar, Addressing Staffing and Cultural Challenges in Attest Services, presented by CPA.com’s Matt Towers.

References/Links:

About the Author:

Steven A. Menges Assurance Team / RIVIO Clearinghouse Product Lead, CPA.com

A business-to-business (B2B) innovator and products executive with 20 years’ progressive experience, Steven Menges is a frequent industry author and speaker on enterprise computing, data analytics, managed service providers (MSPs), IT Security, regulatory compliance, EdTech, and buyer’s journey-based engagement.

Ensuring Success: Strategies to Improve PCR Engagements

Working on preparation, compilation and review (PCR) engagements can be challenging and time-intensive, pushing firms to overwork engagements and leaving them with limited time for higher-value advisory services for their clients. Back in December at Ensuring Success 2018, we discussed strategies to address these challenges and how technology can improve the quality of engagements.

Here are the highlights from that discussion:

  • Traditional Approach to PCR Services: Today many firms rely on manual processes for doing their PCR engagements. They use analog methods to collect and organize information, spend extra time determining the right checklists or procedures to apply and use dated communication practices with clients while facing the added stress of peer reviews.
  • Challenges Experienced in PCR Services: The manual approach to PCR engagements can cause complex challenges for firms and their clients. The top challenges include:
    • A disconnected process
    • Inefficient and confusing communication practices that leave parties without an effective way to collaborate
    • Overworked engagements or the “more is better” approach driven out of fear of not complying with standards and failing peer review

    Ultimately this all takes up too much time and leaves firms with limited time for value added services.

  • Technology as the Solution: Emerging technologies like cloud technology, artificial intelligence and digitized data are transforming the accounting profession, the audit and assurances practices included. OnPoint PCR is a prime example of this convergence. OnPoint PCR uses cloud technology that integrates AICPA content and methodology to keep engagements up-to-date and offers intelligent guidance that eliminate unnecessary steps, enabling firms to enhance engagement quality and efficiency.

Watch our entire Ensuring Success 2018 discussions, Leveraging Technology to Improve PCR Engagements and Overcoming the Stress of Peer Review in PCR Engagements, to hear the discussion about the challenges firms face with the traditional approach to PCR services and how technology can help automate and simplify the process.

Matt Towers
Product Marketing Manager, CPA.com
Matt has over 18 years of experience working in the tax & accounting technology industry with a specific focus in accounting & auditing technology and process. Having worked with thousands of accounting firms over the years to help them understand how to interweave relevant technology and business process, Matt has a keen understanding of the challenges and opportunities facing the profession today. Matt has been a featured speaker at thought leadership events and has been published in A&A publications writing on trends in the profession and the impact of technology and is responsible for managing the CPA.com assurance product line.

Top Five Challenges Facing Firms Performing Prep, Comp and Review Services

Ensuring accuracy and compliance of your preparation, compilation and review services can often be demanding and time-intensive, especially when you consider the added stress of peer review. Many firms are manually building out engagements and determining which procedures apply in order to meet compliance standards pushing them to overwork the process to ensure a positive peer review— which ultimately results in lower realization rates and limited time for higher-value advisory services.

What are the challenges your firm experiences in PCR services? In our infographic, we uncover top challenges we see firms face in PCR services.

#1 Threat of pass with deficiency or failed peer review grade causes firms to overwork engagements.

The fear of not complying with standards and getting dinged on peer review as a result often drives firms to go with a "more is better" approach leaving them exposed to additional risks.

#2 Difficulty keeping up with technology changes to stay competitive.

The rate at which accounting technology is changing can be daunting. Being behind the technology curve and using manual methodology puts firms at a disadvantage and limits their ability to become a full-service firm and gives them little time for higher-value advisory services for clients.

#3 Constant threat of data breaches requires vigilant attention to protect client data.

Often accounting software and financial statement guidance tools are not connected in a secured platform. This forces firms to use low-level security or manual processes to deliver and store financial statements, putting their clients' sensitive information at risk.

#4 Manual, back-and-forth client communications create bottlenecks and downtime on engagements.

It is time-consuming and tedious chasing clients down to get all the information firms need to complete their work, and the firms' clients may feel confused and frustrated by this as well.

#5 Diversity of challenges leads to firm inefficiency, creating a hidden opportunity cost.

Overworking engagements can be costly for assurance engagements. Exposing firms to risk if the work performed exceeds the agreement outlined in your engagement.

Watch our webinar, Balancing Compliance and Efficiency in Prep, Comp and Review Engagements, to learn more about these challenges and gain strategies your firm can take advantage of to feel more confidence and peace of mind around compliance.

Matt Towers
Product Marketing Manager, CPA.com
Matt is responsible for managing the CPA.com assurance product line. Matt has over 18 years of experience working in the tax & accounting technology industry with a specific focus in accounting & auditing technology and process. Having worked with thousands of accounting firms over the years to help them understand how to interweave relevant technology and business process, Matt has a keen understanding of the challenges and opportunities facing the profession today. Matt has been a featured speaker at thought leadership events and has been published in A&A publications writing on trends in the profession and the impact of technology.

A San Francisco Treat: DCPA 2017 Takeaways

After I gave my keynote on the final day of the Digital CPA Conference last week, I had a chance to take a moment and look out at the crowd in the San Francisco Marriott Marquis conference center. And what hit home to me was just how far we’ve come as a community in the past five years.

The first Digital CPA was scheduled to be held Oct. 28-30, 2012, in a hotel with an impressive all-glass lobby just outside of Washington, D.C. Some of you may remember those dates as the East Coast landfall for Hurricane Sandy. We postponed the conference until December, and were grateful most people tore up their busy schedules and showed up. We had a tight-knit group from the beginning.

Now it’s 2017, and many of the practitioners at this year’s event have played a key role in the fast growth of virtual CFO services and the reinvention of client accounting services. And many of these same lessons learned are now being applied to new opportunities emerging in audit and tax. We’re poised for big things in the profession, and Digital CPA – with its energy, enthusiasm and vibrant setting – was a great reflection of that potential.

Here’s some of my takeaways from the conference:

We have a big tent, and it’s getting bigger all the time. We had 430 people at Digital CPA this year, and another 40 connecting remotely. We had more than two dozen people flying in from five different countries outside of the United States, so the strength of the programming, like the challenges and opportunities it addresses, extends across many borders. That’s a lot of momentum, and I want to thank all of you who have helped build this community from the ground up.

The pace of change offers great opportunity. Technology is rapidly transforming the practice of accounting, and all of the discussions at the event made me feel even stronger that there has never been a better opportunity for CPA firms to grow and thrive.

Complementary skills are going to be more important than ever going forward. AICPA Chairman Kimberly Ellison-Taylor talked about this during my Digital CPA keynote, and it was underscored in conference sessions. Technical skills and good judgment are never going to go out of style, but CPAs are going to need expertise in communications, technology and marketing, among other areas, if they’re going to successfully establish high-value advisory practices.

Mistakes and failure aren’t fatal – they’re prerequisites to growth and innovation. This was one of the lessons from Netflix co-founder Marc Randolph’s fantastic presentation. Not everything works out. As a profession, we’re devoted to service quality, and that’s always the goal. But we can’t be afraid to move fast to try something, and move on if it’s clear an approach isn’t working.

Education will move us forward. Blockchain will bring huge changes to the audit, in ways that aren’t fully clear yet. Digital CPA attendees have a high curiosity about this area. This is why we teamed up with the Wall Street Blockchain Alliance this past fall, and why we’re committed to providing context and insight to CPAs on this topic. There’s a whole new world forming in finance and accounting, thanks to blockchain, artificial intelligence, machine learning and data analytics. At CPA.com, it’s our mission to provide thought leadership and guidance for firms navigating these changes. We’ll be here for you.

And if you missed this year’s conference but are curious about next year, check back at digitalcpa.com for updates. We’ll be in Washington, D.C. again from Dec. 3-5, 2018.