Bridge The Gaap - Accounting Podcast

Bridge the GAAP is a blog and podcast that presents conversational discussion about topics in accounting and auditing in an attempt to bridge the gap between theory and practice. In this episode we build a bridge that connects the following three topics: the Republican Presidential Debates, Auditing Standard AU-C 530, and the Heisenberg Uncertainty Principle.   They’re all connected by the fact that they address some of the challenges in using measurements to make judgements.

Today the Bridge the GAAP – Accounting Podcast discusses recent volatility in securities markets.  We’re going to discuss the topic by building a bridge that connects the dramatic drop in the Dow Jones Industrial Average earlier this past week, Accounting Standard ASC 830, and the Ghost in the Machine. We start off by discussing the dramatic sell-off activity in the markets this week, including the fact that on Monday, August 24th, the DJIA at one time was down by more than 1,000 points, representing more than a 6.5% drop in value.  In order to frame the discussion, we start of by describing exactly how the Dow is calculated and give a little bit of history on the subject.  Then we look at Apple's drop on Monday and calculate its portion of the DJIA's drop. While analysts and economists have been attempting to explain the activity, much of the conversation has included the Federal Reserve Rate, Asian markets, commodities prices, and the devaluation of the Yuan, China's currency.  So for our conversation, we f

Today the Bridge The GAAP – Accounting Podcast discusses challenges faced by rapidly advancing technology.  We discuss the topic by building a bridge that connects a hacker ring in Ukraine, SEC Rule 10b-5, and the hacktivist community called "Anonymous." We start off by discussing a complaint filed by the SEC on August 10, 2015, that charged 32 people in a securities fraud scheme involving hackers in Ukraine partnering with stock traders in the U.S. who allegedly realized illegal gains of $100 million over a five year period. In attempt to answer the question of whether or not this qualifies as insider trading, we take a closer look at the Securities and Exchange Act of 1934, Section 16(b) and Section 10(b).  We also examine SEC Rule 10b-5, Rule 10b5-1 and Rule 10b5-2 in order to gain a further understanding of when insider trading is prohibited and when it is allowed. This conversation leads to the broader topic of how rapid technological advances are outpacing our regulations and our preconceptions. The pod

Today the topic of our Bridge The GAAP – Accounting Podcast is logical relationships.  We’re going to discuss the topic by building a bridge that connects the ideas of Forrest Gump (Tom Hanks), Auditing Standard AU-C 520, and synchronicity. We start off by discussing the Davie-Brown Index, which is a survey conducted by a marketing agency in order to measure different attributes of celebrities and popular personalities, including trustworthiness.  Tom Hanks repeatedly shows up at the top of the list, raising the question "What's so trustworthy about Forrest Gump?" In attempt to answer the question, we turn to the famous study performed by social psychologists Hamilton and Gifford, which introduced the term "illusory correlation" while explaining how we form illogical judgments and stereotypes.  As accountants, understanding this process is important because we so often rely on analytical procedures. This conversation leads into a discussion of Auditing Standard AU-C 520, which addresses the auditor's requirem

Today the topic of our Bridge The GAAP – Accounting Podcast is faithful representation.  We’re going to discuss the topic by building a bridge that connects the ideas of testing artificial intelligence, Topic 840 of the Accounting Standards Codification, and skyscrapers in Chicago. We start off by discussing Alan Turing's famous "Imitation Game," which is now typically called the "Turing Test," and is used as a measurement of artificial intelligence.  The approach that Turing used to answer the question serves as a tool to relate the three topics of this podcast. As we discuss Accounting Standard ASC 840, we will cover the difference between capital leases and operating leases, including the four criteria that are considered in determining for a lessee whether a lease is a capital lease.  We'll also discuss direct financing type leases and sales type leases from the perspective of the lessor. The podcast includes a brief discussion about Louis Sullivan, who is considered to be the "Father of the Skyscraper" a

Today the topic of our Bridge The GAAP - Accounting Podcast is fair value.  We’re going to discuss the concept fair value through the prism of several unusual commdoties in the South Pacific, including spinner dolphins' teeth.  By doing so, we will answer shed light on the meaning of fair value and some of the questions raised by its consideration. Along the way we’ll discuss the requirements of Accounting Standard ASC 820, which defines fair value and creates a framework for its measurement and reporting.  We’ll discuss the fair value hierarchy, which is established under ASC 820 as well. The podcast includes a brief look at the 10-K filing of Birner Dental Management Services, Inc., which uses the trademark name PERFECT TEETH and provides a convenient example of a liability measure at fair value using Level 3 inputs under the fair value hierarchy.  There's even a brief discussion about some of the philosophy of Adam Smith.  Enjoy!

Today the topic of our accounting podcast is a little unconventional.  We're going to trace the concept of the fraud triangle back into an unusual case study involving a message from another world.  By doing so, we will answer the question, What do an alien prophecy, Auditing Standard AU-C 240, and a billion-dollar Ponzi schemer all have in common? Along the way we'll discuss the objectives and requirements of Auditing Standard AU-C 240, and how it relates to the requirements established under Auditing Standard AU-C 315, which discusses the auditor's requirement to understand the entity and its internal control.  We'll discuss what fraud risk factors are and cover the documentation required by AU-C 240. The podcast includes a discussion about Ponzi scheme fraudster Scott Rothstein, which is used to shed some light onto the rationalization process.  So with all the themes interwoven, there's a decent amount of psychology that found its way into this week's conversation.  I really enjoyed this podcast, and I ho

Today the topic of our accounting podcast is Auditing Standard AU-C 320, which discusses Materiality.  We’ll answer such questions as, What is materiality?  How is it determined?  What has to be documented? To provide some context to our conversation, we’ll relate the discussion to AU-C 200, which discusses the overall objectives and conduct of an audit, and we'll discuss how materiality relates to audit risk. 

Today the topic of our podcast is Auditing Standard AU-C 315, which discusses the requirement that the auditor understand the entity being audited and its internal control and requires that the auditor identify risks at the financial statement level and at the relevant assertion level.  We’ll answer such questions as, What should we understand about the entity?  How should we perform our risk assessment?  What has to be documented? To provide background to our conversation, we’ll relate the discussion to our previous two podcast episodes which discussed the overall objectives and conduct of an audit as well as the requirements related to planning an audit.

Today the topic is Auditing Standard AU-C 300, which discusses Audit Planning.  We'll answer such questions as, Who is involved in planning an audit?  What are they doing?  What has to be documented? Bridge the GAAP is a podcast that presents conversational discussion about topics in accounting and auditing in an attempt to bridge the gap between theory and practice. 

This episode presents auditing standard AU-C 200, which discusses the objectives of an audit.  The discussion will answer such questions as, What is an audit?  What is meant by auditor independence? What is meant by GAAS?  Bridge the GAAP is a podcast that presents conversational discussion about accounting and auditing in an attempt to bridge the gap between theory and practice.