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PCAOB Proposal Would Require Audit Firms to Disclose a Variety of Metrics

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The Public Company Accounting Oversight Board (PCAOB) issued a pair of proposals on April 9, one of which would require audit firms to publicly disclose several metrics—including the involvement of partners and managers on an audit, auditor workload, and auditor turnover—on a new form that would be accessible to investors.

Erica Williams

“Sound and consistent information bolsters confidence in our capital markets, and can drive audit quality,” PCAOB Chair Erica Williams said in a statement on Tuesday. “Informed by extensive study and stakeholder input, today’s proposals would strengthen PCAOB oversight and equip investors, audit committees, and others with clear, consistent, and actionable data related to the audit.”

Some public accounting firms voluntarily disclose certain firm-level information publicly through their annual audit quality and transparency reports. This proposal would require all PCAOB-registered firms that audit one or more accelerated or large accelerated filers to publicly report a standardized set of 11 metrics that would draw back the curtain and offer investors a look into their work.

“While some firms publicly disclose certain firm-level metrics today, the PCAOB’s staff has observed that the number of firms doing so is small,” the board said in a press release. “Furthermore, the disclosures are inconsistent across firms—there are no common definitions or calculations allowing for consistent comparisons—and most of the disclosures are voluntary, so firms are free to revise or discontinue such reporting anytime. At the same time, there is a lack of incentive for firms, acting on their own or collectively, to provide accurate, standardized, and decision-relevant information about their firms and the engagements they perform.”

The proposed firm and engagement metrics cover:

1. Partner and manager involvement: Hours worked by senior professionals relative to more junior staff across the firm’s issuer engagements and on the engagement.

2. Workload: Average weekly hours worked on a quarterly basis by engagement partners and by other partners, managers, and staff, including time attributable to engagements, administrative duties, and all other matters.

3. Audit resources (use of auditor’s specialists and shared service centers): Percentage of issuer engagements that used specialists and shared service centers at the firm level, and hours provided by specialists and shared service centers at the engagement level.

4. Experience of audit personnel: Average number of years worked at a public accounting firm (whether or not PCAOB-registered) by senior professionals across the firm and on the engagement.

5. Industry experience of audit personnel: Average years of experience of senior professionals in key industries audited by the firm at the firm level and the audited company’s primary industry at the engagement level.

6. Retention and tenure: Continuity of senior professionals (through departures, reassignments, etc.) across the firm and on the engagement.

7. Audit hours and risk areas (engagement-level only): Hours spent by senior professionals on significant risks, critical accounting policies, and critical accounting estimates relative to total audit hours.

8. Allocation of audit hours: Percentage of hours incurred prior to and following an issuer’s year end across the firm’s issuer engagements and on the engagement.

9. Quality performance ratings and compensation (firm-level only): Relative changes in partner compensation (as a percentage of adjustment for the highest rated group) between groups of partners based on internal quality performance ratings.

10. Audit firms’ internal monitoring: Percentage of issuer engagements subject to internal monitoring and the percentage with engagement deficiencies at the firm level; whether the engagement was selected for monitoring and, if so, whether there were engagement deficiencies and the nature of such engagement deficiencies at the engagement level.

11. Restatement history (firm-level only): Restatements of financial statements and management reports on internal control over financial reporting that were audited by the firm over the past five years.

The proposal would require reporting of firm-level metrics annually on a new Form FM, for firms that serve as the lead auditor for at least one accelerated filer or large accelerated filer, the PCAOB said. Reporting of engagement-level metrics for audits of accelerated filers and large accelerated filers would happen via a revised Form AP, which would be renamed “Audit Participants and Metrics.” Firms are currently required to use Form AP to disclose the name(s) of the lead partner(s) on an audit engagement, as well as information about other accounting firms that participated on the audit, including the names of the firms and the extent of their participation.

Finally, the proposal would allow, but not require, limited narrative disclosures on both Form FM and Form AP to provide context and explanation for the required metrics.

The deadline for public comment on the metrics proposals is June 7.

Proposal on framework for collecting information from audit firms

The other proposal issued by the PCAOB on Tuesday would amend the board’s annual and special reporting requirements to “facilitate the disclosure of more complete, standardized, and timely information by registered public accounting firms.”

Most of the information would be made available to the public, but some would be available to the PCAOB only for oversight, the board said.

The PCAOB is proposing to enhance the required reporting of information by registered firms on the regulator’s public Annual Report Form, also known as Form 2, and the Special Reporting Form, also known as Form 3, in several key areas:

Financial information: Under the proposal, all registered firms would report on the public Annual Report Form additional fee information. The largest registered firms would also be required to confidentially submit financial statements annually to the PCAOB.

Audit firm governance information: The proposal would require all registered firms to report on the public Annual Report Form additional information regarding their leadership, legal structure, ownership, and other governance information, including information that would govern a change in the form of the organization.

Network information: The proposal would require on the public Annual Firm Report a more detailed description of any network arrangement to which a registered firm is subject, including describing the legal and ownership structure of the network, network-related financial obligations, information-sharing arrangements between the network and registered firm, and network governing boards or individuals to which the registered firm is accountable.

Special reporting: The proposal would shorten the timeframe for all reporting on the Special Reporting Form from 30 days to 14 days (or more promptly as warranted) and implement a new confidential special reporting requirement for events material to a firm’s organization, operations, liquidity or financial resource, or provision of audit services.

Examples of events required to be confidentially reported under the new Special Reporting framework include:

  • A determination that there is substantial doubt about the firm’s ability to continue as a going concern;
  • A planned or anticipated acquisition of the firm, change in control, or restructuring, including external investment and planned acquisition or disposition of assets or of an interest in an associated entity; or
  • Entering into or disposing of a material financial arrangement that would affect the firm’s liquidity or financial resources.

Cybersecurity: The proposal would require confidential reporting on the Special Reporting Form of significant cybersecurity events within five business days and periodic public reporting of a brief description of the firm’s policies and procedures, if any, to identify and manage cybersecurity risks.

Board member Christina Ho, who cast the only dissenting vote on this proposal, said in a statement that the proposal “represents an overreach of regulatory power and stands to undermine competition in the audit marketplace as well as investor protection.”

“This proposal quantifies neither the increased reporting and recordkeeping requirements nor their estimated costs,” Ho said. “This would not be the case if the PCAOB were subject to the Paperwork Reduction Act, because the PRA requires federal agencies to estimate the ‘burden’ on the public in complying with recordkeeping and/or reporting requirements, where the estimate of the burden includes the value of both the time and the effort to fulfill a collection along with the financial cost.

“My point is that the PCAOB admirably gives stakeholders notice and an opportunity to comment on this proposal as if we were a federal agency subject to the Administrative Procedure Act, but then less admirably elects not to follow the PRA,” she added. “I am profoundly worried that the board’s apparent zeal to impose, in each new proposed standard or rule, new burdens on firms, without sufficient tailoring and without quantifying the estimated burdens, may end up breaking the public company auditing profession’s back, particularly for small firms. If we ‘break’ the profession in the name of investor protection, are we really protecting investors?” 

The deadline for public comment on this proposal also is June 7.

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Documenting Bookkeeping Processes and Procedures

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Documenting Bookkeeping Processes and Procedures

In today’s fast-paced business world, having clear and organized documentation for your bookkeeping processes is more important than ever. Whether you’re running a small business or managing the finance team of a growing organization, well-documented bookkeeping procedures help maintain consistency, reduce errors, and ensure smooth financial operations. From training new employees to passing audits with ease, proper documentation is a key part of strong financial management. This guide explores the best practices for documenting bookkeeping processes and how it can support your business’s long-term financial health.

Why Documenting Bookkeeping Processes Matters

Creating detailed bookkeeping documentation helps ensure that every task, no matter how small, is performed consistently. It provides a reference point for team members and serves as a safeguard against the loss of institutional knowledge. Without it, businesses risk financial disorganization, mistakes in reporting, and delayed month-end closings. Solid documentation also simplifies training, allowing new hires to get up to speed faster and with fewer questions.

Create a Central Bookkeeping Manual

Start by building a centralized bookkeeping procedures manual. This should be a master document that outlines all your financial processes in one place. Include a detailed table of contents to make navigation simple, and break the manual into clearly labeled sections for tasks like bank reconciliations, accounts payable, payroll, and tax reporting. A centralized manual becomes the go-to resource for any bookkeeping-related question.

Use Visual Aids for Clarity

Not everyone learns by reading paragraphs of instructions. That’s where flowcharts and visual aids come in. Use diagrams to map out processes such as invoice approvals, payroll workflows, or monthly closing checklists. Visual aids make it easier to understand the steps involved and how different roles or systems interact. For team members who are new or unfamiliar with a process, these visuals can dramatically reduce confusion.

Document Daily, Weekly, Monthly, and Yearly Tasks

Break your bookkeeping responsibilities into routine timeframes. Clearly list which tasks must be done daily (like updating cash receipts), weekly (such as entering bills), monthly (like closing the books), and annually (including tax filings and 1099 issuance). For each task, include step-by-step instructions and examples when possible. Using screenshots from accounting software can also help clarify what specific steps look like in action.

Be Detailed but Simple

When writing instructions, use clear, simple language. Avoid technical jargon unless it’s necessary, and always explain terms that someone new might not understand. Write your documentation at a 10th-grade reading level so that it’s accessible to everyone on your team. Assume that the reader knows nothing about the task and guide them through the process like a tutorial.

Keep a Standard Format Across All Documentation

Use a consistent format and style throughout your documentation. This means applying the same headers, fonts, bullet styles, and terminology across all sections. Consistency makes the documentation easier to read and helps users find information quickly. It also helps when you need to make updates or train team members using multiple sections of the guide.

Include Technology and Software Instructions

Because most bookkeeping is now handled with accounting software, it’s essential to include documentation for the systems you use. Explain how to log in securely, run reports, handle backups, and connect software with banks or third-party tools. Document how systems like QuickBooks, Xero, or payroll platforms are used in your workflow. Be sure to include troubleshooting tips and contact information for software support if needed.

Schedule Regular Reviews and Updates

Your financial processes will evolve as your business grows. To keep your documentation useful and relevant, set a schedule to review and update it regularly—at least once every quarter or twice a year. During these reviews, check for outdated procedures, changes in regulations, or software updates that affect how tasks are done. Encourage your team to provide feedback if they notice anything unclear or missing in the documentation.

Make Documentation Easily Accessible

It’s important that your team can access the documentation easily, whether it’s stored on a shared drive, intranet, or document management system. Don’t let it sit buried in an email folder or personal computer. Assign someone to be responsible for maintaining the documentation and ensuring everyone knows where to find it.

Build a Culture of Documentation

For documentation to be truly effective, it needs to be part of your organization’s culture. Encourage all finance and accounting team members to document their processes and contribute to improving procedures. Make it a habit to update instructions anytime a process changes or a new one is introduced.

Documentation Is a Tool for Growth

Documenting your bookkeeping processes isn’t just a best practice—it’s a smart strategy for financial organization, accuracy, and efficiency. It supports continuity, improves training, and helps your business run smoothly even during staff transitions or periods of growth. With clear and updated documentation, your business will be better prepared to handle audits, close the books on time, and make informed financial decisions. Investing time in creating strong bookkeeping documentation pays off with fewer mistakes, faster processes, and a more confident team.

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Leaders

Mark Cuban is The Maverick Entrepreneur Changing Business and Beyond

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Mark Cuban's journey embodies the American entrepreneurial spirit

From selling garbage bags door-to-door as a child to becoming a billionaire tech pioneer and beloved “Shark,” Mark Cuban’s journey embodies the American entrepreneurial spirit. His straight-talking approach and business acumen have made him one of the most recognizable business figures of our time.

Early Life and Education

Born in Pittsburgh on July 31, 1958, to working-class parents, Cuban learned the value of hustle early. His grandfather, a Russian immigrant, sold merchandise from the back of his car—perhaps planting the entrepreneurial seed that would define Cuban’s future.

After graduating from Indiana University in 1981 with a degree in business, Cuban didn’t follow a traditional career path. Instead, he moved to Dallas with just $60 in his pocket, sleeping on the floor of a friend’s apartment while working as a bartender.

Building His Fortune

Cuban’s first major success came in 1990 when he sold his computer consulting firm, MicroSolutions, for $6 million. However, his true financial breakthrough arrived during the internet boom of the 1990s. Cuban and his business partner Todd Wagner founded Broadcast.com, an internet radio company that streamed audio of sports events and other content.

In 1999, Yahoo acquired Broadcast.com for $5.7 billion in stock—a deal that instantly made Cuban a billionaire and cemented his place in tech history.

The Dallas Mavericks Era

In 2000, Cuban purchased a majority stake in the NBA’s Dallas Mavericks for $285 million. Under his passionate and sometimes controversial leadership, the team transformed from a struggling franchise into NBA champions in 2011.

Unlike traditional team owners, Cuban sits courtside at games, openly criticizes referees, and maintains close relationships with players. His hands-on approach revolutionized NBA ownership culture and turned the Mavericks into a billion-dollar franchise.

Beyond Business: Media and Philanthropy

Cuban’s charismatic personality made him a natural fit for television. Since 2011, he has been a main investor on ABC’s “Shark Tank,” where his no-nonsense approach and investment savvy have helped launch numerous successful startups.

Behind the public persona lies a dedicated philanthropist. The Mark Cuban Foundation supports various causes, including entrepreneurship programs for at-risk youth and research into treating rare diseases. Following the COVID-19 pandemic, Cuban launched Cost Plus Drugs, aiming to dramatically reduce prescription medication prices for millions of Americans.

Looking Forward

Today, Cuban continues to disrupt industries through his forward-thinking investments in AI, cryptocurrency, and healthcare. Despite his billions, colleagues describe him as remarkably approachable and genuinely passionate about helping entrepreneurs succeed.

Cuban remains focused on making healthcare more affordable through Cost Plus Drugs and exploring new frontiers in digital technology. His commitment to transparency in business practices and creating opportunities for others forms the cornerstone of his ongoing legacy.

For aspiring entrepreneurs, Cuban’s advice remains consistent: follow your passion, outwork the competition, and always be learning. As he often says, “Work like there is someone working 24 hours a day to take it all away from you.”

Mark Cuban’s journey from selling garbage bags to building a multi-billion-dollar empire proves that with determination, innovation, and a willingness to challenge the status quo, extraordinary success is possible.

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Technology

Quantum Computing is Transforming Industries, Security, and Future Technologies

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Quantum Computing is Transforming Industries, Security, and Future Technologies

Quantum computing is rapidly emerging as one of the most transformative technologies of the 21st century. Unlike classical computers, which use bits to process information as either 0s or 1s, quantum computers leverage qubits, allowing them to exist in multiple states simultaneously. This property, known as superposition, along with entanglement and quantum tunneling, enables quantum computers to solve complex problems exponentially faster than traditional systems. As this technology advances, industries across the board are exploring its potential to revolutionize computing, security, and data processing.

Real-World Applications of Quantum Computing in Industries

Several industries are already benefiting from quantum computing’s capabilities. In healthcare, quantum algorithms are accelerating drug discovery by simulating molecular structures at an unprecedented scale, significantly reducing the time required for pharmaceutical research. Financial institutions are leveraging quantum computing to optimize trading strategies, portfolio management, and risk assessment. In manufacturing, quantum simulations enhance material science, leading to the development of stronger and more efficient materials. The logistics sector is also utilizing quantum computing to optimize supply chain management, reducing operational costs and improving efficiency.

Key Developments from Tech Giants in Quantum Research

Leading technology companies such as Google, IBM, Microsoft, and Intel are at the forefront of quantum computing research. Google made headlines with its claim of achieving quantum supremacy in 2019 when its quantum processor completed a calculation in 200 seconds that would take a classical supercomputer thousands of years. IBM continues to advance its quantum computing roadmap with cloud-accessible quantum computers and the development of a 1,000-qubit processor. Microsoft is investing heavily in topological qubits, a novel approach aimed at creating more stable quantum processors. Meanwhile, Intel is working on silicon-based quantum chips, striving to make quantum computing more scalable and accessible.

Quantum Cryptography and Its Potential to Redefine Security

As quantum computers advance, they pose a significant threat to current encryption methods. Traditional cryptographic techniques, such as RSA and ECC encryption, rely on the difficulty of factoring large numbers, a challenge that quantum computers can overcome almost instantly. Quantum cryptography, particularly quantum key distribution (QKD), offers a solution by leveraging the principles of quantum mechanics to create theoretically unbreakable encryption. Governments and cybersecurity firms are actively researching post-quantum cryptographic solutions to safeguard sensitive data against potential quantum attacks.

Challenges in Scaling Quantum Technologies

Despite its immense potential, quantum computing faces several challenges before it can become widely adopted. One of the biggest hurdles is qubit stability, as qubits are highly sensitive to environmental disturbances, leading to errors in computations. Error correction mechanisms are still in their early stages, requiring significant advancements before quantum computers can handle large-scale, practical applications. Additionally, quantum hardware is expensive and requires extreme cooling conditions, making commercialization difficult. Researchers and tech companies are actively working on solutions to address these challenges, but widespread implementation remains years, if not decades, away.

Conclusion

Quantum computing is poised to revolutionize industries by solving complex problems beyond the reach of classical computers. From pharmaceutical research and financial modeling to secure communications and logistics optimization, its applications are vast and transformative. However, challenges related to scalability, stability, and cost must be addressed before quantum computers can become mainstream. With continued advancements from tech giants and research institutions, the future of quantum computing holds immense promise, paving the way for groundbreaking innovations in computing and security.

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