Howard Levy Named Auditing Editor of The CPA Journal

[Las Vegas, NEV] November 28, 2016 – Piercy Bowler Taylor & Kern (PBTK), a full-service accounting firm, announces that its Director of Technical Resources, Howard B. Levy, has been appointed Auditing Editor of The CPA Journal, a highly regarded monthly publication of the New York State Society of CPAs.

Levy’s appointment to Auditing Editor entails authoring a monthly column on new developments and other selected issues in financial auditing. A frequent contributing author of material for publication in the Journal, Levy was appointed to the magazine’s Editorial Board in November last year.

The CPA Journal has been earning its reputation as an objective, critical source of information on issues of interest to CPAs for more than 85 years. It is widely regarded by its users as one of the top publications for members of the accounting profession in public practice, industry, government and education and provides analysis, perspective, and debate on the issues in topics that include accounting and auditing, taxation, personal financial planning, finance, technology, and professional ethics.

Levy’s first article published in the Journal was in 2005. Articles published in 2015 and 2016 are listed below in reverse chronological order (copies of selected items may be obtained by contacting Shannon Hiller at

  • November-December 2016 - “Searching for Buried Treasure: The Elusive Completeness Assertion for Revenue” (a two-part series)
  • October 2016 - “Fighting Fraud—and Serving Famous Frankfurters—for Over a Century: The Story of Old-Fashioned Controls at Nathan’s Famous”
  • September 2016 - “Depreciable Asset Lives: The Forgotten Estimate in GAAP”
  • July 2016 - “The Materiality Mystery: The Gap in GAAS” (co-authored with Julian Jacoby)
  • May 2016 “Old Habits Are Hard to Break: The Expectation Gap and the Case against Careless Use of Outdated Language”
  • February 2016 - “What Auditors Need to Know about SOX Section 404(a) Reports: Hidden Risks and Responsibilities”
  • February 2016 - “Unsolved Problems in Auditing: A Half-Century Retrospective and Update”
  • December 2015 - “Regulating Audit Committees: Isn't It Time for the SEC to Step Up to the Plate?”
  • November 2015 – “Putting the Decades-Long ‘Plain Paper’ Debate to Rest: Will SSARS 21 Be the Final Resolution?”
  • October 2015 “A Fresh Look at Fraud Risk: Guidance for Auditors”
  • July 2015 “Finding the Forest Among the Trees Overcoming Overload and Achieving Greater Disclosure Effectiveness”
  • May 2015 “Was GAAP Ever ‘Generally Accepted’?”
  • April 2015 - “Letter to the Editor: Remember Related Party Procedures in Interim Reviews.”

About Piercy Bowler Taylor & Kern

Piercy Bowler Taylor & Kern is a full-service accounting and business advisory firm that provides accounting and auditing, tax, consulting, valuation and litigation support services. Founded locally in 1990, the firm specializes in the casino gaming and leisure time industries, governmental and not-for-profit organizations, real estate development and construction industries and the legal and general business communities. Now with offices in Salt Lake City, Reno and Las Vegas, PBTK is one of the few independent accounting firms in its local markets to perform SEC audits. For more information on PBTK, visit or call Shannon Hiller at 702.384.1120.


The Importance of Accounting Estimates

A basic postulate of financial accounting is that timely financial reporting requires the use of estimates. And all accounting estimates inherently involve a degree of subjectivity, complexity and uncertainty — some considerably more than others. Although your auditors or other outside accountants may provide advice and guidance, like the financial statements in general, accounting estimates are ultimately the responsibility of management.

Some estimates may be relatively simple to make, but the more subjective or complex they are, and the more quantitatively significant they are to the financial statements, the more judgment and expertise are required to arrive at reliable and supportable results. Sometimes, to provide the necessary expertise to assist management in making and supporting important estimates, it will be necessary to engage outside specialists, such as appraisers, actuaries, lawyers, engineers or geologists.

When financial statements are audited, significant accounting estimates — such as allowances for doubtful accounts, useful lives and possible impairments of long-lived assets, and fair values of financial and sometimes nonfinancial assets — often require special attention from auditors. But whether the financial statements will be audited or not, when accounting estimates are particularly subjective or complex and have the potential to affect reported results of operations of financial position materially, management should take all steps reasonably possible to make the estimation process appropriately robust and the estimates sufficiently reliable, based on all information practically available.

What Auditors Look For

Auditing standards provided by the AICPA’s Auditing Standards Board (ASB) and the Public Companies Accounting Oversight Board (PCAOB) generally require auditors to test fair value measurements and other accounting estimates by management, including when supported by the work of outside specialists, in one or more of the following ways:

  1. Testing management’s process. Auditors will evaluate the quality of management’s estimation process and the reasonableness and consistency of the assumptions and will test the underlying data used by management and any specialists for completeness, accuracy and relevance.
  2. Assessing the objectivity and qualifications of persons responsible for the estimate. This would include any company employee or specialist engaged by management. Additional audit procedures may be selected based on the results of this assessment.
  3. Developing an independent estimate. Using management’s assumptions (once assessed to be reasonable) or alternative assumptions, auditors may come up with independent estimates, sometimes with the help of a specialist employed or engaged by the auditor, to be compared to management’s estimates.
  4. Reviewing subsequent events or transactions. The reasonableness of estimates sometimes can be gauged by looking at events or transactions that occur after the balance sheet date but before the date of the auditor’s report.

At the time of this writing (December 2016), the ASB and PCAOB are both currently engaged in projects intended to strengthen their respective standards that control the nature and extent of the procedures used by auditors to support management’s estimates, including procedures applied when outside specialists are engaged. So now is a good time for company managements to strive to make their estimation processes more robust and supportable under scrutiny.

Finding Help

Public companies are required to disclose in their periodic SEC filings (in a section called “Management’s Discussion and Analysis”) details about the underlying processes and significant assumptions used to develop what are called “critical accounting estimates.” An online search of the filings of public companies in your industry can provide useful information on how to develop and support your critical estimates. For additional help and guidance, contact your PBTK representative or Howard B. Levy.