Learn: Quality of Earnings, SOC 2, FASB Standards Explained

The Ledgerism Brief Learn desk publishes long-form accounting guides on the concepts that show up in real M&A deal rooms, audit engagements, and tax returns. Quality of earnings. EBITDA adjustments. SOC 2 audits. FASB ASC sections. IRC sections. Crypto and digital asset accounting under ASU 2023-08. Written for practitioners, not for search engines.

The short version

  • Real comparison tables: SOC 1 vs SOC 2 vs SOC 3, Type 1 vs Type 2, ISO 27001 vs SOC 2
  • Worked dollar examples: $40M Section 1202 exclusion cap, $4.25M adjusted EBITDA reconciliation
  • Named brands and products: Vanta, Drata, Secureframe, A-LIGN, Coalfire on the SOC 2 side
  • Direct citations: FASB ASC paragraph references, IRC subsection citations, Treas. Reg. links
  • Recent-changes sections: ASU 2023-08, OBBBA Section 1202, post-Section 174 R&E capitalization
  • Every article has 6 to 9 FAQ Q&A pairs and a Bottom Line block

Featured guides

AUDIT

SOC 2 Audit: Type 1 vs Type 2, Cost, Timeline

Trust Services Criteria, audit cost ranges, 6-month observation window for Type 2. The four firms most companies actually pick.

M&A

Quality of Earnings Report Explained

What is in a QoE report, the 14 EBITDA add-back categories that survive buyer pushback, who provides them, what they cost.

TAX

Section 1202 QSBS After OBBBA

$15M exclusion cap, 5-year holding period, gross-asset test, packing-and-stacking strategies, worked example with $50M sale.

Quality of earnings and M&A accounting

QoE is the buyer’s adjusted-EBITDA reconciliation. The seller hands the buyer a P&L. The buyer hires a QoE provider (Big Four, mid-tier accounting firm, or M&A-specialist boutique) to translate that P&L into normalized EBITDA the deal will be priced on. The 14 categories of add-backs that show up in real deals: owner compensation excess, related-party rent normalization, discretionary perks, one-time legal fees, COVID PPP forgiveness reversal, restructuring charges, non-recurring revenue, etc. Read the QoE report deep dive and the 14 EBITDA adjustment categories guide.

Audit and assurance

SOC 2 audits, internal controls testing under SAS 145 and AS 2201, ISO 27001 versus SOC 2 mapping, and the audit firm rotation question. The four firms most US companies pick for SOC 2: A-LIGN (largest single-issuer firm), Coalfire, Schellman, Sensiba. Pricing ranges from $20,000 for a Type 1 at a startup to $150,000+ for a Type 2 with 30+ controls at a mid-market SaaS company. Read the SOC 2 audit deep dive and the internal controls testing methodology.

FASB standards and crypto accounting

FASB ASU 2023-08 moved qualifying crypto assets to fair value as of fiscal years beginning after December 15, 2024. The scope: fungible crypto assets held by an entity, with NFTs and stablecoins excluded. The disclosure mechanics include disaggregated holdings, realized and unrealized gains and losses, and a reconciliation of cost basis to fair value. Read the ASU 2023-08 implementation guide with full before-and-after journal entries.

Tax planning

Section 1202 QSBS, R&D tax credit (Section 41), Section 174 R&E capitalization, Section 1031 like-kind, Section 338(h)(10) elections, and the OBBBA 2025 changes that touched all of these. The OBBBA Section 1202 amendment lifted the per-issuer exclusion cap from $10M to $15M for stock acquired after July 4, 2025, and clarified the gross-asset test computation. Read the Section 1202 OBBBA guide and the R&D credit four-part test guide.

Crypto and digital asset taxation

Cost basis methods (FIFO, LIFO, HIFO, specific identification), Form 8949 mechanics, the 2026 broker reporting under proposed Reg 1.6045-1, DeFi yield treatment, staking income classification, and the wash-sale rule that does not (yet) apply to crypto. Read the crypto tax accounting full guide.

Forensic accounting and fraud detection

What forensic accountants actually do beyond the financial-statement audit: fraud investigation, litigation support, damages calculation, expert witness testimony. The Fraud Triangle (pressure, opportunity, rationalization). The ACFE 2024 Report to the Nations numbers: median loss $1.7 million for schemes lasting 24+ months. Read the forensic accounting practice guide and the 11 categories of financial-statement red flags.

How a guide is structured

Every Learn article follows the same shape: a Key Takeaways box, a definition-style opening (focus keyword in the first 50 words), why the topic matters with a named-source statistic, the mechanics with a worked dollar example, a comparison table when one applies, recent changes that affect the answer, common pitfalls, a 6 to 9 question FAQ, and a Bottom Line. We cite FASB ASC by paragraph, IRC by subsection, court cases by citation, and Treas. Reg. by section.

What is coming next

The active build queue: implementation guides for ASU 2023-08 by industry vertical (asset managers, exchanges, miners); a Form 1099-DA mechanics guide once Reg 1.6045-1 is finalized; the post-OBBBA Section 1202 packing-and-stacking strategies; SOC 2 Type 2 implementation cost benchmarks; the audit firm rotation analysis; and the 2026 forensic accounting compensation survey.

Bottom line

Learn articles are written so a senior associate can read one and be a competent first chair on the topic by the end. That is the bar.

Full article index

Every Learn guide on The Ledgerism Brief, organized by topic. These are the concept articles, worked examples, and standard explainers that practitioners come back to.

M&A and quality of earnings

FASB ASC standards

Audit and assurance

Tax code sections

IRS forms

Crypto and digital asset accounting

R&D tax credit

Reading financial statements

Forensic accounting