Exposure Drafts, Comment Letters, and Statements of Position
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Description
This proposed audit and accounting guide provides guidance on the following matters: 1. Accounting recognition of common property and facilities. Questions arise as to whether the common property in a condominium or planned unit development (PUD) and improvements on such property should be reported in a CIRA's financial statements. This proposed guide provides guidance on the recognition of assets maintained or owned by a CIRA. Questions relating to the accounting treatment of recognized assets, the effect of the manner in which the assets were acquired, and depreciation policies are discussed. 2. Major repairs and replacements. A fundamental issue affecting a CIRA's financial condition is whether the CIRA has estimated its future needs for major repairs and replacements and has designated funds for those needs. Because a CIRA's primary function is to maintain and replace common property, the CIRA's legal documents and some state statutes require it to accumulate funds for future major repairs and replacements. This proposed guide discusses disclosure of anticipated major repairs and property replacements and the auditor's role in evaluating the adequacy of disclosures and reporting on the fund for future major repairs and replacements. 3. Financial reporting. The widespread use of financial reports of CIRAs by potential buyers, lenders, sellers, and others creates a need for financial statement formats that are comparable. This proposed guide recommends a format and presents illustrations. 4. Method of accounting. Under GAAP, CIRAs account for their 'financial activities using the accrual basis of accounting. Alternatively, another comprehensive basis of accounting, such as cash basis, may also be used if the results of applying that basis do not differ substantially from the results using the accrual basis. This proposed guide discusses the various methods. 5. Budgets. CIRAs are generally required by their governing documents to base members' assessments on annual budgets. This proposed guide discusses the development of budgets and their implementation in the operations of CIRAs. o Income taxes. The Internal Revenue Service considers most CIRAs to be taxable entities that are required to file federal income tax returns. Guidelines for determining the tax filing alternatives for CIRAs are discussed in this proposed guide. 6. Audit considerations. Audit procedures specifically applicable to CIRAs are discussed. 7. Review and compilation engagements. Because many CIRA engagements are compilations or reviews, applicable procedures are discussed. 8. Cooperative housing corporations. Issues unique to audits of cooperative housing corporations and financial reporting requirements for those entities are discussed.
Publication Date
1988
Relational Format
Book
Keywords
Condominium associations -- United States -- Auditing -- Standards; Homeowners' associations -- United States -- Auditing -- Standards; Housing, Cooperative -- United States -- Societies, etc. -- Auditing -- Standards; Real property -- United States -- Auditing -- Standards
Disciplines
Accounting | Taxation
Recommended Citation
American Institute of Certified Public Accountants. Task Force on Accounting for Common Interest Realty Associations, "Proposed audit and accounting guide : common interest realty associations ;Common interest realty associations; Exposure draft (American Institute of Certified Public Accountants), 1988, Aug. 31" (1988). Exposure Drafts, Comment Letters, and Statements of Position. 518.
https://egrove.olemiss.edu/aicpa_sop/518
Comments
Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.