Exposure Drafts, Comment Letters, and Statements of Position

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  AICPA Audit and accounting guide: Depository and lending institutions: Banks and savings institutions, credit unions, finance companies and mortgage companies;Depository and lending institutions: Banks and savings institutions, credit unions, finance companies and mortgage companies;Certain Financial Institutions and Entities That Lend to or Finance the Activities of Others; Exposure draft (American Institute of Certified Public Accountants), 2001

  American Institute of Certified Public Accountants. Financial Institution Guide Combination Task Force

  (This copy is missing Appendices A and B.) This American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide has been prepared to assist financial institutions in preparing financial statements in conformity with generally accepted accounting principles (GAAP) and to assist independent accountants in reporting on financial statements (and, as discussed in appendix B, other written management assertions) of those entities. Chapters of the Guide are generally organized by financial statement line item into four sections: a. An Introduction that describes the general transactions and risks associated with the audit area. (The introduction does not address all possible transactions in each area.) b. Regulatory Matters that may be of relevance in the audit of financial statements. Other regulatory matters may exist that require attention in the audit of financial statements following the general guidance on regulatory matters discussed in chapter 5. Further, the Guide does not address regulations that are not relevant to the audit of financial statements and certain of the regulatory requirements discussed may not be applicable to uninsured institutions. c. Accounting and Financial Reporting guidance that addresses accounting and financial reporting issues (Statement on Auditing Standards [SAS] No. 69, The Meaning ofPresent Fairly in Conformity With Generally Accepted Accounting Principles in the Independent Auditor's Report [AICPA, Professional Standards, vol. 1, AU sec. 411], establishes the hierarchy of GAAP). d. Auditing guidance that includes objectives, planning, internal control over financial reporting and possible tests of controls, and substantive tests.

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  Reporting pursuant to the Association for Investment Management and Research performance presentation standards; Statement of position 01-4;

  American Institute of Certified Public Accountants. Investment Performance Statistics Task Force

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  Omnibus AICPA proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 2001, Apr. 16

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

  1. PROPOSED REVISION OF ET SECTION 92: Definitions p PROPOSED REVISION OF INTERPRETATION 101-1 UNDER RULE 101: Interpretation of Rule 101; 2. PROPOSED DELETION OF INTERPRETATION 101-9 UNDER RULE 101: The Meaning of Certain Independence Terminology and the Effect of Family Relationships on Independence; 3. PROPOSED REVISION OF INTERPRETATION 101-11 UNDER RULE 101: Modified Application of Rule 101 for Certain Engagements to Issue Restricted-Use Reports Independence and the Performance of Professional Services Under the Statements on Standards for Attestation Engagements and Statements on Auditing Standards No. 75, Engagements to Apply Agreed Upon Procedures to Specified Elements, Accounts, or Items of a Financial Statement; 4. PROPOSED DELETION OF RULING 6 UNDER RULE 101: Member's Spouse as Accountant of Client; 5. PROPOSED REVISION OF RULING 60 UNDER RULE 101: Employee Benefit Plans-Member's Relationships With Participating Employer(s); 6. PROPOSED DELETION OF RULING 80 UNDER RULE 101: The Meaning of a Joint Closely Held Business Investment; 7. PROPOSED DELETION OF RULING 108 UNDER RULE 101: Participation of Member, Spouse or Dependent in Retirement, Savings, or Similar Plan Sponsored by, or That Invest in, Client.

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  Performing agreed-upon procedures engagements that address internal control over derivative transactions by the New York State insurance law; Statement of position 01-3;

  American Institute of Certified Public Accountants. Reporting on Internal Control Over Derivative Transactions at Insurance Entities Task Force

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  Proposed statement on responsibilities for litigation services no. 1;Statement on responsibilities for litigation services no. 1; Exposure draft (American Institute of Certified Public Accountants), 2001, Dec. 1

  American Institute of Certified Public Accountants. Statement on Responsibilities Task Force. Litigation and Dispute Resolution Services Subcommittee

  The exposure draft sets forth the responsibilities of a litigation services practitioner in a litigation services engagement. The purpose of this exposure draft is to solicit comments from CPAs who provide litigation services and other interested parties. The proposed SOR provides guidance on the application of the Statement on Standards for Consulting Services for a CPA providing litigation service consulting. The exposure draft accomplishes the following: 1. Incorporates into the SOR selected provisions of Special Reports that have been issued previously by the AICPA. 2. Provides guidance as to the application of consulting standards in a litigation services engagement. 3. Recognizes the impact of recent U.S. Supreme Court decisions relative to expert testimony and related changes in the federal Rules of Evidence.

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  Accounting by producers or distributors of films; Statement of position 00-2;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Comment letters on Proposed Statement of Position, Amendment to Scope of Statement of Position 95-2, Financial Reporting by Nonpublic Investment Partnerships, to include commodity pools

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Proposed statement of position : Accounting for investors' interests in unconsolidated real estate investments;Accounting for investors' interests in unconsolidated real estate investments; Exposure draft (American Institute of Certified Public Accountants), 2000, Nov. 21

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This proposed Statement of Position (SOP) provides guidance on accounting for investors' interests in unconsolidated real estate investments. It provides guidance on when and how the equity method of accounting should be applied to such investments. It is intended to supersede SOP 78-9, Accounting for Investments in Real Estate Ventures. This proposed SOP would require the following: 1. An investor holding an equity investment (including nonvoting common stock or nonredeemable preferred stock) in an investee should follow the equity method of accounting for that investee when the investor has the ability to exercise significant influence over the investee, unless the investment is in nonvoting common stock or nonredeemable preferred stock that meets the definition in Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, of an equity security having a readily determinable fair value. If the stock meets that definition, the investor should apply FASB Statement No. 115. For investees such as general partnerships, limited partnerships, limited liability companies (LLCs), and limited liability partnerships (LLPs) that are organized in a "specific ownership account"-like structure and over which the investor does not have the ability to exercise significant influence, the investor's accounting depends on whether its ownership interest meets the definition in FASB Statement No. 115 of an equity security having a readily determinable fair value. If the ownership interest meets that definition, the investor should apply FASB Statement No. 115; if it does not, the investor should apply the equity method. 2. The hypothetical liquidation at book value (HLBV) method should be followed when applying the equity method. HLBV is a balance-sheet-oriented approach to equity method accounting. Under HLBV, an investor determines its share of the earnings or losses of an investee by determining the difference between its "claim on the investee's book value" at the end and beginning of the period. This claim is calculated as the amount that the investor would receive (or be obligated to pay) if the investee were to liquidate all of its assets at recorded amounts determined in accordance with generally accepted accounting principles (GAAP) and distribute the resulting cash to creditors and investors in accordance with their respective priorities. 3. HLBV takes into account all forms of financial interest that an investor has with respect to an investee, including common stock, preferred stock, general or limited partnership interests, debt securities, loans, advances, notes receivable, and other obligations. 4. In applying HLBV, an investor should report a negative investment only to the extent it has guaranteed obligations of the investee, is otherwise committed to provide further financial support for the investee, or when the imminent return to profitable operations by the investee appears to be assured. When the amount an investor would receive or pay upon the hypothetical liquidation of an investee at book value depends on the ability of another investor to fund its negative investment, an investor's claim on the book value of an investee should include only those amounts that it is probable the other investor would fund. 5. An investor has a "basis difference" when there is a difference between the amount of its investment in an investee and its claim on the book value of the investee. Generally, a basis difference should be attributed to assets or liabilities of the investee and accounted for as if the investee were a consolidated subsidiary. 6. In applying HLBV, an investor may recognize more income from an investee than the investee's net income under GAAP. That can occur if an investor has a priority return on its investment and there is sufficient equity of other investors that is subordinate to the preferred investor such that the preferred investor's claim on the book value of the investee increases. 7. An investor's claim on the book value of an investee can change when another investor purchases new equity interests for cash directly from the investee. Any change in the investor's claim on the book value of an investee in these situations should be recognized through the income statement or directly in paid-in capital by the investor in accordance with its accounting policy. 8. An investor should report its share of an investee's prior period adjustments, items of other comprehensive income (OCI), gain or loss from discontinued operations, extraordinary items, and cumulative effect of a change in accounting principle by measuring the incremental effect of each item on the investor's claim on the book value of the investee. 9. Cash distributions received by an investor during a period represent cash from operating activities except to the extent that the distributions cause an increase in the excess of cumulative distributions over cumulative share of earnings. 10. Investors in real estate investees should make the disclosures required by paragraph 20 of Accounting Principles Board (APB) Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. Investors also should provide a summary of key provisions of the ownership agreements that govern how the investee's assets are distributed to the investors and that form the basis for the investor's application of HLBV. This SOP provides examples throughout the text, immediately following the section to 771 which they pertain, to make the SOP as understandable as possible. The provisions of the proposed SOP would be effective for fiscal years beginning after December 15, 2001, with earlier application encouraged. The cumulative effect of changes caused by adopting the provisions of this proposed SOP would be recognized in the period of adoption. Restatement of financial statements issued before adoption would be prohibited.

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  Proposed statement of position : accounting by insurance enterprises for demutualizations and formations of mutual insurance holding companies and for certain long-duration participating contracts;Accounting by insurance enterprises for demutualizations and formations of mutual insurance holding companies and for certain long-duration participating contracts; Exposure draft (American Institute of Certified Public Accountants), 2000, Apr. 3

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee and American Institute of Certified Public Accountants. Demutualization Task Force

  This proposed Statement of Position (SOP) provides guidance on accounting by insurance enterprises for demutualizations and the formation of mutual insurance holding companies (MIHC). The proposed SOP also applies to stock insurance enterprises that apply SOP 95-1, Accounting for Certain Insurance Activities of Mutual Life Insurance Enterprises, to account for participating policies that meet the criteria of paragraph 5 of SOP 95-1. The proposed SOP specifies the following: 1. Financial statement presentation of the closed block. Closed block assets, liabilities, revenues, and expenses should be displayed together with all other assets, liabilities, revenues, and expenses of the insurance enterprise based on the nature of the particular item, with appropriate disclosures relating to the closed block. 2. Accounting for predemutualization participating contracts after the demutualization date or formation of an MIHC and for stock insurance enterprises that have adopted SOP 95-1. A demutualized insurance enterprise should continue to apply the guidance of SOP 95-1 to its participating contracts issued before the date of demutualization or formation of the MIHC that are within the scope of SOP 95-1. However, the segregation of undistributed accumulated earnings on participating contracts is meaningful in a stock life insurance company, because the objective of such presentation is to identify amounts that are not distributable to stockholders. Therefore, after the date of demutualization or formation of an MIHC, the provisions of paragraphs 41 and 42 of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 60, Accounting and Reporting by Insurance Enterprises, relating to dividends on participating contracts should apply to such contracts sold before the date of demutualization or formation of the MIHC. 3. Emergence of earnings. Cumulative actual closed block earnings in excess of the expected periodic amounts calculated at the date of demutualization or formation of an MIHC that will not inure to the stockholders should be recorded as an additional liability to closed block policyholders (referred to as a policyholder dividend obligation). 4. Accounting for participating policies sold outside the closed block after the date of demutualization or formation of an MIHC. SOP 95-1 should be applied to participating policies that meet its conditions and are sold outside the closed block after the date of demutualization or formation of the MIHC. However, provisions of paragraphs 41 and 42 of FASB Statement No. 60 relating to dividends to participating contracts should apply to such contracts sold after the date of demutualization or formation of an MIHC. 5. Accounting for expenses related to a demutualization and the formation of an MIHC. Direct incremental costs related to a demutualization or formation of an MIHC should be classified as a single line item in income from continuing operations. 6. Accounting for retained earnings and other comprehensive income at the date of demutualization and formation of an MIHC. An insurance enterprise that demutualizes in a distribution-form demutualization should reclassify all its retained earnings by the demutualization date to capital stock and additional paid-in capital accounts (the capital accounts). A subscription-form demutualization does not by itself result in reclassification of retained earnings. The equity accounts of an MIHC at the date of formation should be determined using the principles for transactions of companies under common control, with the amount of retained earnings of the demutualized insurance enterprise, before reclassification to the capital accounts, being reported as retained earnings of the MIHC. Because the accounting bases and carrying amounts of assets and liabilities are not changed as a consequence of demutualization or formation of an MIHC, the amounts in accumulated other comprehensive income should also not be changed as a consequence of demutualization or formation of an MIHC. 7. Accounting for a distribution from an MIHC to its members. Because the members of an MIHC are also policyholders of the stock insurance subsidiary, a distribution by an MIHC to its members should be accounted for according to the substance of the transaction. Unless there are substantive independent third-party stockholders, the distribution should be accounted for as a policyholder dividend. This proposed SOP is effective for annual financial statements for years beginning after December 15, 2000. Early adoption is encouraged. The effect of initially applying this SOP should be reported retroactively through restatement of all previously issued financial statements presented for comparative purposes. The cumulative effect of adopting this SOP should be included in retained earnings in the earliest year restated. Expenses associated with a demutualization should be classified as a single line item in income from continuing operations in interim periods in the year of adoption. All other provisions of this SOP need 6b2 not be applied in financial statements for interim periods in the year of initial application, but amounts reported for those interim periods shall be restated if they are reported with annual financial statements for that fiscal year.

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  Proposed statement of position : accounting for and reporting of certain health and welfare benefit plan transactions : amendment to AICPA Audit and accounting guide : audits of employee benefits plans and SOP 92-6, Accounting and reporting by health and welfare benefit plans;Accounting for and reporting of certain health and welfare benefit plan transactions : amendment to AICPA Audit and accounting guide : audits of employee benefits plans and SOP 92-6, Accounting and reporting by health and welfare benefit plans; Exposure draft (American Institute of Certified Public Accountants), 2000, Mar. 22

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee and American Institute of Certified Public Accountants. Employee Benefit Plans Committee

  This proposed statement of position (SOP) would amend chapter 4 of the AICPA Audit and Accounting Guide Audits of Employee Benefit Plans (the Guide), and SOP 92-6, Accounting and Reporting by Health and Welfare Benefit Plans. This proposed SOP would: 1. Revise the standards for measuring, reporting, and disclosing estimated future postretirement benefit payments that are to be funded partially or entirely by plan participants. 2. Specify the presentation requirements for benefit obligation information. 3. Establish standards of financial accounting and reporting for certain postemployment benefits provided by health and welfare benefit plans. 4. Clarify the measurement date for benefit obligations. 5. Require the identification of investments that are 5 percent of the net assets available for benefits. The provisions of this proposed SOP would be effective for financial statements for plan years beginning after December 15, 2000, with earlier application encouraged. Financial statements presented for prior plan years would be required to be restated to comply with the provisions of this proposed SOP.

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  Proposed statement of position : Accounting by certain financial institutions and entities that lend to or finance the activities of others ;Accounting by certain financial institutions and entities that lend to or finance the activities of others; Exposure draft (American Institute of Certified Public Accountants), 2000, May 30

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee and American Institute of Certified Public Accountants. Guides Combination Task Force

  This proposed Statement of Position (SOP) reconciles and conforms, as appropriate, the accounting and financial reporting provisions established by the AICPA Audit and Accounting Guides Banks and Savings Institutions, Audits of Credit Unions, and Audits of Finance Companies. The proposed SOP also explicitly incorporates mortgage companies and corporate credit unions in its scope. The final SOP will be incorporated in a new AICPA Audit and Accounting Guide, which will supersede the existing Guides.* The AICPA Industry Audit and Accounting Guides fall into category (b) of generally accepted accounting principles (GAAP) in the hierarchy established by AICPA Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles in the Independent Auditor's Report. In reconciling the accounting and reporting principles established by the three existing Guides, this proposed SOP specifies provisions that are: 1. Applied authoritatively for the first time to a kind of entity not previously subject to such provisions. 2. Eliminated for an entity previously subject to a provision in lieu of applying it for the first time to other entities. 3. Unique to a kind of entity and its practices and preserved for that kind of entity but not applied to other kinds of entities. As discussed further in the Appendix, this proposed SOP is part of a larger AICPA project designed to merge the three Guides. This broader project involves several other reconciliations of materials in the former Guides, as follows: 1. Reconciliation of general information in the Guides; 2. Reconciliation of auditing guidance in the Guides; 3. Reconciliation of the descriptions of "category a" or "higher level" GAAP in the Guides; 4. Reconciliation, where appropriate, of the sample financial statements in the Guides. These latter reconciliations will occur through conforming changes to the existing Guides at the time that the Guides are actually merged. In this proposed SOP, the Accounting Standards Executive Committee (AcSEC) modified certain accounting and reporting provisions established by the existing Guides. These modifications will be carried forward to the new Guide. These modifications include the following: 1. Accounting guidance for sales of servicing rights related to loans retained was modified to follow the revenue recognition model of Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 95-5, Determination of What Risks and Rewards, If Any, Can Be Retained and Whether Any Unresolved Contingencies May Exist in a Sale of Mortgage Loan Servicing Rights, and the "basis allocation" approach used in FASB Statement of Financial Accounting Standards No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. (See paragraph 6j of this proposed SOP.) 2. Accounting guidance for purchases of receivables and factoring commissions is clarified to indicate applicability of FASB Statement No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, to these transactions. (See paragraph 8d of this proposed SOP.) 3. Disclosure of the entity's policy for classification and method of accounting for interest only strips and other instruments covered by paragraph 14 of FASB Statement No. 125 is added. (See paragraph 9c of this proposed SOP.) 4. Disclosure of the nature, terms, and extent of financial instruments with off-balance-sheet credit risk, except for those instruments already within the scope of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, is added. (See paragraph 9f of this proposed SOP.) 5. Disclosures related to foreign banking organizations, trust operations, and business combinations, are added to existing regulatory capital disclosure requirements for banks and savings institutions. (See paragraph 10 of this proposed SOP.) 6. Disclosure of the amount of loans past due ninety days and still accruing, and the entity's policy for determining past due status is added. (See paragraphs 13b and 13a(3) of this proposed SOP.) This proposed SOP will be the only document exposed for public comment in connection with the preparation of the combined Guide. The remainder of the process of preparing the combined Guide will involve only conforming changes. The proposed SOP eliminates differences in accounting established by the Guides among financial institutions (that is, banks, credit unions, finance companies, and savings institutions), where such differences are not warranted. The proposed SOP also explicitly incorporates mortgage companies and corporate credit unions in its scope. It carries forward accounting guidance for transactions unique to certain financial institutions. A summary of these matters follows. Most of the differences between the respective Audit Guides represent presentation or disclosure requirements. One of the more important differences involves disclosure about regulatory capital requirements. The Guide for banks and savings inst 6af itutions requires these disclosures, but the Guide for credit unions does not. Under the proposed SOP, regulatory capital disclosures will be required for credit unions. Many of the other presentation and disclosure differences are similarly reconciled.

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  Proposed statement of position : amendment to scope of Statement of position 95-2, Financial reporting by nonpublic investment partnerships, to include commodity pools ;Amendment to scope of Statement of position 95-2, Financial reporting by nonpublic investment partnerships, to include commodity pools; Exposure draft (American Institute of Certified Public Accountants), 2000, Aug. 15

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee and American Institute of Certified Public Accountants. SOP 95-2 Amendment Task Force

  This Statement of Position (SOP) amends SOP 95-2, Financial Reporting by Nonpublic Investment Partnerships, to include within the scope of SOP 95-2 investment partnerships that are commodity pools subject to regulation under the Commodity Exchange Act of 1974.

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  SysTrust Principles and Criteria for Systems Reliability Version 2.0; Exposure Draft (American institute of Certified Public Accountants), 2000, July 15

  American Institute of Certified Public Accountants (AICPA) and Chartered Accountants of Canada

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  Comment letters on proposed Statement on Auditing Standards: Omnibus Statement on Auditing Standards -- 2000

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Proposed statement on auditing standards : omnibus statement on auditing standards--2000;Omnibus statement on auditing standards--2000; Exposure draft (American Institute of Certified Public Accountants), 2000, May 1

  American Institute of Certified Public Accountants. Auditing Standards Board

  This Statement : 1. Withdraws Statement on Auditing Standards (SAS) No. 75, Engagements to Apply Agreed-Upon Procedures to Specified Elements, Accounts, or Items of a Financial Statement (AICPA, Professional Standards, vol. 1, AU sec. 622). The guidance in SAS No. 75 currently parallels the guidance in Statement on Standards for Attestation Engagements (SSAE) No. 4, Agreed-Upon Procedures Engagements (AICPA, Professional Standards, vol. 1, AT sec. 600). However, one difference between the two standards is that SAS No. 75 does not require a written assertion as a condition for performance of an agreed-upon procedures engagement. This assertion is effectively embodied in the specified elements, accounts, or items of a financial statement when the basis of accounting is clearly evident. On April 14, 2000, the Auditing Standards Board (ASB) issued an exposure draft of a proposed SSAE that will amend the attestation standards to eliminate the requirement for a written assertion as a condition of performance for agreed-upon procedures engagements. As a result of the elimination of the requirement for a written assertion, there is no longer a need to retain, within the professional standards, a separate standard for agreed-upon procedures engagements relating to specified elements, accounts, or items of a financial statement. Thus, the attestation standards will contain all of the guidance applicable to agreed-upon procedures engagements. 2. Amends AU section 543 to clarify the position of an auditor of an investee accounted for under the equity method (see SAS No. 1, Codification of Auditing Standards and Procedures, AICPA, Professional Standards, vol. 1, AU sec. 543 "Part of Audit Performed by Other Independent Auditors"). 3. Amends SAS No. 58, Reports on Audited Financial Statements (AICPA, Professional Standards, vol. 1, AU sec. 508.08), to include a reference to the country of origin of the accounting principles used to prepare the financial statements and the auditing standards that the auditor follows in performing the audit. This change is considered appropriate because financial statements in conformity with U.S. generally accepted accounting principles and audited in accordance with U.S. generally accepted auditing standards are increasingly available beyond U.S. borders. 4. Amends SAS No. 84, Communications Between Predecessor and Successor Auditors (AICPA, Professional Standards, vol. 1, AU sec. 315.02), to clarify the definition of predecessor auditor. SAS No. 84 does not address the situation in which an auditor is engaged to perform a first-year audit, but does not complete that audit. The proposed amendment clarifies that any auditor who is engaged to perform an audit, but does not complete the audit, is considered a predecessor auditor for purposes of SAS No. 84. This proposed Statement: 1. Withdraws SAS No. 75 and the related Auditing Interpretation No. 1, "Applying Agreed-Upon Procedures to All, or Substantially All, of the Elements, Accounts, or Items of a Financial Statement" (AICPA, Professional Standards, vol. 1, AU sec. 9622.01-.02). 2. Deletes AU section 543.14 and adds a footnote to AU section 543.02. 3. Amends SAS No. 58 and withdraws Auditing Interpretation No. 13 of SAS No. 58. 4. Amends SAS No. 84. Conforming changes resulting from the above-referenced actions will be made throughout the professional standards.

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  Proposed statement on standards for attestation engagements : attestation standards, revision and recodification;Attestation standards, revision and recodification; Exposure draft (American Institute of Certified Public Accountants), 2000, Apr.14

  American Institute of Certified Public Accountants. Auditing Standards Board

  The following is a summary of the significant proposed changes to the attestation standards. 1. This proposed SSAE would supersede SSAE Nos. 1 through 9 (a list of these Statements is included in the transmittal letter to this proposal). 2. The body of the attestation standards is codified and organized in AT sections in the AICPA Professional Standards. This proposed SSAE would change the numbering and order of the AT sections. This reorganization and renumbering will be effected with the approval of the new standard. This exposure draft retains the existing AT section numbers. 3. The proposed revision of AT section 100, Attestation Standards, does the following: a. Changes the title of the section to Attest Engagements. b. Changes the definition of an attest engagement into a statement on the applicability of the standard. Combined with some additional changes (in particular, paragraph .06 in the exposure draft, which correlates with paragraph .03 in existing AT section 100), the proposal clarifies that the attestation standards are applicable when the practitioner and his or her client intend that the engagement be an attest engagement. Practitioners are cautioned to avoid reporting on other types of engagements in a manner similar to an attest engagement as it might reasonably be inferred that the report is an attest report. c. Clarifies that the attestation standards may be applied to a broad range of subject matter. (See section 100.07.) d. Clarifies the relationship between the party responsible for the subject matter (the responsible party), the client, if different than the responsible party, and the practitioner. (See sections 100.11 to 100.13.) e. Revises the third general standard to focus on the essential elements of criteria: they must be suitable (this conforms to terminology used internationally—existing AT section 100 refers to reasonable criteria); they must be available to users; and the subject matter must be capable of reasonably consistent evaluation against them. The proposal also revises the guidance on the characteristics of criteria that make them suitable. f. The proposed statement would enable, in some circumstances, the practitioner to perform and report on engagements when a written assertion can not be obtained from the responsible party. While the presumption is that the practitioner would ordinarily obtain an assertion as part of his or her evidence, the proposal recognizes that in circumstances when the practitioner's client is not the responsible party that an assertion may not be provided. When a written assertion is not obtained, use of the attest report would be restricted to specified parties. g. Enables true direct reporting on subject matter by eliminating the requirement to make reference to an assertion in the practitioner's report. The practitioner also is permitted to report on the written assertion provided by the responsible party. h. Provides expanded guidance on the circumstances in which the use of attest reports should be restricted to specified parties. The majority of this guidance was derived from and is consistent with Statement on Auditing Standards No. 87, Restricting the Use of an Auditor's Report. 4. This proposed SSAE would amend the accompanying AT section 600, Agreed-Upon Procedures Engagements, as follows: a. lt eliminates the requirement for the practitioner to obtain a written assertion in an agreed-upon procedures attest engagement. b. lt incorporates changes needed as a result of the proposed elimination of SAS No. 75. 5. This proposed SSAE shows how the current AT sections 200 through 700 would be changed to conform with the proposed new AT section 100, if issued in final form. Because the existing AT sections 200 through 700 are derived from and are subordinate to AT section 100, the majority of the proposed changes to them are a direct result of the proposed amendments to AT section 100. However, several of the proposed changes are significant and because of the nature of the subject matter addressed in the specific AT sections, some of the changes are not entirely consistent with the corresponding changes proposed in AT section 100. 6. The proposed effective date is for assertions or subject matter as of or for a period ending on or after June 15, 2001. Early application would be permitted. This proposed SSAE would supersede SSAE Nos. 1 through 9 (AICPA, Professional Standards, vol. 1, AT secs. 100 though 700). The existing interpretations of the AT sections will be conformed in accordance with the provisions of this proposed SSAE and retained, if appropriate, in the revised Codification of Statements on Standards for Attestation Engagements.

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  Proposed statement on auditing standards : amendment to Statement on auditing standards no. 55, Consideration of internal control in a financial statement audit, as amended by Statement on auditing standards no. 78, Consideration of internal control in a financial statement audit : an amendment to Statement on auditing standards no. 55;Amendment to Statement on auditing standards no. 55, Consideration of internal control in a financial statement audit, as amended by Statement on auditing standards no. 78, Consideration of internal control in a financial statement audit : an amendment to Statement on auditing standards no. 55; Exposure draft (American Institute of Certified Public Accountants), 2000, Nov. 1

  American Institute of Certified Public Accountants. Auditing Standards Board and American Institute of Certified Public Accountants. Technology Issues Task Force

  This proposed Statement on Auditing Standards (SAS) amends SAS No. 55, Consideration of Internal Control in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 319), as amended by SAS No. 78, Consideration of Internal Control in a Financial Statement Audit: An Amendment to Statement on Auditing Standards No. 55 (AICPA, Professional Standards, vol. 1, AU sec. 319) to provide guidance to auditors about the effect of information technology (IT) on internal control, and on the auditor's understanding of internal control and assessment of control risk. The Auditing Standards Board (ASB) believes the guidance is needed because entities of all sizes increasingly are using IT in ways that affect their internal control and the auditor's consideration of internal control in a financial statement audit. Consequently, in some circumstances, auditors may need to perform tests of controls to perform effective audits. This proposed SAS amends SAS No. 55, as amended by SAS No. 78, to: 1. Incorporate and expand on the concept from SAS No. 80, Amendment to Statement on Auditing Standards No. 31, Evidential Matter (AICPA, Professional Standards, vol. 1, AU sec. 326.14), that in circumstances where a significant amount of information supporting one or more financial statement assertions is electronically initiated, recorded, processed, and reported, the auditor may determine that it is not practical or possible to restrict detection risk to an acceptable level by performing only substantive tests for one or more financial statement assertions. In such circumstances, the auditor should obtain evidential matter about the effectiveness of both the design and operation of controls to reduce the assessed level of control risk. 2. Describe how IT may affect internal control, evidential matter, and the auditor's understanding of internal control and assessment of control risk. 3. Describe both benefits and risks of IT to internal control, and how IT affects the components of internal control, particularly the control activities and information and communication components. 4. Provide guidance to help auditors determine whether specialized skills are needed to consider the effect of computer processing on the audit, to understand the controls, or to design and perform audit procedures. 5. Clarify that in obtaining an understanding of the entity's financial reporting process, the auditor should understand how both standard, recurring entries and nonstandard, nonrecurring entries are initiated and recorded, and the auditor should also understand the controls that have been placed in operation to ensure that such entries are authorized, complete, and correctly recorded. 6. Update terminology and references to IT systems and controls. The proposed SAS does not: 1. Eliminate the alternative of assessing control risk at the maximum level and performing a substantive audit, if that is an effective approach. 2. Change the requirement to perform substantive tests for significant account balances and transaction classes. This proposed SAS amends SAS No. 55, as amended by SAS No. 78.

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  Accounting by insurance enterprises for demutualizations and formations of mutual insurance holding companies and for certain long-duration participating contracts; Statement of position 00-3;

  American Institute of Certified Public Accountants. Demutualization Task Force

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  Auditing health care third-party revenues and related receivables; Statement of position 00-1;

  American Institute of Certified Public Accountants. Health Care Third-Party Revenue Recognition Task Force

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  Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 2000, Apr. 15

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

  1. PROPOSED REVISION OF INTERPRETATION 101-11 UNDER RULE 101: Independence and the Performance of Professional Services Under the Statements on Standards for Attestation Engagements and Certain Statements on Auditing Standards No. 75, Engagements to Apply Agreed-Upon Procedures to Specified Elements, Accounts, or Items of a Financial Statement; 2. PROPOSED REVISION TO RULING 100 UNDER RULE 101: Actions Permitted-Report Re-issuance When Independence Is Impaired; 3. PROPOSED REVISION TO RULING 108 UNDER RULE 101: Participation of Member, Spouse or Dependent in Retirement, Savings, or Similar Plan Sponsored by, or That Invest in, Client; 4. PROPOSED REVISION OF INTERPRETATION 501-5 UNDER RULE 501: Failure to Follow Requirements of Government Bodies, Commissions, or Other Regulatory Agencies in Performing Attest or Similar Services.

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  Statement on Standards for Continuing Professional Education (CPE); Exposure draft (American Institute of Certified Public Accountants), 2000, Feb. 7

  American Institute of Certified Public Accountants. Special Committee on CPE Standards

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  Proposed statements on standards for tax services and interpretation;Standards for tax services and interpretation; Exposure draft (American Institute of Certified Public Accountants), 2000, Apr. 18

  American Institute of Certified Public Accountants. Tax Executive Committee

  1. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 1, Tax Return Positions; 2. PROPOSED INTERPRETATION NO. 1-1, "Realistic Possibility Standard" D PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 2, Answers to Questions on Returns; 3. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 3, Certain Procedural Aspects of Preparing Returns; 4. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 4, Use of Estimates; 5. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 5, Departure From a Position Previously Concluded in an Administrative Proceeding or Court Decision; 6. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 6, Knowledge of Error: Return Preparation; 8. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 7, Knowledge of Error: Administrative Proceedings; 9. PROPOSED STATEMENT ON STANDARDS FOR TAX SERVICES NO. 8, Form and Content of Advice to Taxpayers.

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  Comment letters Re: Statements of Independence Concepts

  Indendence Standards Board

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  Panel on Audit Effectiveness, Report and Recommendations - Exposure Draft - May 31, 2000

  Public Oversight Board

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  Comment letters on Proposed Statement on Standards For Accounting and Review Services Amendment to Statement on Standards for Accounting And Review Services 1, Compilation and Review of Financial Statements

  American Institute of Certified Public Accountants. Accounting and Review Services Committee

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  Comment letters on Proposed Statement on Standards for Accounting And Review Services Financial Statements included in Written Business Valuations

  American Institute of Certified Public Accountants. Accounting and Review Services Committee

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  Proposed statement on standards for accounting and review services : amendment to Statement on standards for accounting and review services 1, Compilation and review of financial statements ;Amendment to Statement on standards for accounting and review services 1, Compilation and review of financial statements; Exposure draft (American Institute of Certified Public Accountants), 1999, Dec. 31

  American Institute of Certified Public Accountants. Accounting and Review Services Committee

  During the last five years, there has been a gradual change in the services that clients of CPAs are requesting. Rapid advances in information technology and low-cost software now enable even the smallest entity to record its transactions and prepare its own financial statements. Nevertheless, many nonpublic entities look to their accountants for varied accounting and business advisory services that often include assistance in the preparation of financial statements intended for management's use. In addition, it has become apparent that there is difficulty and inconsistency within the profession regarding the applicability of Statements on Standards for Accounting and Review Services (SSARS) with respect to compilation engagements. Many entities that need timely financial information for management's use may not need that information in the form of financial statements that comply in all material respects with generally accepted accounting principles or an other comprehensive basis of accounting. In most cases, the compilation report is not useful for these types of entities. Under this proposed amendment, if the accountant submits unaudited financial statements to a client or third party, the accountant should at a minimum compile the financial statements. This concept is similar to that currently found in SSARS 1, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2, AR sec. 100); however, if the financial statements are not expected to be used by a third party, this proposal provides the accountant with communication options when compiling those financial statements. The communication options include not only issuing a compilation report, but also obtaining an engagement letter or issuing a letter to management before or at the time when the financial statements are issued to the client. If the engagement letter or the letter to management is used, the accountant is required to document an understanding with the entity regarding the services to be performed and the limitations on the use of the financial statements. If the accountant is engaged to report on compiled financial statements or if the accountant submits financial statements to a client that are, or reasonably might be expected to be, used by a third party, a compilation report must be issued. Under all situations, the accountant must comply with the performance requirements of SSARS 1 with respect to compilations. The ARSC believes by offering these communication options when performing a compilation, the accountant will use his or her professional judgment about the type of communication options appropriate for the client, provide a quality service, and appropriately respond to the needs of clients. This proposed amendment to SSARS 1 provides communication and performance requirements for unaudited financial statements submitted to a client that are not expected to be used by third party. This Statement requires accountants who are engaged to report on compiled financial statements or submit financial statements to a client that are, or reasonably might be expected to be, used by a third party to issue a compilation report in accordance with the reporting requirements in SSARS 1. An accountant who performs a compilation engagement must adhere to the compilation performance requirements of SSARS 1, regardless of whether the accountant is engaged to report on the financial statements, or if the financial statements will be used by a third party. Under the proposed amendment, if an accountant performs a compilation, a communication to management is required. The type of communication depends on the following: 1. If an accountant is engaged to report on compiled financial statements or submits financial statements to a client that are, or reasonably might be expected to be, used by a third party, the accountant must issue a compilation report. 2. If an accountant submits financial statements to a client that are not expected to be used by a third party, the following communication options are available: a. Issuing a compilation report in accordance with the reporting requirements of SSARS No. 1; b. Obtaining an engagement letter signed by management documenting an understanding with the entity regarding the services to be performed and the limitations on the use of those financial statements; c. Issuing a letter to management documenting an understanding with the entity regarding the services to be performed and the limitations on the use of those financial statements, prior to or at the time the statements are submitted. The documentation of the understanding in the engagement letter or the letter to management as described above should include the following matters: 1. Nature and limitations of the services to be performed; 2. Management to be responsible for the entity's financial statements; 3. No opinion or any other form of assurance on the financial statements to be provided; 4. The financial statements not to be reviewed or audited; 5. Acknowledgement of management's representation and agreement that the financial statements are not to be used by third parties; 6. The financial statements cannot be relied upon to disclose errors, fraud, or illegal acts. The accountant is required to include a reference on each page of the financial statements, such as "Restricted for Management's Use Only, 881 " to protect the public if the financial statements originally thought to be for management's use were to be obtained by a third party. This proposed amendment refers to specific paragraphs as currently numbered in SSARS 1. If this proposal is accepted and issued as a final standard, those references will be appropriately renumbered. This proposal also introduces two new appendixes, appendix A, "Compilation of Financial Statements," and appendix D, "Compilation of Financial Statements Not Intended for Third Party Use—Illustrative Management Letter or Letter to Management." The current appendixes in SSARS 1 have been reordered for the purpose of the proposed amendment. This proposed amendment to SSARS 1 would: 1. Replace paragraphs .01 through .22 of SSARS 1, and the remaining sections of SSARS 1 would be renumbered and conforming changes would be made as needed.

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  Proposed statement on standards for accounting and review services : financial statements included in written business valuations ;Financial statements included in written business valuations; Exposure draft (American Institute of Certified Public Accountants), 1999, Dec. 31

  American Institute of Certified Public Accountants. Accounting and Review Services Committee

  Financial statements included in written business valuations frequently contain departures from generally accepted accounting principles (GAAP) or an other comprehensive basis of accounting (OCBOA) because the purpose of such financial statements is solely to assist in developing and presenting the business valuation of an entity. This Statement is being issued to exempt financial statements included in written business valuations from the applicability of Statement on Standards for Accounting and Review Services (SSARS) 1, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2, AR sec. 100), because users of these statements do not require that the statements be in conformity with GAAP or an OCBOA. This proposed Statement: 1. Exempts historical financial statements and normalized financial statements included in written business valuations from the applicability of SSARS 1. 2. Defines normalized financial statements as financial statements that contain necessary and appropriate adjustments in order to make an entity's financial information more meaningful when presenting and comparing on a consistent basis the financial results of that entity to those of a comparable entity as part of a business valuation engagement.

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  Accounting for and reporting of certain defined contribution plan investments and other disclosure matters : amendment to the AICPA audit and accounting guide, Audits of employee benefit plans; Statement of position 99-3;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Comment letter on Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133.

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Comment letters, propsed statement of position, accounting by producers and distributors of films;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Comment letter on Accounting for Certain Transactions involving Stock Compensation: an interpretation of APB Opinion No. 25

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee. Stock Compensation Task Force

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  Comment leters on proposed Statement on Auditing Standards, Amendment to Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles in the Independent Auditor's Report

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment letters on Proposed Statement on Auditing Standards, Amendments to Statement on Auditing Standards No. 61, Communication with Audit Committees, and Statement on Auditing Standards No. 71, Interim Financial Information.

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment letters on Proposed statement on auditing standards : audit adjustments, reporting on consistency, and service organizations

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment letters on proposed Statement on Auditing Standards, Auditing Financial Instruments

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Proposed statement on auditing standards : amendments to Statement on auditing standards no. 61, Communication with audit committees and Statement on auditing standards no. 71, Interim financial information;Amendments to Statement on auditing standards no. 61, Communication with audit committees and Statement on auditing standards no. 71, Interim financial information; Exposure draft (American Institute of Certified Public Accountants), 1999, Oct. 1

  American Institute of Certified Public Accountants. Auditing Standards Board

  On September 28, 1998, Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Jr., expressed significant concern about the quality of financial reporting in corporate America. Chairman Levitt described the problem as one that must be addressed by the entire financial community rather than the government alone and called for several actions, including the formation of a blue ribbon panel to develop recommendations to improve audit committee performance. The panel was formed and named the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (BRC). In February 1999, the BRC issued Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. The report includes ten recommendations for strengthening the independence of the audit committee and making it more effective. Two of the recommendations (numbers 8 and 10) suggest changes to generally accepted auditing standards (GAAS). As a result of the BRC's recommendations, and in conjunction with actions expected to be taken by the New York Stock Exchange, the National Association of Security Dealers, and the SEC, in a collaborative effort to improve audit committee effectiveness, the ASB believes that the proposed amendments to Statement on Auditing Standards (SAS) No. 61, Communication With Audit Committees (AICPA, Professional Standards, vol. 1, AU sec. 380), and SAS No. 71, Interim Financial Information (AICPA, Professional Standards, vol. 1, AU sec. 722), are responsive to the BRC's recommended changes to GAAS. The ASB supports increasing the dialogue on the matters noted in the amendments to SAS Nos. 61 and 71. However, the effectiveness of this proposal is dependent on the willingness of all parties to engage in the discussion and act on the implications. This document responds to only those recommendations that suggest changes to GAAS. The ASB encourages practitioners to read the BRC's report and recommendations in its entirety. Copies are available online at www.nyse.com and www.nasd.com.

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  Proposed statement on auditing standards : amendment to statement on auditing standards no. 69, The Meaning of "Present fairly in conformity with generally accepted accounting principles" in the independent auditor's report;Amendment to statement on auditing standards no. 69, The Meaning of "Present fairly in conformity with generally accepted accounting principles" in the independent auditor's report;Meaning of "Present fairly in conformity with generally accepted accounting principles" in the independent auditor's report; Exposure draft (American Institute of Certified Public Accountants), 1999, Nov. 29

  American Institute of Certified Public Accountants. Auditing Standards Board

  The Federal Accounting Standards Advisory Board (FASAB) was organized in 1991 by the United States Department of the Treasury, the United States Office of Management and Budget, and the United States General Accounting Office to establish financial accounting and reporting standards for federal governmental entities. On October 19, 1999, AICPA Council adopted a resolution recognizing the FASAB as the body designated to establish generally accepted accounting principles (GAAP) for federal governmental entities under Rule 203, "Accounting Principles," of the AlCPA's Code of Professional Conduct. Members may now express an opinion that the financial statements of a federal governmental entity are in conformity with GAAP if they are prepared in conformity with accounting principles promulgated by the FASAB. Pursuant to the resolution, Statements of Federal Financial Accounting Standards issued by the FASAB since March 1993 are recognized as GAAP for the applicable federal governmental entities. AICPA Council's action came after an evaluation of the FASAB structure and processes based on Council-approved criteria used to assess standards-setting bodies designated to establish accounting principles under rule 203. As resolved, the AlCPA's Board of Directors will, within five years of adoption of the resolution, review the mission and operations of the FASAB and evaluate whether the FASAB continues to meet the aforementioned Council-approved criteria for standards-setting bodies. In response to the Council resolution, the AICPA Auditing Standards Board approved this exposure draft of a proposed Statement on Auditing Standards (SAS). The proposed SAS would amend SAS No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles in the Independent Auditor's Report (AICPA, Professional Standards, vol. 1, AU sec. 411) to reflect FASAB pronouncements in the GAAP hierarchy as sources of established accounting principles. SAS No. 69 explains the meaning of the phrase "present fairly...in conformity with generally accepted accounting principles" in the independent auditor's report. Specifically, SAS No. 69 defines sources of established accounting principles that are generally accepted in the United States. Four categories of such sources, commonly known as the GAAP hierarchy, are defined in the SAS. The proposed amendment to SAS No. 69 reflects FASAB pronouncements in the GAAP hierarchy as sources of established accounting principles, in effect defining a GAAP hierarchy for federal governmental entities. This statement amends SAS No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles in the Independent Auditor's Report (AICPA, Professional Standards, vol. 1, AU sec. 411).

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  Proposed statement on auditing standards : audit adjustments, reporting on consistency, and service organizations (Omnibus statement on auditing standards, 1999);Audit adjustments, reporting on consistency, and service organizations (Omnibus statement on auditing standards, 1999); Exposure draft (American Institute of Certified Public Accountants), 1999, Apr. 22

  American Institute of Certified Public Accountants. Auditing Standards Board

  This proposed Statement on Auditing Standards (SAS) amends various SASs and consists of the following three parts: Part 1, Audit Adjustments; Part 2, Reporting on Consistency; and Part 3, Service Organizations. Part 1 AUDIT ADJUSTMENTS: The amendments in part 1 of this proposed SAS are being issued to establish audit requirements that would encourage audit clients to record financial statement adjustments proposed by auditors in audits of financial statements. The Auditing Standards Board (ASB) believes such requirements would improve the financial statement reporting process. Part 1 of this proposed SAS would amend three SASs to establish audit requirements that clarify management's responsibility for the disposition of financial statement misstatements brought to its attention. The amendments would: 1. Add an item to the list of matters in AU section 310.06 that generally are addressed in the understanding with the client (the engagement letter) (see SAS No. 1, Codification of Auditing Standards and Procedures, as amended by SAS No. 83, Establishing an Understanding With the Client, AICPA, Professional Standards, vol. 1, AU sec. 310, "Appointment of the Independent Auditor"). It would indicate that management is responsible for adjusting the financial statements to correct material misstatements and for affirming to the auditor in the representation letter that the effects of any uncorrected misstatements brought to its attention by the auditor are not material, both individually and in the aggregate, to the financial statements taken as a whole. 2. Require the auditor to obtain, in the management representation letter, management's acknowledgement that it has considered the financial statement misstatements brought to its attention by the auditor and has concluded that any uncorrected misstatements are not material, both individually and in the aggregate, to the financial statements taken as a whole. It also would require that a summary of the uncorrected misstatements be included in the representation letter or in an attachment thereto. 3. Require the auditor to inform the audit committee, as defined in SAS No. 61, Communication With Audit Committees (AICPA, Professional Standards, vol. 1, AU sec. 380), about uncorrected misstatements brought to management's attention by the auditor that were determined by management to be immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The amendments in part 1 of this proposed SAS would amend: 1. SAS No. 1 as amended by SAS No. 83 (AU sec. 310); 2. SAS No. 85, Management Representations (AICPA, Professional Standards, vol. 1, AU sec. 333); 3. SAS No. 61. Part 2 REPORTING ON CONSISTENCY: The amendments in part 2 of this proposed SAS are being issued to clarify which changes in the reporting entity require a consistency explanatory paragraph in the auditor's report. Part 2 of this proposed SAS amends SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 420, "Consistency of Application of Generally Accepted Accounting Principles"), to: 1. Conform the list of changes in AU sec. 420.07 that constitute a change in the reporting entity to the guidance in paragraph 12 of Accounting Principles Board Opinion No. 20, Accounting Changes. 2. Clarify that the auditor need not add a consistency explanatory paragraph to the auditor's report when a change in the reporting entity results from a transaction or event. 3. Eliminate the requirement to add a consistency explanatory paragraph to the auditor's report when a pooling of interests is not accounted for retroactively in comparative financial statements. (However, in these circumstances the auditor would still be required to express a qualified or adverse opinion because of the departure from generally accepted accounting principles.) 4. Eliminate the requirement to qualify the auditor's report and consider adding a consistency explanatory paragraph to the report if single year financial statements that report a pooling of interests do not disclose combined information for the prior year. The amendments in part 2 of this proposed SAS would amend SAS No. 1, AU section 420. Part 3 SERVICE ORGANIZATIONS: The amendments in part 3 of this proposed SAS are being issued to help auditors determine the kind of information about a service organization they need when auditing the financial statements of an entity that uses a service organization to process transactions. Part 3 of this proposed SAS amends SAS No. 70, Reports on the Processing of Transactions by Service Organizations (AICPA, Professional Standards, vol. 1, AU sec. 324) to: 1. Clarify the applicability of SAS No. 70 by replacing existing language with the language and concepts in SAS No. 55, Consideration of Internal Control in a Financial Statement Audit, as amended by SAS No. 78 (AICPA, Professional Standards, vol. 1, AU sec. 319), to state that the SAS is applicable when an entity obtains services from another organization that are part of the entity's "information system." 2. Provide guidance to help auditors determine whether services are part of the information system. 3. Revise and clarify the factors a user auditor should 806 consider in determining the significance of a service organization's controls to a user organization's controls. 4. Clarify the guidance on determining whether information about a service organization's controls is necessary to plan the audit. 5. Clarify that information about a service organization's controls may be obtained from a variety of sources. 6. Change the title of SAS No. 70 from Reports on the Processing of Transactions by Service Organizations to Service Organizations. The amendments in part 3 of this proposed SAS would amend SAS No. 70.

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  Proposed statement on auditing standards : auditing financial instruments : (to supersede Statement on auditing standards no. 81, Auditing investments);Auditing financial instruments : (to supersede Statement on auditing standards no. 81, Auditing investments); Exposure draft (American Institute of Certified Public Accountants), 1999, June 10

  American Institute of Certified Public Accountants. Auditing Standards Board

  This proposed Statement on Auditing Standards (SAS) provides guidance to auditors in planning and performing auditing procedures for financial statement assertions about financial instruments. The Auditing Standards Board (ASB) believes the guidance is needed primarily because of expanding requirements for financial statements to provide information about the fair value of financial instruments and the increasing tendency for entities to use service organizations to help them manage activities involving financial instruments. This proposed SAS: a. Indicates that an auditor may need special skill or knowledge to plan and perform auditing procedures for certain assertions about financial instruments and provides guidance on obtaining that skill or knowledge. b. Provides guidance on inherent risk considerations for assertions about financial instruments. c. Provides guidance on control risk considerations for assertions about financial instruments, including considerations when the entity uses one or more service organizations. d. Indicates that evaluating evidential matter for assertions about financial instruments may require the auditor to use considerable judgment and provides general guidance for those situations. e. Provides general guidance on auditing considerations related to the initial designation of a financial instrument as a hedge and the continued application of hedge accounting. f. Indicates that a service organization's services may affect the nature, timing, and extent of the auditor's substantive tests in a variety of ways. g. Provides examples of substantive tests for the existence or occurrence, completeness, and rights and obligations assertions. h. Provides guidance on substantive tests of valuation assertions that are based on management's intent and ability, including consideration of generally accepted accounting principles that require management to document its intentions. i. Provides guidance on designing substantive tests of valuation assertions based on cost, an investee's financial results, amounts due under a contract, and fair value, including guidance for evaluating management's consideration of the need to recognize impairment losses. This proposed SAS would supersede SAS No. 81, Auditing Investments.

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  Proposed statements on quality control standards : system of quality control for a CPA firm's accounting and auditing practice : (a revision of Statement on quality control standards no. 2, System of quality control for a CPA firm's accounting and auditing practice : and the personnel management element of a firm's system of quality control-- competencies required by a practitioner-in-charge of an attest engagement;System of quality control for a CPA firm's accounting and auditing practice : (a revision of Statement on quality control standards no. 2, System of quality control for a CPA firm's accounting and auditing practice : and the personnel management element of a firm's system of quality control-- competencies required by a practitioner-in-charge of an attest engagement;Personnel management element of a firm's system of quality control-- competencies required by a practitioner-in-charge of an attest engagement; Exposure draft (American Institute of Certified Public Accountants), 1999, June 17

  American Institute of Certified Public Accountants. Auditing Standards Board

  The Auditing Standards Board (ASB) is considering the issuance of two Statements on Quality Control Standards (SQCSs) to provide a CPA firm with improved guidance for establishing and maintaining a quality control system for its accounting and auditing practice. Proposed Statement of Quality Control Standard, System of Quality Control for a CPA Firm's Accounting and Auditing Practice (A Revision of SQCS No. 2) In recent years, the Securities and Exchange Commission (SEC) has successfully brought enforcement actions against individuals who, in the SEC's opinion, did not apply professional standards in his or her role as the concurring partner reviewer on SEC engagements. A task force established by the SEC Practice Section observed that professional standards do not discuss the role of the concurring partner reviewer and recommends that a revision be made to the quality control standards to require a firm to address in its quality control policies and procedures, if applicable, the SEC Practice Section membership requirement for concurring partner reviews on SEC engagements. To assist individuals who wish to comment on the proposed Statement the SEC Practice Section has provided, on its webpage, the concurring partner review membership requirement and related appendix. The Website address of the SEC Practice Section is http://www.aicpa.org/members/div/secps/index.htm. Proposed Statement on Quality Control Standard, the Personnel Management Element of a Firm's System of Quality Control—Competencies Required by a Practitioner-in-Charge of an Attest Engagement The Uniform Accountancy Act (UAA), a model legislative statute and related administrated rules issued by a joint task force of the AICPA and the National Association of State Boards of Accountancy (NASBA), provides certain requirements concerning licensees in public practice that supervise attest services or signs or authorizes someone to sign the accountant's report on the financial statements on behalf of the firm to meet certain experience requirements as required by professional standards. Thus, the issuance of the UAA resulted in consideration of the best method to address this particular requirement of the UAA in professional standards. This in turn resulted in a reconsideration of the Personnel Management element of quality control. A firm would be required to adopt quality control policies and procedures to provide the firm with reasonable assurance that individuals who are responsible for supervising accounting, auditing, and attest engagements and signing or authorizing an individual to sign the accountants report on such engagements meet certain minimum competencies. The Joint Task Force on Quality Control Standards has recommended revisions to the Guide, Quality Control Policies and Procedures for CPA Firms: Establishing Quality Control Policies and Procedures, to provide guidance to firms on implementing and monitoring the requirements outlined in the proposed Statement. The ASB anticipates approving the revised Guide concurrently with the adoption of this proposed Statement and has provided excerpts of the Guide on its Web site to assist individuals who wish to comment on the proposed Statement. The Web site address of the ASB is http://www.aicpa.org/members/div/auditstd. The proposed standards have been developed based on the recommendations of the Joint Task Force on Quality Control Standards, which was formed to develop general guidance for a system of quality control. In addition to ASB representation, the task force is composed of representatives from the SEC Practice Section Peer Review Committee and the AICPA Peer Review Board. The task force wishes to acknowledge the contributions of its observers from NASBA and the Public Oversight Board. The SEC Practice Section Peer Review Committee and the AICPA Peer Review Board have reviewed the exposure drafts and have advised the ASB that, although modifications may need to be made to their peer review programs, these modifications are not expected to result in an expansion of peer review to services provided beyond a firm's accounting and auditing practice. Proposed Statement on Quality Control Standards, System of Quality Control for a CPA Firm's Accounting and Auditing Practice (a Revision of SQCS No. 2) This proposed Statement revises the Engagement Performance element of quality control and will require a firm to establish policies and procedures, cf7 if applicable, to address the SEC Practice Section's membership requirement for concurring partner review on SEC engagements. This revision will now provide a link to professional standards and the membership requirement of the SEC Practice Section. Proposed Statement on Quality Control Standards, the Personnel Management Element of a Firm's System of Quality Control—Competencies Required by a Practitioner-in-Charge of an Attest Engagement This proposed Statement establishes a requirement for a firm to adopt quality control policies and procedures to provide reasonable assurance that individuals responsible for signing attest reports meet certain competencies. The proposed standard focuses on competencies that an individual would be expected to possess for certain kinds of attest engagements. The concept of competency is consistent with the existing Personnel Management element of quality control, which among other matters, requires that "those hired possess the appropriate characteristics to enable them to perform competently" and "work is assigned to personnel having the degree of technical training and proficiency required in the circumstances." These proposed Statements would amend QC Section 20.18 of SQCS No. 2 and provide additional guidance to firms about adoption of policies and procedures relating to the personnel management element of quality control. Issuance of the proposed Statements would also require the adoption of amendments to the Guide Quality Control Policies and Procedures for CPA Firms: Establishing Quality Control Policies and Procedures (the Guide), to be updated. As a result of the issuance of these Statements and updating the Guide, firms with well-established quality control systems should not have to make significant modifications to their policies and procedures.

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  Comment letters on proposed Audit and Accounting Guide, Life and Health Insurance Entities

  American Institute of Certified Public Accountants. Committee on Insurance Accounting and Auditing. Audits of stock life insurance companies

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  Accounting for and reporting of postretirement medical benefit (401(h)) features of defined benefit pension plans : amendment to the AICPA audit and accounting guide, Audits of employee benefit plans; Statement of position 99-2;

  American Institute of Certified Public Accountants. Employee Benefit Plans Committee

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  Proposed statement of position : Accounting for and reporting of certain employee benefit plan investments and other disclosure matters : (proposed amendment to the American Institute of Certified Public Accountants Audit and accounting guide, Audits of employee benefit plans);Accounting for and reporting of certain employee benefit plan investments and other disclosure matters : (proposed amendment to the American Institute of Certified Public Accountants Audit and accounting guide, Audits of employee benefit plans); Exposure draft (American Institute of Certified Public Accountants), 1999, May 17

  American Institute of Certified Public Accountants. Employee Benefit Plans Committee

  This proposed statement of position (SOP) would amend chapters 3 and 4 of the AICPA Audit and Accounting Guide, Audits of Employee Benefit Plans (the Guide). This proposed SOP would amend SOP 94-4, Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined Contribution Plans, and SOP 92-6, Accounting and Reporting by Health & Welfare Benefit Plans. This proposed SOP would simplify disclosures for certain investments and would supersede AICPA Practice Bulletin 12, Reporting Separate Investment Fund Option Information of Defined Contribution Pension Plans. This proposed SOP would accomplish the following: a. Amend paragraph 3.20 of the Guide to eliminate the previous requirement for a defined contribution plan to present plan investments by general type for participant-directed investments in the statement of net assets available for benefits. b. Amend paragraph 3.28(k) and supersede paragraph 3.28(I) of the Guide and supersede Practice Bulletin No. 12 to eliminate the requirement for a defined contribution plan to disclose participant-directed investment programs. c. Amend paragraph 3.28(g) of the Guide to require a defined contribution plan to identify nonparticipant-directed investments that represent five percent or more of net assets available for benefits. d. Amend paragraphs 3.28(p) and 4.57 of the Guide, paragraph 53 of SOP 92-6, and paragraph 15 of SOP 94-4 to require defined contribution plans, including both health and welfare, and pension plans, to disclose benefit-responsive investment contracts in the aggregate rather than by investment fund option. e. Replace exhibits E-l through E-5 in the Guide. This proposed SOP would be effective for financial statements for plan years ending after December 15, 1999. Earlier application will be encouraged for fiscal years for which annual financial statements have not been issued. If the previously required "by-fund" disclosures are eliminated, the reclassification of comparative amounts in financial statements for earlier periods will be required.

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  Guidance to practitioners in conducting and reporting on an agreed-upon procedures engagement to assist management in evaluating the effectiveness of its corporate compliance program; Statement of position 99-1;

  American Institute of Certified Public Accountants. Health Care Pilot Task Force

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  Comment letters on Discussion Paper, Accounting By Life Insurance Enterprises For Deferred Acquisition Costs On Internal Replacements Other Than Those Covered By FASB Statement No. 97

  American Institute of Certified Public Accountants. Insurance Companies Committee

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  Proposed revisions to the AICPA standards for performing and reporting on peer reviews;AICPA standards for performing and reporting on peer reviews;Standards for performing and reporting on peer reviews; Exposure draft (American Institute of Certified Public Accountants), 1999, May 17

  American Institute of Certified Public Accountants. Peer Review Board

  The AICPA Peer Review Board is issuing this exposure draft to update the Standards for Performing and Reporting on Peer Reviews (AICPA, Professional Standards, vol. 2 PR section 100). This proposal: 1. Replaces the term "on-site peer review" with "systemic review" in order to more accurately describe this type of peer review. On a systemic review, the reviewer expresses an opinion on the firm's system of quality control (page 7). 2. Changes the definition of engagements that require a firm to have an on-site (systemic) review. Firms that perform services listed in paragraph 4 of the Standards (which includes review engagements) are required to have a systemic review unless the only services performed are compilations. Under certain circumstances discussed in the Interpretations to the Standards, systemic reviews may be performed at a location other than the reviewed firm's office (page 7). 3. Creates a new type of peer review for firms that only perform compilation engagements called a "report review". An opinion is not issued on a report review. All other firms required to have a peer review have a systemic review. The proposal explains the objectives, basic requirements, engagement selection criteria, reporting requirements and acceptance process for report reviews. With this proposal, "off-site" peer reviews are completely eliminated (page 8). 4. Provides guidance on handling disagreements on report reviews (page 9). 5. Eliminates committee-appointed review teams (CARTs) or association formed review teams for report reviews (page 9). 6. Provides that report reviews are to be performed by only one individual and that individual is designated as the reviewer (page 9). 7. Requires that in order to qualify for service as a reviewer for a systemic review, the reviewer's firm must have received an unmodified peer review report on its system of quality control. A report reviewer must have received an unmodified peer review report on its system of quality control or an unmodified report on its "off-site" peer review (until eliminated). If a firm's most recent review was a report review, then the firm's members are not eligible to perform peer reviews (page 10). 8. Highlights the fact that systemic and report reviews are subject to oversight by the AICPA and the administering entity (page 10). 9. Requires that in order to qualify for service as a peer review committee member with the responsibility for acceptance of reviews, an individual must be associated with a firm that has received an unmodified report on its most recently completed systemic or "off-site" peer review (until eliminated). If the firm's most recent review was a report review, then the member is not eligible for committee service charged with the responsibility for acceptance of any peer reviews (page 11). The changes, if adopted after full consideration of the comments received, will be incorporated into the AICPA Standards for Performing and Reporting on Peer Reviews effective for peer reviews that commence on or after January 1, 2001. Early implementation is not allowed.

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  Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 1999, Aug. 2

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

  1. PROPOSED REVISION OF INTERPRETATION 101-9 UNDER RULE 101: The Meaning of Certain Independence Terminology and the Effect of Family Relationships on Independence [Definition of Member or Member's Firm]; 2. PROPOSED REVISION OF INTERPRETATION 501-1 UNDER RULE 501: Retention of Client Records; 3. PROPOSED REVISION TO RULING 41 UNDER RULE 101: Member as Auditor of Insurance a Financial Services Company that Manages Member's Assets; 4. PROPOSED REVISION TO RULING 109 UNDER RULE 101: Member's Investment in Financial Services Products That Invest in Clients; 5. PROPOSED RULING UNDER RULE 101: Employee Benefit Plan Sponsored by Client