Exposure Drafts, Comment Letters, and Statements of Position

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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; Exposure draft (American Institute of Certified Public Accountants), 2003, May 30

  American Institute of Certified Public Accountants. Peer Review Board

  The AICPA Peer Review Board's (Board) 1998 Strategic Plan included a reevaluation and enhancement of the AICPA Peer Review Program (Program). As a result, two years ago, the Board completed Phase I of a two phase project to reevaluate and enhance the Program. Phase I related to off-site reviews, which led to new standards developed for engagement and report reviews, and were effective for peer reviews commencing on or after January 1, 2001. Phase II began in October 2001 with the Board forming the System Review Task Force (Task Force). The Task Force was formed with the purpose of reevaluating the administration, performance, reporting, objectives and overall effectiveness of system reviews conducted under the Program. The Task Force considered many factors in its reevaluation, including the changing regulatory and practice influences in the SEC and non-SEC environments. The Task Force also solicited input from many different parties involved in the peer review process, including CPA firms and users of peer review results. After concluding its reevaluation, the Task Force made numerous recommendations to the Board to enhance the Program. The Board agreed with the Task Force's recommendations and also proposed others, including revisions to engagement and report reviews. As a result, the Board has issued this exposure draft which proposes revisions to the AICPA Standards for Performing and Reporting on Peer Reviews (Standards). AICPA, Professional Standards, vol. 2 PR Section 100.

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  Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 2003, March 19

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

  1. PROPOSED REVISION OF INTERPRETATION NO. 101-5 UNDER RULE 101: Loans From Financial Institution Clients and Related Terminology; 2. PROPOSED REVISION OF ET SECTION 92: Definitions; 3. PROPOSED REVISION OF ETHICS RULING NO. 91 UNDER RULE 101: Member Leasing Property to or From a Client; 4. PROPOSED REVISION OF INTERPRETATION NO. 101-3 UNDER RULE 101: Performance of Other Nonattest Services; 5. PROPOSED DELETION OF INTERPRETATION NO. 101-13 UNDER RULE 101: Extended Audit Services; 6. PROPOSED DELETION OF ETHICS RULING NO. 103 UNDER RULE 101: Attest Report on Internal Controls; 7. PROPOSED DELETION OF ETHICS RULING NO. 104 UNDER RULE 101: Operational Auditing Services; 8. PROPOSED DELETION OF ETHICS RULING NO. 105 UNDER RULE 101: Frequency of Performance of Extended Audit Procedures

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  Comment letters for exposure draft entitled Omnibus 2002.

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

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  Proposed statement on standards for accounting and review services, Omnibus -- 2002;Omnibus -- 2002; Exposure draft (American Institute of Certified Public Accountants), 2002, Aug. 1

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

  Periodically, the Accounting and Review Services Committee (ARSC) issues an Omnibus Statement. The Omnibus includes proposed revisions to existing Statements on Standards for Accounting and Review Services (SSARSs) that have been accumulated over a period of time. The proposed revisions due to the significance of the issues and cost benefit considerations do not in and of themselves warrant the issuance of separate standards. Therefore, an Omnibus is issued. 1. The auditing literature allows an accountant who may be associated with financial statements of a public company, but has not audited or reviewed such statements, to state that he or she has not audited the unaudited information and includes example report wording. This guidance is also appropriate for compilation and review engagements; however, SSARSs currently do not include example wording. This amendment will revise SSARS No. 1, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2, AR sec. 100.03), to include wording that may be appropriate under the circumstances. 2. The accounting literature does not require the statement of retained earnings to be presented as a financial statement. Accounting Principles Board Opinion No. 12, Omnibus Opinion—1967, requires disclosure of a change in capital. This can be done by preparation of a separate statement in the notes to the financial statements or as part of another basic statement. In addition, the example reports currently do not refer to the statement of comprehensive income. This amendment will include two footnotes to SSARS No. 1 (AR sec. 100.14 and AR sec. 100.36), stating (1) the statement of retained earnings is not a required statement and, if not presented as a separate statement, reference in the compilation and review report is not needed and (2) if the statement of comprehensive income is presented, reference should be made in the appropriate paragraphs of the report. 3. SSARSs currently do not specifically require a signature of the accounting firm or the accountant on a review or compilation report. This proposed amendment will revise SSARS No. 1 (AR sec. 100.11 and 100.33) to require a signature. The guidance in AR section 100.12 and 100.13 has been deleted and included in AR section 100.11; guidance in AR section 100.34 and 100.35 has been deleted and included in AR section 100.33. 4. The current guidance found in SSARS No. 1 (AR sec. 100.29) requires the accountant to obtain a representation letter from management. The guidance is not specific about the content of the letter, the dating of the letter, and current management's responsibility regarding previous years. This amendment will require specific representations for the accountant to receive from management when performing a review engagement and will provide guidance on the dating of the letter and guidance regarding obtaining representations from current management when they were not present during all periods covered by the accountant's report. 5. SSARS No. 1 (AR sec. 100.44) includes the guidance on reporting for supplementary information. Currently the guidance is unclear with respect to separate reporting on supplementary information in a compilation engagement. This proposed amendment would explicitly allow for a separate report on supplementary information in a compilation engagement, consistent with guidance on supplemental information in a review report. 6. SSARSs currently do not refer to the Statements on Quality Control Standards (SQCSs) and how those standards interact with SSARSs. The proposed amendment will clarify that although an effective quality control system is conducive to compliance with SSARSs, deficiencies in or noncompliance with a firm's quality control system do not, in and of themselves, indicate that an engagement was not performed in accordance with the applicable professional standards. This amendment would be included after the last section of SSARS No. 1 (before the Effective Date). 7. SSARS No. 4, Communications Between Predecessor and Successor Accountants (AICPA, Professional Standards, vol. 2, AR sec. 400), provides guidance on communications between accountants when the successor accountant decides to communicate with the predecessor regarding acceptance of an engagement. This amendment defines predecessor and successor accountants, provides guidance regarding acceptance of an engagement, suggests inquiries the successor accountant may decide to ask the predecessor accountant, and includes an example successor accountant acknowledgment letter, which the predecessor may want to use in connection with granting access to the working papers. The proposed amendments would revise SSARS No. 1 and SSARS No. 4.

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  Accounting for derivative instruments and hedging activities by not-for-profit health care organizations, and clarification of the performance indicator; Statement of position 02-2;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Proposed statement of position : Accounting and reporting by insurance enterprises for certain nontraditional long-duration insurance contracts and for separate accounts;Accounting and reporting by insurance enterprises for certain nontraditional long-duration insurance contracts and for separate accounts; Exposure draft (American Institute of Certified Public Accountants), 2002, July 31

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This Statement of Position (SOP) provides guidance on accounting and reporting by insurance enterprises for certain nontraditional long-duration contracts and for separate accounts. This SOP requires, among other things, the following: 1. Separate account presentation. This SOP concludes that the portion of separate account assets representing contract holder funds should be measured at fair value and reported in the insurance enterprise's financial statements as a summary total, with an equivalent summary total for related liabilities, if the separate account arrangement meets all of the criteria specified in paragraph 10 of this SOP. If a separate account arrangement does not meet the criteria, assets representing contract holder funds under the arrangement should be accounted for and recognized as general account assets. Any related liability should be accounted for as a general account liability. 2. Interest in separate accounts. This SOP concludes that assets underlying an insurance enterprise's proportionate interest in a separate account do not represent contract holder funds, and thus do not qualify for separate account reporting and valuation. If a separate account arrangement meets the criteria of paragraph 10 of this SOP and (a) the terms of the contract allow the contract holder to invest in additional units in the separate account or (b) the insurance enterprise is marketing contracts that permit funds to be invested in the separate account, the assets underlying the insurance enterprise's proportionate interest in the separate account should be accounted for in a manner consistent with similar assets held by the general account that the insurance enterprise may be required to sell. 3. Gains and losses on the transfer of assets from the general account to a separate account. This SOP concludes that assets transferred from the general account to a separate account should be recognized at fair value to the extent of third-party contract holders' proportionate beneficial interests in the separate account if the separate account arrangement meets the criteria in paragraph 10 of this SOP. Any resulting gain related to the third-party contract holder's proportionate interest should be recognized immediately in earnings of the general account of the insurance enterprise provided that the risks and rewards of ownership have been transferred to contract holders. A guarantee of the asset's value or minimum rate of return or a commitment to repurchase the asset would not transfer the risks of ownership, and no gain should be recognized. If the separate account arrangement does not meet the criteria in paragraph 10 of this SOP, the transfer generally should have no financial reporting effect (that is, general account classification and carrying amounts should be retained). However, in certain situations loss recognition may be appropriate. If the transferred asset is subsequently sold by the separate account, any remaining unrecognized gain related to the insurance enterprise's proportionate beneficial interest should be recognized immediately in the earnings of the general account of the insurance enterprise. If third-party contract holders' proportionate beneficial interests in the separate account are subsequently increased, or the insurance enterprise otherwise reduces its proportionate interest in the separate account arrangement that meets the criteria in paragraph 10 of this SOP, the reduction in the insurance enterprise's proportionate interest may result in additional gain. If an insurance enterprise's proportionate interest subsequently increases as a result of transactions executed at fair value (for example, at net asset value), the increase is considered a purchase from the contract holder and should be recognized at fair value. 4. Liability valuation. This SOP concludes that the basis for determining the balance that accrues to the contract holder for a long-duration insurance or investment contract that is subject to FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, is the accrued account balance as described in FASB Statement No. 97, paragraphs 15 and 17a. The accrued account balance equals: a. Deposit(s) net of withdrawals; b. Plus amounts credited pursuant to the contract; c. Less fees and charges assessed; d. Plus additional interest (for example, persistency bonus); and e. Other adjustments (for example, appreciation or depreciation recognized in accordance with paragraph 19 of this SOP to the extent not already credited and included in (b) above). For contracts that have features that may result in more than one potential account balance, the accrued account balance should be based on the highest contractually determinable balance that will be available in cash or its equivalent without reduction for future fees and charges expected to be assessed. The accrued account balance should not reflect any surrender adjustments (for example, market value annuity adjustments, surrender charges, or credits). 5. Return based on a contractually referenced pool of assets or index. This SOP concludes that for a contract not accounted for under the guidance of FASB Statement No. 133, Accounting for D 1e69 erivative Instruments and Hedging Activities, that provides a return based on the total return of a contractually referenced pool of assets (or a contractually referenced interest rate index) either through crediting rates or termination adjustments, the accrued account balance should be based on the fair value of the referenced pool of assets (or applicable index value) at the balance sheet date even if the related assets are not recognized at fair value. 6. Annuitization options. This SOP concludes that no liability should be recognized during the accumulation phase related to the potential effect of annuitization options. 7. Determining the significance of mortality and morbidity risk and classification of contracts that contain death or other insurance benefit features. This SOP concludes that to determine the accounting under FASB Statement No. 97 for a contract that contains death or other insurance benefit features, the insurance enterprise should first determine whether the contract is an investment or universal life-type contract. If the mortality and morbidity risks are other than nominal and the fees assessed or insurance benefits are not fixed and guaranteed, the contract should be classified as a FASB Statement No. 97 universal-life type contract. The determination of significance should be made at contract inception, other than at transition, and should be based on a comparison of the present value of expected excess payments to be made under insurance benefit features with the present value of all amounts assessed against the contract holder (revenue), under reasonably possible outcomes. 8. Accounting for contracts that contain death or other insurance benefit features. This SOP concludes that for contracts classified as insurance contracts that have amounts assessed against contract holders each period for the insurance benefit feature that are not proportionate to the insurance coverage provided for the period, a liability should be established in addition to the account balance to recognize the portion of such assessments that compensates the insurance enterprise for benefits to be provided in future periods. This SOP concludes that the amount of the additional liability, for an insurance benefit feature that is included in a contract that is classified as an insurance contract and has amounts assessed that are not proportionate to the insurance coverage provided for the period, should be determined based on a ratio equal to the present value of total expected excess payments and related expenses over the life of the contract divided by the present value of total expected assessments over the life of the contract (benefit ratio). The liability at the balance sheet date should be equal to: a. The current benefit ratio multiplied by the cumulative assessments; b. Less the cumulative excess payments and related expenses; c. Plus accreted interest. However, in no event may the liability balance be less than zero. The change in the additional liability should be recognized as a component of benefit expense in the statement of operations. 9. Accounting for contracts that provide only death or other insurance benefit features. This SOP concludes that an insurance enterprise assuming only the insurance benefit feature of underlying contracts in a noncancellable or guaranteed renewable contract, or issuing a contract that provides only an insurance benefit feature that wraps a noninsurance contract, that has been evaluated by the insurance enterprise to have other than nominal mortality and morbidity risk, should calculate a liability for the portion of premiums collected each period that represents amounts to compensate the insurance enterprise for benefits to be provided in future periods, using the methodology as described in paragraphs 26 through 30 of this SOP. 10. Sales inducements to contract holders. This SOP concludes that sales inducements provided to the contract holder, whether for investment or universal life-type contracts, should be recognized as part of the liability for policy benefits over the period for which the contract must remain in force for the contract holder to qualify for the inducement or at the crediting date, if earlier, in accordance with paragraph 18 of this SOP. No adjustments should be made to reduce the liability related to the sales inducements for anticipated surrender charges, persistency, or early withdrawal contractual features. This SOP also concludes that sales inducements that are recognized as part of the liability under paragraph 32 of this SOP, that are explicitly identified in the contract at inception, and that meet the criteria specified in paragraph 33 of this SOP should be deferred and amortized using the same methodology and assumptions used to amortize capitalized acquisition costs. The insurance enterprise should demonstrate that such amounts are (a) incremental to amounts credited on similar contracts without sales inducements; and (b) higher than the contract's expected ongoing crediting rates for periods after the inducement, as applicable; that is, the crediting rate excluding the inducement should be consistent with assumptions used in estimated gross profits or margins, contract illustrations, and interest crediting strategies. The deferred amount should be recognized on the statement of financial position as an asset, and amortization should be recognized as a component of benefit expense. 11. Disclosures. This SOP requires certain disclosures related to the following: a. Separate account assets and liabilities; the nature, extent, and timing of minimum guarantees related to variable contracts and the insurance enterprise's interest in separate accounts (for example, seed money). b. An insurance enterprise's accounting policy for sales inducements, including the nature of the costs capitalized and the method of amortizing those costs, the amount of costs capitalized and amortized for each of the periods presented, and the unamortized balance as of each balance sheet date presented. c. The nature of the liabilities and methods and assumptions used in estimating any contract benefits recognized in excess of the account balance pursuant to paragraphs 17 and 32 of this SOP.

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  Proposed statement of position : Accounting for derivative instruments and hedging activities by not-for-profit health care organizations, and clarification of the performance indicator;Accounting for derivative instruments and hedging activities by not-for-profit health care organizations, and clarification of the performance indicator; Exposure draft (American Institute of Certified Public Accountants), 2002, June 14

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This Statement of Position (SOP) amends the AICPA Audit and Accounting Guide Health Care Organizations (Guide) to address how nongovernmental not-for-profit health care organizations should report gains or losses on hedging and nonhedging derivative instruments under Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The SOP requires the following: 1. Not-for-profit health care organizations should apply the provisions of FASB Statement No. 133 (including the provisions pertaining to cash flow hedge accounting) in the same manner as for-profit enterprises. 2. Not-for-profit health care organizations should provide all the disclosures required by paragraph 45 of FASB Statement No. 133, including disclosures related to reclassifications into earnings of gains and losses that are reported in accumulated other comprehensive income. Although those organizations are not otherwise required to report changes in the components of comprehensive income pursuant to paragraph 26 of FASB Statement No. 130, Reporting Comprehensive Income, such organizations should separately disclose the beginning and ending accumulated derivative gain or loss that has been excluded from the performance indicator (earnings measure), the related net change associated with current period hedging transactions, and the net amount of any reclassifications into the performance indicator in a manner similar to that described in paragraph 47 of FASB Statement No. 133. The SOP also amends the Guide to clarify that the performance indicator (earnings measure) reported by not-for-profit health care organizations is analogous to income from continuing operations of a for-profit enterprise. The provisions of the SOP are effective for fiscal years beginning after December 15, 2002. The provisions of the SOP should be applied prospectively as of the beginning of a fiscal year. Not-for-profit health care organizations that reported derivative gains or losses in a manner inconsistent with the conclusions of the SOP in financial statements issued prior to adoption of the SOP are not permitted to reclassify those gains or losses upon adoption. Those organizations are required to disclose in the notes to the financial statements what the performance indicator reported in the year of adoption would have been if the reporting practices followed before adoption of this SOP had continued to be applied.

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  Comment Letters on the Exposure Draft of the Proposed Statement on Auditing Standards, Interim Financial Information, October 28, 2002

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Proposed statement on auditing standards : Amendment to Statement on auditing standards no. 50, Reports on the application of accounting principles;Amendment to Statement on auditing standards no. 50, Reports on the application of accounting principles Reports on the application of accounting principles; Exposure draft (American Institute of Certified Public Accountants), 2002, April 30

  American Institute of Certified Public Accountants. Auditing Standards Board

  In response to a request from the Securities and Exchange Commission (SEC), the Auditing Standards Board (ASB) agreed to reconsider the guidance in SAS No. 50 with respect to the provision permitting an accountant to issue a written report to intermediaries on the application of accounting principles not involving facts or circumstances of a specific entity ("hypothetical transactions"). The SEC has expressed concerns regarding the appropriate use of these reports and whether such reports are in the best interest of the public. Due to the nature of a hypothetical transaction, there is no way for a reporting accountant to know, for example, whether the continuing accountant of a specific entity with the transaction has reached a different conclusion on the application of accounting principles for the same or a similar transaction, or how the specific entity has accounted for similar transactions in the past. As a result of its deliberations, the ASB believes that a revision to SAS No. 50 to prohibit an accountant from providing a written report on a hypothetical transaction would be appropriate. This proposed amendment would prohibit an accountant from providing a written report on the application of accounting principles not involving facts and circumstances of a specific entity. This proposed Statement amends SAS No. 50, Reports on the Application of Accounting Principles (AICPA, Professional Standards, vol. 1, AU sec. 625).

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  Proposed statement on auditing standards and proposed statement on standards for attestation engagements : Omnibus -- 2002;Proposed statement on standards for attestation engagements : Omnibus -- 2002;Omnibus -- 2002; Exposure draft (American Institute of Certified Public Accountants), 2002, May 15

  American Institute of Certified Public Accountants. Auditing Standards Board

  Periodically, the Auditing Standards Board (ASB) issues an Omnibus Statement. The Omnibus includes proposed revisions to existing standards, either Statements on Auditing Standards (SAS) or Statements on Standards for Attestation Engagements (SSAE) that have been accumulated over a period of time. The proposed revisions due to the significance of the issue and cost benefit considerations do not in and of themselves warrant the issuance of separate standards. Therefore, an Omnibus is issued. 1. SAS No. 95, Generally Accepted Auditing Standards (AICPA Professional Standards, vol. 1, AU sec. 150) provides guidance with respect to the authoritative nature of generally accepted auditing standards (GAAS). This amendment would clarify the status of appendices to SASs as being interpretive publications. 2. SAS No. 25, The Relationship of Generally Accepted Auditing Standards to Quality Control Standards (AICPA, Professional Standards, vol. 1, AU sec. 161.02 - .03), and SSAE No. 1, Attest Engagements (AICPA, Professional Standards, vol. 1, AT sec.101.17 - .18), are being amended to clarify the relationship between Statements on Quality Control Standards (SQCS) and engagements performed under SAS and SSAE. These amendments clarify that although an effective quality control system is conducive to compliance with GAAS or attestation standards, deficiencies in or noncompliance with a firm's quality control system do not, in and of themselves, indicate that an engagement was not performed in accordance with the applicable professional standards. 3. SAS No. 47, Audit Risk and Materiality in Conducting an Audit (AICPA, Professional Standards, vol. 1, AU sec. 312), paragraphs .04 and .09, require the auditor to consider adjustments individually and in the aggregate. Paragraphs .34 through .41 in the section entitled "Evaluating Audit Findings" do not indicate that the auditor should evaluate misstatements individually and in the aggregate. This proposed amendment would clarify the auditor's responsibility with respect to evaluating audit adjustments. 4. Interpretation No. 6, "Responsibilities of Service Organizations and Service Auditors With Respect to Subsequent Events in a Service Auditor's Engagement, of SAS No. 70, Service Organizations (AICPA, Professional Standards, vol. 1, AU sec. 9324.38-.40), includes guidance regarding subsequent events. This guidance currently states that "A service auditor should consider inquiring of management" about subsequent events. This proposed amendment would revise the guidance to state that "A service auditor should inquire of management" about subsequent events and bring the guidance from the interpretation into SAS No. 70. 5. The exposure draft entitled Consideration of Fraud in a Financial Statement Audit requires the auditor to make inquiries of management about fraud and the risk of fraud. In support of and consistent with these inquiries, this proposed amendment would revise the guidance for management representations about fraud currently found in SAS No. 85, Management Representations (AICPA, Professional Standards, vol. 1, AU sec. 333), paragraph 6h and Appendix A. 6. SAS No. 58, Reports on Audited Financial Statements (AICPA, Professional Standards, vol. 1, AU sec. 508.65), states that the auditor's report on comparative financial statements should be dated as of the date of completion of the most recent audit. The guidance found in SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 530.01, "Dating of the Independent Auditor's Report"), states that "Generally, the date of completion of the field work should be used as the date of the independent auditor's report." This proposed amendment would make the guidance in AU section 508.65 consistent with the guidance in AU section 530.01 by using the term "completion of fieldwork" as opposed to "completion of his most recent audit." 7. SAS No. 8, Other Information in Documents Containing Audited Financial Statements (AICPA, Professional Standards, vol. 1, AU sec. 550), and SAS No. 52, Required Supplementary information (AICPA, Professional Standards, vol. 1, AU sec. 558.08 and .10), do not indicate whether an auditor may issue a report providing an opinion, in relation to the basic financial statements taken as a whole, on supplementary information and other information that has been subjected to auditing procedures applied to the audit of those basic financial statements. This amendment would clarify that such reporting is allowed. 8. The applicability paragraph to SAS No. 52, Required Supplementary Information, as currently written, does not include such items as AICPA Industry Audit and Accounting Guides, which are considered generally accepted accounting principles (GAAP) as described in SAS No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles (AICPA, Professional Standards, vol. 1, AU sec. 411), as amended. This amendment would include all sources of GAAP in the applicability section of SAS No. 52. 9. The current guidance on supplementary information is silent as to whether the auditor is permitted to report that Required Supplementary Information in an auditor-submitted document that is neither incomplete, nor otherwise deficient, is fairly stated in relation to the basic financial statements taken as a whole. This amendment would revise the gui dc2 dance in SAS No. 29, Reporting on Information Accompanying the Basic Financial Statements in Auditor-Submitted Documents (AICPA, Professional Standards, vol. 1, AU sec. 551), paragraph .15 (paragraph .15 has been split and revised as paragraphs .15 and .16), and delete footnote 6 to clarify the reporting guidance with respect to required supplementary informarion. 10. SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 560, "Subsequent Events), paragraph .01, currently defines subsequent events in terms of the date of issuance of the auditor's report. In order to make the auditing standard consistent with accounting standards (Statement of Financial Statement Accounting Standards No. 5, Accounting for Contingencies), this proposed amendment would delete the reference to the auditor's report from the definition of subsequent events. 11. SAS No. 1, Codification of Auditing Standards and Procedures {AICPA, Professional Standards, vol. 1, AU sec. 561, "Subsequent Discovery of Facts Existing at the Date of the Auditor's Report'), paragraph .01, and the title to the section, refer to subsequent discovery of facts existing at the date of the auditor's report. The wording of AU section 561.03, however, implies that the auditor's responsibility extends through the date of issuance of the report. This is inconsistent with the intent of the section. The proposed amendment to AU section 561.03 would clarify the auditor's responsibility with respect to subsequent events. 12. SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 530, "Dating of the Independent Auditor's Report'), provides guidance regarding the dating of the independent auditor's report. When discussing the time frame with respect to subsequent events, the current guidance refers to the date of issuance of the auditor's report. This amendment clarifies that the date referred to is the date of issuance of the related financial statements.

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  Proposed statement on auditing standards : Auditing fair value measurements and disclosures;Auditing fair value measurements and disclosuses; Exposure draft (American Institute of Certified Public Accountants), 2002, June 28

  American Institute of Certified Public Accountants. Auditing Standards Board

  In recent years, generally accepted accounting principles (GAAP) have required entities to significantly increase the use of fair value for measuring, presenting, and disclosing in their financial statements assets, liabilities, and specific components of equity. The business environment and GAAP that apply to the transactions and events in that environment have become more complex. Along with that complexity and the increased use of fair value measurements and disclosures comes an increasing acknowledgment of the importance of fair values in the financial reporting process. The ASB believes that a Statement on Auditing Standards (SAS) providing overall guidance on auditing considerations relating to fair value is needed to address the current and expected needs of practitioners. The proposed SAS, entitled Auditing Fair Value Measurements and Disclosures, establishes general guidance that provides a framework within which the auditor can exercise professional judgment in auditing fair value measurements and disclosures. The proposed SAS does not address specific types of assets or liabilities, transactions, or industry-specific practices. SAS No. 92, Auditing Derivative Instruments, Hedging Activities, and Investments in Securities (AICPA, Professional Standards, vol. 1, AU sec. 332), is an example of such specific auditing guidance. The proposed SAS requires the auditor to: 1. Obtain sufficient competent audit evidence to provide reasonable assurance that fair value measurements and disclosures are in conformity with GAAP. 2. Obtain an understanding of the entity's process for determining fair value measurements and disclosures and of the relevant controls sufficient to develop an effective audit approach. 3. Evaluate whether the fair value measurements and disclosures in the financial statements are in conformity with GAAP. 4. Evaluate management's intent and ability to carry out specific courses of action where relevant to the fair value measurements and disclosures. 5. Evaluate whether the entity's method of measurement is appropriate (this requirement applies where alternative methods for measuring fair value are available under GAAP, or where the method of measurement is not prescribed). 6. Evaluate whether the entity's fair value measurements are applied consistently. 7. Consider whether to use the work of a specialist. 8. Test the entity's fair value measurements and disclosures (based on the assessment of the risk of material misstatement). 9. Determine that the audit committee is informed about the process used by management in formulating particularly sensitive accounting estimates, including fair value estimates, and about the basis for the auditor's conclusions regarding the reasonableness of those estimates. The exposure draft would result in a new SAS that provides guidance to auditors when auditing fair value measurements and disclosures. It does not amend or supersede any existing SASs.

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  Proposed statement on auditing Standards: Consideration of fraud in a financial statement audit : (supersedes Statement on auditing standards no. 82, AICPA, Professional Standards, vol. 1, AU sec. 316; and amends SAS no. 1, Codification of auditing standards and procedures, AICPA, Professional standards, vol. 1, AU sec. 230, "Due professional care in the performance of work," and SAS no. 85, Management representations, AICPA, Professional standard, vol. 1, AU sec 333;Consideration of fraud in a financial statement audit : (supersedes Statement on auditing standards no. 82, AICPA, Professional Standards, vol. 1, AU sec. 316; and amends SAS no. 1, Codification of auditing standards and procedures, AICPA, Professional standards, vol. 1, AU sec. 230, "Due professional care in the performance of work," and SAS no. 85, Management representations, AICPA, Professional standard, vol. 1, AU sec 333; Exposure draft (American Institute of Certified Public Accountants), 2002, Feb. 28

  American Institute of Certified Public Accountants. Auditing Standards Board

  This proposed Statement on Auditing Standards (SAS) establishes standards and provides guidance to auditors in fulfilling their responsibility as it relates to fraud in an audit of financial statements conducted in accordance with generally accepted auditing standards (GAAS). The exposure draft also includes Appendix B, "A Proposed Amendment to SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU section 230, 'Due Professional Care in the Performance of Work.'" In 1997 the Auditing Standards Board (ASB) issued SAS No. 82, Consideration of Fraud in a Financial Statement Audit (AICPA, Professional Standards, vol.1, AU secs. 110, 230, 312, and 316), with an objective of enhancing auditor performance by providing auditors with additional operational guidance on the consideration of material fraud in a financial statement audit. At the time of issuance of SAS No. 82, the ASB committed to study the impact the standard would have on practice after its implementation and determine whether further enhancements would be appropriate. In response to that commitment, the Fraud Research Steering Task Force was formed and sponsored five academic research projects to obtain information that would be useful in the reexamination. The results of those research projects are briefly summarized in the section entitled "Additional Background Information," that appears subsequently. In 1998, at the request of the Securities and Exchange Commission , the Public Oversight Board (POB) appointed a Panel on Audit Effectiveness (the Panel) to examine the current audit model, including the way independent audits are performed regarding the auditor's consideration of fraud. The Panel provided a "Report and Recommendations" on August 31, 2000, including a number of recommendations addressed to the ASB that concerned earnings management and fraud. The Panel's report is briefly discussed in the section entitled "Additional Background Information." Since the issuance of SAS No. 82, the International Auditing Practices Committee (IAPC) of the International Federation of Accountants has examined the auditor's responsibility to consider fraud and error, resulting in the issuance of a revised International Standard on Auditing (ISA 240) in the spring of 2001. That standard incorporated many of the concepts formulated in SAS No. 82 and provided guidance beyond that included in SAS No. 82. Largely in response to the developments outlined above, the current Fraud Task Force was formed in September 2000. Its objective, reproduced in the section entitled "Additional Background Information," directed the task force to consider the need to revise SAS No. 82 based on the preceding academic research, recommendations from the Panel, and information and recommendations provided by other financial reporting stakeholders. It also instructed the task force to be sensitive to international developments and the long-term need to work toward global audit standard-setting solutions. This important initiative of the ASB and its Fraud Task Force is part of a broader AICPA program to address the growing concerns about fraudulent financial reporting. Although the proposed Statement resulting from this initiative addresses the auditor's effectiveness in detecting material misstatements in financial statements due to fraud, broader efforts are needed focusing not only on the auditor's role, but that of management, the audit committee, regulators, and others in addressing this important issue, and focusing not only on the detection of fraud, but on prevention and deterrence aswell. This proposed Statement does not change the auditor's responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud (as described in AU sec. 110.01). However, the proposed Statement does establish standards and provide guidance to auditors in fulfilling that responsibility, as it relates to fraud. The following is an overview of the content of the proposed Statement: A. Description and characteristics of fraud. This section of the proposed Statement describes fraud and its characteristics, including the aspects of fraud particularly relevant to an audit of financial statements. B. Discussion among engagement personne 11b6 l regarding the risks of material misstatement due to fraud. This section requires, as part of planning the audit, that there be a discussion among the audit team members to consider the susceptibility of the entity to material misstatement due to fraud and to reinforce the importance of adopting an appropriate mindset of professional skepticism. C. Obtaining the information needed to identify the risks of material misstatement due to fraud. This section requires the auditor to gather the information necessary to identify the risks of material misstatement due to fraud, by the following: 1. Making inquiries of management and others within the entity; 2. Considering the results of the analytical procedures performed in planning the audit (The proposed Statement also requires that the auditor perform analytical procedures relating to revenue.); 3. Considering fraud risk factors; 4. Considering certain other information; D. Identifying risks that may result in a material misstatement due to fraud. This section requires the auditor to use the information gathered above to identify risks that may result in a material misstatement due to fraud. E. Assessing the identified risks after taking into account an evaluation of the entity's programs and controls. This section requires the auditor to evaluate the entity's programs and controls that address the identified risks of material misstatement due to fraud, and to assess the risks taking into account this evaluation. F. Responding to the results of the assessment. This section requires the auditor to respond to the results of the risk assessment. This response may include the following: 1. A response to identified risks that has an overall effect on how the audit is conducted, that is, a response involving more general considerations apart from the specific procedures otherwise planned; 2. A response to identified risks that involves the nature, timing, and extent of the auditing procedures to be performed; 3. A response involving the performance of certain procedures to further address the risk of material misstatement due to fraud involving management override of controls (See item 9 in the following section, entitled "How It Affects Practice."). G. Evaluating audit test results. This section requires the auditor's assessment of the risk of material misstatement due to fraud to be ongoing throughout the audit and that the auditor evaluate at the completion of the audit whether the accumulated results of auditing procedures and other observations affect the assessment. It also requires the auditor to consider whether identified misstatements may be indicative of fraud and, if so, directs the auditor to evaluate their implications. H. Communicating about fraud to management, the audit committee, and others. This section provides guidance regarding the auditor's communications about fraud to management, the audit committee, and others. I. Documenting the auditor's consideration of fraud. This section describes related documentation requirements.

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  Proposed statement on auditing standards : Interim financial information : (to supersede Statement on auditing standards no. 71, Interim financial information;Interim financial information : (to supersede Statement on auditing standards no. 71, Interim financial information; Exposure draft (American Institute of Certified Public Accountants), 2002, July 26

  American Institute of Certified Public Accountants. Auditing Standards Board

  This proposed Statement on Auditing Standards (SAS) establishes standards and provides guidance to an accountant performing a review of interim financial information of: 1. A public entity, or 2. A nonpublic entity that makes a filing with a regulatory agency in preparation for a public offering or listing, and has had or is currently having its latest annual financial statements audited. The term interim financial information means financial information or statements covering a period less than a full year or for a 12-month period ending on a date other than the entity's fiscal year end. The term accountant, as used in this SAS, refers to a CPA performing a review engagement. The standards and guidance for performing reviews of interim financial information currently reside in SAS No. 71, Interim Financial Information (AICPA, Professional Standards, vol. 1, AU sec. 722). The Auditing Standards Board (ASB) is revising SAS No. 71 to provide additional guidance on performing reviews of interim financial information and to incorporate the requirement of the Securities Exchange Commission (SEC) for timely filings of interim financial information. This proposed SAS also incorporates relevant recommendations of the Public Oversight Board's Panel on Audit Effectiveness in its August 31, 2000 document, Report and Recommendations, as well as recommendations of the AlCPA's Professional Issues Task Force in Practice Alert 2000-4, "Quarterly Review Procedures for Public Companies." This proposed SAS revises SAS No. 71 by: 1. Clarifying the applicability of generally accepted auditing standards to a review of interim financial information. Citing the SEC requirement that an entity engage an independent accountant to review the entity's interim financial information before the entity files its quarterly report on Form 10-Q or Form 10-QSB, and modifying the relevant guidance in the SAS to reflect this requirement. 2. Providing guidance to an accountant performing an initial review of interim financial information. A review engagement is deemed an initial review if the accountant has not audited the financial statements of the previous year end. Requiring an accountant to establish an understanding with his or her client regarding the services to be performed in an interim review engagement, and specifying the matters generally included in that understanding. 3. Requiring the accountant to perform certain additional specified procedures in an interim review engagement, including: a. Comparing disaggregated revenue data, for example, comparing revenue reported by month and by product line or business segment for the current interim period with that of comparable prior periods. b. Obtaining evidence that the interim financial information agrees or reconciles with the accounting records. c. Inquiring of members of management who have responsibility for financial and accounting matters about their knowledge of any fraud perpetrated on the entity, any alleged or suspected fraud, or any allegations of fraudulent financial reporting on the part of the entity received in communications from employees, former employees, short sellers, financial analysts, or others. 4. Providing an illustrative report for a review of comparative interim financial information. 5. Providing guidance on the accountant's consideration, in an interim review engagement, of matters related to an entity's ability to continue as a going concern, and presenting reporting options related to such matters. 6. Adding an appendix to the SAS that presents examples of analytical procedures the accountant may consider performing 7. Adding an appendix to the SAS that provides examples of unusual or complex situations an accountant would ordinarily consider inquiring about when conducting a review of interim financial information. 8. Adding an appendix to the SAS containing two illustrative representation letters for a review of interim financial information. The first letter is designed to be used independently of any other letter. The second letter is designed to be used in conjunction with the representation letter for the audit of the financial statements of the prior year end. This proposed SAS would supersede SAS No. 71.

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  Proposed statement on quality control standards : Amendment to Statement on quality control standards no. 2, system of quality control for a CPA firm's accounting and auditing practice;Amendment to Statement on quality control standards no. 2, system of quality control for a CPA firm's accounting and auditing practice; Exposure draft (American Institute of Certified Public Accountants), 2002, May 15

  American Institute of Certified Public Accountants. Auditing Standards Board

  Statement on Quality Control Standards (SQCS) No. 2, System of Quality Control for a CPA Firm's Accounting and Auditing Practice (AICPA, Professional Standards, vol. 2, QC sec. 20.03), is being amended to clarify that deficiencies in individual audit, attest, compilation, and review engagements do not, in and of themselves, indicate that the firm's system of quality control is insufficient to provide it with reasonable assurance that its personnel comply with applicable professional standards. By the addition of a footnote, this amendment would clarify the relationship of deficiencies in individual engagements and a firm's system of quality control. This proposed Statement amends SQCS No. 2, System of Quality Control for a CPA Firm's Accounting and Auditing Practice (AICPA, Professional Standards, vol. 2, QC sec. 20.03).

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  Performing agreed-upon procedures engagements that address annual claims prompt payment reports as required by the New Jersey administrative code; Statement of position 02-1;

  American Institute of Certified Public Accountants. New Jersey Annual Claims Prompt Payment Reports Task Force

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  Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 2002, June 17

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

  1. PROPOSED REVISION OF INTERPRETATION NO. 101-1A.2 UNDER RULE 101: Interpretation of Rule 101; 2. PROPOSED REVISION OF INTERPRETATION NO. 101-2 UNDER RULE 101: Employment or Association With Attest Clients Former Practitioners and Firm Independence; 3. PROPOSED REVISION OF INTERPRETATION NO. 101-10 UNDER RULE 101: The Effect on Independence of Relationships With Entities Included in the Governmental Financial Statements; 4. PROPOSED REVISION OF ETHICS RULING NO. 41 UNDER RULE 101: Financial Services Company Has Custody of a Member's Assets Member as Auditor of Insurance Company; 5. PROPOSED REVISION OF ETHICS RULING NO. 70 UNDER RULE 101: Member's Depository Relationship With Client Financial Institution; 6. PROPOSED DELETION OF ETHICS RULING NO. 77 UNDER RULE 101: Individual Considering or Accepting Employment With the Client

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  Proposed tax standards interpretation : Proposed interpretation 1-2, "Tax Planning," of statement on standards for tax services no. 1, Tax Return Positions;Proposed interpretation 1-2, "Tax Planning," of statement on standards for tax services no. 1, Tax Return Positions;Interpretation 1-2, "Tax Planning," of statement on standards for tax services no. 1, Tax Return Positions; Exposure draft (American Institute of Certified Public Accountants), 2002, Nov. 11

  American Institute of Certified Public Accountants. Tax Executive Committee

  Statements on Standards for Tax Services (SSTSs) Nos. 1 through 8 and Interpretation 1-1 to Statement No. 1, “Realistic Possibility Standard,” reflect the AICPA’s standards of tax practice and delineate members’ responsibilities to taxpayers, the public, the government, and the profession. The Statements are intended to be part of an ongoing process that may require changes to and interpretations of current SSTSs in recognition of the accelerating rate of change in tax laws and the continued importance of tax practice to members. A significant area of many members’ tax practices involves assisting taxpayers in tax planning. An area of recurring controversy has been the increase in transactions that are potentially abusive tax shelters. Taxing authorities, courts, the AICPA, and other professional organizations have struggled with defining and regulating these transactions. Crucial in the debate about the appropriate means of addressing tax shelters has been the recognition that it may be difficult to clearly delineate the scope of transactions that are considered tax shelters in a way that will discourage abuse. At the same time, it must be recognized that taxpayers have a legitimate interest in arranging their affairs so as to pay no more than their fair share of taxes, and that tax professionals, including members, have a role to play in advancing these efforts. In addition to the difficulty in defining the term tax shelter, it was determined that there was a compelling need for a comprehensive interpretation of a member’s responsibilities in connection with tax planning, with the recognition that such guidance would clarify how those standards would apply across the spectrum of tax planning, including those situations involving tax shelters, regardless of how that term is defined. The Interpretation, therefore, includes Illustrations that cover a broad range of practice situations. Please be advised that the SSTSs, and this Interpretation, have been written in as simple and objective a manner as possible. However, by their nature, ethical standards provide for an appropriate range of behavior that recognizes the need for interpretations to meet a broad range of personal and professional situations. The SSTSs recognize this need by, in some sections, providing relatively subjective rules and by leaving certain terms undefined. These terms and concepts are generally rooted in tax concepts, and therefore should be readily understood by tax practitioners. It is, therefore, recognized that the enforcement of these rules, as part of the AICPA’s Code of Professional Conduct Rule 201, General Standards, and Rule 202, Compliance With Standards, will be undertaken with flexibility in mind and handled on a case-by-case basis. Members are expected to comply with them.

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  Comment letters to proposed statement of position: Accounting for certain costs and activities related to property, plant, and equipment, volume 4;

  American Institute of Certified Public Accountants. Accounting Standards Board

  The comment letters have been dvided into 4 volumes.

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  Amendment to scope of Statement of position 95-2, Financial reporting by nonpublic investment partnerships, to include commodity pools; Statement of position 01-1;

  American Institute of Certified Public Accountants. Accounting Standards Executive

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  Accounting and reporting by health and welfare benefit plans : amendment to AICPA audit and accounting guide, Audits of employee benefit plans, and SOP 92-6, Accounting and reporting by health and welfare benefit plans; Statement of position 01-2;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Accounting by certain entities (including entities with trade receivables) that lend to or finance the activities of others; Statement of position 01-6;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Amendments to specific AICPA pronouncements for changes related to the NAIC codification; Statement of position 01-5;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Comment letters to proposed statement of position: Accounting for certain costs and activities related to property, plant, and equipment, volume 1;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  Number 1 of 4 volumes. Includes letters from 120 respondents.

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  Comment letters to proposed statement of position: Accounting for certain costs and activities related to property, plant, and equipment, volume 2;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  Number 2 of 4 volumes. Includes letters from 111 respondents.

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  Comment letters to proposed statement of position: Accounting for certain costs and activities related to property, plant, and equipment, volume 3;

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  Number 3 of 4 volumes. Includes letters from 80 respondents.

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  Proposed statement of position : accounting for certain costs and activities related to property, plant, and equipment;Accounting for certain costs and activities related to property, plant, and equipment; Exposure draft (American Institute of Certified Public Accountants), 2001, June 29

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This Statement of Position (SOP) provides guidance on accounting for certain costs and activities relating to property, plant, and equipment (PP&E). For purposes of this SOP, a project stage or timeline framework is used and PP&E assets are accounted for at a component level. Costs incurred for PP&E are classified into four stages: preliminary, preacquisition, acquisition-or-construction, and in-service. The SOP requires, among other things, the following: A. Preliminary stage costs, except for payments to obtain an option to acquire PP&E, should be charged to expense as incurred. B. Preacquisition and acquisition-or-construction stage costs should be charged to expense as incurred unless the costs are directly identifiable with the specific PP&E. Directly identifiable costs include only: 1. Incremental direct costs of activities incurred in transactions with independent third parties for the specific PP&E. 2. Certain costs directly related to specified activities performed by the entity for the specific PP&E. 3. Payments to obtain an option to acquire PP&E. C. Costs related to PP&E that are incurred during the in-service stage, including costs of normal, recurring, or periodic repairs and maintenance activities, should be charged to expense as incurred unless the costs are incurred for (1) the acquisition of additional PP&E or components of PP&E or (2) the replacement of existing PP&E or components of PP&E. D. Removal costs incurred during replacement of PP&E, except for certain demolition costs, should be charged to expense as incurred. E. During all stages, general and administrative costs and overhead costs, including costs of support functions, should be charged to expense as incurred. F. Costs of planned major maintenance activities are not a separate PP&E asset or component. Those costs should be charged to expense, except for acquisitions or replacements of components that are capitalizable under the in-service stage guidance of this SOP. G. A component is a tangible part or portion of PP&E that (1) can be separately identified as an asset and depreciated or amortized over its own expected useful life and (2) is expected to provide economic benefit for more than one year. If a component has an expected useful life that differs from the expected useful life of the PP&E asset to which it relates, the cost should be accounted for separately and depreciated or amortized over its expected useful life. Component accounting should begin at the time of acquisition or construction. Component accounting for a replacement should begin at the time of replacement. If an entity replaces a part or portion of a PP&E asset that has not been previously accounted for as a separate component, and the replacement meets the definition of a component, then the entity should capitalize the replacement, account for it as a separate component going forward, estimate the net book value of the replaced item, and charge that net book value to depreciation expense in the period of replacement. H. This SOP is effective for financial statements for fiscal years beginning after June 15, 2002, with earlier application encouraged.

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  Proposed statement of position : amendments to specific AICPA pronouncements for changes related to the NAIC codification ;Amendments to specific AICPA pronouncements for changes related to the NAIC codification; Exposure draft (American Institute of Certified Public Accountants), 2001, Apr. 2

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

  This proposed AICPA Statement of Position (SOP) amends AICPA SOP 94-5, Disclosures of Certain Matters in the Financial Statements of Insurance Enterprises, as a result of the completion of the National Association of Insurance Commissioners (NAIC) Codification of statutory accounting practices for certain insurance enterprises. The amendments to SOP 94-5 included in this proposed SOP would require insurance enterprises to disclose, at the date each balance sheet is presented, beginning with financial statements for fiscal years beginning on or after January 1, 2001, a description of the prescribed or permitted statutory accounting practice and the related monetary effect on statutory surplus of using an accounting practice that differs from either state-prescribed statutory accounting practices or NAIC statutory accounting practices. Retroactive application is not permitted. Those disclosures should be made if (a) state-prescribed statutory accounting practices differ from NAIC statutory accounting practices or (b) permitted state statutory accounting practices differ from either state prescribed statutory accounting practices or NAIC statutory accounting practices, and the use of prescribed or permitted statutory accounting practices (individually or in the aggregate) results in reported statutory surplus or risk-based capital that is materially different from the statutory surplus or risk-based capital that would have been reported had NAIC statutory accounting practices been followed. This proposed SOP' also includes the following auditing guidance that has been updated as a result of the completion of the NAIC Codification: AICPA SOP 95-5, Auditor's Reporting on Statutory Financial Statements of Insurance Enterprises, and SOP 94-1, Inquiries of State Insurance Regulators; and AICPA Auditing Interpretation No. 12, "Evaluation of the Appropriateness of Informative Disclosures in Insurance Enterprises' Financial Statements Prepared on a Statutory Basis," of Statement on Auditing Standards (SAS) 62, Special Reports (AICPA, Professional Standards, vol. 1, AU sec. 9623.60-.77). The included auditing guidance has been approved by the Auditing Standards Board. This proposed SOP is effective for financial statements and audits of financial statements for fiscal years beginning on or after January 1, 2001. If comparative financial statements are presented for fiscal years beginning before January 1, 2001, the disclosure provisions of SOP 94-5 effective prior to this SOP apply to permitted statutory accounting practices by the domiciliary state insurance department.

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  Comment Letters for Exposure Draft Entitled, Generally Accepted Auditing Standards, 2001

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment letters on Proposed amendments to SAS No. 55.

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment Letters on Proposed Statement on Auditing Standards and Statement on Standards for Attestation Engagements – Audit Documentation, June 272001

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment letters on Proposed Statement on Auditing Standards: Audit Documentation

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Proposed statement on auditing standards and statement on standards for attestation engagements : audit documentation;Audit documentation; Exposure draft (American Institute of Certified Public Accountants), 2001, June 27

  American Institute of Certified Public Accountants. Auditing Standards Board and American Institute of Certified Public Accountants. Audit Documentation Task Force

  The proposed Statement on Auditing Standards (SAS) provides an updated framework within which the auditor can exercise professional judgment in determining the nature and extent of audit documentation needed to comply with professional standards. The guidance in the current documentation standard, which is SAS No. 41, Working Papers (AICPA, Professional Standards, vol. 1, AU sec. 339), has not been significantly changed since September 1967. Given the changes in the auditing environment in recent years, the Auditing Standards Board (ASB) undertook to develop guidance that would provide an updated framework for practitioners performing audits of financial statements. The proposed SAS and amendments to certain other SASs (see appendix B) are the result of the ASB's efforts. In future standards-setting projects, the ASB will consider the need for specific documentation requirements. The concepts developed for this proposed SAS also are relevant to practitioners performing attestation engagements. Accordingly, the exposure draft includes a proposed amendment to Statement on Standards for Attestation Engagements (SSAE) No. 10, Attestation Standards: Revision and Recodification (AICPA, Professional Standards, vol. 1, AT secs. 101-701) (see appendix B). The proposed SAS: 1. Uses the term audit documentation in place of working papers. 2. Reminds auditors that inspection procedures, as described in Statement of Quality Control Standards No. 3, Monitoring a CPA Firm's Accounting and Auditing Practice (AICPA, Professional Standards, vol. 2, QC sec. 30), may be used to evaluate the extent of a firm's compliance with its quality control policies and procedures and that review of audit documentation is an inspection procedure. 3. Incorporates the current requirement in SAS No. 22, Planning and Supervision (AICPA, Professional Standards, vol. 1, AU sec. 311), for a written audit program (or set of audit programs) for every audit. 4. Introduces the concept that audit documentation should (a) enable a reviewer with relevant knowledge and experience to understand from the information contained therein the nature, timing, extent, and results of auditing procedures performed, and the evidence obtained, and (b) indicate the engagement team member(s) who performed and reviewed the work. 5. Lists factors that the auditor should consider in determining the nature and extent of the audit documentation to be prepared for a particular audit area or auditing procedure. 6. For auditing procedures that involve inspection of documents or confirmation of balances, requires audit documentation to include an identification of the items tested and, where appropriate, abstracts or copies of documents such as significant contracts or agreements. (In a current standards-setting project, the ASB is considering documentation requirements for other types of auditing procedures.) 7. Requires documentation of audit findings or issues that in the auditor's judgment are significant, actions taken to address them, and the basis for the conclusions reached. The proposed Statement includes a list of types of significant audit findings and issues. 8. Requires the auditor to adopt reasonable procedures to prevent unauthorized access to the audit documentation. The proposed amendments to other SASs (see appendix B) accomplish the following: 1. SAS No. 22, Planning and Supervision — Move the guidance in paragraph 5 regarding the audit program, modified as necessary, to the new SAS. 2. SAS No. 47, Audit Risk and Materiality in Conducting an Audit (AICPA, Professional Standards, vol. 1, AU sec. 312) —Add a requirement to document the nature and effect of aggregated misstatements as well as the auditor's conclusion about whether those misstatements cause the financial statements to be materially misstated. 3. SAS No. 56, Analytical Procedures (AICPA, Professional Standards, vol. 1, AU sec. 329) —Add a specific documentation requirement that applies when an auditor uses an analytical procedure as the principal substantive test of a significant financial statement assertion. 4. SAS No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (AICPA, Professional Standards, vol. 1, AU sec. 341) —Add a requirement to SAS No. 59 for the auditor to document the conditions or events that led him or her to believe that there is substantial doubt about the entity's ability to continue as a going concern; the work performed in connection with the auditor's evaluation of management's plans; the auditor's conclusion as to whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time; and the consideration and effect of that conclusion on the financial statements, disclosures, and audit report. The proposed amendment to SSAE No. 10 (see appendix B) incorporates in the attestation standards the concepts and terminology in the proposed SAS. It also unifies the documentation guidance in the attestation standards.

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  Proposed statement on auditing standards : generally accepted auditing standards : (supersedes "Generally accepted auditing standards" of Statement on auditing standards no. 1, Codification of auditing standards and procedures, AICPA, Professional standards, vol. 1, AU sec. 150);Generally accepted auditing standards : (supersedes "Generally accepted auditing standards" of Statement on auditing standards no. 1, Codification of auditing standards and procedures, AICPA, Professional standards, vol. 1, AU sec. 150); Exposure draft (American Institute of Certified Public Accountants), 2001, May 4

  American Institute of Certified Public Accountants. Auditing Standards Board and American Institute of Certified Public Accountants. Generally Accepted Auditing Standards Hierarchy Task Force

  The body of auditing literature grew and evolved considerably during the twentieth century. American Institute of Certified Public Accountants (AICPA) boards and committees have issued ninety-three Statements on Auditing Standards (SASs), some of which have been superseded, and numerous auditing interpretations. The AICPA also has published Auditing Statements of Position, Audit and Accounting Guides and numerous other publications containing guidance of varying authority on how to conduct an audit of financial statements in accordance with generally accepted auditing standards (GAAS). Although the AICPA has, on occasion, realigned and clarified the authority of these publications, some uncertainty remains in the minds of auditors and others about which publications auditors must know and follow when conducting an audit. Furthermore, because of the large volume of auditing publications, some auditors may not be aware of publications that may be applicable to their audit engagements. The Auditing Standards Board (ASB) believes the proposed SAS will significantly reduce uncertainty about which publications the auditor must comply with and which publications the auditor must consider when performing an audit in accordance with GAAS. The ASB also expects that auditors will become more aware of other applicable auditing publications that may provide useful auditing guidance, increasing the likelihood that auditors will use them. All of this should result in increased audit quality. The proposed SAS: 1. Identifies the body of auditing literature. 2. Clarifies the authority of auditing publications issued by the AICPA and others. 3. Specifies which auditing publications the auditor must comply with and those he or she must consider when conducting an audit in accordance with GAAS. 4. Identifies specific AICPA auditing publications and provides information on how to obtain them. This proposed SAS would supersede SAS No. 1, Codification of Auditing Standards and Procedures, AU section 150, Generally Accepted Auditing Standards. Certain other descriptions of the authority of AICPA auditing publications also will be revised to conform to the descriptions included in the proposed SAS. These include the head note in AU Section 100, Statements on Auditing Standards - Introduction (AICPA, Professional Standards, vol. 1, AU sec. 100), the authority statement included at the end of each newly-published SASs, the Notice to Readers included in AICPA Audit and Accounting Guides and AICPA Audit Guides, and certain other notices and authority statements included in other AICPA auditing publications.

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  Proposed Model Policies for Conditioning and Transitioning for the Uniform CPA Examination and Proposed Revisions to Rules 5-1 to 5-10 Relating to the Uniform Accountancy Act, November 20, 2001, Exposure draft (American Institute of Certified Public Accountants), 2001, November 20

  American Institute of Certified Public Accountants. Board of Examiners

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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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  Letter from Jeff Pieper, Manager, Subscription Administration, AICPA Re: Discontinuance of Subscription Service for Printed Content of AICPA Meetings.

  Jeff Piepper

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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