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Accounting by participating mortgage loan borrowers; Statement of position 97-1;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letter on Accounting for derivative and similar financial instruments and for hedging activities
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letter on the FASB’s June 11, 1997 Exposure Draft of a Proposed Statement of Financial Accounting Concepts, Using Cash Flow Information in Accounting Measurements.
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters on Employers' disclosures about pensions and other postretirement benefits : an amendment of FASB statements no. 87, 88, and 106
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to proposed statement of position: reporting on the costs of start-up activities;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to proposed statement on auditing standards and statement on standards for attestation engagements : establishing an understanding with the client;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to Proposed Statement on Auditing Standards, Communication between predecessor and successor auditors;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters to proposed statement on auditing standards: Management representations;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Proposed statement of position : deposit accounting : accounting for insurance and reinsurance contracts that do not transfer insurance risk;Deposit accounting : accounting for insurance and reinsurance contracts that do not transfer insurance risk; Exposure draft (American Institute of Certified Public Accountants), 1997, June 30
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
This proposed Statement of Position (SOP) provides guidance on how to account for insurance and reinsurance contracts that do not transfer insurance risk. It applies to all entities and all insurance and reinsurance contracts that do not transfer insurance risk except for long-duration life and health insurance contracts. The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to in this proposed SOP as deposit accounting. The proposed SOP does not address when deposit accounting should be applied. This proposed SOP specifies the following: 1. Insurance and reinsurance contracts for which the deposit method is appropriate should be classified as one of the following, which are those: a. That transfer only significant timing risk. b. That transfer only significant underwriting risk. c. That transfer neither significant timing nor underwriting risk. d. With indeterminate risk. 2. At inception, a deposit asset or liability should be recognized for insurance and reinsurance contracts accounted for under deposit accounting and should be measured based on the consideration paid or received less any explicitly identified premiums or fees to be retained by the insurer or reinsurer. 3. Insurance and reinsurance contracts that transfer neither significant timing nor underwriting risk and insurance and reinsurance contracts that transfer only significant timing risk should be accounted for using the interest method. Changes in estimates of the timing or amounts of recoveries should be accounted for by recalculating the effective yield. The asset or liability should then be adjusted to the amount that would have existed had the new effective yield been applied since the inception of the contract. The revenue and expense recorded for such contracts shall be included in interest income or interest expense. 4. Insurance or reinsurance contracts that transfer only significant underwriting risk should be accounted for by measuring the deposit based on the unexpired portion of the coverage provided until losses are incurred that will be reimbursed under the contracts. Once a loss is incurred that will be reimbursed under this kind of contract, the deposit should be measured by the present value of the expected future cash flows arising from the contract plus the remaining unexpired portion of the coverage provided. Changes in the recorded amount of the deposit, other than the unexpired portion of the coverage provided, should be included in the income statement of the insured as an offset against the loss recorded by the insured that will be reimbursed under the contract and in an insurer's income statement as an incurred loss. The reduction in the deposit related to the unexpired portion of the coverage provided should be recorded by the insured and the insurer who are insurance enterprises as an adjustment to incurred losses. If the insured and the insurer are enterprises other than insurance enterprises, the reduction in the deposit related to the unexpired portion of the coverage provided should be recorded as an expense. 5. For insurance and reinsurance contracts with indeterminate risk, the guidance in SOP 92-5, Accounting for Foreign Property and Liability Reinsurance, as to the open-year method, should be followed. The open-year method should not, however, be used to defer losses that otherwise would be recognized pursuant to FASB Statement No. 5. Under the open-year method, the effects of the contracts are not included in the determination of net income until sufficient information becomes available to reasonably estimate and allocate premiums. The open-year method requires that these effects be aggregated in the balance sheet. When sufficient information becomes available to reasonably estimate and allocate premiums, the insurance or reinsurance contract with indeterminate risk should be reclassified into one of the other three categories as an insurance or reinsurance contract that transfers neither significant timing nor underwriting risk, transfers only significant timing risk, or transfers only significant underwriting risk, as appropriate, and accounted for accordingly. This proposed SOP is effective for financial statements for fiscal years beginning after December 15, 1998, with earlier adoption encouraged. Restatement of previously issued annual financial statements would not be permitted. Initial application of this proposed SOP should be as of the beginning of an entity's fiscal year (that is, if the proposed SOP were adopted before the effective date and during an interim period, all prior interim periods would be required to be restated). The effect of initially adopting this SOP should be reported as a cumulative effect of a change in accounting principle (in accordance with the provisions of Accounting Principles Board Opinion No. 20, Accounting Changes).
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Proposed Statement of Position: Reporting on the Costs of Start-up Activities, Draft - Not for Public Distribution, February 11, 1997; Exposure Draft (American Institute of Certified Public Accountants) 1997, February 11
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Proposed statement of position : Reporting on the costs of start-up activities;Reporting on the costs of start-up activities; Exposure draft (American Institute of Certified Public Accountants), 1997, Apr. 22
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
This Statement of Position (SOP) provides guidance on the financial reporting of start-up costs. It requires costs of start-up activities to be expensed as incurred. The SOP broadly defines start-up activities and provides examples to help entities determine what costs are and are not within the scope of this SOP. This SOP applies to all nongovernmental entities and is effective for financial statements for fiscal years beginning after December 15, 1997. Earlier application is encouraged in fiscal years for which financial statements previously have not been issued.
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Proposed statement of position : Software revenue recognition, Draft - 6/5/97; Exposure draft (American Institute of Certified Public Accountants); 1997, June 5
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Software revenue recognition; Statement of position 97-2;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Statement of Position: Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, November 17, 1997, Draft - For Discussion Only
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters on proposed the SOP on Deposit Accounting, 3162.DA
American Institute of Certified Public Accountants (AICPA)
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Proposed auditing interpretation : the use of legal interpretations as evidential matter to support management's assertion that a transfer of financial assets qualifies as a sale; Exposure draft (American Institute of Certified Public Accountants), 1997, November 24
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 : establishing an understanding with the client : (amendments to Statement on auditing standards no. 1, AU section 310, "Relationship between the auditor's appointment and planning" and Statement on standards for attestation engagements no. 1, AT section 100, "Attestation standards") ;Proposed statement on standards for attestation engagements : establishing an understanding with the client : (amendments to Statement on auditing standards no. 1, AU section 310, "Relationship between the auditor's appointment and planning" and Statement on standards for attestation engagements no. 1, AT section 100, "Attestation standards") ;Establishing an understanding with the client : (amendments to Statement on auditing standards no. 1, AU section 310, "Relationship between the auditor's appointment and planning" and Statement on standards for attestation engagements no. 1, AT section 100, "Attestation standards"); Exposure draft (American Institute of Certified Public Accountants), 1997, Mar. 7
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) is proposing an amendment to existing standards to provide guidance on obtaining an understanding with the client about the services to be performed. Currently, such guidance is not included in the Statements on Auditing Standards (SASs) or the Statements on Standards for Attestation Engagements (SSAEs). However, the recently-issued 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) requires that a CPA firm provide policies and procedures for obtaining an understanding with the client regarding services to be performed. SQCS No. 2 also states that professional standards may provide guidance in deciding whether such understanding should be oral or written. The ASB recognizes a need for authoritative guidance about this issue to reduce misunderstandings as to the nature of the audit and attest engagement to be performed. The proposed Statements would amend existing professional standards to incorporate guidance about obtaining an understanding with the client regarding the services to be performed. The proposed Statements would require the auditor to establish an understanding with the client that includes the objectives of the engagement, the responsibilities of management and the auditor, and any limitations of the engagement. The proposed Statements also would require that the auditor document his or her understanding with the client in the working papers, preferably through a written communication with the client. The proposed Statements would include specific matters that ordinarily would be addressed in the understanding with the client. In addition, the proposed Statements would provide guidance when the auditor believes that an understanding with the client has not been established. The proposed Statements would amend: 1. SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 310), and would change the title of the section from "Relationship Between the Auditor's Appointment and Planning" to "Appointment of the Independent Auditor." 2. SSAE No. 1, Attestation Standards (AICPA, Professional Standards, vol. 1, AT sec. 100).
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Proposed statement on auditing standards : communications between predecessor and successor auditors : (to supersede Statement on auditing standards no. 7, Communications between predecessor and successor auditors, and its interpretations);Communications between predecessor and successor auditors : (to supersede Statement on auditing standards no. 7, Communications between predecessor and successor auditors, and its interpretations); Exposure draft (American Institute of Certified Public Accountants), 1997, Mar. 7
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) has issued this exposure draft to provide appropriate guidance on the auditor's responsibility regarding communications between predecessor and successor auditors. This proposed Statement provides guidance relating to communications between predecessor and successor auditors when a change of auditors has taken place or is in process. This proposed Statement: 1. Revises the definitions of predecessor and successor auditors to reflect the current proposal environment found in today's practice. 2. Expands the required communications with the predecessor auditor before the successor auditor accepts an engagement to include inquiries about communications made by the predecessor auditor to audit committees or others with equivalent authority and responsibility as described in SAS No. 82, Consideration of Fraud in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 316), SAS No. 54, Illegal Acts by Clients (AICPA, Professional Standards, vol. 1, AU sec. 317), and SAS No. 60, Communication of Internal Control Related Matters Noted in an Audit (AICPA, Professional Standards, vol. 1, AU sec. 325), and any other reasonable inquiries that the successor auditor may wish to ask the predecessor auditor. 3. Clarifies the successor auditor's responsibility with respect to obtaining sufficient competent evidential matter used in analyzing the impact of the opening balances on the current year financial statements and consistency of accounting principles as a matter of professional judgment. Examples of audit evidence provided include the most recent audited financial statements, the predecessor auditor's report thereon, the results of inquiry of the predecessor auditor, the results of the successor auditor's review of the predecessor auditor's working papers, and audit procedures performed on the current period's transactions that may provide evidence about the opening balances or consistency. 4. Expands the working papers ordinarily made available to the successor auditor by the predecessor auditor to include documentation of planning, internal control, audit results and other matters of continuing audit significance. 5. Introduces an illustrative client consent and acknowledgment letter and an illustrative successor auditor acknowledgment letter. A predecessor auditor may conclude that obtaining written communications from both the former client and the successor auditor will allow greater communication between both parties and greater access to the working papers than would be the case in the absence of such communications. The ASB believes that it is in the public interest for successor auditors to have greater access to working papers and, accordingly, for all practitioners to have access to these letters and to use them in their practice if they so choose. These letters are presented for illustrative purposes only and not as a requirement by the proposed Standard. 6. Incorporates the Interpretations, Communications Between Predecessor and Successor Auditors Auditing Interpretations of Section 315 (AICPA, Professional Standards, vol. 1, AU sec. 9315), into the proposed Statement. This proposed Statement would supersede SAS No. 7, Communications Between Predecessor and Successor Auditors (AICPA, Professional Standards, vol. 1, AU sec. 315), and Its Interpretations.
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Proposed Statement on auditing standards : Management representations (to supersede Statement on auditing standards no. 19, Client representations, and Auditing interpretation no. 2 "Management representations when current management was not present during the period under audit") and an amendment to Statement on auditing standards no. 58, Reports on audited financial statements;Management representations (to supersede Statement on auditing standards no. 19, Client representations, and Auditing interpretation no. 2 "Management representations when current management was not present during the period under audit") and an amendment to Statement on auditing standards no. 58, Reports on audited financial statements; Exposure draft (American Institute of Certified Public Accountants), 1997, June 9
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) has issued this exposure draft to provide appropriate guidance regarding written management representations to be obtained by an auditor as part of an audit performed in accordance with generally accepted auditing standards. A task force of the ASB reviewed Statement on Auditing Standards (SAS) No. 19, Client Representations (AICPA, Professional Standards, AU sec. 333), and determined that it needed to be updated to reflect changes in auditing practice and the auditing environment since SAS No. 19 was issued. This proposed Statement would supersede SAS No. 19. This proposed Statement: 1. Clarifies the requirement for an auditor to obtain written representations for all financial statements and periods covered by the auditor's report. 2. Includes a representation made by management that states that it is management's belief that the financial statements are fairly presented in conformity with generally accepted accounting principles. 3. Includes a list of updated specific representations to be obtained from management that are consistent with representations obtained in current practice. Such representations include information concerning fraud as referred to in SAS No. 82, Consideration of Fraud in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 316) and significant estimates and material concentrations known to management that are required to be disclosed in accordance with the AlCPA's Statement of Position 94-6, Disclosure of Certain Significant Risks and Uncertainties. 4. States that the auditor ordinarily should obtain a representation letter tailored to cover representations relating to the financial statements unique to the entity's business or industry. Also, appendix B, "Additional Representations," has been added to the proposed Statement and includes additional representations that may be appropriate in certain situations. 5. Requires the auditor to investigate the circumstances and consider the reliability of a representation made, if that representation is contradicted by other audit evidence. 6. Includes guidance regarding materiality levels that may be stated explicitly in the representation letter, in either qualitative or quantitative terms. Also, the illustrative management representation letter included in appendix A, "Illustrative Management Representation Letter," includes a aulatiative discussion of materiality. 7. Includes guidance for circumstances when an auditor should obtain an updated representation letter from management such as when a predecessor auditor is requested by a former client to reissue his or her report on the financial statements of a prior period. Also, an illustrative updating management representation letter has been added to the proposed Statement in appendix C, "Illustrative Updating Management Representation Letter." This exposure draft contains a proposed revision to SAS No. 58, Reports on Audited Financial Statements (AICPA, Professional Standards, vol 1, AU sec. 508.71), which would expand a predecessor auditor's procedures when asked by a former client to reissue his or her report on the financial statements of a prior period. This proposed amendment would require the predecessor auditor to obtain a letter of representation from management, in addition to the representation letter from the successor auditor, before reissuing a report previously issued on financial statements of a prior period. See the section herein entitled, "Proposed Amendment to Statement on Auditing Standards No. 58, Reports on Audited Financial Statements." In conjunction with the proposed amendment to SAS No. 58, an illustrative updating management representation letter is included as appendix C, "Illustrative Updating Management Representation Letter," of the proposed Statement. This proposed Statement would supersede SAS No. 19 and Auditing Interpretation No. 2, "Management Representations When Current Management Was Not Present During the Period Under Audit" (AICPA, Professional Standards, vol. 1, AU sec. 9333). It also would amend SAS No. 58.
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Proposed statement on standards for attestation engagements : management's discussion and analysis ;Management's discussion and analysis; Exposure draft (American Institute of Certified Public Accountants), 1997, Mar. 7
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) is considering the issuance of a Statement on Standards for Attestation Engagements (SSAE) to provide guidance to practitioners who may be engaged to examine or review management's discussion and analysis (MD&A) prepared pursuant to the published rules and regulations of the Securities and Exchange Commission (SEC). The ASB has observed the following since a proposed SSAE was first issued for exposure in 1987, and subsequently deferred: 1. Possible changes may occur in the existing financial reporting model as a result of the Comprehensive Model for Business Reporting proposed by the AICPA Special Committee on Financial Reporting. Such model is more forward-looking than the current financial reporting model; management's discussion and analysis that public registrants are currently required to prepare addresses certain elements proposed by the model. 2. During the research performed by the AICPA Special Committee on Financial Reporting, some users expressed a desire for more auditor involvement in financial information that they receive. 3. Existing guidance does not address a number of issues practitioners should consider in applying the Attestation Standards to an engagement to examine or review MD&A (including whether the practitioner needs to have audited or reviewed the financial statements to which the MD&A relates; internal control considerations; application of materiality considerations in the performance of an examination and in forming an opinion on, or providing the basis for reporting on a review of, the MD&A presentation; and the nature of specific procedures that should be performed), whether a review level of service is appropriate for MD&A, or whether it is appropriate to accept an engagement with respect to a presentation similar to MD&A in a non-SEC environment. Accordingly, the ASB believes that the profession should be proactive rather than reactive to changes in the business environment and be appropriately positioned to provide such service if requested. The ASB also believes that the proposed Standard would provide a framework that may be useful in providing assurance services in the future as companies experiment with new forms of financial presentations, such as the Comprehensive Model for Business Reporting. An examination or a review of MD&A would provide a higher level of assurance as to reasonableness to both the users and the preparers of the MD&A than is provided today in the context of an audit of financial statements. Existing standards included in Statement on Auditing Standards (SAS) No. 8, Other Information in Documents Containing Audited Financial Statements (AICPA, Professional Standards, vol. 1, AU sec. 550), only require the auditor to read the MD&A and consider whether the MD&A, or the manner of its presentation, is materially inconsistent with information, or the manner of its presentation, appearing in the financial statements. A comparison of the procedures under SAS No. 8 versus an examination or review of MD&A appears in the Table at the end of this Summary. An examination of MD&A would provide both the users and the preparers with an independent opinion regarding whether the presentation includes the required elements of Item 303 of Regulation S-K and the related published SEC rules and regulations, whether the historical financial information included in the MD&A is accurately derived from the entity's financial statements, and whether the underlying information and assumptions of the entity provide a reasonable basis for the disclosures contained therein. A review of MD&A would provide users and preparers with negative assurance concerning such matters. In addition to the assurance that is obtained from an examination or a review level of service, management would also benefit by improving the MD&A through an independent view of the content. Improvements to the MD&A presentation improve the quality of information available to users. Audit committees might benefit through the additional discussions with the auditors and review of the draft MD&A presentation that would result from an examination or review engagement. This proposed Statement provides guidance to assist the practitioner in the following: 1. Accepting an engagement; 2. Planning the engagement; 3. Considering internal control applicable to the preparation of MD&A; 4. Obtaining sufficient evidence for an examination; 5. Applying analytical procedures and inquiries for a review; 6. Considering events subsequent to the balance-sheet date; 7. Reporting. Fundamental to accepting an engagement to examine MD&A under this proposed Statement is the requirement for the practitioner to have audited the financial statements for at least the latest period subject to his or her examination of MD&A. Similarly, in order to accept an engagement to review MD&A, the practitioner is required to have performed either an audit of the annual financial statements or a review of interim financial statements for at least the latest period to which the MD&A presentation relates. If there is a predecessor practitioner who examined or reviewed the MD&A for a prior period(s), the successor practitioner may refer to the reports of the predecessor practitioner for the earlier period(s) if the predecessor practitioner's permission is obtained. Otherwise, the successor practitioner is required to apply the appropriate procedures relating to information concerning prior years included in the current MD&A presentation in order to examine or review such prese d36 ntation. If the practitioner is requested by entities to provide this service, the proposed Statement would be applied to engagements by public companies that are required to follow Item 303 of Regulation S-K and nonpublic entities that choose to prepare MD&A using the published SEC rules and regulations. Although an engagement to perform an examination or review of an MD&A presentation may be performed under SSAE No. 1, Attestation Standards, this proposed Statement expands on the guidance in such standard by providing specific guidance with respect to engagement acceptance, performance issues, and reporting matters for an MD&A presentation. SAS No. 8, which requires the auditor to read the MD&A and consider whether the MD&A or its presentation is materially inconsistent with information, or the manner of its presentation, appearing in the financial statements, would continue to apply to situations in which the auditor is not engaged to examine or review the MD&A presentation. This proposed SSAE would require amending various paragraphs of SAS No. 72, Letters for Underwriters and Certain Other Requesting Parties (AICPA, Professional Standards, vol. 1, AU sec. 634), to permit accountants to examine or review and report separately on an Item 303 MD&A presentation. Accordingly, the proposed amendments to SAS No. 72 are included as an appendix to this proposed SSAE. Commentators to this proposed Statement should be aware that practitioners performing an engagement to examine or review MD&A under this proposed Statement must be independent pursuant to rule 101 of the Code of Professional Conduct (AICPA, Professional Standards, vol. 2, ET sec. 101) because of the required condition that the practitioner has to have audited or reviewed historical financial statements for at least the latest period to which the MD&A presentation applies.
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Comment letters on Use of Legal Interpretations As Evidential Matter to Support Management’s Assertion That a Transfer of Financial Assets Qualifies as a Sale
American Institute of Certified Public Accountants. Auditing Standards Board. FASB 125 Audit Issues Task Force
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Comment Letter on the FASB's June 1997 Special Report, Issues Associated with the FASB Project on Business Combinations (the Special Report)
American Institute of Certified Public Accountants. Business Combinations Task Force
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Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 1997, Mar. 14
American Institute of Certified Public Accountants. Professional Ethics Executive Committee
1. PROPOSED RULINGS UNDER RULE 101: Member Has Significant Influence Over an Entity That Has Significant Influence Over a Client; 2. Member's Investment in Financial Services Products That Invest in Clients; 3. PROPOSED REVISION OF RULING NO. 52 UNDER RULE 101: Unpaid Fees; 4. PROPOSED RULING UNDER RULE 301: Disclosure of Confidential Client Information in Legal Proceedings; 5. PROPOSED REVISION OF INTERPRETATION 501-2 UNDER RULE 501: Discrimination and Harassment in Employment Practices; 6. PROPOSED DELETION OF RULING NO. 82 AND PROPOSED REVISION OF RULING NO. 176 UNDER RULE 502: Newsletter and Member's Association with Newsletters and Publications
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Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 1997, Sept. 16
American Institute of Certified Public Accountants. Professional Ethics Executive Committee
1. PROPOSED REVISION OF RULING NO. 3 UNDER RULE 101: Member as Signer or Cosigner of Checks Involvement in Disbursing Client Funds; 2. PROPOSED REVISION OF RULING NO. 31 UNDER RULE 101: Financial Interest in a Performance of Services for Common Interest Realty Associations (CIRAs), Including Cooperatives, Condominium Associations, Planned Unit Developments, Homeowners Associations, and Timeshare Developments , or Other Common Interest Realty Association; 3. PROPOSED DELETION OF RULING NO. 58 UNDER RULE 101: Member as Lessor; 4. PROPOSED REVISION OF RULING NO. 91 UNDER RULE 101: Member Leasing Property To or From a Client; 5. PROPOSED DELETION OF RULING NO. 33 UNDER RULE 101: Member as Participant in Employee Benefit Plan; 6. PROPOSED DELETION OF RULING NO. 61 UNDER RULE 101: Participation of Member's Spouse in Client's Stock Ownership Plans (Including an ESOP); 7. PROPOSED RULING UNDER RULE 101: Participation in Health and Welfare Plan of Client; 8. PROPOSED RULING UNDER RULE 101: Participation of Member or Spouse in Retirement, Savings, or Similar Plan Sponsored by or That Invests in Client; 9. PROPOSED RULING UNDER RULE 101: Member as Beneficiary of a Will or Trust.
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Statement of Position: Accounting by Insurance and other Enterprises for Insurance-Related Assessments, Draft 7/3/97
American Institute of Certified Public Insurance Companies Committee. Assessment Task Force
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Comment letters to Exposure draft proposed AICPA Standards for Performing and Reporting on peer reviews;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to proposed statement of position: Accounting by insurance and other enterprises for guaranty-fund and certain other insurance-related assessments;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to proposed statement of position: Accounting by insurance and other enterprises for guaranty-fund and certain other insurance-related assessments;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to proposed statement on auditing standards : Amendment to statement on auditing standards no. 31, evidential matter;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters to proposed statement on auditing standards : consideration of fraud in a financial statement audit;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters to proposed statement on auditing standards: Investments in debt and equity securities;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letter to proposed statement of position : Accounting for the costs of computer software developed or obtained for internal use;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Environmental remediation liabilities, including auditing guidance; Statement of position 96-1;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Proposed statement of position : Accounting by insurance and other enterprises for guaranty-fund and certain other insurance-related assessments ;Accounting by insurance and other enterprises for guaranty-fund and certain other insurance-related assessments; Exposure draft (American Institute of Certified Public Accountants), 1996, Dec. 5
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
This proposed Statement of Position (SOP) would provide guidance on accounting by insurance and other enterprises for guaranty-fund and certain other insurance-related assessments. The SOP provides: 1. Guidance for determining when an insurance enterprise should recognize a liability for guaranty-fund and other assessments. 2. Guidance on how to measure the liability and allows for the discounting of the liability, if the amount and timing of the cash payments are fixed and reliably determinable. 3. Criteria for when an asset may be recognized for a portion or all of the assessment liability or paid assessment that can be recovered through premium tax offsets or policy surcharges. 4. Requirements for disclosure of certain information. This SOP would be effective for financial statements for fiscal years beginning after December 15, 1 997. Early adoption is encouraged. Previously issued annual financial statements should not be restated. Initial application of this SOP should be as of the beginning of an entity's fiscal year (that is, if the SOP is adopted prior to the effective date and during an interim period other than the first interim period, all prior interim periods should be restated). Insurance enterprises should report the effect of initially adopting this SOP in a manner similar to a cumulative effect of a change in accounting principle (refer to paragraph 20 of Accounting Principles Board [APB] Opinion No. 20, Accounting Changes).
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Proposed statement of position : Accounting for the costs of computer software developed or obtained for internal use;Accounting for the costs of computer software developed or obtained for internal use; Exposure draft (American Institute of Certified Public Accountants), 1996, Dec. 17
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
This Statement of Position (SOP) provides guidance on accounting for the costs of computer software developed or obtained for internal use. The SOP requires the following: 1. Computer software meeting the characteristics specified in this SOP is internal-use software. 2. Except as stated in the following sentence, external direct costs of materials and services consumed in developing or obtaining internal-use computer software; payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use computer software project (to the extent of the time spent directly on the project); and interest costs incurred in developing computer software for internal use should be capitalized as a long-lived asset. Computer software costs that are research and development should be expensed as they are incurred in accordance with the provisions of Financial Accounting Standards Board (FASB) Statement No. 2, Accounting for Research and Development Costs. 3. Training costs included in the purchase price of computer software should be expensed as incurred. Maintenance fees included in the purchase price should be recognized in expense over the maintenance period. 4. Impairment should be recognized and measured in accordance with the provisions of FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. 5. The costs of computer software developed or obtained for internal use that are capitalized should be amortized over the estimated useful life of the software in a systematic and rational manner. 6. Proceeds received from the sale of computer software developed or obtained for internal use should be applied against the carrying amount of that software. No profit should be recognized until aggregate proceeds from sales exceed the carrying amount of the software. The SOP identifies characteristics and provides examples to assist in determining when computer software is for internal use. The SOP applies to all nongovernmental entities and is effective for financial statements for fiscal years beginning after December 15, 1997. Earlier application is encouraged in fiscal years for which financial statements have not been issued.
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Proposed statement on auditing standards : amendment to statement on auditing standards no. 31, "evidential matter";Amendment to statement on auditing standards no. 31, "evidential matter"; Exposure draft (American Institute of Certified Public Accountants), 1996, May 20
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board is proposing an amendment to Statement on Auditing Standards (SAS) No. 31, Evidential Matter (AICPA, Professional Standards, vol. 1, AU sec. 326), to incorporate the concept of evidential matter in electronic form. The proposed amendment also provides guidance regarding the potential audit impacts of evidential matter in electronic form and describes matters an auditor should consider in such circumstances. This proposed Statement would provide guidance for a practitioner who has been engaged to audit an entity's financial statements where significant information is transmitted, processed, maintained, or accessed electronically. The proposed Statement would include examples of evidential matter in electronic form and provide that an auditor should consider the time during which such evidential matter exists or is available in determining the nature, timing, and extent of substantive tests. In addition, the proposed Statement would indicate that an auditor may determine that, in certain engagement environments where evidential matter is in electronic form, it would not be practical or possible to reduce detection risk to an acceptable level by performing only substantive tests. The proposed Statement would provide that in such circumstances, an auditor should consider performing tests of controls to support an assessed level of control risk below the maximum for affected assertions. This proposed Statement would amend SAS No. 31.
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Proposed statement on auditing standards : consideration of fraud in a financial statement audit and amendments to statements on auditing standards no. 1, Codification of auditing standards and procedures, and no. 47, Audit risk and materiality in conducting an audit ;Consideration of fraud in a financial statement audit and amendments to statements on auditing standards no. 1, Codification of auditing standards and procedures, and no. 47, Audit risk and materiality in conducting an audit; Exposure draft (American Institute of Certified Public Accountants), 1996, May 1
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) has issued this exposure draft to provide expanded operational guidance on the consideration of fraud in conducting a financial statement audit. The proposed changes in auditing standards also clarify the auditor's present responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether caused by error or fraud. In addition, the proposed changes provide added guidance on the standard of due professional care in the performance of work, including the need to exercise professional skepticism, and the concept of reasonable assurance. Proposed Statement on Auditing Standards, Consideration of Fraud in a Financial Statement Audit: This proposed Statement on Auditing Standards (SAS), Consideration of Fraud in a Financial Statement Audit: 1. Describes fraud and its characteristics. 2. Requires the auditor to specifically assess the risk of material misstatement due to fraud and provides categories of fraud risk factors that should be considered in the auditor's assessment. 3. Provides guidance on how the auditor should respond to the results of the assessment. 4. Provides guidance on the evaluation of audit test results as they relate to the risk of material misstatement due to fraud. 5. Describes related documentation requirements. 6. Provides guidance regarding the auditor's communication about fraud to management, the audit committee, and others. Proposed Amendments to SAS No. 1, Codification of Auditing Standards and Procedures: The exposure draft contains proposed revisions to Section 110 of SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 110, "Responsibilities and Functions of the Independent Auditor"), that include a statement of the auditor's responsibility in connection with planning and performing an audit of financial statements. The ASB believes the addition of this paragraph to the standards would clarify the auditor's presently existing responsibility in an audit for the detection of material misstatements in financial statements resulting from fraud. While the statement of responsibility is clarified, it is not substantively changed - that is, it continues to be framed by the concepts of materiality and reasonable assurance. The proposed revisions to Section 230 of SAS No. 1 (AICPA, Professional Standards, vol. 1, AU sec. 230, "Due Professional Care in the Performance of Work"), include an expanded discussion of due professional care and reasonable assurance. The objective of these revisions is to emphasize the need for professional skepticism throughout the conduct of the audit and to provide guidance on the concept of reasonable assurance. The proposed revisions to SAS No. 1 described above would provide a foundation for the operational guidance on the consideration of fraud to be contained in the proposed SAS, Consideration of Fraud in a Financial Statement Audit. Proposed Amendment to SAS No. 47, Audit Risk and Materiality in Conducting an Audit: The exposure draft also contains proposed revisions to SAS No. 47, Audit Risk and Materiality in Conducting an Audit (AICPA, Professional Standards, vol. 1, AU sec. 312). These revisions would provide a foundation within the audit risk model for the consideration of fraud and incorporate certain guidance relating to errors that was formerly included in SAS No. 53, The Auditor's Responsibility to Detect and Report Errors and Irregularities (AICPA, Professional Standards, vol. 1, AU sec. 316), which is proposed to be superseded. This proposed SAS would supersede SAS No. 53. It also would amend: 1. Section 110 of SAS No. 1 (AICPA, Professional Standards, vol. 1, AU section 110, "Responsibilities and Functions of the Independent Auditor"). See appendix A herein for the proposed amendment. 2. Section 230 of SAS No. 1 (AICPA, Professional Standards, vol. 1, AU sec. 230, "Due Professional Care in the Performance of Work"). See appendix B herein for the proposed amendment. 3. SAS No. 47. See appendix C herein for the proposed amendment. The proposed SAS also would require other conforming changes to certain of the auditing standards and to other materials, such as industry audit and accounting guides.
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Proposed statement on auditing standards : Investments in debt and equity securities (to supersede AU section 332, "Long-term investments," of SAS No. 1, Codification of auditing standards and procedures);Investments in debt and equity securities (to supersede AU section 332, "Long-term investments," of SAS No. 1, Codification of auditing standards and procedures); Exposure draft (American Institute of Certified Public Accountants), 1996, May 29
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board is revising the guidance on auditing investments to make that guidance consistent with recently issued accounting standards, particularly Financial Accounting Standards Board Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. This proposed Statement would supersede AU section 332, "Long-Term Investments," of Statement on Auditing Standards No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 332), and would delete Interpretation No. 1 of AU section 332, "Evidential Matter for the Carrying Amount of Marketable Securities" (AICPA, Professional Standards, vol. 1, AU sec. 9332). This proposed Statement would supersede AU section 332 and would require that the references to Interpretation No. 1 of AU section 332, "Evidential Matter for the Carrying Amount of Marketable Securities," be deleted from the AICPA Audit and Accounting Guide Banks and Savings Institutions.
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Comment letters, proposed Statement of Position, Software Revenue Recognition;
American Institute of Certified Public Accountants. Auditing Standards Board. Executive Committee
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Proposed AICPA standards for performing and reporting on peer reviews ;AICPA standards for performing and reporting on peer reviews;Standards for performing and reporting on peer reviews; Exposure draft (American Institute of Certified Public Accountants), 1996, June 26
American Institute of Certified Public Accountants. Peer Review Board
The AICPA Peer Review Board (the Board) is issuing this proposed Standard to update the Standards for Performing and Reporting on Peer Reviews (AICPA, Professional Standards, vol. 2, PR sec. 100) for the recently revised Statements on Quality Control Standards. In addition, now that the AICPA peer review program has been in existence for over six years, the five-year phase-in has been accomplished, and firms are undergoing their second triennial reviews, the Board believes it is appropriate to reevaluate the overall guidance provided in these Standards. In addition to the changes listed on the next page as specific issues for comments, this proposal: 1. Expands the definition of an accounting and auditing practice for the purposes of performing and reporting on a peer review to include attest services on financial information when the firm audits, reviews, or compiles the historical financial statements of the client. 2. Prohibits an individual from serving as a reviewer, whether on an on-site or an off-site peer review, if his or her ability to practice accounting and auditing has been limited or restricted in any way by a regulatory, monitoring, or enforcement body. 3. Requires the peer review, including the selection of offices to be visited and engagements to be reviewed, be planned and performed on a risk based approach. 4. Revises the basis for selecting engagements for review on off-site peer reviews. 5. Requires a reviewed firm to submit its letter of response to the team captain (on-site peer review) or reviewer (off-site peer review) for review and comment prior to submission of the document to the state CPA society administering the peer review. 6. Revises the report paragraph of the adverse report for an off-site peer review to report only on the engagements reviewed. 7. Adds a section on the evaluation of reviewers' performance and describes various actions that may be required of a reviewer if deficient performance is noted. 8. Requires all members of a state CPA society committee responsible for considering the results of peer reviews to be associated with a firm that has received an unqualified report on its most recently completed peer review. The proposed Standard would supersede the Standards for Performing and Reporting on Peer Reviews.
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Proposed AICPA standards for performing and reporting on peer reviews; Exposure draft (American Institute of Certified Public Accountants), 1996, May 31
American Institute of Certified Public Accountants. Peer Review Board
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Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 1996, Feb. 28
American Institute of Certified Public Accountants. Professional Ethics Executive Committee
1. PROPOSED INTERPRETATION UNDER RULE 101: Extended Audit Services; 2. PROPOSED RULINGS UNDER RULE 101: Member Providing Attest Report on Internal Controls; 3. Member Providing Operational Auditing Services; 4. Frequency of Performance of Extended Audit Procedures; 5. PROPOSED DELETION OF RULING NO. 97 UNDER RULE 101: Performance of Certain Extended Audit Services; 6. PROPOSED REVISION OF RULING NO. 17 UNDER RULE 101: Financial Interests in Certain Organizations; 7. PROPOSED RULING UNDER RULE 501 AND RULE 301: Member Removing Files or Workpapers From an Accounting Firm; 8. PROPOSED RULING UNDER RULE 503 AND RULE 302: Member Operating a Separate Business That Receives Commissions or Contingent Fees
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Proposed statement of position : Software revenue recognition (To supersede SOP 91-1, software revenue recognition);Software revenue recognition (To supersede SOP 91-1, software revenue recognition); Exposure draft (American Institute of Certified Public Accountants), 1996, June 14
American Institute of Certified Public Accountants. Software Revenue Recognition Working Group
This proposed Statement of Position (SOP) provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions. This proposed SOP would supersede SOP 91-1, Software Revenue Recognition. This proposed SOP requires the following: 1. If an arrangement to deliver software or a software system, either alone or together with other products or services, requires significant production, modification, or customization of software, the entire arrangement should be accounted for in conformity with Accounting Research Bulletin No. 45, Long-Term Construction-Type Contracts, using the relevant guidance in SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, unless specified criteria for separate accounting for any service element are met. 2. Separate accounting for a service element of an arrangement to which contract accounting applies is required if both of the following criteria are met. a. The services are not essential to the functionality of any other element of the transaction. b. The services are stated separately in the contract such that the total price of the arrangement would be expected to vary as the result of inclusion or exclusion of the services. 3. If an arrangement to deliver software or a software system does not require significant production, modification, or customization of software, revenue should be recognized when all of the following criteria are met: a. Persuasive evidence of an agreement exists. b. Delivery has occurred. c. The vendor's fee is fixed or determinable. d. Collectibility is probable. 4. Software arrangements may consist of multiple elements, that is, additional software products, upgrades/enhancements, rights to exchange or return software, postcontract customer support (PCS), or services, including elements deliverable only on a when-and-if-available basis. If contract accounting does not apply, the vendor's fee must be allocated to the various elements based on vendor-specific objective evidence of fair values. If sufficient vendor-specific objective evidence of fair values does not exist, all revenue from the arrangement should be deferred until such sufficient evidence exists, or until all elements have been delivered. Exceptions to this guidance are provided for PCS, subscriptions, and arrangements in which the fee is based on the number of copies. Vendor-specific objective evidence is limited to (a) the price charged when the element is sold separately, or (b) if not yet being sold separately, the price for each element established by management having the relevant authority. 5. The portion of the license fee allocated to an element should be recognized as revenue when all of the revenue recognition criteria have been met. In applying those criteria, delivery of an element is considered not to have occurred if there are undelivered elements that are essential to the functionality of any delivered elements. Additionally, collectibility of that portion of the fee is not considered to be probable if the amount of the fees attributable to delivered elements is subject to forfeiture, refund, or other concession if the undelivered elements are not delivered. The provisions of this proposed SOP are effective for fiscal years beginning after December 15, 1996. Earlier application is encouraged. The cumulative effect of changes caused by adopting the provisions of this proposed SOP should be included in the determination of net income in conformity with Accounting Principles Board Opinion No. 20, Accounting Changes.
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Proposed statement on standards for accounting and review services : assembly of financial statements for internal use only ;Assembly of financial statements for internal use only; Exposure draft (American Institute of Certified Public Accountants), 1995, Sept. 6
American Institute of Certified Public Accountants. Accounting and Review Services Committee
The Accounting and Review Services Committee is issuing this proposed Statement for the reasons set forth in the preceding letter. In brief, those reasons are as follows: 1. Every entity needs timely financial information for management's use but management may not need that information in the form of financial statements that comply in all material respects with generally accepted accounting principles (GAAP) or another comprehensive basis of accounting. Many large public companies obtain this kind of information by using a "soft close," which eliminates many adjustments required for GAAP financial statements. However, Statement on Standards for Accounting and Review Services (SSARS) 1 requires the CPA for a small, nonpublic entity to issue a compilation report that describes departures from such principles. Moreover, SSARS 1, combined with CPA firm quality control procedures designed for compilation reports that may be used by third parties, adds cost and delay to the process of providing clients with the service they need. 2. Existing compilation standards, coupled with advances in technology, have created a situation where the decision on whether to issue a compilation report may hinge on technicalities such as who instructs a computer to print the financial statements and, as a result, have created wide variances in practice. The proposed Statement is conceptually consistent with the "assembly" provisions of the attestation standard governing forecasts and projections. It would: 1. Define the assembly of financial statements. 2. Provide an optional exemption from the requirements of SSARS 1, including its reporting requirements, for the unaudited financial statements of a nonpublic entity assembled for internal use only. 3. Require a written understanding with the nonpublic entity when the accountant is engaged to assemble financial statements for internal use only. 4. Provide an optional legend for each page of the financial statements indicating that they are restricted to internal use only, with a reference to the engagement letter. This proposed Statement would not affect existing standards for the compilation or review of financial statements.
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Comment letters to proposed statement of position: Accounting by participating Mortgage loan borrowers;
American Institute of Certified Public Accountants. Accounting Standards Board
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Proposed statement of position : Environmental remediation liabilities (including auditing guidance);Environmental remediation liabilities (including auditing guidance); Exposure draft (American Institute of Certified Public Accountants), 1995, June 30
American Institute of Certified Public Accountants. Accounting Standards Division. Environmental Accounting Task Force
This Statement of Position (SOP) consists of two Parts: (1) a nonauthoritative discussion of major federal legislation dealing with pollution control (responsibility) laws and environmental remediation (cleanup) laws and the need to consider various individual state and other non-United States government requirements and (2) authoritative guidance on specific accounting issues that are present in the recognition, measurement, display, and disclosure of environmental remediation liabilities. This SOP does not provide guidance on accounting for pollution control costs with respect to current operations or on accounting for costs of future site restoration or closure that are required upon the cessation of operations or sale of facilities. This SOP also does not provide guidance on accounting for environmental remediation actions that are undertaken at the sole discretion of management and that are not induced by the threat of assertion of litigation, a claim, or an assessment. Furthermore, this SOP does not provide guidance on recognizing liabilities of insurance companies for unpaid claims, nor does it address asset impairment issues. The SOP is written in the context of the operations taking place in the United States, however the accounting guidance is applicable to all operations of the reporting entity. This SOP provides: A. That environmental remediation liabilities should be accrued when the criteria of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, are met, and it includes benchmarks to aid in the determination of when environmental remediation liabilities should be recognized in accordance with FASB Statement No. 5. B. That an accrual for environmental liabilities should include — (1) Incremental direct costs of the remediation effort, as defined. (2) Costs of compensation and benefits for employees to the extent an employee is expected to devote time directly to the remediation effort. C. That the measurement of the liability should include— (1) The entity's allocable share of the liability for a specific site. (2) The entity's share of amounts related to the site that will not be paid by other potentially responsible parties or the government. D. That the measurement of the liability should be based on enacted laws and existing regulations, policies, and remediation technology. E. That the measurement of the liability should be based on the reporting entity's estimates of what it will cost to perform all elements of the remediation effort when they are expected to be performed and that the measurement may be discounted to reflect the time value of money if the aggregate amount of the obligation and the amount and timing of cash payments for a site are fixed or reliably determinable. F. Guidance on the display of environmental remediation liabilities in financial statements and on disclosures about environmental-cost-related accounting principles, environmental remediation loss contingencies, and other loss contingency disclosure considerations. The provisions of this SOP are effective for fiscal years beginning after December 15, 1995. Earlier application is encouraged. The effect of initially applying this SOP shall be reported as a change in accounting estimate. Restatement of previously issued financial statements is not permitted.
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Comment letters 1-183 for exposure draft proposed statement on standards for accounting and review services: Assembly of financial statements for internal use only;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters 184-283 for exposure draft proposed statement on standards for accounting and review services: Assembly of financial statements for internal use only;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee