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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
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Comment letters 284-403 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 404-522 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, personal financial planning exposure draft 8/15/95: proposed statement on responsibilities in personal financial planning Practice: Developing a basis for recommendations;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters Received On the April 14, 1995 Exposure Draft of a Proposed Audit & Accounting Guide Not-for-Profit Organizations VOL. 2 (79-155);
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters to Exposure draft, Amendment to statement on auditing Standards no. 58, 'Reports on audited financial statements';
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters to Exposure draft, Proposed statement of position : Environmental remediation liabilities (including auditing guidance);
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment letters to exposure draft: Proposed statements on quality control standards : System of quality control for a CPA firm's accounting and auditing practice, and Monitoring a CPA firm's accounting and auditing practice;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Comment Letters to proposed audit and accounting guide: Health Care organizations;
American Institute of Certified Public Accountants. Accounting Standards Executive Committee
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Proposed statement of position : accounting by participating mortgage loan borrowers ;Accounting by participating mortgage loan borrowers; Exposure draft (American Institute of Certified Public Accountants), 1995, July 5
American Institute of Certified Public Accountants. Accounting Standards Executive Committee and American Institute of Certified Public Accountants. Participating Mortgages Task Force
This proposed statement of position (SOP) establishes the borrower's accounting for a participating mortgage loan if the lender participates in increases in the market value of the mortgaged real estate project, the results of operations of that mortgaged real estate project, or both. This proposed SOP requires the following: 1. At origination, the borrower should record the participating mortgage loan without allocating any of the proceeds to a liability related to the participation feature. 2. At the end of each reporting period, a participation liability should be reported equal to the amount that would be required to extinguish the participation liability if (a): the participating mortgage loan matured or was refinanced at that date, or (b) the mortgaged property was sold at that date. When establishing or adjusting the participation liability, the corresponding charge or credit should be to debt discount. 3. As estimates of the participation liability change because of changes in estimates of the market value of the property, the borrower should recalculate the effective interest rate to reflect the changes in expected future payments. The borrower should recalculate that rate assuming that (a) the amount of the expected future payment will be paid on the due date of the loan and (b) the recalculated expected future payment amount was known at the inception of the loan. The debt discount related to the participation liability should be adjusted, with a corresponding charge or credit to interest expense, to the amount that would have existed had the new effective interest rate been applied since the origination of the participating mortgage loan. 4. Certain disclosures must be included in the financial statements. This proposed SOP is effective for fiscal years beginning after June 15, 1996. Earlier application is encouraged. The effect of initially applying this proposed SOP should be reported in a manner similar to that of the cumulative effect of a change in accounting principle.
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Comment letters on on the exposure draft, "Amendments to Statements on Auditing Standards and Statements on Standards for Attestation Engagements to Incorporate the Internal Control - Integrated Framework Report."
American Institute of Certified Public Accountants. Auditing Standards Board
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Comment letters on proposed exposure draft Omnibus Statement on Auditing Standards and Statements on Standards for Attestation Engagements - 1995.
American Institute of Certified Public Accountants. Auditing Standards Board
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Comment letters received on AcSEC's October 10, 1994 exposure draft, Reporting by Real Estate Companies of Supplemental Current-Value Information
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. 58, Reports on audited financial statements;Amendment to Statement on auditing standards no. 58, Reports on audited financial statements; Exposure draft (American Institute of Certified Public Accountants), 1995, July 20
American Institute of Certified Public Accountants. Auditing Standards Board
In making this proposal to eliminate the requirement that, when certain criteria are met, the auditor add an uncertainties explanatory paragraph to the auditor's report, the Auditing Standards Board (ASB) considered the following factors: 1. The issuance of Statement of Position (SOP) 94-6, Disclosure of Certain Significant Risks and Uncertainties, and previous changes to accounting standards have significantly improved the disclosure of risks and uncertainties in financial statements. 2. Under existing reporting standards, the absence of an uncertainties explanatory paragraph in the auditor's report could cause financial statement users to incorrectly conclude that the entity faces no significant risks or uncertainties. The current standard, therefore, has the potential to distract financial statement users from financial statement disclosures, including the disclosures required by SOP 94-6. 3. Existing reporting standards provide the auditor with the option of emphasizing a matter regarding the financial statements in the auditor's report by adding a separate paragraph to the report. This option is available to the auditor when he or she wishes to emphasize significant risks and uncertainties disclosed in the financial statements. 4. The required uncertainties explanatory paragraph does not and should not communicate new information to financial statement users. Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, and SOP 94-6 establish standards for the disclosure of contingencies and certain significant estimates. If the financial statement disclosures are inadequate, the auditor is required to express a qualified or adverse opinion on the financial statements because of departures from generally accepted accounting principles (GAAP). 5. This proposal does not affect the provisions of Statement on Auditing Standards (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) which requires that the auditor add an explanatory paragraph to the auditor's report when there is substantial doubt about an entity's ability to continue as a going concern. This proposed Statement amends SAS No. 58, Reports on Audited Financial Statements (AICPA, Professional Standards vol. 1, AU sec. 508). Among the more significant provisions of the proposed Statement are amendments that: 1. Eliminate the requirement that, when certain criteria are met, the auditor add an uncertainties explanatory paragraph to the auditor's report. 2. Expand the guidance in paragraph 37 of SAS No. 58 to indicate additional matters the auditor may wish to emphasize in the auditor's report. 3. Add a footnote to paragraph 37 of SAS No. 58 to reiterate that the addition of an emphasis of a matter paragraph to the auditor's report is optional rather than required. 4. Add a paragraph to SAS No. 58 to indicate that an auditor may disclaim an opinion on financial statements due to uncertainties. This reporting option was previously presented in footnote 11 of SAS No. 58.
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Proposed statement on auditing standards and statement on standards for attestation engagements : amendments to statements on auditing standards and statements on standards for attestation engagements to incorporate the internal control-integrated framework report ;Amendments to statements on auditing standards and statements on standards for attestation engagements to incorporate the internal control-integrated framework report; Exposure draft (American Institute of Certified Public Accountants), 1995, Feb. 23
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) is issuing this proposed statement on auditing standards (SAS) and statement on standards for attestation engagements (SSAE) to provide auditors1 with improved guidance on performing an audit of an entity's financial statements and performing attestation services. The ASB is proposing changes to SAS No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 31 9), to replace the SAS No. 55 definition and description of the internal control structure with the definition and description in Internal Control — Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO report). The ASB believes the COSO report rapidly is becoming a widely accepted framework for sound internal control among U.S. organizations and its acceptance and use will continue to grow. Therefore, the ASB believes it is appropriate to revise SAS No. 55 to incorporate the COSO report to provide timely and useful guidance to auditors. In addition, the ASB is proposing changes to SSAE No. 2, Reporting on an Entity's Internal Control Structure Over Financial Reporting (AICPA, Professional Standards, vol. 1, AT sec. 400), to conform the description of elements of an entity's internal control structure to the components of an internal control structure contained in the proposed amendment to SAS No. 55 and in the COSO report. This proposed Statement consists solely of amendments to existing statements. The proposed amendments are outlined in the following paragraphs. SAS No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 319.01, .02, .06 through .22, and .66 through .69) This proposed amendment would: 1. Replace the definition of the internal control structure in SAS No. 55 with the COSO report definition. 2. Replace the three elements of the internal control structure in SAS No. 55 with the five components in the COSO report. 3. Replace appendix A and delete appendixes B, C, and D of SAS No. 55. 4. Make editorial conforming changes for terminology throughout SAS No. 55. SSAE No. 2, Reporting on an Entity's Internal Control Structure Over Financial Reporting (AICPA, Professional Standards, vol. 1, AT sec. 400.01, .12 through .16, .20, .26, and .27) This proposed amendment would: 1. Replace the three elements of the internal control structure with the five components of the internal control structure contained in the proposed amendment to SAS No. 55 and the COSO report. 2. Make editorial conforming changes throughout SSAE No. 2 to substitute components for elements. As a result of amending SAS No. 55 and SSAE No. 2 to incorporate the COSO report, as outlined above, this proposed Statement also includes amendments to: 1. SAS No. 70, Reports on the Processing of Transactions by Service Organizations (AICPA, Professional Standards, vol. 1, AU sec. 324.07, .26 and .42) 2. SAS No. 60, Communication of Internal Control Structure Related Matters Noted in an Audit (AICPA, Professional Standards, vol. 1, AU sec. 325.02 and .04) In addition, as a consequence of the foregoing changes to existing standards, the proposed Statement would require updating the guidance in the Audit Guide Consideration of the Internal Control Structure in a Financial Statement Audit and other audit and accounting guides that provide guidance on the internal control structure in audits of specific industries.
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Proposed statement on auditing standards and statement on standards for attestation engagements : omnibus statement on auditing standards and statement on standards for attestation engagements, 1995;Omnibus statement on auditing standards and statement on standards for attestation engagements, 1995; Exposure draft (American Institute of Certified Public Accountants), 1995, Feb. 23
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) is issuing this proposed statement on auditing standards (SAS) and statement on standards for attestation engagements (SSAE) to provide auditors1 with improved guidance on performing an audit of an entity's financial statements and performing attestation services. This proposed Statement would amend various sections of the SASs and the SSAEs. Among its more significant provisions are amendments that would: 1. Clarify the requirement to prepare a written audit program for every audit. 2. Preclude the auditor from using conditional language in a going-concern explanatory paragraph. 3. Preclude an AICPA accounting or audit guide or auditing interpretation from allowing additional distribution of statutory financial statements under an other comprehensive basis of accounting. 4. Provide working paper documentation requirements for attestation engagements. This proposed Statement would amend: 1. SAS No. 22, Planning and Supervision (AICPA, Professional Standards, vol. 1, AU sec. 311.05). 2. 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. 341.13). 3. SAS No. 1, Codification of Statements on Auditing Standards (AICPA, Professional Standards, vol. 1, AU sec. 544, "Lack of Conformity With Generally Accepted Accounting Principles," paragraphs .02 and .04), and SAS No. 62, Special Reports (AICPA, Professional Standards, vol. 1, AU sec. 623.05). 4. SSAE No. 1, Attestation Standards (AICPA, Professional Standards, vol. 1, AT sec. 100, "Attestation Standards").
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Proposed statements on quality control standards : System of quality control for a CPA firm's accounting and auditing practice, and Monitoring a CPA firm's accounting and auditing practice ;System of quality control for a CPA firm's accounting and auditing practice;Monitoring a CPA firm's accounting and auditing practice; Exposure draft (American Institute of Certified Public Accountants), 1995, Aug. 18
American Institute of Certified Public Accountants. Auditing Standards Board
The Auditing Standards Board (ASB) is considering the issuance of two Statements on Quality Control Standards (SQCSs) to provide a CPA firm with improved guidance for establishing a quality control system for its accounting and auditing practice. The AICPA Division for CPA Firms SEC Practice Section Peer Review Committee and Private Companies Practice Section Peer Review Committee and the AICPA Peer Review Board (collectively the AICPA practice-monitoring committees) have observed that there is a diversity in practice and existing guidance does not address a number of issues CPA firms should consider in establishing a quality control system and suggested the ASB perform a comprehensive review of the existing quality control standard. The proposed standards have been developed based on the recommendations of the Joint Task Force on Quality Control Standards, which was formed to develop general guidance for a system of quality control. In addition to ASB representation, the task force is composed of representatives of the AICPA practice-monitoring committees, the AICPA Management Consulting Services Executive Committee, the AICPA Personal Financial Planning Executive Committee and the AICPA Tax Executive Committee. Although the latter three committees have representatives on the joint task force, the system of quality control described in the exposure drafts would be required only for a firm's accounting and auditing practice. The AICPA practice-monitoring committees have reviewed the exposure drafts and have advised the ASB that, although modifications will need to be made to their peer review programs, these changes are not expected to result in an expansion of peer review to services provided beyond a firm's accounting and auditing practice. The proposed general standard redefines a firm's accounting and auditing practice to include all audit, attest, and accounting and review services for which professional standards have been established by the ASB or the Accounting and Review Services Committee under rules 201 and 202 of the AICPA Code of Professional Conduct. The definition of a firm's accounting and auditing practice would include engagements performed under Statements on Standards for Attestation Standards issued by the ASB. These standards had not been issued when SQCS No. I, System of Quality Control for a CPA Firm, was promulgated. While not establishing any new elements of quality control, the proposed standards would replace the nine specific elements discussed in SQCS No. 1 with five broad elements. While many aspects of the previous nine elements have been retained, the following discussion highlights significant changes: 1. Independence, Integrity, and Objectivity — This element replaces the SQCS No. 1 element of Independence. It provides added emphasis on the importance of these matters to a firm's quality control system and provides a description of the concept of independence. 2. Personnel Management — This element combines the previous four elements of Hiring, Advancement, Assigning Personnel to Engagements, and Professional Development to emphasize their interrelationship, since the goal of each is to have personnel performing, supervising, and reviewing work who possess the characteristics of integrity, objectivity, competence, experience, intelligence, and motivation. This element adds a requirement for firms to establish policies and procedures to meet the continuing professional education requirements of the AICPA and regulatory agencies such as state boards of accountancy and the U.S. General Accounting Office. 3. Acceptance and Continuance of Clients and Engagements — SQCS No. 1 limited the Acceptance and Continuance of Clients element to a discussion of the need to consider the integrity of management in the acceptance and continuance of clients. This element has been broadened to include consideration of the acceptance of client engagements (as opposed to a client relationship) to ensure a firm has in place policies and procedures to provide reasonable assurance that the firm will undertake only those engagements that can be completed with professional competence. A requirement has also been included that policies and procedures provide for obtaining an understanding with the client regarding the nature, scope, and limitations of the services to be performed. 4. Engagement Performance — The practice-monitoring committees have found that practitioners often confused the existing Supervision element with the supervision requirements of the first standard of field work under generally accepted auditing standards. The retitled element includes the SQCS No. 1 elements of Supervision and Consultation and discusses a firm's need to establish policies and procedures to cover planning, performing, supervising, reviewing, documenting, and communicating the results of each engagement in accordance with applicable professional standards. 5. Monitoring — This element encompasses and expands the prior Inspection element. Inspection has been deemed to be a retroactive evaluation of compliance with professional standards and review of the continuing appropriateness of a firm's quality control 990 policies and procedures and the firm's compliance with them. Monitoring involves an ongoing consideration and evaluation relating to the design and application of each of the other elements of quality control. The proposed monitoring standard describes how inspection procedures contribute to the monitoring function. It also describes other procedures or activities that can contribute to the monitoring function. These proposed Statements would supersede SQCS No. 1 and its interpretations in their entirety. Issuance of the proposed Statements would also require the Guide Quality Control Policies and Procedures for CPA Firms: Establishing Quality Control Policies and Procedures (AICPA, Professional Standards, vol. 2, QC sec. 90) to be updated. As a result of the issuance of these Statements and updating the Guide, firms with well-established quality control systems should not have to make significant modifications to their policies and procedures.
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Continuing Professional Education (CPE) Network, August 31, 1995; Exposure Draft (American Institute of Certified Public Accountants), 1995 Aug. 31
American Institute of Certified Public Accountants. CPE Planning Committee
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Proposed audit and accounting guide : health care organizations ;Health care organizations; Exposure draft (American Institute of Certified Public Accountants), 1995, April 14
American Institute of Certified Public Accountants. Health Care Committee and American Institute of Certified Public Accountants. Health Care Audit Guide Task Force
This Guide applies to organizations whose principal operations consist of providing or agreeing to provide health care services and that derive all or almost all of their revenues from the sale of goods or services; it also applies to organizations whose primary activities are the planning, organization, and oversight of such organizations, such as parent or holding companies of health care providers. This Guide applies to health care organizations that are either (a) investor-owned businesses or (b) not-for-profit organizations that have no ownership interest and are essentially self-sustaining from fees charged for goods and services, as defined in Financial Accounting Standards Board (FASB) Statement of Financial Accounting Concepts No. 4, Objectives of Financial Reporting by Nonbusiness Organizations, paragraph 8, or (c) governmental. This Guide applies to the following types of health care organizations: 1. Clinics, medical group practices, individual practice associations, individual practitioners, emergency care facilities, laboratories, surgery centers, and other ambulatory care organizations; 2. Continuing care retirement communities (CCRCs); 3. Health maintenance organizations (HMOs) and similar prepaid health care plans; 4. Home health agencies; 5. Hospitals; 6. Nursing homes that provide skilled, intermediate, and less intensive levels of health care; 7. Drug and alcohol rehabilitation centers and other rehabilitation facilities; This Guide also applies to integrated delivery systems that include one or more of the above types of organizations. This Guide does not apply to voluntary health and welfare organizations, as defined in FASB Statement No. 117, Financial Statements of Not-for-Profit Organizations. These organizations should follow the AICPA Audit and Accounting Guide Not-for-Profit Organizations. Related fund-raising foundations that meet the definition of a not-for-profit organization given in FASB Statement No. 117 also should follow the AICPA Audit and Accounting Guide Not-for-Profit Organizations. When separate financial statements are issued for a state or local governmental health care organization that uses enterprise fund accounting and reporting, the accounting, reporting, and disclosure requirements set forth in this Guide and by pronouncements of the Governmental Accounting Standards Board (GASB) apply. (See chapter 1 for a discussion of the application of GAAP.)
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Auditor's reporting on statutory financial statements of insurance enterprises : supersedes Statement of position 90-10, Reports on audited financial statements of property and liability insurance companies, and amends AICPA audit and accounting guide, Audits of property and liability insurance companies, and AICPA industry audit guide, Audits of stock life insurance companies; Statement of position 95-5;
American Institute of Certified Public Accountants. Insurance Companies Committee
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Letters for state insurance regulators to comply with the NAIC Model Audit Rule ; Statement of position 95-4;
American Institute of Certified Public Accountants. Insurance Companies Committee
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Accounting for certain distribution costs of investment companies : amendment to AICPA audit and accounting guide, Audit of investment companies; Statement of position 95-3;
American Institute of Certified Public Accountants. Investment Companies Committee
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Financial reporting by nonpublic investment partnerships; Statement of position 95-2;
American Institute of Certified Public Accountants. Investment Companies Committee
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Accounting for certain insurance activities of mutual life insurance enterprises; Statement of position 95-1;
American Institute of Certified Public Accountants. Mutual Life Insurance Task Force
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Audits of not-for-profit organizations receiving federal awards : amendment to AICPA audit and accounting guides, Audits of providers of health care services, Audits of voluntary health and welfare organizations, Audits of colleges and universities, and Audits of certain nonprofit organizations; Statement of position 92-9;
American Institute of Certified Public Accountants. Not-for-Profit Organizations Committee
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Proposed audit and accounting guide : Not-for-profit organizations ;Not-for-profit organizations; Exposure draft (American Institute of Certified Public Accountants), 1995, April 14
American Institute of Certified Public Accountants. Not-for-Profit Organizations Committee
This AICPA Audit and Accounting Guide has been prepared to assist nongovernmental not-for-profit organizations in preparing financial statements in conformity with generally accepted accounting principles (GAAP) and to assist independent auditors in auditing and reporting on those financial statements. This Guide applies to organizations that meet the definition of a not-for-profit organization included in appendix D of Financial Accounting Standards Board (FASB) Statement No. 117, Financial Statements of Not-for-Profit Organizations. Some organizations that have traditionally been considered to be not-for-profit organizations and that have been covered by American Institute of Certified Public Accountants (AICPA) Industry Audit Guides or Audit and Accounting Guides that are superseded by this Guide do not meet the definition of a not-for-profit organization in FASB Statement No. 117. Although FASB Statement No. 117 excludes those organizations from its scope, it nevertheless contains broad guidelines that would enable them to prepare meaningful financial statements. Accordingly, this Guide applies to certain organizations, referred to in this guide as not-for-profit organizations, though those organizations do not meet the definition of a not-for-profit organization in FASB Statement No. 117. This Guide incorporates certain provisions of FASB Statements No. 116, Accounting for Contributions Received and Contributions Made, and No. 117. Not all guidance that is included in those Statements, however, is incorporated, repeated, or summarized in this Guide. Accordingly, those Statements should be read in conjunction with this Guide. Like FASB Statements No. 116 and No. 117, this Guide is directed at not-for-profit organizations in general, and not at specific kinds of such organizations, such as voluntary health and welfare organizations or private colleges and universities. It is expected that various industry associations will publish guidance on applying both the FASB Statements and this Guide to specific kinds of organizations.2 This Guide supersedes the following AICPA Audit and Accounting Guides: 1. Industry Audit Guide Audits of Voluntary Health and Welfare Organizations; 2. Industry Audit Guide Audits of Colleges and Universities; 3. Audit and Accounting Guide Audits of Certain Nonprofit Organizations. lt also supersedes the following AICPA Statements of Position (SOPs): 1. SOP 74-8, Financial Accounting and Reporting by Colleges and Universities; 2. SOP 78-10, Accounting Principles and Reporting Practices for Certain Nonprofit Organizations.