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Exposure Drafts, Comment Letters, and Statements of Position

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Proposed statements on auditing standards: analytical procedures ;Analytical procedures; Exposure draft (American Institute of Certified Public Accountants), 1987, Feb 14

American Institute of Certified Public Accountants. Auditing Standards Board

This proposed statement on auditing standards responds to public expectations of auditors to assume more responsibility for detecting fraudulent financial reporting by requiring the use of analytical procedures in all audit engagements. Analytical procedures can be effective in identifying financial misstatements and alerting the auditor to the possiblity of certain types of material irregularity.
Proposed audit and accounting guide : audits of government contractors ;Audits of government contractors; Exposure draft (American Institute of Certified Public Accountants), 1987, Nov. 2

American Institute of Certified Public Accountants. Government Contractors Guide Special Committee

A significant period of time has elapsed since the publication in 1975 of the Audits of Government Contractors. In the interim, the pace of change in both the government contracts process and financial reporting requirements has accelerated, thus increasing the need for further guidance. Therefore, the guide has been revised to assist independent accountants in examining and reporting on financial statements of government contractors. The government contracts environment grows more complex with the addition of each new statute and regulation, and the significant rate of change in those regulations requires constant attention and guidance to remain current. Furthermore, effective application of the regulations in a given circumstance requires extensive knowledge of the regulations, cases interpreting the regulations, and relevant guidance for implementation. Both business persons and accounting professionals associated with financial reporting of government contractors should understand the legislative and regulatory requirements as well as the business risks unique to government contractors. The government contracting process generates additional risks through the funding and review processes. The application of this guide is unique because the government purchases all types of goods and services and, consequently, affects a wide variety of industries. Furthermore, government contract rules and regulations apply to both contracts and subcontracts and prime contractors and subcontractors. The objectives of this guide are to provide (1) a general background of the environment and (2) practical guidance to independent accountants on the accounting, auditing, and financial reporting for government contractors. In addition, the guide: 1. Identifies relevant regulations and professional accounting pronouncements and summarizes key provisions of those regulations and pronouncements. This includes government contract, SEC, financial reporting, and tax accounting requirements. 2. Describes the fundamental activities in the government contracts process. 3. Describes the business and operating risks and their effects on the audit and reporting processes. 4. Identifies auditing and financial reporting issues and describes the prevalent practices. 5. Provides a glossary of terms and an annotated bibliography for reference.
Proposed audit and accounting guide : audits of property and liability insurance companies;Audits of property and liability insurance companies; Exposure draft (American Institute of Certified Public Accountants), 1987, July 22

American Institute of Certified Public Accountants. Insurance Companies Committee

This audit and accounting guide, which supersedes the 1966 AICPA Industry Audit Guide, Fire and Casualty Insurance Companies and the statements of position that amended that guide, has been prepared to assist the independent auditor in examining and reporting on financial statements of property and liability insurance companies. This guide describes those operating conditions and auditing procedures that are unique to the industry and illustrates the form and content of financial statements and disclosures for property and liability insurance companies, pools, syndicates, and other organizations such as governmental insurance pools. Chapter 1 discusses the nature, conduct, and regulation of the insurance industry. Other significant areas discussed in this guide include: 1. Audit considerations, including a discussion of the study and evaluation of internal control and EDP. 2. The premium cycle, which includes a discussion of rating, transactions, accounting principles, and special risk considerations. 3. The claims cycle, which includes a discussion of accounting practices and special risk considerations. 4. The investment cycle, which includes a discussion of regulation, various investment alternatives, accounting practices, and special risk considerations . 5. Reinsurance, which includes a discussion of the types of reinsurance, accounting practices, ceded reinsurance, and assumed reinsurance. 6. Taxes, which includes both federal and state taxation. 7. Differences between statutory accounting practices and generally accepted accounting principles. 8. The auditor's report, which includes a discussion of the various types of reports and illustrates those reports. In addition, appendices B and C discuss internal accounting controls and auditing objectives and procedures. Users of this audit guide should be aware of certain accounting issues affecting the insurance industry that are being studied by the accounting profession. The Insurance Companies Committee and the AICPA Accounting Standards Executive Committee (AcSEC) have prepared certain issues papers and are developing drafts of others to discuss those issues as well as present resolutions for them.
Proposed statement on standards for attestation engagements : attest services related to MAS engagements ;Attest services related to MAS engagements; Exposure draft (American Institute of Certified Public Accountants), 1987, May 29

American Institute of Certified Public Accountants. Management Advisory Services Executive Committee

This proposed statement amends the Statement on Standards for Attestation Engagements, Attestation Standards. It provides guidance on performing an attest service as part of a management advisory services (MAS) engagement and on the use in attest engagements of assertions, criteria, and evidence derived from a concurrent or prior MAS engagement. It also distinquishes the evaluations that practitioners may make in MAS engagements.
Omnibus proposal of Professional Ethics Division interpretations and rulings ;Revision to interpretation 101-5 under rule of conduct 101, "Independence:" The meaning of certain terminology used in Rule 101-A-3;Meaning of certain terminology used in Rule 101-A-3;Ruling No. 66 under rule of conduct 101, "Independence:" Member's investment in individual retirement account or Keogh Retirement Plan;Member's investment in individual retirement account or Keogh Retirement Plan;Ruling No. 67 under rule of conduct 101, "Independence:" Member's depository relationship with client financial institution;Member's depository relationship with client financial institution;Ruling No. 68 under rule of conduct 101, "Independence:" Servicing of Loan;Servicing of Loan;Ruling No. 69 under rule of conduct 101, "Independence:" Blind Trust;Blind Trust;Ruling No. 70 under rule of conduct 101, "Independence:" Joint investment with a promoter and/or general partner;Joint investment with a promoter and/or general partner;Ruling No. 182 under rule of conduct 501, "Acts Discreditable:" Termination of engagement prior to completion;Termination of engagement prior to completion;Withdrawal of interpretation 201-3 under rule 201, "General Standards:" Shopping for Accounting or Auditing Standards;Shopping for Accounting or Auditing Standards; Exposure draft (American Institute of Certified Public Accountants), 1987, May 25

American Institute of Certified Public Accountants. Professional Ethics Executive Committee

The Professional Ethics Executive Committee proposes to revise Interpretation 101-5 in order to provide guidance to members with respect to the terms "loans" and "financial institution" as used in Rule 101. Investment by a member's IRA or Keogh plan in a client would be considered to impair that member's independence with respect to that client. The member's independence would not be considered impaired with respect to the financial institution provided that the checking account, savings accounts, certificates of deposit, and money market account are fully insured. The mere servicing of a member's loan by a client financial institution would not impair the member's independence with respect to the client. A member's independence would be considered impaired whether or not the member's direct financial interest in the client is placed in a blind trust. Ruling No. 62 under ET section 191 provides guidance for joint investments when both the member and client are limited partners. If a member has been engaged to prepare a tax return and the client or the member terminates the engagement before the tax return is delivered to the client, the member's responsibility is to return only those records originally provided. The committee proposed that Interpretation 201, "Shopping for Accounting or Auditing Standards," be withdrawn.
Proposed statement of position : Accounting for frequent travel award programs, developmental and preoperating costs, purchases and exchanges of take-off and landing slots, and airframe modifications ;Accounting for frequent travel award programs, developmental and preoperating costs, purchases and exchanges of take-off and landing slots, and airframe modifications; Exposure draft (American Institute of Certified Public Accountants), 1987, June 30

American Institute of Certified Public Accountants. Task Force on Airlines

Until certain practical limitations and cost benefit considerations have been overcome, the incremental cost of providing free travel awards generally should be accrued when the award levels are achieved. Developmental costs related to preparation of operations of new routes should not be capitalized as previously permitted under the AICPA Industry Audit Guide, Audits of Airlines. The costs of acquiring take-off and landing slots are identifiable intangible assets that should be accounted for in conformity with Accounting Principles Board (APB) Opinion No. 17, Intangible Assets. The costs associated with airframe modifications that enhance the usefulness of the aircraft should be capitalized and depreciated over the lesser of the estimated useful lives of the aircraft or the modifcations.
Comment letters to the National Commission on Commission on Fraudulent Financial Reporting, 1987 (Treadway Commission) Vol. 1

Data General; Bernard B. Lynn; Jefferson Bankshare; New Alternatives Fund; CTS Corporation; Drexel University; Henry R. Jaenicke; Health Care Affiliates; Jonathan Pittway; Manfred E. Philip; Willis A. Smith; Mobil Corporation; Robert W. Bramlett; Joseph M. Cassano; Medalist Industries; Ralph S. Saul; Reginald H. Jones; Dairy Mart Convenience Stores; Lombard Associates; Defense Contract Audit Agency; National Association of Accountants; FMC Corporation; New York State Society of Certified Public Accountants; Kansas City Power & Light Company; General Electric Company; Melvin L. Hirch; United Guardian; DynCorp; Palm Desert National Bank; Central and South West Services; Nova Natural Resources Corporation; Household International; Raymond C. Dockweiler; University of Missouri-Columbia; Hillenbrand Industries; National Association of Accountants; Public Service Electric and Gas Company; Telecommunications; Edmund W. Littlefield; Sterling Drug; General Re Corporation; Doyle Z. Williams; Service Fracturing Company; GTE Corporation; R. H. Macy & Company; John M. Crockett; American Society of Corporate Secretaries; Procter & Gamble Company; Goodyear Tire & Rubber Company; Anheuser-Busch Companies; Riggs National Bank; Will& Emery McDermott; Royal Insurance; Steven Rice; Multimedia; John F. Burlingame; Francis Kemp; NCNB Corporation; Honeywell International; Hershey Entertainment and Resort Company; Institute of Internal Auditors. Calgary Chapter; Crowe Chizek & Company; Public Service Indiana; W. R. Persons; USX Corporation; Gary, Stosch, Walls & Company; Francine Neff; Louisiana Land and Exploration Company; St. Louis County Council. Office of the County Auditor; Michael W . Maher; University of Chicago; Merck & Company; Upjohn Company; Howard Hughes Medical Institute; General Mills; Mitchell Rothkopf; CSX Corporation; Clark Management Services; Ford Motor Company; Philip Morris Companies; Becton Dickinson and Company; Pennsylvania Institute of Certified Pubic Accountants; William Lundquist; Northeast Utilities; Dayton Hudson Corporation; Newell Rubbermaid; Maryland Association of Certified Public Accountants; San Diego Gas & Electric; Freeman Properties; Southwestern Bell Corporation; Ameritech; National Association of Accountants. Management Accounting Practices Committee; Baird, Kurtz & Dobson; Walter O. Baggett; Manhattan College; Texas Instruments; Philip F. Jacoby; American University; Unites States. Department of Education; Howard Savings Bank; DuPont; American Express Company; Machinery and Allied Products Institute; Washington Gas Light Company; Rockwell International; ITT Corporation; Pennzoil Company; AT&T; Financial Executives Institute; Kimberly-Clark Corporation; ThomasNet; Theresa Dailey; Bankers Trust Company; Wells Fargo Bank; PepsiCo; National Commission of Fraudulent Financial Reporting; and James C. Treadway
Comment letters to the National Commission on Commission on Fraudulent Financial Reporting, 1987 (Treadway Commission) Vol. 2

National Commission of Fraudulent Financial Reporting; James C. Treadway; College of William & Mary; CPC International; Florida. Department of Banking and Finance. Office of Comptroller; Thompson, Greenspon & Company; F. W. Woolworth & Company; Midland Company; Stanley Works; American Brands; Eli Lilly and Company; Delmarva Power; Barry Wright Corporation; American Institute of Certified Public Accountants. Public Oversight Board; Virginia Power and Electric Company; Seidman & Seidman; Primark Corporation; Arthur Andersen. Public Review Board; FDIC; Gulf Canada Corporation; Eamon Kelly; Tulane University; Texaco; Boeing Company; Carolina Power & Light Company; Xerox Corporation; BellSouth Corporation; Canadian National; Tom A. Nelson; University of Utah; Curtis C. Veerschoor; DePaul University; Colorado Society of Certified Public Accountants; Federal Reserve System. Board of Governors; National Association of State Boards of Accountancy; MSU System Services; American Bar Association; Washington Public power Supply System; General Motors Corporation; Pacific Gas and Electric Company; Premark International; Bank Administration Institute; General Dynamics Corporation; Life Investors; Sears, Roebuck and Company; Greyhound Corporation; Sovran Financial Corporation; Black & Decker Corporation; Goodyear Tire & Rubber Company; Ashland Oil; Bob Spilman; Shell Oil Company; John Zick; Gordon Pilcher; Carol Inbery; California State University; 3M; Avon Products; Consolidated-Bathurst; Chevron Corporation; National Council of Savings Institutions; Thomas Dyckman; American Accounting Association. Treadway Commission Task Force; Contel Corporation; First Chicago; American Standard; Southern California Edison Company; Public Service Company of Colorado; W. R. Grace & Company; Unocal Corporation; Sonat; Hershey Foods Corporation; Atlantic City Electric Company; Eaton Corporation; Champion International Corporation; Thomas Holton; Norton Company; National Association of Accountants; Monsanto Company; Pharmaceutical Manufacturers Association; May Department Stores Company; AmSouth Bancorporation; Schering-Plough Corporation; IBM Corporation; Aetna Life and Casualty; Citicorp; Business Rountable; Valero Energy Corporation; Scott Paper Company; Washington Mutual Savings Bank; Johnson & Johnson; PPG Industries; Endevco; Midland Company; Office of City Auditor, Portland (Oregon). Office of City Auditor; American President Companies; W. M. Ellinghaus; Price Waterhouse; Peat Marwikc Main & Company; Deloitte Haskins & Sells; Touche Ross & Co.; Arthur Young & Company; Arthur Andersen; Ernst & Whinney; Coopers & Lybrand; American Institute of Certified Public Accountants; Timken Company; Robinson Grant & Company; Central Louisiana Electric Company; Institute of Internal Auditors; Federal National Mortgage Association; J. S. Parker; U.S. Home Corporation; New York City. Office of Comptroller; International Paper Company; Merrill Lynch & Company; Dow Chemical Company; Continental Illinois Corporation; Anheuser-Busch Companies; United Virginia Bankshares; Yellow Freight System, Inc. of Delaware; Patrick J.F. Gratton; Warner Lambert; Pacific Telesis; United States. Comptroller General; International Minerals & Chemical Corporation; Bristol-Myers Company; Fifth Third Bancorp; Briercroft Savings Association; United Water Resources; Consolidated Edison Company of New York; University of Illinois at Urbana-Champaign; Procter & Gamble Company; U.S. House of Representatives; John Dingell; Wm. Wrigley Jr. Company; and JC Penney Company
Proposed statement of position : accounting for joint costs of informational materials and activities of not-for-profit organizations that include a fund-raising appeal;Accounting for joint costs of informational materials and activities of not-for-profit organizations that include a fund-raising appeal; Exposure draft (American Institute of Certified Public Accountants), 1986, May 23

American Institute of Certified Public Accountants. Accounting Standards Division

Proposed Amendment of SOP 78-10, Accounting Principles and Reporting Practices for Certain not-for-Profit Organizations and of AICPA Industry Audit Guide, Audits of Voluntary Health and Welfare Organizations. The proposed statement of position recommends the folowing: If It can be demonstrated that a bona fide program or management and general function has been conducted in conjunction with an appeal for funds, joint costs or informational materials or activities that include a fund-raising appeal should be allocated between fund-raising and the appropriate program or management and general function.
Reporting repurchase-reverse repurchase agreements and mortgage-backed certificates by savings and loan associations : amendment to AICPA audit and accounting guide, Savings and loan associations; Statement of position 86-1;

American Institute of Certified Public Accountants. Accounting Standards Division
Proposed audit and accounting guide : audits of agricultural producers and agricultural cooperatives ;Audits of agricultural producers and agricultural cooperatives; Exposure draft (American Institute of Certified Public Accountants), 1986, Jan. 17

American Institute of Certified Public Accountants. Agribusiness Special Committee

This proposed audit and accounting guide primarily codifies existing practice in (1) auditing the financial statements of agricultural producers and agricultural cooperatives and (2) accounting by those types of entities. AICPA Statement of Position (SOP) 85-3, Accounting by Agricultural Producers and Agricultural Cooperatives, is included as an appendix to this proposed guide; its recommendations on accounting for agricultural producers and agricultural cooperatives are an integral part of this proposed guide. SOP 85-3 and the accounting provisions of this guide do not apply to personal financial statements of agricultural producers or statements prepared on a comprehensive basis of accounting other than generally accepted accounting principles. They also do not apply to the following: growers of timber; growers of pineapple and sugarcane in tropical regions; raisers of animals for competitive sports; or merchants or noncooperative processors of agricultural products that purchase commodities from growers, contract harvesters, or others serving agricultural producers. Significant areas discussed in this guide include: 1. Cost accounting and cost allocations by agricultural producers. 2. Normal versus abnormal costs of agricultural producers. 3. Accounting for income taxes by agricultural producers and agricultural cooperatives. 4. Accounting for losses by agricultural cooperatives. 5. Departmental and functional accounting by agricultural cooperatives. 6. Auditing procedures applicable to producers' and cooperatives' investments in agricultural cooperatives. In addition, the proposed guide includes illustrative financial statements of an agricultural producer and of an agricultural cooperative.
National Curriculum, a Pathway to Excellence; Exposure Draft (American Institute of Certified Public Accountants), 1986, Jan. 31

American Institute of Certified Public Accountants. Continuing Professional Education Division. National Curriculum Task Forces
Proposed revision of statement of Tax policy number 8 : suggested improvements for the Social Security retirement system ;Suggested improvements for the Social Security retirement system; Exposure draft (American Institute of Certified Public Accountants), 1986, Aug. 1

American Institute of Certified Public Accountants. Federal Taxation Division

The proposed revision updates and provides additional supporting material for Tax Policy Statement Number 8 which was published in 1980. The Tax Policy Statement proposes revision to the Social Security system to make it actuarially more sound and to provide a fairer relationship between contributions and benefits.
Statements on responsibilities in tax practice; Exposure draft (American Institute of Certified Public Accountants), 1986, Aug. 18

American Institute of Certified Public Accountants. Federal Taxation Executive Committee

This booklet represents a codification of the introductory statement and the eight Statements on Responsibilities in Tax Practice issued by the Tax Division of the AICPA. The Statements on Repsonibilities in Tax Practice began in 1964 and were last revised in 1975 to reflect changes in the Code of Professional Ethics. Since that time the Internal Revenue Code has been amended on many occasions with the addition of numerous taxes and penalties on tax preparers and/or clients' actions or lack thereof. The CPA is expected to be familiar with and comply with the preparer regulations, Treasury Ciruclar No. 230, the AICPA Rules of Conduct and related rulings or other interpretations.
Proposed audit and accounting guide : finance companies (including lending activities of other enterprises);Finance companies (including lending activities of other enterprises); Exposure draft (American Institute of Certified Public Accountants), 1986, July 9

American Institute of Certified Public Accountants. Finance Companies Guide Special Committee

This proposed revised audit and accounting guide reflects changes in accounting and auditing literature that have occurred since the guide was last published in 1973. This proposed revision would apply to all finance companies and to lending activities of other enterprises. The proposed guide recommends the following changes in accounting practices, which the committee believes are desirable and warranted: 1. Recognition of interest income on finance receivables using the interest (actuarial) method (page 10); 2. Use of the accrual with suspension basis for recording interest income (pages 11 and 12); 3. Inclusion of interest as a holding cost in determining net realizable value of repossessed collateral expected to be held for a significant period (page 15). In addition, the proposed guide includes an expanded discussion of the insurance activities of finance companies (pages 49 through 56).
Proposed statement of position : accounting by prepaid health care plans;Accounting by prepaid health care plans; Exposure draft (American Institute of Certified Public Accountants), 1986, Oct. 6

American Institute of Certified Public Accountants. Health Maintenance Organizations Task Force

This proposed statement of position provides guidance on applying generally accepted accounting principles in accounting for health care costs, contract losses, reinsurance, and acquisition costs of prepaid health care plans. Prepaid health care plans should accrue health care costs as services are rendered, including estimates of costs incurred but not yet reported to the plan. When expected future health care costs and maintenance expenses under a group of existing contracts will probably exceed anticipated future premiums and reinsurance recoveries on those contracts, a loss should be recognized. Reinsurance premiums should be reported as a health care cost. Acquisition costs of prepaid health care plans should be expensed as incurred.
Omnibus proposal of Professional Ethics Division interpretations and rulings ;Ruling No. 64 under ET section 191: Joint investment with a promoter and/or general partner;Joint investment with a promoter and/or general partner;Ruling No. 65 under ET section 191: Member as director of agency for which client raises funds;Member as director of agency for which client raises funds;Ruling no. 66 under ET section 191: Use of CPA designation by member not in public practice;Use of CPA designation by member not in public practice;Interpretation 101-9: Meaning of certain independence terminology and the effect of family relationships on independence;Meaning of certain independence terminology and the effect of family relationships on independence;Interpretation 201-2: Prospective financial information;Prospective financial information;Interpretation 201-4: Definition of the term engagement as used in Rule 201--General standards;Definition of the term engagement as used in Rule 201--General standards;Interpretation 502-2, Subsection 5: False, misleading or deceptive acts in advertising or solicitation;False, misleading or deceptive acts in advertising or solicitation;Ruling no. 181 under ET section 591: Sale of a practice--Purchase of accounts;Sale of a practice--Purchase of accounts; Exposure draft (American Institute of Certified Public Accountants), 1986, June 13

American Institute of Certified Public Accountants. Professional Ethics Executive Committee

Ethics Ruling No. 64 was developed to illustrate that a member's limited partnership investment in a nonclient limited partnership controlled by the same promoter and/or general partner as the member's audit (or other services requiring independence) client limited partnership would cause an impairment of independence under certain circumstances. Ruling No. 65 has been developed to advise members that under rule 101 of the AICPA Code of Professional Ethics the appearance of a member's independence would be considered to be impaired with respect to the foundation because of a member's service on the board of directors of an organization receiving funding from the foundation. Ruling No. 66 provides that the use of the CPA designation by a member who is not in public practice in a manner to imply that the member is independent of the employer will be considered a knowing mispresentation of fact. In Interpretation 101-9, the Ethics Executive Committee is proposing to limit the exception to professional employees not participating in the engagement. The revision of Interpretation 201-2 covers prospective financial information prepared for internal use only, partial presentations of prospective financial information and other matters not covered by that standard. Proposed Interpretation 201-4 states that the engagements with respect to which the General Standards of Rule 201 apply include the engagements described in the Statement on Standards for Attestation Engagements, the Statement on Standards for Accountants' Services on Prospective Financial Information, and certain Statements on Auditing Standards, which, while not applicable to audits of financial statements, are applicable to other types of engagements. The Professional Ethics Executive Committee proposes to delete from the Ethics Code Interpretation 502-2, Subsection 5, Testimonials and Endorsements. The Professional Ethics Executive Committee has concluded that the use of an account broker to facilitate the sale or a purchase of a practice would not be proscribed by Rule 503.
Proposed ruling no. 66 under ET section 191 : use of CPA designation by member not in public practice ;Use of CPA designation by member not in public practice; Exposure draft (American Institute of Certified Public Accountants), 1986, June 13

American Institute of Certified Public Accountants. Professional Ethics Executive Committee

To provide guidance to members not in public practice on the use of the CPA designation, the Professional Ethics Executive Committee proposes, subject to member comment, to issue Ruling 66 under ET section 191 of the AICPA Code of Professional Ethics. Ruling 66 provides that the use of the CPA designation by a member who is not in public practice in a manner to imply that the member is independent of the employer will be considered a knowing misrepresentation of fact.
Proposed statement on standards for accounting and review services : reporting on personal financial statements included in written personal financial plans;Reporting on personal financial statements included in written personal financial plans; Exposure draft (American Institute of Certified Public Accountants), 1985, Dec. 18

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

This proposed Statement provides the accountant with an optional exemption from the requirements of Statement on Standards for Accounting and Review Services 1, as amended, for personal financial statements included in a written personal financial plan prepared by the accountant when such statements and the related plan have been developed solely to assist a client and a client's advisers in achieving the client's personal financial goals and objectives and for no other purpose. In those circumstances, the proposed Statement would require the accountant to issue a special form of written report and would specify the information required in that report.
Accounting by agricultural producers and agricultural cooperatives; Statement of position 85-3;

American Institute of Certified Public Accountants. Accounting Standards Division
Accounting for dollar repurchase, dollar reverse repurchase agreements by sellers-borrowers : amendment to AICPA audit and accounting guide, Savings and loan associations; Statement of position 85-2;

American Institute of Certified Public Accountants. Accounting Standards Division
Financial reporting by not-for-profit health care entities for tax-exempt debt and certain funds whose use is limited : amendment to AICPA industry audit guide, Hospital audit guide; Statement of position 85-1;

American Institute of Certified Public Accountants. Accounting Standards Division
Draft: Small business consulting practice aid: Assisting clients in developing personal financial plans, May 1985

American Institute of Certified Public Accountants (AICPA)
Proposed authoritative statement : attestation standards;Attestation standards; Exposure draft (American Institute of Certified Public Accountants), 1985, Feb. 15

American Institute of Certified Public Accountants. Auditing Standards Board

This proposed Statement establishes standards that (A) Provide a framework for all "attest" engagements--that is, engagements to report on the reliability of assertions for third-party use--regardless of the subject matter or level of assurance. (B) Are a natural extension of (but do not supersede) the ten generally accepted auditing standards. (C) Make explicit three preconditions for attest services to be performed: (1) The attester has adequate knowledge of the subject matter. (2) There are reasonable measurement and disclosure criteria. (3) The assertions are capable of reasonably consistent estimation or measurement using such criteria. (D) Provide for two levels of attest assurance that can be reported to the general public: (1) Positive assurance--In reports that express conclusions on the basis of an "examination." (2) Negative assurance--In reports that express conclusions on the basis of a "review." (E) Provide for attest services based on agreed-upon criteria or procedures as long as the report is restricted to the parties who agreed upon the criteria or procedures.
Proposed statement on auditing standard : reports on the application of accounting principles ;Reports on the application of accounting principles; Exposure draft (American Institute of Certified Public Accountants), 1985, Dec. 6

American Institute of Certified Public Accountants. Auditing Standards Board

Management, accountants, and others often consult with professionals, including other accountants, on the application of accounting principles to new transactions and financial products. This proposed statement provides guidance to accountants who provide this service and establishes performance and reporting standards that (A) Apply (1) to written reports on the application of accounting principles and (2) to oral reports on a specific transaction when the reporting accountant concludes that the report is intended to be used by the principal to the transaction as primary support for a decision on the application of accounting principles; (B) Require consultation with a principal's continuing accountant when evaluating those accounting principles at the request of a principal that relate to a specific transaction.
Proposed statement on auditing standards : reporting on financial statements prepared for use in other countries ;Reporting on financial statements prepared for use in other countries; Exposure draft (American Institute of Certified Public Accountants), 1985, Oct. 15

American Institute of Certified Public Accountants. Auditing Standards Board

This proposed statement establishes standards that apply to U.S. auditors who express an opinion on financial statements of a U.S. entity prepared in conformity with accounting principles of another country for use outside the United States. The proposed statement establishes standards that--(1) Require the auditor to obtain written representations from management regarding the distribution of such financial statements; (2) Permit the auditor to use a modified U.S.-style report form or a non-U.S. standard report if the financial statements are used only outside the United States or will not have more than limited use in the United States; (3) Permit the auditor to use dual reports or a U.S. standard report modified for U.S. GAAP departures if the financial statements will be used in the United States.
Proposed statement on auditing standards : The auditor's consideration of uncertainties;Auditor's consideration of uncertainties; Exposure draft (American Institute of Certified Public Accountants), 1985, Nov. 8

American Institute of Certified Public Accountants. Auditing Standards Board

If adopted, this proposed Statement would supersede Statement on Auditing Standards No. 2, Reports on Audited Financial Statements, paragraphs 21 through 26. It provides additional guidance to assist the auditor in deciding whether to modify ("subject to") his report because of a matter involving an uncertainty. This reporting guidance follows the framework of FASB Statement No. 5, Accounting for Contingencies, which discusses contingencies in terms of the probable, reasonably possible and remote likelihood of their occurrence. Guidance regarding procedures for auditing uncertainties is also provided.
Proposed statement of position : Reporting funds flows, liquidity, and financial flexibility for banks ;Reporting funds flows, liquidity, and financial flexibility for banks; Exposure draft (American Institute of Certified Public Accountants), 1985, Oct. 1

American Institute of Certified Public Accountants. Committee on Banking

The proposed statement recommends certain changes in the traditional format and presentation in statements of changes in financial position for banks in order to provide more meaningful guidance to accountants and bankers on this subject. The proposed statement of changes in financial position emphasizes financial resources invested in earnings assets. Related banking activities are presented together as financial resources provided by (1) operations, (2) deposits and other financing activities, and (3) nonearning investments of financial resources. The proposed statement of changes in financial position is based on changes in year-end balance sheet amounts rather than average balances. In addition to specific recommendations concerning form and content of banks' statements of changes in financial position, the proposed statement of position suggests additional types of explanatory disclosure that would not be embodied in the basic financial statements, but would help the reader better understand the interest rate sensitivity and funds management of banks.
Proposed statement of position : Reporting repurchase-reverse repurchase agreements and mortgage-backed certificates by savings and loan associations ;Reporting repurchase-reverse repurchase agreements and mortgage-backed certificates by savings and loan associations; Exposure draft (American Institute of Certified Public Accountants), 1985, Oct. 28

American Institute of Certified Public Accountants. Committee on Savings and Loan Associations

The proposed statement recommends certain disclosures by savings and loan associations, as described in paragraph 30, for repurchase and reverse repurchase agreements, including dollar repurchase and dollar reverse repurchase agreements. In addition, the proposed statement of position recommends that mortgage-backed, pass-through certificates be reported separately on the statement of financial condition by savings and loan associations. The proposed statement also recommends that the market value of the mortgage-backed certificates be disclosed in the statement of financial condition or the notes to the financial statements.
Proposed statement on standards for accounting and review services : reporting on personal financial plans;Reporting on personal financial plans; Exposure draft (American Institute of Certified Public Accountants), 1985, March 4

American Institute of Certified Public Accountants. Financial Planning Task Force and American Institute of Certified Public Accountants. Accounting and Review Services Committee

An exposure draft of a proposed Statement on Standards for Accounting and Review Services, entitled Reporting on Personal Financial Plans accompanies this letter. SSARS 1 requires, as a minimum that an accountant comply with the standards established for compilation services whenever they submit a financial statement to their client or others. Increasingly, accountants are providing comprehensive personal financial planning services to clients which may include personal financial statements, supplementary explanatory information and prospective financial information. Often personal financial plans present financial information on transactions which may be historical, pro forma or prospective. This information is often interspersed through narrative material and recommendations, which taken as a whole, comprises the overall personal financial plan. Some accountants assert that users of personal financial plans understand the nature, limitations, and objectives of a personal financial plan and that financial statements are incidental to the preparation of the plan. Given those assertions, applying SSARS would require some unusual considerations.
Proposed audit and accounting guide : audits of investment companies ;Audits of investment companies; Exposure draft (American Institute of Certified Public Accountants), 1985, Jan. 15

American Institute of Certified Public Accountants. Investment Companies Special Committee

The proposed revision of the AICPA Industry Audit Guide, Audits of Investment Companies, reflects changes in accounting literature, laws, and regulations that have occurred since the guide was last published in 1973. The draft incorporates Statements of Position 74-11, 77-1, and 79-1; several amendments adopted into law by the Internal Revenue Code; revised SEC rules; and changes in industry practices. The draft recommends the following additional changes in accounting and reporting practices, which the committee believes are desirable and warranted: 1. The per share data presented as supplementary information has been modified and the amount of ratio information increased. Information on the portfolio turnover rate has been deleted. 2. The sample financial statements have been modified to reflect requirements in accordance with the SEC's revision of article 6 of Regulation S-X, which is effective for years ending after June 15, 1983. The most notable change is the adoption of an all-inclusive income statement. 3. The proposed guide recommends one accounting method for all tax-free business combinations of investment companies. That method most closely approximates the accounting followed for tax purposes. 4. Dividends declared on short securities are treated as an expense to reflect current preferred accounting treatment, not as a reduction of investment income as suggested in the present guide. 5. Chapters discussing unit investment trusts and variable annuities, including their financial statements, have been added. 6. The use of third-party reviews of internal accounting controls is discussed. 7. An accounting treatment for distribution expenses under a distribution plan adopted under rule 12(b)(l) of the Investment Company Act of 1940 is recommended. 8. The discussion of accounting matters related to portfolios has been expanded to include accounting for commodities and futures, forward placement and standby commitment contracts, repurchase agreements, and foreign investments. 9. The proposed guide states that using a statement of net assets in place of a statement of assets and liabilities is acceptable under GAAP and the particular use should depend on which presentation is more meaningful to the investor. The SEC's revised rules under article 6 of Regulation S-X proscribe the use of the statement of net assets if the amount of investment in securities of unaffiliated issuers is not at least 95 percent of total assets. 10. The SEC's August 15, 1984 proposal, "Semi-Annual Report Form for Registered Investment Companies," would replace Form N-1R and Form N-5R with Form N-SAR. If adopted, the final guide will be revised accordingly.
Omnibus proposal of interpretations and rulings: Proposed interpretation 302-1: Meaning of the phrase "The Findings of Governmental Agencies" as stated in Rule 302 of the Rules of Conduct, Proposed interpretation 101-10: The effect on independence of relationships proscribed by Rule 101 with nonclient entities included with a member's client in the financial statements of a governmental reporting entity, Ruling No. 63 under ET section 191: Review of prospective financial information--Member's independence of promoters, Ruling No. 64 under ET section 191: Joint investment with a Promoter or general partner;Proposed interpretation 302-1: Meaning of the phrase "The Findings of Governmental Agencies" as stated in Rule 302 of the Rules of Conduct;Meaning of the phrase "The Findings of Governmental Agencies" as stated in Rule 302 of the Rules of Conduct;Proposed interpretation 101-10: The effect on independence of relationships proscribed by Rule 101 with nonclient entities included with a member's client in the financial statements of a governmental reporting entity;Effect on independence of relationships proscribed by Rule 101 with nonclient entities included with a member's client in the financial statements of a governmental reporting entity,The;Ruling No. 63 under ET section 191: Review of prospective financial information--Member's independence of promoters;Ruling No. 64 under ET section 191: Joint investment with a Promoter or general partner; Exposure draft (American Institute of Certified Public Accountants), 1985, May 17

American Institute of Certified Public Accountants. Professional Ethics Executive Committee

It is the position of the Professional Ethics Executive Committee that a "finding of a governmental agency" in tax matters results from the settlement of a controversy with the appropriate govenment agency. Proposed Interpretation 101-10 requires a member issuing a report on the combined financial statements of a governmental reporting entity to be independent of the oversight entity and each of the component units included in the report. The AICPA Professional Ethics Division has developed proposed Ruling No. 63, "Review of Prospective Financial Information--Member's Independence of Promoters," to clarify the independence requirements and provide guidance in applying them. Ruling No. 62 unde ET Section 191 provides guidance for joint investments when both the member and client are limited partners but does not focus on the relationship that involves the client (or an officer, director, or principal owner thereof) functioning as the promoter or general partner.
Reporting on personal financial plans (proposesed SSARS); (Exposure draft (American Institute of Certified Public Accountants), 1985, December 12

American Institute of Certified Public Accountants. Technical Information Division
Uniform CPA Examination/May1980-November 1984, Auditing: Selected Questions and Unofficial Answers Indexed to Content Specification Outline

James D. Blum and Edward R. Gehl
Proposed authoritative statement : Prospective financial statements ;Prospective financial statements; Exposure draft (American Institute of Certified Public Accountants), 1984, June 27

American Institute of Certified Public Accountants. Auditing Standards Board

This proposed Statement provides that an accountant who reports on, or consents to the use of his name in conjunction with, prospective financial statements that are not restriced to internal use should either compile or review the prospective financial statements, following the guidance in this Statement, and report accordingly. The proposed Statement is applicable to all accountants, whether engaged in accounting, auditing, tax, or MAS practices. The proposed Statement would (1) establish procedures and reporting standards for a compilation service on prospective financial statements; (2) extend the review service described in the 1980 AICPA guide, Guide for Review of a Financial Forecast, to financial projections and multiple projections and establish standards with respect to review services; (3) prohibit an accountant from compiling or reviewing prospective financial statements that omit a summary of significant assumptions; (4) permit an accountant to assemble or assist in assembling prospective financial statements without requiring him to issue a report on such statements as long as he does not consent to the use of his name in conjunction with such prospective financial statements.
Proposed statement on auditing standards : Obtaining evidential matter regarding the completeness assertion ;Obtaining evidential matter regarding the completeness assertion; Exposure draft (American Institute of Certified Public Accountants), 1984, Dec. 27

American Institute of Certified Public Accountants. Auditing Standards Board

Statement on Auditing Standards No. 31, Evidential Matter, lists five broad categories of assertions embodied in financial statement components. Four of them deal with transactions and accounts that are included in the financial statements; one of them, the completeness assertion, deals with whether there are transactions and accounts that have been improperly excluded from the financial statements. The unique nature of the completeness assertion has caused practice problems in obtaining evidential matter regarding that assertion. This proposed Statement addresses those problems. The auditor should not rely solely on management's written representations as evidential matter regarding the completeness assertion. The auditor should obtain evidential matter regarding the completeness of those types of transactions that he has reason to believe have occurred. The auditor should not rely solely on internal accounting controls over completeness as evidential matter regarding the completeness assertion.
Proposed statement on auditing standards : Reporting on pro forma financial information in SEC filings ;Reporting on pro forma financial information in SEC filings; Exposure draft (American Institute of Certified Public Accountants), 1984, June 29

American Institute of Certified Public Accountants. Auditing Standards Board

The objective of pro forma financial information is to show what the significant direct effects on historical financial information might have been had a consummated or proposed transaction or event occurred at an earlier date. This proposed statement provides guidance on the independent accountant's responsibilities when engaged to report on pro forma financial information contained in a filing with the SEC. Article 11 of Regulation S-X sets forth the SEC's requirements regarding pro forma financial information. The proposed Statement describes the conditions under which the accountant may agree to report.
Issues Paper: Accounting for Income Taxes fo Stock Life Insurance Companies; Exposure Draft (American Institute of Certified Public Accountants), 1984, May 9

American Institute of Certified Public Accountants. Insurance Companies Committee
Proposed audit and accounting guide : audits of entities with oil and gas producing activities ;Audits of entities with oil and gas producing activities; Exposure draft (American Institute of Certified Public Accountants), 1984, April 25

American Institute of Certified Public Accountants. Oil and Gas Committee

This proposed audit and accounting guide describes operations and accounting practices that are unique to the production of oil and gas as well as matters that are unique to the audit of financial statements of entities with oil and gas producing activities. Descriptions of accounting practices were limited to those that were essential to understanding typical audit objectives and procedures unique to the industry. Specifically, the proposed guide discusses income taxes, internal control, and audit considerations in the oil and gas producing industry. The proposed guide also discusses the business activities of the oil and gas producing industryâ€” acquisition of mineral properties, exploration, drilling and development, oil and gas reserves, and production. The committee specifically asks for comments on the accounting for take-or-pay contracts as discussed in paragraph 280.
Proposed guide on the use of real estate appraisal information ;Guide on the use of real estate appraisal information; Exposure draft (American Institute of Certified Public Accountants), 1984, July 31

American Institute of Certified Public Accountants. Real Estate Committee

This proposed guide provides guidance for auditors on --(1) the valuation concepts used in the accounting literature; (2) the valuation concepts used in the appraisal literature; (3) the methods used by appraisers to value real estate assets; (4) the selection and evaluation of a real estate appraiser; (5) the auditor's consideration of valuation data; (6) reporting considerations.
Auditing life reinsurance; Statement of position 1984 November;

American Institute of Certified Public Accountants. Reinsurance Auditing and Accounting Task Force
Proposed statement of position : auditing life reinsurance;Auditing life reinsurance; Exposure draft (American Institute of Certified Public Accountants), 1984, April 30

American Institute of Certified Public Accountants. Reinsurance Auditing and Accounting Task Force

This exposure draft provides guidance on certain significant aspects of internal accounting controls and auditing procedures for life reinsurance. For ceded reinsurance, this exposure draft provides guidance on internal accounting controls and related auditing procedures regarding the evaluation of the assuming company's financial responsibility and stability. For assumed reinsurance, the draft provides guidance on internal accounting controls and related auditing procedures regarding the assessment of the accuracy and reliability of data received from the ceding company. The draft also provides guidance on the auditor's test of selected reinsurance contracts, transactions, and related balances.
Proposed audit guide : Audits of service-center-produced records ;Audits of service-center-produced records; Exposure draft (American Institute of Certified Public Accountants), 1984, Sept. 4

American Institute of Certified Public Accountants. Service-Center-Produced Records Task Force

This proposed audit guide provides guidance to independent auditors of organizations that use services provided by EDP service centers and to independent auditors who are engaged to report on certain aspects of the system of internal accounting control that relate to accounting systems processed by EDP service centers. This guide would replace and supersede the audit guide, Audits of Service-Center-Produced Records, issued in 1974. This guide represents a revision of the 1974 guide to incorporate the general guidance in Statement on Auditing Standards No. 44, Special-Purpose Reports on Internal Accounting Control at Service Organizations, and other auditing pronouncements issued since the guide was first published. This proposed audit guide discusses: 1. The effects of a client's use of an EDP service center on the auditor's study and evaluation of internal control. 2. Reporting on reviews of EDP service centers. 3. Using reports on internal control at EDP service centers.
Proposed audit and accounting guide: Audits of state and local governmental units;Audits of state and local governmental units; Exposure draft (American Institute of Certified Public Accountants), 1984, Oct. 19

American Institute of Certified Public Accountants. State and Local Government Accounting Committee

This proposed audit and accounting guide would supersede the existing guide published in 1974. It was developed to reflect changes in accounting and auditing that have taken place since the original guide was issued. The proposed guide primarily codifies existing practice in auditing state and local governmental units. Significant areas discussed in the guide include: 1. Recognition and discussion of NCGA statements and other accounting literature issued since the 1974 guide. 2. Recognition that the auditor's report extends to the individual fund types or funds examined rather than the presentation taken as a whole. 3. Discussion of determining the principal auditor in situations in which funds or fund types are examined by different auditors and the appropriate reporting in those situations. 4. Discussion of general aspects of single audits of federally assisted programs. In addition, the proposed guide illustrates auditor's reports for many common situations and presents an inventory of internal accounting control procedures that could be applied by state and local governmental units.
Proposed audit guide : Audits of federal financial assistance to state and local governmental units;Audits of federal financial assistance to state and local governmental units; Exposure draft (American Institute of Certified Public Accountants), 1984, Dec. 28

American Institute of Certified Public Accountants. Task Force on Single Audits of Federal Financial Assistance

This proposed audit guide provides guidance to Independent auditors when conducting financial and compliance audits of federal assistance programs awarded to state and local governmental units and Indian tribal governments as required by the Single Audit Act of 1984, Public Law 98-502. This guide and the Industry Audit Guide, Audits of State and Local Governmental Units, are applicable when an auditor is engaged to examine and report on the general purpose financial statements of governmental units that include federal financial assistance funds. Areas discussed in the proposed guide include the following: 1. Legal and regulatory requirements; 2. Findings and questioned costs; 3. Requirements applicable to subrecipients of federal financial assistance; 4. Initial-year audit and stub periods; 6. Responsibilities of cognizant agency; 6. Joint audit considerations. In addition, the proposed guide illustrates auditors' reports on financial statements and internal accounting control and auditors' comments on compliance with applicable laws and regulations.
Uniform CPA Examination/May1979-November 1983, Auditing: Selected Questions and Unofficial Answers Indexed to Content Specification Outline

James D. Blum
Accounting for asserted and unasserted medical malpractice claims of health care providers and related issues; Statement of position 87-1;

American Institute of Certified Public Accountants. Accounting Standards Division

This proposed statement provides guidance on applying generally accepted accounting principles in accounting for uninsured asserted and unasserted medical malpractice claims, captive insurance companies, retrospectively rated premiums, claims-made insurance policies, and trust funds of health care providers. The statement supplements the AICPA Hospital Audit guide. In general, the accrual of the estimated cost of uninsured asserted and unasserted medical malpractice claims should be based primarily on the health provider's own experience. A health care provider insured under a claims-made policy should accrue the cost of providing tail coverage at the end of the current period. A retrospectively rated insurance policy whose ultimate premium is primarily based on the health care provider's experience does not transfer risk. A wholly owned captive insurance subsidiary should accrue estimated claims of its parent based primarily on the parent's own experience. A trust fund established to pay malpractice claims, whether revocable or irrevocable, should be included in the financial statements of a health care provider.
Reporting by banks of investment securities gains or losses : December 31, 1983 : amendment to AICPA industry audit guide Audits of banks; Statement of position 83-1;

American Institute of Certified Public Accountants. Accounting Standards Division