Exposure Drafts, Comment Letters, and Statements of Position

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

  American Institute of Certified Public Accountants. Accounting Standards Board

  The comment letters have been dvided into 4 volumes.

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

  American Institute of Certified Public Accountants. Accounting Standards Executive

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

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

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

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  Comment letters on Proposed amendments to SAS No. 55.

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Comment letters on Proposed Statement on Auditing Standards: Audit Documentation

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

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

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

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

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

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

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

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

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

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

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

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

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

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

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

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

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

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

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

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

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

  American Institute of Certified Public Accountants. Demutualization Task Force

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

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

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

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

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

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

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

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

  American Institute of Certified Public Accountants. Tax Executive Committee

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

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  Comment letters Re: Statements of Independence Concepts

  Indendence Standards Board

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

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

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

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

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

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

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

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

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

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

  American Institute of Certified Public Accountants. Auditing Standards Board