Exposure Drafts, Comment Letters, and Statements of Position

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  Omnibus proposal of Professional Ethics Division interpretations and rulings; Exposure draft (American Institute of Certified Public Accountants), 2004, Aug. 9

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

  1. PROPOSED ETHICS RULING NO. 112 UNDER RULE 102: Use of a Third-Party Service Provider to Assist a Member in Providing Professional Services; 2. PROPOSED ETHICS RULING NO. 12 UNDER RULES 201 AND 202: Applicability of General and Technical Standards When Using a Third-Party Service Provider; 3. PROPOSED REVISION OF ETHICS RULING NO. 1 UNDER RULE 301: Use of a Third-Party Service Provider to Provide Professional Services to Clients or Administrative Support Services to the Member Computer Processing of Clients' Returns; 4. PROPOSED DELETION OF ETHICS RULING NO. 5 UNDER RULE 301: Records Retention Agency

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  Comment letters on Proposed Statement of Position “Auditing the Statement of Social Insurance”

  American Institute of Certified Public Accountants. Social Insurance Task Force

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  Proposed statement of position : Auditing the statement of social insurance;Auditing the statement of social insurance; Exposure draft (American Institute of Certified Public Accountants), 2004, March 5

  American Institute of Certified Public Accountants. Social Insurance Task Force

  This proposed Statement of Position (SOP) was issued to assist CPAs in auditing the statement of social insurance. a financial statement required by Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards (SFFAS) No. 17, Accounting for Social Insurance, and SFFAS No. 25, Reclassification of Stewardship Responsibilities and Eliminating the Current Services Assessment. In summary, a statement of social insurance is a long-term projection of the present value of the income to be received from or on behalf of existing and future participants of social insurance programs (for example, Social Security), the present value of the benefits to be paid to those same individuals, and the difference between the income and benefits. This proposed SOP: 1. Identifies the sources of authoritative accounting standards for the preparation of the statement of social insurance. 2. Describes the components of the statement of social insurance. 3. Identifies management’s responsibilities in preparing the statement of social insurance and the estimates underlying it. 4. Identifies the elements included in the process of developing estimates —factors, assumptions, data, and models. 5. Describes the auditor’s responsibility when auditing the statement of social insurance, including planning the audit, performing substantive procedures, and reporting on the statement of social insurance. 6. Requires the auditor, in certain circumstances, to obtain the services of an outside actuary to assist in performing procedures that assess (1) the methods and assumptions, of the agency’s actuary, and (2) whether the findings of the agency’s actuary are not unreasonable. An outside actuary is an actuary who is not employed or managed by the agency. 7. Contains examples of representations that should be included in a representation letter for an audit of a statement of social insurance. 8. Provides examples of auditor’s reports on the statement of social insurance. 9. Includes an appendix containing examples of: a. Procedures the auditor performs to obtain knowledge about the agency’s process for developing, evaluating, and incorporating estimates in the statement of social insurance; b. Controls that are relevant to the agency’s preparation of the statement of social insurance; c. Procedures the auditor performs to test controls and assertions in the statement of social insurance.

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  Proposed statement on standards for accounting and review services : Performance of review engagements;Performance of review engagements; Exposure draft (American Institute of Certified Public Accountants), 2003, Dec. 11

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

  The attached is an exposure draft of a proposed Statement on Standards for Accounting and Review Services (SSARS) entitled Performance of Review Engagements. SSARS No. 1, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2, AR sec. 100.24-.33), currently provides guidance on analytical procedures, inquiries, and other procedures applicable to a review of financial statements whether prepared under generally accepted accounting principles or a comprehensive basis of accounting other than generally accepted accounting principles. This Statement will revise SSARS No. 1 to expand on previously provided guidance on analytical procedures, inquiries, and other review procedures; to provide inquiries regarding fraud in a review engagement and to require representations regarding fraud in the management representation letter; and to clarify and provide guidance regarding workpaper documentation in a review engagement. The proposed Statement would be effective for reviews of financial statements for periods ending on or after December 15, 2004. The proposed Statement would revise SSARS No. 1.

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  Proposed statement on standards for accounting and review services : Standards for accounting and review services;Standards for accounting and review services; Exposure draft (American Institute of Certified Public Accountants), 2003, Dec. 11

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

  The attached is an exposure draft of a proposed Statement on Standards for Accounting and Review Services (SSARS) entitled Standards for Accounting and Review Services. The proposed Statement will establish a SSARS hierarchy. The proposed Statement will be beneficial to practitioners by making them aware of the appropriate literature and the various publications' standing in the SSARS hierarchy. In addition, the Statement addresses a technical correction to SSARS No. 2, Reporting on Comparative Financial Statements (AICPA, Professional Standards, vol. 2, AR sec. 200). SSARS currently provide guidance to be followed when the financial statements of a prior period have been compiled or reviewed by a predecessor accountant whose report is not presented and the successor accountant has not compiled or reviewed those financial statements. This Statement will revise SSARS No. 2 (AR sec. 200.17, footnote 9) to conform with the guidance found in Statement on Auditing Standards No. 58, Reports on Audited Financial Statements (AICPA, Professional Standards, vol. 1, AU sec. 508.74, footnote 29), as amended, which states that a successor auditor may name the predecessor auditor if the predecessor auditor's practice was acquired by, or merged with, that of the successor auditor. The proposed Statement would revise SSARS No. 2.

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  Accounting and reporting by insurance enterprises for certain nontraditional long-duration insurance contracts and for separate accounts; Statement of position 03-01

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Accounting for certain loans or debt securities acquired in a transfer; Statement of position 03-03

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Allowance for credit losses; Exposure draft (American Institute of Certified Public Accountants), 2003, June 19

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Financial highlights of separate accounts : an amendment to the audit and accounting guide audits of investment companies; Statement of position 03-05

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Proposed statement of position: Accounting by insurance enterprises for deferred acquisition costs on internal replacements other than those specifically described in FASB statement no. 97;Accounting by insurance enterprises for deferred acquisition costs on internal replacements other than those specifically described in FASB statement no. 97 ; Exposure draft (American Institute of Certified Public Accountants), 2003, March 14

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Proposed statement of Position : Accounting for real estate time-sharing transactions Accounting for real estate time-sharing transactions; Exposure draft (American Institute of Certified Public Accountants), 2003, Feb. 20

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This Statement of Position (SOP) provides guidance on a seller's accounting for real estate time-sharing transactions. 1. For a time-sharing transaction to be accounted for as a sale, the transaction should meet the following criteria: a. The seller transfers nonreversionary title to the time-share. b. The transaction is consummated. c. The buyer makes cumulative payments (excluding interest) of at least 10 percent of the sales value of the time-share. d. Sufficient time-shares have been sold to reasonably assure that the units will not become rental property. If the seller does not transfer nonreversionary title, the transaction should be accounted for in the same manner as an operating lease. 2. If a time-sharing transaction accounted for as a sale meets certain criteria, the seller should recognize revenue immediately under the full accrual method. If a transaction accounted for as a sale does not meet those criteria, the seller should delay recognition of revenue. 3. The seller should apply the full accrual method if: a. The time-sharing receivable is not subject to future subordination. b. The seller can demonstrate collectibility of the receivable. c. The seller can estimate credit losses with reasonable reliability. d. Development of the project is complete. 4. The seller should apply the percentage-of-completion method if the first three conditions for full accrual accounting are met but development of the project is not complete. 5. If any of the first three conditions for full accrual accounting is not met but development is complete, the seller should apply the cash-received method. 6. If a transaction previously accounted for under the deposit, cash-received, or combined method of accounting meets the criteria for a "higher" revenue recognition method, the seller should change to the applicable accounting method for that transaction in the period in which the criteria are met. 7. Certain sales incentives the seller provides a buyer to consummate a transaction should be recorded by reducing the stated sales price of the time-share by the excess of the fair value of the incentive over the amount the buyer pays and recording the incentive separately. 8. All costs incurred to sell time-shares should be charged to expense as incurred except for certain costs that are: a. Incurred for tangible assets used directly in selling the time-shares. b. Incurred for services performed to obtain regulatory approval of sales. c. Direct and incremental costs of successful sales efforts under the percentage-of-completion or deposit methods of accounting. 9. The seller should account for cost of sales and time-sharing inventory in accordance with the relative sales value method. 10. The term credit losses should be interpreted broadly to include all situations in which, as a result of credit concerns, a time-share seller collects less than 100 percent of the contractual cash payments of a note receivable, except for certain transfers of receivables to independent third parties by the seller. 11. Rental and other operations during holding periods, including sampler programs and mini-vacations, should be accounted for as incidental operations, which requires that any excess of revenues over costs is recorded as a reduction of inventory cost. 12. The accounting treatment for more complex time-sharing structures such as timesharing special purpose entities (SPEs), points systems, and vacation clubs should be determined using the same sale and revenue recognition guidance as for simpler structures, provided that the time-sharing interest has been sold to the end-user. 13. If the seller, seller's affiliate, or related party operates an exchange, points, affinity, or similar program, the program's operations constitute continuing involvement by the seller, and the seller should determine its accounting based on an evaluation of whether it will receive compensation at prevailing market rates for its program services. 14. A reload transaction is considered to be a separate sale of a second interval, and the accounting for the second interval is determined via application of the sale and revenue recognition guidance of this SOP.

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  Proposed statement of position : financial highlights of separate accounts : an amendment to the audit and accounting guide audits of investment companies;Financial highlights of separate accounts : an amendment to the audit and accounting guide audits of investment companies; Exposure draft (American Institute of Certified Public Accountants), 2003, July 15

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This Statement of Position (SOP) provides guidance on reporting financial highlights by separate accounts of insurance enterprises. This SOP requires, among other things, the following: Disclosure of ranges. Separate accounts with more than two levels of contract charges or net unit values per subaccount may elect to present the required financial highlights for contract expense levels that had units issued or outstanding during the reporting period (including number of units, unit fair value, net assets, expense ratio, investment income ratio, and total return) for either: 1. Each contract expense level that results in a distinct net unit value and for which units were issued or outstanding during the reporting period; or 2. The range of the lowest and highest level of expense ratio and total return, and the related unit fair values during each reporting period. The financial highlights table in the separate account's financial statements should state clearly that the expense ratio considers only the expenses borne directly by the separate account and excludes expense incurred indirectly by the underlying funds or charged through the redemption of units. The disclosure should include ranges of all fees that are charged by the separate account and whether those fees are assessed as direct reductions in unit values or through the redemption of units. Expense ratio. The expense ratio represents the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded. The financial highlights note should also provide disclosure of the ranges of all charges assessed to the separate account, including discussion of the manner in which the charges are assessed. Total return ratio. The total return ratio represents the total return for the periods indicated, including changes in the value of the underlying fund, which reflects the reduction of unit value for expenses assessed. The ratio does not include any expenses assessed through the redemption of units. The total return is calculated for the period indicated or from the effective (fund inception) date through the end of the reporting period. Investment income ratio. The investment income ratio represents the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund(s) in which the subaccounts invest. This SOP is effective for annual financial statements issued for fiscal years ending after December 15, 2003, and for interim financial statements issued after initial application. Presentation of previously issued financial highlights on a comparable basis is permitted, but not required. The provisions of this SOP should be applied prospectively from the beginning of the year of adoption.

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  Proposed statement of position : reporting financial highlights and schedule of investments by nonregistered investment partnerships : an amendment to the audit and accounting guide audits of investment companies and AICPA statement of position 95-2, financial reporting by nonpublic investment partnerships;Reporting financial highlights and schedule of investments by nonregistered investment partnerships : an amendment to the audit and accounting guide audits of investment companies and AICPA statement of position 95-2, financial reporting by nonpublic investment partnerships; Exposure draft (American Institute of Certified Public Accountants), 2003, July 15

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

  This Statement of Position (SOP) provides guidance on the application of certain provisions of the AICPA Audit and Accounting Guide Audits of Investment Companies (the Guide) and AICPA SOP 95-2, Financial Reporting by Nonpublic Investment Partnerships, that are directed to the reporting by investment partnerships of financial highlights and the schedule of investments. It amends certain provisions of the Guide and of SOP 95-2 by adapting those provisions to nonregistered investment partnerships based on their differences in organizational and operational structures from registered investment companies. Additionally the SOP incorporates and elevates in authority the guidance provided in previously issued Technical Practice Aids (TPAs) 6910.04 through 6910.10. The guidance in certain TPAs was revised as a result of further deliberations on the above items. Thus the guidance provided by those TPAs is now included in the issues indicated below. The guidance in other TPAs, however, has been carried forward without change. This SOP provides that: 1. Nonregistered investment partnerships, other than those that meet certain criteria as indicated in the next bullet, should calculate and disclose as a financial highlight an annual total rate of return based on a "geometric linking" of performance for each discrete period within a year for which invested capital is constant. 2. Nonregistered investment partnerships that meet the criteria by the terms of their offering document as indicated in the next sentence should calculate and disclose as a financial highlight an internal rate of return since inception for the current and prior accounting period. The partnership criteria are: (1) have limited lives, (2) do not continuously raise capital and are not required to redeem their interests upon investor request, (3) have as a predominant operating strategy the return of the proceeds from disposition of investments to investors, (4) have limited opportunities, if any, for investors to withdraw prior to termination of partnership, and (5) do not invest significantly in market-traded securities. 3. Nonregistered investment partnerships should calculate the denominator of their expense and net investment income ratios based on average net assets (ANA). 4. Nonregistered investment partnerships whose expenses are based on committed capital should provide additional disclosures of the total committed capital of the partnership, the year of formation of the partnership and the year the partnership made its first investment, and the ratio of the total contributed capital to committed capital. 5. Nonregistered investment partnerships should disclose the number of contracts and range of expiration or maturity dates of derivative instruments in the condensed schedule of investments based on whether the fair value (or, for open futures contracts, cumulative appreciation (depreciation)) of a specific type of derivative and underlying (for example, equity index of a particular stock exchange, U.S. Treasury Bond, or natural gas) exceeds 5 percent of net assets, regardless of counterparty. 6. "Funds-of-funds" partnerships should provide certain qualitative disclosures in addition to the name of the investment for investments in nonregistered investment partnerships that exceed 5 percent of net assets. 7. Nonregistered investment partnerships should calculate ANA by using the fund's weighted ANA (as measured at each accounting period) and any other period when capital is contributed or withdrawn. 8. Funds-of-funds and master-feeder funds should calculate net investment income and expense ratios based on the net investment income and expenses reported in the statement of operations. This SOP is effective for annual financial statements issued for fiscal years ending after December 15, 2003, and for interim financial statements issued after initial application. Presentation of previously issued financial highlights on a comparable basis is permitted, but not required. The provisions of the SOP should be applied prospectively from the beginning of the year of adoption.

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  Reporting financial highlights and schedule of investments by nonregistered investment partnerships : an amendment to the audit and accounting guide audits of investment companies and AICPA statement of position 95-2, financial reporting by nonpublic investment partnerships; Statement of position 03-04

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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  Comment Letters on Proposed Statement of Auditing Standards, Sarbanes-Oxley Omnibus Statement on Auditing Standards, April 1, 2003

  American Institute of Certified Public Accountants. Auditing Standards Board

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  Proposed statement on auditing standards : Sarbanes-Oxley omnibus statement on auditing standards;Sarbanes-Oxley omnibus statement on auditing standards; Exposure draft (American Institute of Certified Public Accountants), 2003, April 1

  American Institute of Certified Public Accountants. Auditing Standards Board

  This proposed Statement on Auditing Standards (SAS) was issued to address certain provisions of the Sarbanes-Oxley Act of 2002 (the Act). This proposed SAS creates a new requirement in the auditing standards for SEC engagements for a review by a reviewing partner (often referred to as a concurring partner) of the audit of financial statements and, where applicable, the review of interim financial information. Previously, these requirements were contained in the rules of the AICPA's SEC Practice Section. This proposed SAS also sets a new requirement for the review by a reviewing partner of the audit of internal control over financial reporting required by the proposed SAS, Auditing an Entity's Internal Control Over Financial Reporting in Conjunction With the Financial Statement Audit. The proposed SAS also amends SAS No. 96, Audit Documentation (AICPA, Professional Standards, vol. 1, AU sec. 339), and SAS No. 100, Interim Financial Information (AICPA, Professional Standards, vol. 1, AU sec. 722), to incorporate a requirement of the Act to retain certain audit and review documentation for a period of seven years from the end of the audit or review period. This requirement is consistent with the final SEC rule entitled Retention of Records Relevant to Audits and Reviews, which was issued in January 2003. This proposed SAS also amends various AU sections to reflect the impact of various provisions of the Act on existing auditing standards.

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  Proposed statement on auditing standards : Sarbanes-Oxley omnibus statement on auditing standards;Sarbanes-Oxley omnibus statement on auditing standards; Exposure draft (American Institute of Certified Public Accountants), 2003, April 1

  American Institute of Certified Public Accountants. Auditing Standards Board

  This is an edited version of an exposure draft with the same name and date. This proposed Statement on Auditing Standards (SAS) was issued to address certain provisions of the Sarbanes-Oxley Act of 2002 (the Act). This proposed SAS creates a new requirement in the auditing standards for SEC engagements for a review by a reviewing partner (often referred to as a concurring partner) of the audit of financial statements and, where applicable, the review of interim financial information. Previously, these requirements were contained in the rules of the AICPA's SEC Practice Section. This proposed SAS also sets a new requirement for the review by a reviewing partner of the audit of internal control over financial reporting required by the proposed SAS, Auditing an Entity's Internal Control Over Financial Reporting in Conjunction With the Financial Statement Audit. The proposed SAS also amends SAS No. 96, Audit Documentation (AICPA, Professional Standards, vol. 1, AU sec. 339), and SAS No. 100, Interim Financial Information (AICPA, Professional Standards, vol. 1, AU sec. 722), to incorporate a requirement of the Act to retain certain audit and review documentation for a period of seven years from the end of the audit or review period. This requirement is consistent with the final SEC rule entitled Retention of Records Relevant to Audits and Reviews, which was issued in January 2003. This proposed SAS also amends various AU sections to reflect the impact of various provisions of the Act on existing auditing standards.

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  Attest engagements on greenhouse gas emissions information; Statement of position 03-02

  American Institute of Certified Public Accountants. Auditing Standards Board; Joint Task Force of the AICPA and CICA on Sustainability Reporting

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  Proposed revisions to the AICPA standards for performing and reporting on peer reviews;AICPA standards for performing and reporting on peer reviews; Exposure draft (American Institute of Certified Public Accountants), 2003, May 30

  American Institute of Certified Public Accountants. Peer Review Board

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

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

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

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

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

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

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

  American Institute of Certified Public Accountants. Auditing Standards Board

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

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

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

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

  American Institute of Certified Public Accountants. Professional Ethics Executive Committee

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

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

  American Institute of Certified Public Accountants. Tax Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Board

  The comment letters have been dvided into 4 volumes.

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

  American Institute of Certified Public Accountants. Accounting Standards Executive

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

  American Institute of Certified Public Accountants. Accounting Standards Executive Committee

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

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

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

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

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

  American Institute of Certified Public Accountants. Board of Examiners