Following up on the issueance of SAS No. 121 the Accounting and Review Services Committee (ARSC) issued SSARS No. 20, Revised Applicability of Statements on Standards for Accounting and Review Service. Issued February 2011, this SSARS is effective for reviews of financial statements for periods beginning after December 15, 2011. Early application is permitted.
SSARS No. 20 simply amends paragraph .01 of AR section 90, Review of Financial Statements, so that SSARSs do not apply when the provisions of SAS No. 100, Interim Financial Information, as amended by SASs No. 116, Interim Financial Information, and No. 121, Revised Applicability of Statement on Auditing Standards No. 100, Interim Financial Information (AICPA, Professional Standards, vol. 1, AU sec. 722), apply.
Information on AICPA standard setting activities are available on the AICPA website http://www.aicpa.org/ under the Interest and Research tabs.
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Saturday, February 26, 2011
SAS No. 121 Issued by ASB
The Auditing Standards Board (ASB) has issued SAS No. 121, Revised Applicability of Statement on Auditing Standards No. 100, Interim Financial Information. Issued in February 2011 this SAS is effective for interim reviews of interim financial information for periods beginning after December 15, 2011. Early application is permitted.
Looking back to February 2009, you’ll recall that the ASB issued SAS No. 116, Interim Financial Information, which amended SAS No. 100, Interim Financial Information,(AU section 722 of AICPA Professional Standards) to address the independent accountant’s professional responsibilities when the accountant undertakes an engagement to review interim financial information of a nonissuer. SAS No. 121 further amends SAS No. 100 to make AU section 722 applicable when the accountant audited the entity’s latest annual financial statements, and the appointment of another accountant to audit the current year financial statements is not effective prior to the beginning of the period covered by the review.
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Looking back to February 2009, you’ll recall that the ASB issued SAS No. 116, Interim Financial Information, which amended SAS No. 100, Interim Financial Information,(AU section 722 of AICPA Professional Standards) to address the independent accountant’s professional responsibilities when the accountant undertakes an engagement to review interim financial information of a nonissuer. SAS No. 121 further amends SAS No. 100 to make AU section 722 applicable when the accountant audited the entity’s latest annual financial statements, and the appointment of another accountant to audit the current year financial statements is not effective prior to the beginning of the period covered by the review.
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Comparative Financial Statements After SSARS No. 19
As you are aware, SSARS No. 19, Compilation and Review Engagements was effective for compilations and reviews of financial statements for period ending on or after December 15, 2010. Since SSARS No. 19 revised the reporting requirements for compilation and review engagements accountants have questioned how they should report when comparative financial statements are presented and the prior year compilation or review was not performed in accordance with SSARS No. 19.
The AICPA has issued guidance on how to handle this question in an article entitled Reporting on Compiled or Reviewed Financial Statements For Periods Ended on or After December 15, 2010 With Comparative Financial Statements For Periods Ended Before December 15, 2010.
AR section 200, Reporting on Comparative Financial Statements has been revised to reflect conforming changes necessary due to the issuance of SSARS No. 19. The reissuance of a prior year report on financial statements that the accountant compiled or reviewed in accordance with pre SSARS No. 19 literature is not a compilation or review of those financial statements. It is the reissuance of a report on a service previously performed and reported on. Therefore the accountant may use the SSARS No. 19 reporting format to reissue his or her prior year report. He or she does not have to reissue the report using the pre SSARS No. 19 report format.
Guidance from the AICPA contains examples of compilation and review reports on comparative financial statements prepared in accordance with accounting principles generally accepted in the United States of America for the years ended December 31, 2010 and 2009.
In addition to the above guidance, the AICPA also offers additional implementation guidance and training on SSARS No. 19, including:
Compilation and Review Engagements Guide
Compilation and Review Developments - Risk Alert
Personal Financial Statements Exhibit Companion to SSARS No. 19
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The AICPA has issued guidance on how to handle this question in an article entitled Reporting on Compiled or Reviewed Financial Statements For Periods Ended on or After December 15, 2010 With Comparative Financial Statements For Periods Ended Before December 15, 2010.
AR section 200, Reporting on Comparative Financial Statements has been revised to reflect conforming changes necessary due to the issuance of SSARS No. 19. The reissuance of a prior year report on financial statements that the accountant compiled or reviewed in accordance with pre SSARS No. 19 literature is not a compilation or review of those financial statements. It is the reissuance of a report on a service previously performed and reported on. Therefore the accountant may use the SSARS No. 19 reporting format to reissue his or her prior year report. He or she does not have to reissue the report using the pre SSARS No. 19 report format.
Guidance from the AICPA contains examples of compilation and review reports on comparative financial statements prepared in accordance with accounting principles generally accepted in the United States of America for the years ended December 31, 2010 and 2009.
In addition to the above guidance, the AICPA also offers additional implementation guidance and training on SSARS No. 19, including:
Compilation and Review Engagements Guide
Compilation and Review Developments - Risk Alert
Personal Financial Statements Exhibit Companion to SSARS No. 19
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 4. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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Saturday, February 12, 2011
Proposed Statement On Auditing Standards
The ASB issued Proposed Statement on Auditing Standards Alert As To the Intended Use of The Auditor’s Written Communication on December 21, 2010. The proposed SAS supersedes SAS No. 87, Restricting the Use of an Auditor’s Report (AICPA, Professional Standards, vol. 1, AU sec. 53]). The comment period ends April 29, 2011.
This proposed SAS is part of the ASB’s Clarity Project and
This proposed SAS is part of the ASB’s Clarity Project and
- Eliminates the use of the term "restricted use" and instead addresses the intended use of such communications.
- Establishes an umbrella requirement to include an alert as to the intended use of the auditor’s written communication when the subject matter of that communication is based on measurement or disclosure criteria that are determined by the auditor to be suitable only for a limited number of users who can be presumed to have an adequate understanding of the criteria, measurement or disclosure criteria that are available only to the specified parties, or matters identified by the auditor during the course of the engagement that are not the primary objective of the engagement (commonly referred to as a by-product report).
- Modifies the guidance pertaining to single combined reports covering both (a) communications that are required to include an alert as to intended use and (b) communications that are for general use, which do not ordinarily include such an alert.
The proposed SAS would be effective for written communications related to audits of financial statements for periods ending on or after December 15, 2012, and, for all other engagements conducted in accordance with generally accepted auditing standards (GAAS), for written communications issued on or after December 15, 2012.
Proposed SASs are available for download on the AICPA's website http://www.aicpa.org/.
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ASU 2011–01
FASB issued Accounting Standards Update Receivables (Topic 310) Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20 in January 2011.
If you’ve been keeping track of ASUs you know the FASB issued 29 ASUs in 2010. In January 2011, FASB issued the first ASU of 2011. ASU 2011-01 was issued because of stakeholder concerns about new disclosure requirements in paragraphs 310-10-50-31 through 50-34 of the FASB Accounting Standards Codification® about troubled debt restructurings in one reporting period followed by a change in what constitutes a troubled debt restructuring shortly thereafter would be burdensome for preparers and may not provide financial statement users with useful information. They asked the Board to defer the effective date of the disclosure requirements for public entities about troubled debt restructurings in ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, to be concurrent with the effective date of the guidance for determining what constitutes a troubled debt restructuring, as presented in proposed ASU, Receivables (Topic 310): Clarifications to Accounting for Troubled Debt Restructurings by Creditors.
FASB therefore issued this ASU. The amendments delay indefinitely the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring.
The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring would then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011.
Accounting Standards Updates are available for download from the FASB's website, http://www.fasb.org/.
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If you’ve been keeping track of ASUs you know the FASB issued 29 ASUs in 2010. In January 2011, FASB issued the first ASU of 2011. ASU 2011-01 was issued because of stakeholder concerns about new disclosure requirements in paragraphs 310-10-50-31 through 50-34 of the FASB Accounting Standards Codification® about troubled debt restructurings in one reporting period followed by a change in what constitutes a troubled debt restructuring shortly thereafter would be burdensome for preparers and may not provide financial statement users with useful information. They asked the Board to defer the effective date of the disclosure requirements for public entities about troubled debt restructurings in ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, to be concurrent with the effective date of the guidance for determining what constitutes a troubled debt restructuring, as presented in proposed ASU, Receivables (Topic 310): Clarifications to Accounting for Troubled Debt Restructurings by Creditors.
FASB therefore issued this ASU. The amendments delay indefinitely the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring.
The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring would then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011.
Accounting Standards Updates are available for download from the FASB's website, http://www.fasb.org/.
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Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 3. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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Proposed Revised SAS
The ASB has issued a proposed revised SAS Proposed Revised Statement on Auditing Standards Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country. It would supersede SAS No. 51, Reporting on Financial Statements Prepared for Use in Other Countries (AICPA, Professional Standards, vol. 1, AU sec. 534).
If this exposure draft looks familiar to you it is because the ASB issued an exposure draft, SAS Reporting on Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country on September 30, 2009. After revising the previous exposure draft for certain matters noted in comment letters, the ASB decided to reexpose the SAS (referred to in the exposure draft as the proposed revised SAS) to seek additional comments.
The proposed revised SAS says that when financial statements are prepared in accordance with a financial reporting framework generally accepted in another country, and such financial statements are intended for use in the other country, the proposed revised SAS would require the inclusion of an emphasis of matter paragraph that will highlight the foreign financial reporting framework in any report also intended for use in the United States, and permits an unqualified opinion.
If this exposure draft looks familiar to you it is because the ASB issued an exposure draft, SAS Reporting on Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country on September 30, 2009. After revising the previous exposure draft for certain matters noted in comment letters, the ASB decided to reexpose the SAS (referred to in the exposure draft as the proposed revised SAS) to seek additional comments.
The proposed revised SAS says that when financial statements are prepared in accordance with a financial reporting framework generally accepted in another country, and such financial statements are intended for use in the other country, the proposed revised SAS would require the inclusion of an emphasis of matter paragraph that will highlight the foreign financial reporting framework in any report also intended for use in the United States, and permits an unqualified opinion.
This proposed revised SAS addresses circumstances in which an auditor practicing in the United States is engaged to report on financial statements that have been prepared in accordance with a financial reporting framework generally accepted in another country not adopted by a body designated by the Council of the AICPA (Council) to establish generally accepted accounting principles (GAAP) when such audited financial statements are intended for use outside the United States. This proposed revised SAS is not intended to preclude the use of such audited financial statements in the United States.
Note that this proposed revised SAS:
- Does not apply to financial statements prepared in accordance with financial reporting frameworks established by the bodies designated by the Council.
- Is applicable to engagements to report on financial statements prepared in accordance with a jurisdictional variation of IFRSs when the entity’s financial statements do not contain an explicit and unreserved statement in an appropriate note to the financial statements that its financial statements are in compliance with IFRSs as issued by the IASB.
- Does not apply to engagements to report on financial statements of a U.S. subsidiary of a foreign registrant parent company that are presented in the parent company’s filing with the SEC when the subsidiary’s financial statements have been prepared in accordance with a financial reporting framework used by the parent company and audited in accordance with auditing standards generally accepted in the United States of America (GAAS).
The proposed revised SAS was issued in November 2010. The comment period ended January 31, 2011 and the SAS would be effective for audits of financial statements for periods ending on or after December 15, 2012.
Statements on Auditing Standards exposure drafts are available for download on the AICPA website www.aicpa.org.
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