Those of you who may be engaged to compile or review personal financial statements will find an exhibit issued by the AICPA to their Guide, Compilation and Review Engagements of interest.
The exhibit covers compilations and reviews of personal financial statements. It points out that AR section 80, Compilation of Financial Statements, and AR section 90, Review of Financial Statements (AICPA, Professional Standards, vol. 2) are applicable to compilations and reviews of personal financial statements in the same manner as to compilations and reviews of financial statements of commercial entities. The exhibit provides specific guidance regarding how those AR sections are applied in compilations and reviews of personal financial statements.
It reminds us that FASB ASC Section 274 says that personal financial statements should present assets at their estimated current values and liabilities at their estimated current amounts at the date of the financial statements.
It contains illustrations of engagement letters for compilations and reviews of personal financial statements; client representation letters; as well as illustrations of the accountant’s compilations and review reports.
This exhibit may be downloaded from the AICPA website at http://www.aicpa.org under InterestAreas/AccountingAndAuditing/Resources/CompReview.
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Friday, October 29, 2010
Friday, October 22, 2010
Blue-Ribbon Panel Picks Differential GAAP
The Blue–Ribbon Panel on Private Company Standards (the Panel) met for the fourth time October 8, 2010 in New York. Previously the Panel has considered seven alternative standard–setting models and structures for private companies including one that retained the current model and two that incorporated IFRS for SMEs. They eliminated four of the models and retained three. The models were further delineated between a restructured FASB Board and a separate private company standards board.
At the October meeting after thoughtful discussion a majority of panel members favored differential GAAP and a separate board.
On October 19, 2010 at their fall meeting the AICPA Governing Council approved a resolution supporting work of blue ribbon panel on private company financial reporting. An overwhelming voice vote supported the resolution. The Council declared the profession's readiness to implement differential GAAP for private companies as determined by a separate standard-setting board.
Those recommendations will be included in a report to the Financial Accounting Foundation (FAF). The separate board would consist of people with private company experience and report to the FAF, which oversees the FASB and GASB.
How will differential GAAP affect your practice?
Tell us how you think it will affect your practice by adding a comment.
The minutes of the Blue-Ribbon Panel's meetings are available on FASB website, http://www.fasb.org/ under Standards.
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Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 2. 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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At the October meeting after thoughtful discussion a majority of panel members favored differential GAAP and a separate board.
On October 19, 2010 at their fall meeting the AICPA Governing Council approved a resolution supporting work of blue ribbon panel on private company financial reporting. An overwhelming voice vote supported the resolution. The Council declared the profession's readiness to implement differential GAAP for private companies as determined by a separate standard-setting board.
Those recommendations will be included in a report to the Financial Accounting Foundation (FAF). The separate board would consist of people with private company experience and report to the FAF, which oversees the FASB and GASB.
How will differential GAAP affect your practice?
Tell us how you think it will affect your practice by adding a comment.
The minutes of the Blue-Ribbon Panel's meetings are available on FASB website, http://www.fasb.org/ under Standards.
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 2. 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, October 2, 2010
FAF/AICPA/NASBA Blue-Ribbon Panel on Standard Setting for Private Companies is Seeking Input from Accountants
The American Institute of Certified Public Accountants (AICPA), the Financial Accounting Foundation (FAF; the parent organization of the Financial Accounting Stan
The Panel will comprehensively review the current system of stan
- Who are the actual users of private company financial statements and how do they use GAAP financial statements in their decision making?
- What is the key, decision-useful information that the various users need from GAAP financial statements?
- Are current GAAP financial statements meeting those needs? Why or why not?
- Are the benefits of GAAP financial statements outweighing the costs of preparing those statements for private companies?
- How does stan
- To the extent that current GAAP is not meeting user needs in a cost-beneficial manner, what are some possible alternatives for private company stan
The Panel is currently seeking input from accountants regarding these matters at: http://www.fasb.org/cs/ContentServer?site=FASB&c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176157332360 . The time to have our voices heard is now!
Saturday, September 11, 2010
New Proposed ASU on Leases
Back in March 2009 the FASB and the IASB issued a discussion paper, Leases: Preliminary Views. After considering the responses to this discussion paper, the two Boards have issued a Proposed Accounting Standards Update Leases (Topic 840). This proposed ASU was issued August 17, 2010. The comment period ends December 15, 2010.
The main proposal in the proposed ASU is that lessees and lessors should apply a right-of-use model in accounting for all leases (including leases of right-of-use assets in a sublease) other than leases of biological and intangible assets, leases to explore for or use natural resources and leases of some investment properties. This means that:
(a) a lessee would recognize an asset representing its right to use the leased (‘underlying’) asset for the lease term (the ‘right-of-use’ asset) and a liability to make lease payments.
(b) a lessor would recognize an asset representing its right to receive lease payments and, depending on its exposure to risks or benefits associated with the underlying asset, would either recognize a lease liability while continuing to recognize the underlying asset (a performance obligation approach); or derecognize the rights in the underlying asset that it transfers to the lessee and continue to recognize a residual asset representing its rights to the underlying asset at the end of the lease term (a derecognition approach).
Assets and liabilities recognized by lessees and lessors would be measured on a basis that:
(a) assumes the longest possible lease term that is more likely than not to occur, taking into account the effect of any options to extend or terminate the lease.
(b) uses an expected outcome technique to reflect the lease payments, including contingent rentals and expected payments under term option penalties and residual value guarantees, specified by the lease.
(c) is updated when changes in facts or circumstances indicate that there would be a significant change in those assets or liabilities since the previous reporting period.
For contracts that combine service and lease components, the right to receive lease payments and the liability to make lease payments would exclude payments arising from distinct service components and for the draft IFRS, non-distinct service components for lessors that apply the derecognition approach.
For leases of 12 months or less, lessees and lessors would be able to apply simplified requirements.
The exposure draft also contains proposed disclosures based on stated objectives. This includes disclosures about the amounts recognized in the financial statements arising from leases and the amount, timing and uncertainty of cash flows arising from those contracts.
ASUs are available on the FASB website, www.fasb.org under Standards.,br/>
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Friday, August 20, 2010
Proposed ASU on Disclosure of Certain Loss Contingencies
The FASB issued Proposed Accounting Standards Update Contingencies (Topic 450) Disclosure of Certain Loss Contingencies on July 20, 2010. At that time the comment period was to have ended August 20, 2010. The FASB has extended the comment period to Sept. 20, 2010 as a result of feedback from early respondents. For public entities, the new guidance would be effective for fiscal years ending after December 15, 2010, and interim and annual periods in subsequent fiscal years. For nonpublic entities, the new guidance would be effective for the first annual period beginning after December 15, 2010, and for interim periods of fiscal years after the first annual period.
The FASB issued this proposed Update because investors and other users of financial reporting have expressed concerns that disclosures about loss contingencies under the existing guidance in Topic 450 do not provide adequate and timely information to assist them in assessing the likelihood, timing, and magnitude of future cash outflows associated with loss contingencies.
The amendments in this proposed Update would apply to all entities, both public and nonpublic, except that nonpublic entities would not be required to provide a tabular reconciliation of accrued loss contingencies.
Objective
This proposed Update would establish the following disclosure objective: An entity shall disclose qualitative and quantitative information about loss contingencies to enable financial statement users to understand (a) the nature of the loss contingencies (b) their potential magnitude and (c) their potential timing (if known).
To achieve this objective, an entity would consider the following principles in determining disclosures that are appropriate for its individual facts and circumstances for loss contingencies that meet the disclosure threshold:
a. During early stages of a loss contingency’s life cycle, an entity would disclose information that is available to enable users to understand the loss contingency’s nature, potential magnitude, and potential timing (if known). In early stages information may be limited and so disclosure may be limited. In subsequent reporting periods, disclosure would be more extensive as more information becomes available.
b. An entity may aggregate disclosures about similar contingencies (for example, by class or type) so that the disclosures are understandable and not too detailed.
Disclosures
The amendments in this proposed Update would require disclosure of certain remote loss contingencies. This expands the population of loss contingencies that are required to be disclosed to achieve more timely disclosure of remote loss contingencies with a potentially severe impact.
When assessing the materiality of loss contingencies to determine whether disclosure is required, an entity would not consider the possibility of recoveries from insurance or other indemnification arrangements.
The proposed amendments would retain the current qualitative disclosures. In addition to the quantitative disclosures required under GAAP, the amendments would require disclosure of publicly available quantitative information, other relevant nonprivileged information, and, in some cases, information about possible recoveries from insurance and other sources.
A public entity would be required to provide tabular reconciliations, by class, of recognized (accrued) loss contingencies that present the activity in the account during the reporting period.
Proposed ASUs are available on the FASB website, http://www.fasb.org/.
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Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 2. 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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The FASB issued this proposed Update because investors and other users of financial reporting have expressed concerns that disclosures about loss contingencies under the existing guidance in Topic 450 do not provide adequate and timely information to assist them in assessing the likelihood, timing, and magnitude of future cash outflows associated with loss contingencies.
The amendments in this proposed Update would apply to all entities, both public and nonpublic, except that nonpublic entities would not be required to provide a tabular reconciliation of accrued loss contingencies.
Objective
This proposed Update would establish the following disclosure objective: An entity shall disclose qualitative and quantitative information about loss contingencies to enable financial statement users to understand (a) the nature of the loss contingencies (b) their potential magnitude and (c) their potential timing (if known).
To achieve this objective, an entity would consider the following principles in determining disclosures that are appropriate for its individual facts and circumstances for loss contingencies that meet the disclosure threshold:
a. During early stages of a loss contingency’s life cycle, an entity would disclose information that is available to enable users to understand the loss contingency’s nature, potential magnitude, and potential timing (if known). In early stages information may be limited and so disclosure may be limited. In subsequent reporting periods, disclosure would be more extensive as more information becomes available.
b. An entity may aggregate disclosures about similar contingencies (for example, by class or type) so that the disclosures are understandable and not too detailed.
Disclosures
The amendments in this proposed Update would require disclosure of certain remote loss contingencies. This expands the population of loss contingencies that are required to be disclosed to achieve more timely disclosure of remote loss contingencies with a potentially severe impact.
When assessing the materiality of loss contingencies to determine whether disclosure is required, an entity would not consider the possibility of recoveries from insurance or other indemnification arrangements.
The proposed amendments would retain the current qualitative disclosures. In addition to the quantitative disclosures required under GAAP, the amendments would require disclosure of publicly available quantitative information, other relevant nonprivileged information, and, in some cases, information about possible recoveries from insurance and other sources.
A public entity would be required to provide tabular reconciliations, by class, of recognized (accrued) loss contingencies that present the activity in the account during the reporting period.
Proposed ASUs are available on the FASB website, http://www.fasb.org/.
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 2. 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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Sunday, August 15, 2010
Blue Ribbon Panel Asking for Feedback
As you are no doubt aware, the Blue Ribbon Panel, a joint effort by the AICPA; the Financial Accounting Foundation (FAF) FASB’s parent organization; and the National Association of State Boards of Accountancy (NASB) has been discussing alternate models for private company financial reporting. The panel considered seven alternative models at its July meeting. They eliminated models that were based on IFRS and a model that effectively would have maintained the status quo. The three models that remain would result in differences in GAAP for private companies, where warranted, compared with GAAP for public companies. The three are:
- U.S. GAAP with Exclusions for Private Companies—with enhancements
- U.S. GAAP—Baseline GAAP with Public Company Add-Ons
- Separate, Stand-Alone GAAP Based on Current U.S. GAAP
Another recommendation to come out of the panel’s discussion is consideration of a separate board for private companies under the FAF. FASB would still set public company standards and the new board would be made up of individuals that are focused on private companies. This “private companies board” would decide whether, what and how GAAP should apply to private companies starting with the FASB standards.
Now the panel is asking for your feedback. They are asking users of private company financial statements, preparers and practitioners to respond to a series of questions. The questions will help the panel in (1) discussing how accounting standards can best meet the needs of U.S. users of private company financial statements and (2) making recommendations. The questions are on fasb.org and must be submitted by Sept. 15. A summary of the responses will be distributed to panel members and participating observers. The summary will be included as part of the observer notes (a publicly available meeting handout) for the panel’s next meeting, Oct. 8 at the AICPA’s New York City office.
Take advantage of this opportunity to tell the panel what you think about private company accounting standards. And while you’re at it, tell us what you think about a separate accounting standards board for private companies by leaving a comment.
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Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 2. 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, August 7, 2010
Commission Studying the Future of Accounting Education
Now's your chance to tell a new commission what you think needs to be taught to future accountants. The American Accounting Association (AAA) and the AICPA have formed a new commission to study possible future paths of higher education for students who plan on becoming accountants. The "Pathways Commission" will ask for input from all areas the accounting community. This includes individuals and representatives from organizations that impact the various current accounting education pathways.
According to Bruce Behn, University of Tennessee professor and chair of the commission, the commission's goal is to facilitate an open, transparent discussion to be supported by both technolgy and public discussions.
The commission recognizes the difficulty of sustaining the momentum for change in the dynamic environment of accounting practice and education. For this reason the commission's efforts are structured to continue into the future.
The commission was formed to study accounting pathways because a number of forces are affecting accounting education including:
According to Bruce Behn, University of Tennessee professor and chair of the commission, the commission's goal is to facilitate an open, transparent discussion to be supported by both technolgy and public discussions.
The commission recognizes the difficulty of sustaining the momentum for change in the dynamic environment of accounting practice and education. For this reason the commission's efforts are structured to continue into the future.
The commission was formed to study accounting pathways because a number of forces are affecting accounting education including:
- Shortages of qualified teachers with accounting doctorates,
- The need to revise the accounting curricula regularly in light of fast-paced business changes,
- University budget constraints that threaten to make the cost of education prohibitive, and
- The need for training in specialized areas to meet the profession's demands.
The commission will hold its first meeting Oct. 15-17 in Washington, D.C.
More information on the commission may be found at http://www.pathwayscommission.org/.
New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide. 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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