ASB Reissues Proposed SAS

The ASB has reissued an exposure draft, Proposed Revised Statement On Auditing Standards Financial Statements Prepared In Accordance With A Financial Reporting Framework Generally Accepted In Another Country. It will supersede SAS No. 51, Reporting on Financial Statements Prepared for Use in Other Countries. The exposure draft was issued November 9, 2010. The comment period ends January 31, 2011.

The ASB issued an exposure draft Reporting on Financial Statements Prepared in Accordance With a Financial Reporting Framework Generally Accepted in Another Country in 2009. However, after revising that exposure draft as a result of issues raised in comment letters, the Board decided to reexpose the SAS.

In the proposed revised SAS, 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, while permitting an unqualified opinion.

In addition the concept of limited use in the previous exposure draft has been eliminated in the proposed revised SAS.

Effective Date
The proposed revised SAS would be effective for audits of financial statements for periods ending on or after December 15, 2012.

The reissued exposure draft is available on the AICPA website, http://www.aicpa.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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SQCS No. 8 Replaces SQCS No. 7

As part of its clarity drafting conventions the ASB has issued Statement on Quality Control Standards (SQCS) No. 8, A Firm’s System of Quality Control (Redrafted). This SQCS supersedes SQCS No. 7. It was issued November 2010 and is effective as of January 1, 2012. Early application is permitted.

As with many of the redrafted standards SQCS No 8, does not change or expand SQCS No. 7 in any significant respect. Instead certain requirements that are duplicative of broader requirements in SQCS No. 7 have been moved to application and other explanatory material. This is consistent with International Standard on Quality Control No. 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.

Documentation

You should be aware that Paragraph 46 of SQCS No. 8 contains a requirement that procedures established for dealing with differences of opinion should enable a member of the engagement team to document that member’s disagreement with the conclusions reached after appropriate consultation.

You’ll recall that this requirement was included in SAS No. 108, Planning and Supervision (AICPA, Professional Standards, vol. 1, AU sec. 311, par. .32). The ASB believes that this requirement is more appropriately placed at the firm level for all engagements.

A summary of SQCS No. 8 is available on the AICPA website, http://www.aicpa.org/InterestAreas/AccountingAndAuditing.

New Publication
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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Original Auditing Standards: Where are they?

Most of the news on auditing standards lately has been on Clarified Auditing Standards. As you know the Auditing Standards Board (ASB) has been working on redrafting, revising, and converging audit, attest, and quality control standards with international standards. But the clarified auditing statements are not effective until December 15, 2012. So meanwhile where do you find the current standards?

Since the AICPA revamped their website it is more difficult to find the standards. So for your information here’s the link:

http://www.aicpa.org/Research/Standards/AuditAttest/Pages/SAS.aspx.

On this page you’ll find a list of the SASs from No. 1 to 120, with links to their respective Auditing Sections (AU) in the professional standards. The list is current as of June 1, 2010.

Proposed ASU on Transfers and Servicing

The FASB has issued an exposure draft on Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements designed to improve the accounting for repurchase agreements (repos) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. The comment period ends January 15, 2011.

As you are no doubt aware, in a typical repo transaction, an entity transfers financial assets to a counterparty in exchange for cash with an agreement for the counterparty to return the same or equivalent financial assets for a fixed price in the future. Under Topic 860, Transfers and Servicing, an entity may or may not recognize a sale upon the transfer of financial assets subject to repo agreements, based, in part, on whether the entity has maintained effective control over the transferred financial assets.

The proposed Update is designed to simplify the accounting for these transactions by removing from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets, as well as implementation guidance related to that criterion.

Proposed ASUs are available on the FASB website, www.fasb.org.

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SEC Work Plan on IFRS Progress Report

The SEC Staff has published its first progress report on the “Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers.” As you are aware the SEC has been studying whether to allow U.S. issuers in the U.S. to use IFRS. The SEC directed the SEC Staff to come up with a work plan to determine whether, when, and how current financial reporting system for U.S. issuers should be transitioned to a system that incorporates IFRS. The Work Plan was published in February 2010 and covers the following area:

Characteristics of IFRS and standard-setting process:

• Sufficient development and application of IFRS for the U.S. domestic reporting system.
• The independence of standard setting for the benefit of investors.

Transition considerations:

• Investor understanding and education regarding IFRS.
• Examination of the U.S. regulatory environment that would be affected by a change in accounting standards.
• The impact on issuers, both large and small, including changes to accounting systems. changes to contractual arrangements, corporate governance considerations, and litigation contingencies.
• Human capital readiness.

The update draws no major conclusions. However, you will find some areas of particular interest in the progress report including concerns about the funding of the IASB which is funded by voluntary contributions. In addition industry regulators are concerned about the general lack of industry-specific standards and practices in IFRS. Work is also being done to analyze federal and state tax impacts, audit regulation and standard setting and broker-dealer and investment company reporting. Another issue has to do with the method of any incorporation of IFRS because of the incorporation of ‘U.S. GAAP’ references currently in U.S. laws, contractual documents, regulatory requirements and guidelines, and similar documents.

You may download the Work Plan Progress Report at www,sec.gov/spotlight/gloabalaccountingstandards/workplanprogress102910.pdf.

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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