White Paper for Members in Business and Industry Guide to Understanding Internal Control and Internal Control Services for Smaller Entities

The AICPA recently issued a white paper on understanding internal control and internal control services directed to members in business and industry. The concept of internal control services is part of SSARS No. 19.

While practitioners must understand the concepts of internal control and internal control services, so must members in business and industry, including audit committees and managers. It’s important for these members to understand the concepts of internal control and independence and the effect they have on the CPA practitioners they hire to audit, review, or compile their financial statements, as well as perform internal control services.

While practitioners understand that if a CPA practitioner has established or maintained internal controls, including performing ongoing monitoring activities for a client, the CPA’s independence has been impaired and thus he or she is precluded from performing an audit or review engagement for that client. The client may not understand such limitations. The white paper addresses these issues.


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IRS Will Require Disclosure of Uncertain Tax Positions

An article in the April issue of the Journal of Accountancy documents questions and answers with IRS Commissioner Doug Shulman, (www.journalofaccountancy.com/Issues/2010/Apr/20102509.htm). The second question reads, "What can you tell CPAs who are concerned about the proposed reporting regime for uncertain tax positions?" His answer is basically that we need to be glad the IRS isn't exercising its legal authority and demanding all the FIN 48 working papers! Being the nice folks they are, the commissioner says they are only asking for a list of positions and the maximum exposure to those positions....for the time being!

Agree with this or not, monitoring tax compliance has become the burden of the return preparer under this proposal. Work to prepare the list of uncertainties and their maximum exposure will increase return preparation time considerably, not to mention the time that will be consumed by IRS follow-up inquiries and audits. On top of this, we can expect that failure to provide a complete list of uncertain tax positions could bring huge penalties. When is enough enough?

Speak now or forever hold your peace!The AICPA's Tax Division is collecting input to formulate a response to the IRS proposal at MemberinputonAnnouncement2010-9@aicpa.org. We can also respond directly to the proposal at www.irs.gov. Let your voice be heard!

FASB News Release

NEWS RELEASE 03/11/10

FASB and IASB Issue Exposure Draft on the Reporting Entity Concept

Norwalk, CT, March 11, 2010—The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) today published for public comment the Exposure Draft (ED), Conceptual Framework for Financial Reporting: The Reporting Entity.

The ED is part of a joint project between the FASB and IASB to develop a common and improved conceptual framework that provides a sound foundation for developing future accounting standards. It discusses what constitutes a reporting entity, which in different situations could be a group of entities, a single entity, or only a portion of an entity.

The ED is available for download at www.fasb.org or www.iasb.org. Interested parties are encouraged to review and provide comment on the ED by the July 16, 2010 deadline. More information about the Conceptual Framework project is available at www.fasb.org or by visiting www.iasb.org.

Contacts:

Neal McGarity, Director of Communications, FASB, telephone: 203-956-5347, email: nemcgarity@f-a-f.org

Mark Byatt, Director of Corporate Communications, IASB,
telephone: +44 (0)20 7246 6472, email: mbyatt@iasb.org

Sonja Horn, Communications Adviser, IASB,
telephone: +44 (0)20 7246 6463, email: shorn@iasb.org