New GAAP hierarchy for federal government audits.




New Hierarchy for Federal Government Audits
The General Accounting Office has issued for exposure an amendment to Government Auditing Standards (the yellow book) that would establish a GAAP framework for federal financial statements. The ED formally defines the meaning of presents fairly in accordance with GAAP for the federal government by creating a hierarchy of GAAP for auditors of federal programs and agencies. Comments on the ED are due by July 15.

The GAO currently requires such auditors to state in their reports that the financial statements are prepared in accordance with GAAP for federal financial reporting purposes. If finalized, this ED will allow auditors to simply write that the statements are prepared in accordance with GAAP. The GAAP hierarchy the ED has created for the federal government, which is similar to the hierarchy defined in SAS no. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles in the Independent Auditors Report , will allow them to achieve this.

The revisions to the yellow book would be effective for financial statement audits for periods ending on or after September 15, 1998. Copies of the ED are available on the GAOs Web site at www.gao.gov or by calling the GAO at 202-512-6000.

New Guide Clarifies Investments Accounting
GASB has answered a lot of questions from financial statement preparers and auditors on implementing Statement no. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, which was issued March 1997. To make both the questions and the answers available as a reference tool, GASB published a guide on investment valuation that includes suggestions from its staff, advisory committee members and people who already have implemented the standard.

Statement no. 31 requires state and local governments to report their investments at fair value on the balance sheet. Fair value is the amount, such as the current price of a five-year U.S. Treasury bond, at which two willing parties could exchange an investment. The statement was effective for fiscal years starting after June 15, 1997.

The implementation guide contains 122 questions and answers on transactions covered by Statement no. 31, on investments that carry below-market yields and on determining fair value. Other topics include marking to market, amortized cost, investment instruments and external investment pools.

Copies of the guide (product code GQA31) are available for $24 from the GASB order department by calling 203-847-0700, ext. 555.



SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

QUIZ

News quiz: Scam email plagues tax professionals—again

Even as the IRS reported on success in reducing tax return identity theft in the 2016 season, the Service also warned tax professionals about yet another email phishing scam. See how much you know about recent news with this short quiz.