Audit And Attest


The Institute’s Accounting and Review Services Committee (ARSC) released three statements on standards for accounting and review services (SSARSs) and an interpretation (see Official Releases, page 109). SSARS no. 12, Omnibus Statement on Standards for Accounting and Review Services—2005 (# 060650JA); SSARS no. 13, Compilation of Specified Elements, Accounts, or Items of a Financial Statement (# 060651JA); and SSARS no. 14, Compilation of Pro Forma Financial Information (# 060652JA), can be ordered from www.cpa2biz.com or from the AICPA at 888-777-7077. The interpretation, “Applicability of SSARSs to Reviews of Nonissuers Who Are Owned by or Controlled by an Issuer,” which relates to SSARS no. 1, Compilation and Review of Financial Statements, is available at www.aicpa.org/download/members/div/auditstd/SSARS_ . The ARSC also issued new and revised illustrative representation letters for engagements performed under the SSARSs, revised illustrative inquiries for review engagements and a revised illustrative successor accountant acknowledgement letter. These documents are available at www.aicpa.org/members/div/auditstd/technic_arsc.asp .

The AICPA’s Auditing Standards Board issued two interpretations of statements on auditing standards: “Auditing Derivative Instruments, Hedging Activities, and Investments in Securities” and “Auditing Interests in Trusts Held by a Third-Party Trustee and Reported at Fair Value” ( www.aicpa.org/download/auditstd/announce/ ; see Official Releases, page 121). The interpretations clarify that when an auditor determines that the nature and extent of auditing procedures should include testing the measurement of investments in securities, simply receiving a confirmation from a third party does not constitute adequate audit evidence with respect to the valuation assertion. The interpretations also reiterate management’s responsibility for establishing an accounting and financial reporting process for determining fair value measurements.

The AICPA issued three auditing technical practice aids (TPAs): Consideration of Impact of Losses From Natural Disasters Occurring After Completion of Audit Field Work and Signing of the Auditor’s Report But Before Issuance of the Auditor’s Report and Related Financial Statements; Audit Considerations When Client Evidence and Corroborating Evidence in Support of the Financial Statements Has Been Destroyed by Fire, Flood, or Natural Disaster and Considerations When Audit Documentation Has Been Destroyed by Fire, Flood, or Natural Disaster. The TPAs are available at www.aicpa.org/members/div/auditstd/ .

The Public Company Accounting Oversight Board (PCAOB) adopted an auditing standard and issued ethics and independence rules addressing tax services, contingent fees and certain related general ethics and independence standards. PCAOB Auditing Standard no. 4, Reporting on Whether a Previously Reported Material Weakness Continues to Exist, establishes requirements and provides direction for auditors reporting on unresolved material weaknesses. The rules identify circumstances in which providing tax services impairs auditor independence, strengthen the auditor’s responsibilities in connection with seeking audit committee preapproval of tax services and lay a foundation for the PCAOB’s independence rules. The standard and rules will not take effect unless the SEC approves them ( www.pcaobus.org/rules/rulemaking_docket.aspx ).

The AICPA issued Practice Alert 2005-1, Auditing Procedures With Respect to Variable Interest Entities, which provides guidance to auditors of nonissuers and their firms on planning and performing auditing procedures with respect to variable interest entities. The alert is available at www.aicpa.org/download/auditstd/ .

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