AICPA Issues Guidance on Subsequent Events


New guidance is available on the effect of FASB’s Accounting Standards Codification Topic 855, Subsequent Events, in compilation and review engagements.

 

The AICPA’s Audit and Attest Standards Team issued a new Technical Inquiry and Reply (TPA) 9150.26, “The Accountant’s Responsibilities for Subsequent Events in Compilation and Review Engagements.”

 

According to the TPA, FASB ASC 855, Subsequent Events, does not change the accountant’s responsibilities under AR section 100, Compilation and Review of Financial Statements (AICPA, Professional Standards, vol. 2), which states that an accountant performing a review engagement should inquire of members of management who have responsibility for financial and accounting matters concerning events subsequent to the date of the financial statements that could have a material effect on the financial statements.

 

In a compilation engagement, the accountant has no responsibility with respect to subsequent events unless he or she learns of evidence or information that a subsequent event that has a material effect on the financial statements has occurred.

 

When such evidence or information comes to an accountant’s attention during a compilation or review engagement, he or she should request that management consider the possible effects on the financial statements, including the adequacy of any related disclosure. If the accountant determines that a subsequent event is not appropriately accounted for in the financial statements or disclosed in the notes, he or she should follow the guidance in paragraphs .56–.58 of AR section 100 regarding departures from generally accepted accounting principles, the TPA states.

 

For more, see the full technical practice aid.

SPONSORED REPORT

How the election may affect taxation of business income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

Did you follow 2016’s biggest accounting news?

CPAs will remember 2016 as a year of new standards and new faces. How well did you follow the biggest accounting events? The 7 questions in this quiz will help you find out