The AICPA Auditing Standards Board issued three exposure drafts. A proposed Statement on Quality Control Standards (SQCS), A Firm’s System of Quality Control, will replace all existing SQCSs and provide guidance for a CPA firm’s responsibilities for its system of quality control over its accounting and auditing practice ( www.aicpa.org/download/members/div/auditstd/ed_sqcs.pdf). The ED, which should be read in conjunction with the AICPA Code of Professional Conduct, describes elements of quality control and other matters essential to the effective design, implementation and maintenance of the system. It also explains how the proposed guidance differs from existing SQCSs and international standards on quality control. Comments are due September 30, 2006.

Comments on two other EDs are due September 15, 2006. One, a proposed Statement on Standards for Attestation Engagements (SSAE), SSAE Hierarchy, identifies the body of attest literature, clarifies the authority of attest publications issued by the AICPA and others, and provides additional guidance on related matters ( www.aicpa.org/download/members/div/auditstd/finaledssaehierarchy.pdf). Another, a proposed Statement on Auditing Standards (SAS), Omnibus—2006, includes proposed revisions to SAS nos. 102, Defining Professional Requirements in Statements on Auditing Standards; 105, Amendment to Statement on Auditing Standards No. 95; 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; 110, Performing Procedures in Response to Assessed Risks and Evaluating the Evidence Obtained; 99, Consideration of Fraud in a Financial Statement Audit; and 103, Audit Documentation (www.aicpa.org/download/members/div/).

Conrad W. Hewitt, CPA, became the SEC’s chief accountant in August. He was a chief financial regulator for the State of California and, earlier, a longtime managing partner of Ernst & Young. Hewitt’s priorities include leading the SEC’s work on implementing the Sarbanes-Oxley Act’s internal control provisions and promoting convergence of U.S. GAAP and international financial reporting standards.

The SEC issued a concept release to elicit public comments on the guidance it is developing to help managers of public companies, both domestic and foreign, assess their internal controls over financial reporting ( www.sec.gov/rules/concept/2006/34-54122.pdf ). In particular, the guidance will address how to identify risks to the accuracy of financial statement accounts and disclosure and the related internal controls that address those risks; the objectives of the evaluation procedures and methods or approaches management uses to gather evidence supporting its assessment; factors management should consider to determine the nature, timing and extent of its evaluation procedures; and documentation requirements, overall objectives of documentation and factors that may influence documentation requirements. Comments are due September 18, 2006.

The IRS sought recommendations from the public on how to make it easier and less expensive for Americans to satisfy their federal tax obligations. The service’s Office of Taxpayer Burden Reduction encouraged tax practitioners, business owners and others to submit proposals on form 13285A ( www.irs.gov/pub/irs-pdf/ ).

FASB issued Interpretation no. 48, Accounting for Uncertainty in Income Taxes, which prescribes a consistent recognition threshold and measurement attribute for application in a financial statement to a position taken or expected to be taken on a tax return ( www.fasb.org/st/summary/finsum48.shtml ). The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. It is effective for fiscal years beginning after December 15, 2006. FASB encourages earlier application by enterprises that have not issued any financial statements in the period in which they adopt the interpretation.

The board also issued a staff position (FSP) that will require companies to recalculate their leveraged leases if there is an actual or projected change in the timing of cash flows related to income taxes generated by the leveraged lease ( www.fasb.org/fasb_staff_positions/fsp_fas13-2.pdf ). The guidance in this FSP amends FASB Statement no. 13, Accounting for Leases, and is applicable to fiscal years beginning after December 15, 2006.

The Alternative Investments Task Force of the Auditing Standards Board issued a practice aid for auditors, Alternative Investments—Audit Considerations ( www.aicpa.org/members/div/ ). Certain not-for-profit organizations, health care entities, pension plans and mutual funds have greatly increased their investments in such assets, whose market value is not readily determinable. GAAP generally requires entities to carry alternative investments on their books at fair value. The complexity of accounting for such investments increases the risk of misstatement in financial statements. The practice aid provides auditors with guidance on general auditing considerations; addressing financial statement existence and valuation assertions; management representations; disclosure of certain significant risks and uncertainties; and reporting.

Publishing Director
Geoffrey L. Pickard

Colleen Katz

Managing Editor
Cheryl Rosen

Senior Editors
Laura Baron
Katharine W. Coveleski
Peter D. Fleming
Michael Hayes
James Quaglietta
Robert Tie

Senior Assistant Editor
Sarah Cobb

Assistant Editor
Vince Nolan

Contributing Editors
Anita Dennis
Lesli S. Laffie
Barbara J. Shildneck
Joseph T. Wells
Stanley Zarowin

Production Director
Peter M. Tuohy

Art Director
Jeryl A. Costello

Production Manager
Gene Cioffi

Production Editor
D. Hillel Lofaso

Senior Production Associates
Valrie Mason
Ingrid Medina

Associate Publisher
Thomas R. Greve

Advertising Team Manager
Karin DeMarco

Advertising Representatives
Joseph Torres

Advertising Production Manager
John Weinberg

Editorial Offices
e-mail: joaed@aicpa.org

Advertising Office

Classified Ads
Russell Johns Associates, Inc.
e-mail: joa@rja-ads.com

Catherine Allen, Kenneth D. Askelson, James Bean, John C. Boma, Steven J. Brown, Jolene C. Brucks, Thomas F. Burrage, Linda Burt, J. Gregory Bushong, R. Patrick Cargill, Benson J. Chapman, Rosemarie T. Dunn, Thomas Emmerling, Elizabeth Fender, Robert J. Freeman, Kim Gibson, Alan Glazer, Randi K. Grant, Patrick T. Hanratty, DeAnn Hill, James E. Hunton, Sandra Johnigan, Susan S. Jones, G. William Kennedy, Frank J. Kopczynski, Jeffrey B. Kraut, Dennis B. Kremer, Alan Levin, John Lewison, Joseph P. Liotta, Mano Mahadeva, Jane M. Mancino, Benjamin F. Mathews, David McIntee, Anita Meola, Debra Mitchell, Roger H. Molvar, Brenda Morris, Craig Murray, Glenn Newman, Lyne P. Noella, Edward T. Odmark, Mary P. Ricciardello, Mark L. Richardson, Marshall B. Romney, Steven E. Sacks, Peggy Scott, Carolyn Sechler, Gary Shamis, Ivan J. Sotomayor, Alan Steiger, Paul C. Sullivan, Barry S. Sziklay, Gary R. Trugman, Robert Willens, Mark A. Yahoudy, Alan S. Zipp
Accounting: John Althoff, J. Gregory Bushong, Alan Glazer, Russell Golden, Debra Mitchell, Daniel Noll, Edward T. Odmark, Alan Steiger; Auditing: Catherine Allen, Susan S. Jones, Charles E. Landes, Joseph P. Liotta, Douglas Prawitt, Thomas Ratcliffe, Edward T. Odmark, Ivan J. Sotomayor; Business & Industry: Kenneth D. Askelson, Stuart R. Benton, Benson J. Chapman, Jeffrey B. Kraut, Alan Steiger; Business Valuation/Litigation Services: Thomas F. Burrage, Robert Gray, Edward Mendlowitz, Robert F. Reilly, Linda Trugman; Personal Financial Planning: John C. Boma, R. Patrick Cargill, Thomas Emmerling, Patrick T. Hanratty, Peggy Scott, Mark A. Yahoudy; Practice Management: Richard V. Kretz, Bea L. Nahon, William Pirolli, Carolyn Sechler, Gary Shamis; Tax: Steven J. Brown, Benson J. Chapman, DeAnn Hill, Sidney Kess, William Stromsem, Steven Thompson


Preparing the statement of cash flows

This instructive white paper outlines common pitfalls in the preparation of the statement of cash flows, resources to minimize these risks, and four critical skills your staff will need as you approach necessary changes to the process.


Keeping you informed and prepared amid the COVID-19 crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.