The goal of the clarity project is to make auditing standards easier to read, understand and apply. Consistent with the ASB’s strategy to converge its standards with those of the International Auditing and Assurance Standards Board (IAASB), each proposed standard has been redrafted using the corresponding International Standards on Auditing
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TOPICS / AUDIT & ASSURANCE
Audit
Obtaining Quality Employee Benefit Plan Audit Services – The Request for Proposal
Employee benefit plan sponsors and administrators can save time selecting an audit firm and evaluating the quality of its services by writing a thorough Request for Proposal (RFP). Consider these tips offered by the AICPA Employee Benefit Plan Audit Quality Center: P Provide a brief description of the engagement. Describe
A Global Standard for Professional Ethics
EXECUTIVE SUMMARY Standard setting organizations in more than 100 countries have adopted the International Federation of Accountants’ (IFAC) Code of Ethics for Professional Accountants, while others are in the process of converging with the code. The code applies to professionals in public practice, business, academia and government. The IFAC code’s
Better Evidence Gathering
Well-designed audit confirmation practices provide valuable third-party evidence that sheds light on financial statement assertions made by management. Confirmations can be an effective tool for auditors working with accounts including payables and receivables, inventory, investment securities, lines of credit and other actual or contingent liabilities. The procedures also can supply
Highlights
FASB issued Statement no. 141(R), Business Combinations , and Statement no. 160, Noncontrolling Interests in Consolidated Financial Statements . Effective for fiscal years beginning after Dec. 15, 2008, the standards are intended to improve, simplify and internationally converge accounting for business combinations and the reporting of noncontrolling interests
Deepening Insolvency: An Emerging Threat?
EXECUTIVE SUMMARY Deepening insolvency is a relatively new and developing legal theory. Courts have disagreed about whether deepening insolvency is a stand-alone tort claim or simply a basis for seeking damages related to fraud, professional malpractice or another claim. If an auditor is alleged to have “missed” an
Highlights
FASB tentatively approved a one-year delay in the effective date for FIN 48, Accounting for Uncertainty in Income Taxes, for private enterprises, including not-for-profit organizations. Acting on a request from the Private Company Financial Reporting Committee for a deferral, the FASB board is seeking public comment on a
CBT Too Easy? Think Again
The concerns about how easy the new CPA exam is, expressed in the letter “ CBT: Too Easy? ” ( JofA , Sept.05, page 12), are valid but unnecessary. I took the last paper and pencil exam in November 2003. The exam was very difficult, and I was able to
Risk Assessment Standards in Action
Eight standards rolled out in 2006 by the Auditing Standards Board are sparking a cultural shift for auditors. The standards—Statement on Auditing Standards nos. 104–111—are designed to enhance auditors’ responses to audit risk and materiality and encourage them to focus on areas with the greatest risk of
Opportunity Detected
EXECUTIVE SUMMARY The crux of the SEC’s interpretive guidance for management is a top-down, risk-based approach that puts risk first and foremost. Four key areas of opportunity can be used to reduce an organization’s overall SOX 404 compliance effort— risk assessment, entity-level controls, control selection and testing
A Man of Principles
Your interview with Robert Pozen (“Seeking Clarity,” Oct. 07, page 30) was intriguing. My first question is: Who on the JofA staff interviewed him, and why was the byline not disclosed? The most insightful question was, “How can more principles-based standards work in the U.S….?” His answer was, “No one
Highlights
The Center for Audit Quality issued a set of white papers to address issues practitioners may encounter as a result of the “liquidity crisis” spurred by deterioration in the markets for subprime mortgages and related securities. The CAQ Professional Practice Executive Committee said firms would benefit from the
Navigating the Crossroads of Control and Independence
EXECUTIVE SUMMARY Statement on Auditing Standards no. 112, Communicating Internal Control Related Matters Identified in an Audit , introduced terms, definitions and guidance for identifying and evaluating control deficiencies and communicating significant deficiencies and material weaknesses. It requires an auditor to communicate in writing to a client’s
Highlights
Japan and the International Accounting Standards Board (IASB) agreed to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRS). The two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRS, with the remaining differences being removed on or before June 30,
Accounting for Uncertainty
EXECUTIVE SUMMARY FASB Interpretation no. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, sets the threshold for recognizing the benefits of tax return positions in financial statements as “more likely than not” (greater than 50%) to be sustained by a taxing authority. The effect is most
AICPA Urges Congress to Reconsider Preparer Standards
When Congress passed the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007, it contained one major tax policy change not reflected in the title. The law, which was enacted May 25, included a provision that raises the standards applicable to tax return
Eight Habits of Highly Effective Audit Committees
EXECUTIVE SUMMARY To ensure that your committee is up to its mission, you must first define the mission by drafting a strong charter that identifies audit committee functions, authority and responsibilities, along with the skills and experience its members must possess. Success is not automatic. Specify critical
Highlights
The Consulting Services Executive Committee of the AICPA issued in June a new professional standard on valuation services, Statement on Standards for Valuation Services no. 1, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset. The standard provides guidelines to CPAs for developing estimates of
Highlights
The PCAOB adopted Auditing Standard no. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated With An Audit of Financial Statements, to replace Auditing Standard no. 2. The new standard is designed to increase the likelihood that material weaknesses in internal control will be
Auditing
The AICPA’s Private Companies Practice Section created an online toolkit devoted to Statement on Auditing Standards no. 112, Communication of Internal Control Related Matters Identified in an Audit. SAS 112 is effective for audits of periods ending on or after Dec. 15, 2006. The toolkit includes talking points, sample client
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Tax season quick guide
Get ready for tax season with the JofA’s annual filing season quick guide, an easy-to-use compilation of dollar thresholds, tax tables, standard amounts, credits, and deductions. Download and print for quick reference this tax season.
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