by Stephen Reed | Accounting News, Audit and Accounting, Business Consulting, IRS, News, Professional Services
An Invitation to Comment: Improving the Auditor’s Report (ITC) was released June 22 by the International Auditing and Assurance Standards Board (IAASB), seeking input on potential changes to improve the information provided in the auditor’s report on financial statements.
In response, the AICPA’s Auditing Standards Board (ASB) is asking members to complete a survey – AICPA Auditing Standards Board – Improving the Auditor’s Report – to help inform the ASB’s response to the ITC. The survey will be open through September 10, 2012, and can be accessed on the ASB website.
The ASB has stated it “recognizes that the clarified standards will become effective within the next few months, including the revised standards for auditor reporting. However, in view of the ASB’s commitment to converge its standards with those of the IAASB, the ASB is very interested in the direction the IAASB is moving related to this topic and the likelihood of changes to the standard audit opinion that the IAASB may propose.”
The proposed improvements to the auditor’s report that are included in the ITC would be “required for all entities, except for the proposed inclusion of auditor commentary which would only be required to be included by public interest entities (PIEs),” according to the ASB.
The IAASB’s ITC suggests the following changes to auditor reporting:
Additional information in the auditor’s report to highlight matters that, in the auditor’s judgment, are likely to be most important to users’ understanding of the audited financial statements or the audit, referred to as “Auditor Commentary.” This information would be required for PIEs – which includes, at a minimum, listed entities – and could be provided at the discretion of the auditor for other entities.
Auditor conclusion on the appropriateness of management’s use of the going concern assumption in preparing the financial statements and an explicit statement as to whether material uncertainties in relation to going concern have been identified.
Auditor statement as to whether any material inconsistencies between the audited financial statements and other information have been identified based on the auditor’s reading of other information, and specific identification of the information considered by the auditor.
Prominent placement of the auditor’s opinion and other entity-specific information in the auditor’s report.
Through the survey, the ASB is seeking feedback on the ITC’s questions for respondents on pages thirteen through fifteen. The survey also includes questions regarding the topics covered in the ITC to solicit US-specific feedback.
Depending on the amount of detail survey participants wish to share with the ASB, the survey should take ten to forty minutes. Before completing the survey, the ASB recommends that participants review the ITC.
Full Article: http://www.accountingweb.com/article/abs-seeks-feedback-specific-auditors-reports/219773
by Tiffany Evans | Accounting News, Audit and Accounting, Business Consulting, Financial Statement Reporting, IRS, News, QuickBooks, Resources, Retail & Distribution, Tax Consulting, Tax Planning, Tax Planning - Individual, Tax Preparation - Individual
The Financial Accounting Standards Board (FASB) has issued for public comment a proposed Accounting Standards Update (ASU) that is intended to improve the presentation of reclassifications out of accumulated other comprehensive income. The proposed amendments balance the benefits to users of financial statements without imposing significant additional costs to preparers, according to FASB’s In Focus documents. The proposed update would apply to all public and private organizations that issue financial statements in conformity with US GAAP and that report other comprehensive income.
The ASU Comprehensive Income (Topic 220), Presentation of Items Reclassified Out of Accumulated Other Comprehensive Income, would require a tabular disclosure of the effect of items reclassified, which presents, in one place, information about the amounts reclassified and a road map to related financial disclosures. This information is currently presented throughout the financial statements under US GAAP.
Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income.
Some items of other comprehensive income that are reclassified after a reporting period, and which FASB uses in its presentation examples, include cash flow hedges, unrealized gains and losses on available-for-sale securities, and foreign currency translation adjustments. US GAAP disclosure requirements already require this information to be disclosed, the Exposure Draft (ED) of the amendments states.
The ED provides examples of tabular formats and addresses the needs of life insurers. It also refers to US GAAP requirements for defined benefit pension costs.
“Stakeholders raised concerns that certain requirements about the reclassification of items out of accumulated other comprehensive income would be costly for preparers and add unnecessary complexity to financial statements,” said FASB Chairman Leslie F. Seidman. “Based on this new feedback, the Board is proposing a revised approach that will present information about other comprehensive information in a useful way that is more cost-effective.”
No decision has been made regarding an effective date. Stakeholders are asked to provide their written comments on the proposed ASU by October 15, 2012.
Full article: http://www.accountingweb.com/article/fasb-proposes-changes-presentation-reclassified-income/219733
by Daniel Kittell | Accounting News, Bookkeeping, Business Consulting, CPA, News, Tax Consulting, Tax Planning - Individual
The true cost of public employee pensions will become clearer under changes approved June 25 by the accounting standards-setter for state and local governments ? the Governmental Accounting Standards Board (GASB).
The GASB has approved two new standards that mark a major departure in the way pension costs are accounted for and described in financial statements today.
The major difference is that liabilities will be reported on the balance sheet for the first time. The net pension liability is the difference between the total pension liability (the present value of projected benefit payments to employees based on their past service) and the assets (mostly investments reported at fair value) set aside to pay current employees, retirees, and beneficiaries. Currently, governments must only report as a liability the difference between the contributions they are required to make to a pension plan in a given year versus what is actually funded.
Many states and municipal governments have not fully funded their pensions. In fact, the gap between the promises states have made for public employees’ retirement benefits and the money they have set aside to pay these bills was at least $1.38 trillion in fiscal year 2010, according to the Pew Center on the States.
Some observers believe the changes will help users of financial statements more clearly see the consequences of future proposed benefit increases.
Note Disclosures and Supplementary Information
Governments must also “comprehensively and comparably” measure the annual costs of pension benefits under the new standards.
The new statements are:
Statement No. 67, Financial Reporting for Pension Plans, which changes the existing guidance for the financial reports of most pension plans. The standard is effective for periods beginning after June 15, 2013.
Statement No. 68, Accounting and Financial Reporting for Pensions, establishes new financial reporting requirements for most governments that provide their employees with pension benefits. Provisions are effective for fiscal years beginning after June 15, 2014.
Early implementation is encouraged for both statements.
The American Institute of CPAs (AICPA) came out in favor of the new rules. AICPA President and CEO Barry C. Melancon said in a statement, “The new GASB standards will benefit users of these financial statements as well as taxpayers, since state and local governments for the first time will have to report unfunded pension liabilities on their balance sheets providing a clearer view of pension obligations.”
Statements 67 and 68 can be downloaded from the GASB website early August. Bound copies of the statements and a plain-language description of the new requirements also will be available.
Full Article: http://www.accountingweb.com/article/new-accounting-standards-pension-costs/219421
