Joanne M. Flood
Wiley Practitioner's Guide to GAAS 2017
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The book contains numerous excerpts taken from the Statements on Auditing Standards, the Statements on Standards for Attestation Engagements, and the Statements on Standards for Accounting and Review Services, and interpretations of these statements. These are noted by reference to the specific standard or AICPA Codification section, except for definitions which appear under a separate heading at the beginning of each section. These standards are copyrighted by the American Institute of Certified Public Accountants, Inc. and reprinted with permission of the AICPA.
This book contains definitions taken from Statement of Financial Accounting Concepts 2, Qualitative Characteristics of Accounting Information; and Statement of Financial Accounting Concepts 7, Using Cash Flow Information and Present Value in Accounting Measurements, which are copyrighted by the Financial Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, Connecticut 06856-5116, USA. Portions are reprinted with permission. Complete copies of these documents are available from the FASB.
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PREFACE
Auditing Standards
Following the creation of the Public Company Accounting Oversight Board (PCAOB), the AICPA's Auditing Standards Board (ASB) reassessed its mission. The ASB developed a plan to converge US generally accepted auditing standards (GAAS) with the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB). Thus, the ASB's clarity project began work to:
● Redraft the auditing standards for clarity – to make the standards easier to read, understand, and apply
● Converge US standards with the ISAs
The ASB has completed its project. While clarity and convergence, not change, were the goals of the clarity project, the project did create some changes that require auditors to make changes in practice. For ease of use, this book arranges information according to the sections of the AICPA's auditing standards codification.
Preparation, Compilation, and Review Standards
In May 2010, the AICPA's Accounting and Review Services Committee (ARSC) approved a clarity project with the purpose of aligning the conventions of its standards with the ASB standards and making the compilation and review standards easier to read, understand, and apply. One divergence from the ASB approach is that the ARSC decided not to include application guidance for governmental and smaller, less complex entities. Otherwise, the formats are similar and include:
● Objectives– define the context in which the requirements are set
● Definitions– explain, where relevant, specific terms
● Requirements– what the practitioners must do to meet the objectives of the standard
● Application and other explanatory matters– provide further guidance for carrying out the requirements of the standard. These paragraphs use an “A” prefix and are in a separate section that follows the requirements section.
As a result of the ARSC clarity project, a new section identifier, “AR-C,” was established for the clarified standards in order to avoid confusion with references to the extant “AR” sections.
SSARS No. 21
Statement on Standards for Accounting and Review Services (SSARS) No. 21, Clarification and Recodification, is a product of the SSARS clarity project. There have long been practice problems around when an accountant is associated with or involved in the preparation of financial statements. Questions circled around the accountant's responsibilities and the users' perceptions of the meaning of the accountant's involvement. With the advent first of computers and then the cloud, these issues became even more complex.
In an effort to clarify the accountant's role under various scenarios, in October 2014 the AICPA released SSARS No. 21. This standard significantly affects public practitioners who prepare financial statements and is effective for reviews, compilations,