The purpose of this course is to inform the reader of the various changes affecting accounting, compilation and review, and auditing engagements including newly issued FASB and FASB statements, new statements issued by the Auditing Standards Board, changes in compilation and review, and more.

CHAPTER 1
FASB No. 164: Not-for-Profit Entities: Mergers and Acquisitions Including an amendment of FASB Statement No. 142 (FASB ASC Topic 958)

• Distinguish between a merger and an acquisition with a not-for-profit organization
• Understand the rules for a merger
• Understand the rules for an acquisition
• Apply the steps for recording an acquisition
• Review the disclosures required by FASB No. 164

CHAPTER 2
FASB No. 165: Subsequent Events (FASB ASC Topic 855)

• Define the two types of subsequent events
• Identify events that trigger the subsequent event rules
• Identify non-recognition events

CHAPTER 3
FASB No. 166: Accounting for Transfers of Financial Assets: an Amendment of FASB Statement No. 140

• Understand the types of asset transfers that are subject to the FASB No. 166/140 rules
• Learn the types of transfers that qualify for sale accounting
• Understand how to account for a transfer of a participating interest
• Discuss how to account for a transfer that is not accounted for as a sale

CHAPTER 4
FASB No. 167: Amendments to FASB Interpretation No. 46R: Consolidation of Variable Interest Entities- An Interpretation of ARB No. 51: (FASB ASC Topic 810)

• List the three conditions required to consolidate a VIE
• Define a variable interest entity
• Determine which entity is a primary beneficiary
• List the different types of variable interests
• Present the consolidated financial statements that include a variable interest entity

CHAPTER 5
FASB No. 168: The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (FASB ASC Topic 105)

• Categorize sources of GAAP into the new GAAP hierarchy
• List the five areas of the Accounting Standards Codification
• Learn about the simplified language used in the new Codification
• Understand how to reference the new Codification in working papers

CHAPTER 6
Current Developments-Accounting and Financial Reporting

• Learn the latest FASB Staff Positions (FSPs) and Accounting Standards Updates (ASU) issued in 2009 and 2010
• Review the proposed changes to revenue recognition and financial statement display
• Address the international convergence project
• Learn the proposed changes to lease accounting

CHAPTER 7
Compilation and Review Update

• Understand the extensive changes made by SSARS No. 19
• Learn how the new lack of independence disclosure rules apply to
• compilation engagements
• Define the new term “review evidence”
• Discuss the new documentation requirements for compilation and review engagements

CHAPTER 8
New Auditing Standards and Other Auditing Developments

• Read SASs with an understanding of the professional requirements imposed on auditors;
• Communicate internal control related matters in accordance with SAS No. 115
• Discuss the audit requirements for a compliance audit
• Apply the compliance requirements for different types of supplementary information found in SAS No. 119-120
• Understand the importance aspects of fraud and fraud prevention
• Implement the changes found in several new auditing standards.
• Apply the requirements found in PCAOB AS7

Chapter 1

FASB No. 164:  Not-for-Profit Entities:  Mergers and Acquisitions Including an amendment of FASB Statement No. 142   (FASB ASC Topic 958)

Introduction

Objective

Background

Scope of FASB No. 164  

Definitions used within FASB No. 164:

Rules of FASB No. 164

Distinguishing between a merger and an acquisition

Review feedback questions and suggested solutions

Rules for a merger

Rules for an acquisition

Step 1: Identify the acquirer

Step 2:  Determine the acquisition date

Step 3: Recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree

Step 4 Recognizing and measuring goodwill acquired or a contribution received

Effective Date and Transition

Review feedback questions and suggested solutions

Exhibit A:   Recognizing Particular Assets Acquired and Liabilities Assumed

Exhibit B:  Definition of a Business and a Nonprofit Activity

Exhibit C: Further Guidance on Applying the Acquisition Method

Review feedback questions and suggested solutions

Chapter 2

FASB No. 165: Subsequent Events  (FASB ASC Topic 855)

Introduction

Background

Requirements of FASB No. 165 (ASC Topic 865)

Scope

Definitions used within FASB No. 165

Rules

Disclosures

Reissuance of financial statements

Effective date and transition

Review feedback questions and suggested solutions

Chapter 3

FASB No. 166: Accounting for Transfers of Financial Assets: an Amendment of FASB Statement No. 140

Objective

Background

Rules

Scope

Transfers of financial assets and liabilities

Review questions and suggested solutions

Servicing financial assets and liabilities

Special rules for financial assets subject to prepayment

Disclosures

Unit of account in applying FASB No. 166

Removal of Qualifying Special-Purpose Entity (QSPE) Concept

Examples of Applications of FASB No. 166

Effective date

Review questions and suggested solutions

Chapter 4

FASB No. 167: Amendments to FASB Interpretation No. 46R: Consolidation of Variable Interest Entities- An Interpretation of ARB No. 51: (FASB ASC Topic 810)

SECTION 1

Introduction

Consolidated Statements

The Variable Interest Entity Rules- FIN 46R

FASB Interpretation No. 46R- Consolidation of Variable Interest Entities-An Interpretation of ARB No. 51

Key Changes Made to Interpretation No.  46R by FASB No. 167

What is a VIE?

General Rules of FIN 46R

Application of FIN 46R

Review Questions and Suggested Solutions

SECTION 2

Rules of FIN 46R

Basic Rules for Consolidation- 3 Requirements

Requirement 1 for Consolidation: There Must Be a Variable Interest Entity (VIE)

Definition of a VIE

Condition 1: The Total Equity Investment at Risk is Not Sufficient

10 percent Presumption Rule

Qualitative Methods for Determining the Sufficiency of Equity

Quantitative Method for Determining the Sufficiency of Equity

Quantitative Method 1- Expected  Losses Method

Timing of Determining Whether An Entity is a VIE

Reconsideration of VIE Status

Condition 2: VIE Based on Equity Holders Lacking Risks and Rights of Ownership

Review Questions and Suggested Solutions

SECTION 3

Requirement 2 for Consolidation: An Entity Must Have a Variable Interest in the VIE

Definition of a Variable Interest

Fees Paid to Decision-Makers or Service Providers

Leases

Receivables

Typical Degree of Variability- Variable Interests

Implicit Variable Interests

Review Questions and Suggested Solutions

SECTION 4

Requirement 3 for Consolidation: Determining the Primary Beneficiary of the VIE

Definition of a Primary Beneficiary

Rules for Determining the Primary Beneficiary

Determining the Primary Beneficiary

Related Party Rules- Primary Beneficiaries

The Lease Issue- Implicit Variable Interests

Review Questions and Suggested Solutions

SECTION 5

Initial Test and Measurement of the VIE By the Primary Beneficiary

Deconsolidation

Updating the Primary Beneficiary Test

Disclosures Under FIN 46R                           

Effective Date and Transition Requirements of FIN 46R

Review Questions and Suggested Solutions

Chapter 5

FASB No. 168: The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (FASB ASC Topic 105)

Objectives

Introduction

Background

Scope

Definitions

The New FASB No. 168 GAAP Hierarchy (ASC Topic 105)

Accounting Standards Codification (ASC)

SEC Response to FASB ASC

PCAOB Q&A

Accounting Standards Updates (ASUs)

Grandfathered rules and excluded matters

Simplifying the language within the Codification

Effective Date and Transition

Applying the new FASB ASC

Review Feedback Questions and Suggested Solutions

Chapter 6

Current Developments-Accounting and Financial Reporting

I.  FASB Staff Positions (FSPs) and Accounting Standards Updates (ASUs)

FASB Staff Position (FSP) FAS 115-2 and FAS 124-2: Recognition and Presentation of Other-Than-Temporary Impairments

FASB Staff Position (FSP) FAS 107-1 and APB 28-1: Interim Disclosures about Fair Value of Financial Instruments

FASB Staff Position (FSP) FAS 157-4: Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly

FASB Staff  Position (FSP) FAS 141(R)-1: Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies

Accounting Standards Updates (ASUs)

ASU: 2009-06: Accounting Standards Update 2009-06 Income Taxes  Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities  (ASC 740)

Accounting Standards Update 2009-12: Fair Value Measurements and Disclosures- Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)  (ASC 820)

Accounting Standards Update 2009-13: Revenue Recognition

Multiple-Deliverable Revenue Arrangements a consensus of the FASB Emerging Issues Task Force  (ASC 605)

Accounting Standards Update 2009-14: Software Certain Revenue Arrangements That Include Software Elements a consensus of the FASB Emerging Issues Task Force (ASC 985)

ASU 2010-02: Accounting Standards Update (ASU) 2010-02: Consolidation- Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification  (ASC 810)

Accounting Standards Update 2010-06: Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements  (ASC 820)

Review Questions and Suggested Solutions

II.   Latest Developments on the Accounting Front

Reporting Information About the Financial Performance of Business Enterprises

Revenue Recognition

Review Questions and Suggested Solutions

International Accounting Standards Convergence

Changes Coming to FASB No. 13 (ASC 840)- Lease Accounting

FASB Moves Going Concern into GAAP

Review Questions and Suggested Solutions

Chapter 7: Compilation and Review Update

Introduction

Background

I.  Framework for Performing and Reporting on Compilation and Review Engagements

Introduction

Definitions

Objectives and Limitations of  Compilation Engagements

Objectives and Limitations of  Review Engagements

Professional Requirements

Hierarchy of Compilation and Review Standards and Guidance for Compilation and Review Standards

Ethical Principles and Quality Control Standards

Elements of a Compilation or Review Engagement

Three Party Relationship

An Applicable Financial Reporting Framework

Financial Statement or Financial Information

Evidence

Compilation and Review Reports

Materiality

Review Questions and Suggested Solutions

II.  Compilation Engagements

Establishing an Understanding

Compilation Performance Requirements

Documentation in a Compilation Engagement

Revised Reporting Requirements for Compilation Engagement

Entity’s Ability to Continue as a Going Concern

Subsequent Events

Subsequent Discovery of Facts Existing at the Date of the Compilation Report

Supplementary Information

Communicating to Management and Others

Change in an Engagement from an Audit or Review to a Compilation

Review Questions and Suggested Solutions

III.  Review Engagements

General Rules for Performing a Review Engagement

Establishing an Understanding

Performance Requirements- Review Engagement:

Incorrect,  Incomplete, or  Otherwise  Unsatisfactory Information

Management Representations

Documentation Required in a Review Engagement

Reporting on a Review of  Financial Statements

Entity’s Ability to Continue as a Going Concern

Subsequent Events

Subsequent Discovery of Facts Existing at the Date of the Review Report

Supplementary Information- Review Engagement

Communicating to Management and Others

Change in an Engagement from an Audit to a Review

Effective Date and Implementation

Review Questions and Suggested Solutions

Chapter 8: New Auditing Standards and Other Auditing Developments

I.   Newly Issued Auditing Standards

SAS No. 115: Communicating Internal Control Related Matters Identified in an Audit

SAS No. 116:  Interim Financial Information Amendment to AU Section 722, Interim Financial Information

Review Questions and Suggested Solutions

SAS No. 117: Compliance Audits

SAS No. 118: Other Information in Documents Containing Audited Financial Statements

Review Questions and Suggested Solutions

SAS No. 119: Supplementary Information in Relation to the Financial Statements as a Whole

SAS No. 120: Required Supplementary Information

Review Questions and Suggested Solutions

II.  Other Auditing Developments

Client and Employee Fraud

The Move to Dump the PCAOB

New PCAOB Auditing Standards

Auditing Standards Board Convergence Plan

SEC delays effective date of Section 404 for smaller companies

Review Questions and Suggested Solutions

Glossary