Academic journal article Journal of Accountancy

AICPA Issues EDs and SOP

Academic journal article Journal of Accountancy

AICPA Issues EDs and SOP

Article excerpt

Two exposure drafts, on auditing standards and personal financial planning, and a statement of position on investment companies are available.

ED amends statement

The American Institute of CPAs auditing standards board has issued a proposed Statement on Auditing Standards, Amendment to Statement on Auditing Standards no. 58, "Reports on Audited Financial Statements," and called for comments on the proposed statement's provisions by October 20, 1995.

The exposure draft would eliminate the requirement that when certain criteria are met the auditor add an uncertainties explanatory paragraph to his or her report. Other significant provisions concern guidance on other matters the auditor may wish to add to or emphasize in the report, such as the addition of an emphasis-of-a-matter paragraph and an auditor's disclaimer of an opinion on financial statements due to uncertainties.

The ASB noted that in developing guidance it considers the relationship between the cost imposed, and the benefits reasonably expected, to be derived from audits. It also considers differences the auditor may encounter in auditing financial statements of small businesses and makes special provisions to meet those needs. The board would "particularly appreciate comments on those matters."

ED on PFP practice

The Institute's personal financial planning executive committee has issued an exposure draft of the proposed Statement on Responsibilities in Personal Financial Planning Practice no. 5, Developing a Basis for Recommendations, and has requested comments by October 16.

This ED provides guidance on performing each of the three functions that are involved in developing recommendations:

1. Collecting relevant information, including the client's goals, financial situation and resources; nonfinancial factors; external economic factors; and reasonable estimates, projections and assumptions furnished by the client and his or her advisers or developed by the CPA.

2. Analyzing the client's current situation and identifying its strengths and weaknesses.

3. Formulating, evaluating and recommending appropriate strategies and courses of action for achieving the client's goals. …

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