Accounting Bulletin 2006-01
Many public companies had to restate their financials results in 2005 for improper lease accounting. FAS 13 requires, among other things, to straight-line rent income or expense for incremental lease agreements. To provide guidance on this matter, the AICPA released a set of Q&A on accounting for operating leases. The information is available at http://www.aicpa.org/download/acctstd/LEASE_TPAs_5600.07.pdf.
Accounting Bulletin 2006-02
SFAS 151 requires that abnormal inventory costs such as idle capacity, freight, handling, and spoilage be recognized as current period charges instead of being allocated to inventory. SFAS 153 requires nonmonetary assets to be recorded at fair value unless the transaction lacks commercial substance. An exchange has commercial substance if the entity's future cash flows are expected to change as a result of the transaction. Previous to SFAS 154, entities were required to recognize, by including in net income of the period, the cumulative effect of changing to a new accounting principle. The Statement now requires retrospective application to prior periods, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.
Full text or summaries of the following standards may be obtained at http://www.fasb.org/st/.
Accounting Bulletin 2006-03
The FASB recently ratified the consensuses reached by the Emerging Issues Task Force (EITF) in EITF Issue No. 06-3, "How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)." Currently, some companies in the US present sales on a gross basis, that is, the sales tax is included in both revenues and costs. While other companies, choose a net presentation which does not include the sales tax in either sales or cost. The issue does not address which method is preferable. However, it does require companies that use the gross method to disclose this accounting policy in accordance with APB Opinion No. 22 and the amount of those taxes if their significant.
Audit Bulletin 2006-01
The AICPA has issued several Statements on Auditing Standards to enhance audit effectiveness. The Risk Assessment Standards (SAS 104-111) will significantly impact the manner in which we plan and perform our audits. Under these standards, the auditor is required to obtain a more in-depth understanding of the entity's environment and internal controls in order to perform audits under a risk-based approach. The standards will be in effect for periods beginning on or after December 15, 2006.
Audit Bulletin 2008-01
The Puerto Rico State Society of CPA issued a press release on January 8, 2008 to announce the impact of 11 new Statement on Auditing Standards (SAS 104-114). “These standards significantly change the scope of the work performed by CPAs for their clients in the areas of evaluating risks, design and audit procedures, definition and communication of significant deficiencies in internal controls, and the impact on the CPA’s opinion about the financial statements,” Society of CPA President Agnes Suárez. The Journal of Accountancy has also issued a series of articles on the new standards in the July 2006, January 2007 and January 2008 editions.
Full text of the press release or articles may be obtained at: http://www2.colegiocpa.com/publicaciones.html
http://www.aicpa.org/pubs/jofa/joahome.htm.
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