Assessment 1 Research
for attestation standards from the AICPA how are they codified?PCAOB? for compilations and reviews?
"AT-C" sections "AT" "AR-C"
What are the two key objectives of performing technical accounting research?
- To account for transactions or items in a manner that is appropriate and supportable based on authoritative guidance- To create documentation describing the research performed and supporting the conclusion reached.
Identify four parties who typically perform accounting research and explain why they perform research:
-Corporate Accountants: perform in preparation of the company's financial statements or tax returns, also tax planning- Auditors: research whether a client's positions are supportable based on authoritative guidance.-Regulators: Reviewing corporations' financial statements may require research to understand positions taken.-Investors: May see concern or adjust models when a company's positions are inconsistent with other similar companies.
What two SEC divisions were discussed in the chapter, and what are some of these divisions' responsibilities?
-Division of Enforcement: law enforcement agency, authority to enforce securities laws in order to protect the investing public -AICPA then FASB: authority to establish accounting standards
List three reasons why accounting standards might require change over time.
-Practitioners, such as preparers or auditors, may express concern that existing requirements are unclear, and may request clarification from the standard setter. This can result in changes to, or interpretations of, existing guidance. -Simplification of complex requirements- to reduce the cost and complexity of financial reporting- is a current area of focus for the FASB -Investors and analysts, might drive the request for changes, concerned that existing reporting or disclosure requirements do not provide sufficient, useful information for decision making. 1.Practitioners might request additional clarity 2.Investors might request more disclosure/transparency 3.To address new types of transactions 4.To simplify existing standards, or to move toward objectives-based guidance Convergence with other standard setters
Differentiate between the requirements for public (versus nonpublic) companies to prepare financial statements, and state why----in both cases----accounting research is frequently necessary.
-Public Companies: required to file financial statements with the SEC-Nonpublic: NOT required to file FS with SEC, BUT FS may be necessary to satisfy lenders, venture capitalists, or other stakeholders-BOTH: research is frequently necessary to ensure the FS have been prepared in accordance with applicable accounting standards
What are the required elements for a nonauthoritative source citation?
1) type of standard 2) title of the standard is fully written out and italicized 3) the paragraph number 4) abbreviation, in parenthesis, that the author intends to use for future references to the standard
Describe the "hierarchy" of auditing guidance sources issued by the AICPA.
1. Professional standards (including application and explanatory material) 2. Interpretative publications (including A&A Guides) 3. Other nonauthoritative resources (including journal articles)
What is the IFRS for SME's judgement hierarchy?
1. apply specific requirements from iFRS for SME's (if not available management must use judgement to select an account policy that is relevant and reliable) 2. guidance in ifrs involving similar related issues 3. conceptual guidance from section 2 4. guidance from full ifrs involving similar issues
Fill in these blanks. The sec has historically had ___1 ___ authority to issue accounting standards. However, it has chosen to delegate this authority: -first to the ___2___, with its two committees ____3______ and ___4_____. Then to the _____5_____. Today the SEC primarily focuses on its ___6____ activities.
1. had full power and ability 2. AICPA 3. CAP (committee on accounting procedure) 4. APB (Accounting Principles Board) 5. FASB 6. enforcement
What are examples of nonauthoritative guidance?
1.Industry practices, 2.FASB Concepts Statements, 3.AICPA Issues Papers, 4.IFRS, 5.Pronouncements of professional associations/regulators, 6.Textbooks, etc. ØAccounting Standards Updates ØPre-Codification standards ØAccounting firm guidance
List the organizations, in chronological order, that have historically been responsible for setting accounting standards.
1934-present: SEC1938-1959: Committee on Accounting Procedure1959-1973: Accounting Principles Board (APB)1973-current: Financial Accounting Standards Board (FASB)2009: FASB Codification
In your own words, how is a "foreign private issuer" defined? What is the significance of this designation?
A foreign private issuer ("FPI") is generally any foreign issuer (other than a foreign government) incorporated or organized under the laws of a jurisdiction outside of the United States that meets certain specified conditions
When should a researcher turn to the IAS 8 hierarchy? In other words, what is a situation in which that hierarchy might be relevant?
Apply specific IFRS (standards and interpretations) if available
What is one implication of the U.S AICPA being a member body of the IFAC?
As a member body of IFAC, the AICPA agrees to have ethics standards that are at least as stringent as the IESBA standards
Aside from auditing standards, what are some of the other professional standards issued by the AICPA?
Audit & Attest Standards. Code of Professional Conduct. Compilation and Review Standards. Peer Review Standards. Tax Standards.
Explain the numbering for S-sections from the SEC. Why does the chapter recommend that researchers consult S-99 in addition to other S-sections that might apply?
By using an "S" in front of the section number, non-public companies can identify that (although helpful) the guidance is not authoritative for them there may be more guidance in the S-99 section that applies to the topic. Not all S-sections fit neatly into the Codification. Thus, the S-99 Section acts as a catch all for guidance that doesn't fit in perfectly.
What is the meaning of the term contemporaneous? Explain.
Certain accounting elections must be documented at the time a transaction is executed.
What is the sole source of authoritative GAAP for nongovernmental entities?
FASB codification, all guidance in the codification has equal authority
What future changes is the FASB planning to make to its Conceptual Framework?
FASB hopes to replace all existing concepts statements with a single document (con 8) that reads like a chapter book
Contrast the U.S FASB's process of issuing new guidance (i.e., involving "ASUs" to update the Codification) to the IASB's process for updating its guidance.
FASB projects culminate in the issuance of a nonauthoritative Accounting Standards Update (ASU), a document that explains the reason for the project, the decisions reached, the Board's rationale, and that makers the changes--resulting from this guidance--to be made within the authoritative Codification. IASB projects generally result in the direct amendment or replacement of existing standards or, as necessary to address new topics, the issuance of a new standard.
What sources of guidance were used to populate the codification? how is guidance is organized within the Codification?
FASB statements, interpretations, technical bulletins, staff positions, and staff implementation guides CAP and APB guidance EITF abstracts and d-topics Derivatives implementation group (DIG) AICPA you can find this info and guidance in the FASB's about the codification document on the cod homepage
What is meant by the terms jurisdictional IFRS and carve-outs?
Financial statements of entities that are under common control, primarily prepared for use in a transaction, are most often described as 'combined' or 'carve out' financial statements Jurisdictional filing profiles describe how and when IFRS financial statements are made available to investors.
What are accounting firm resources?
Firm technical specialists (such as those pictured below) often write interpretive guidance for their firm and for clients' use in applying complex topics. Includes: Firm research databases (subscription required) Firm-published guide books by topic Technical accounting alerts and "hot topics" whitepapers Firm auditors may also have access to: National office consultation databases Verbal inquiries of peers (who may be performing audits in the same industry)
When should you consult whitepapers?
For interpretive guidance related to emerging issues or newly-issued FASB requirements These offer timely insight into possible implementation issues associated with new guidance.
Why might an accounting researcher access a pre-Codification standard or ASU?
Grandfathered content Basis for conclusions Historical guidance
What replaced the IASC?
IASB in 2001 over 140 countries require or permit the use of IFRS the U.S does permit for certain entities** "FASB saying okay we will adopt IFRS but we will stay in existence and have requirements that the U.S has to abide by"
Describe the relationship between the IFRS Foundation and the IASB.
IASB members are responsible for the development and publication of IFRS Accounting Standards, including the IFRS for SMEs Accounting Standard. The IASB is also responsible for approving Interpretations of IFRS Accounting Standards as developed by the IFRS Interpretations Committee (formerly IFRIC).
What are the benefits of nonauthoritative sources?
Interpret complex areas within GAAP. Offer additional context, such as helping researchers understand the intent of Codification requirements.
you are trying to determine whether guidance on asset retirement obligations applies to environmental remediation liabilities resulting from the improper operation of an asset. what browse path might you use? what area did you start in, what was the topic name, subtopic, and what section would you search within this subtopic
Liabilities 410 Asset Retirement and Environmental Obligations 20 Asset Retirement Obligations 15 Scope and Scope Exceptions Obligations resulting from improper operations do not represent costs that are an integral part of the tangible long-lived asset and therefore should not be accounted for as part of the cost basis of the asset
Must a CPA always apply safeguards after a threat has been identified? In what circumstances might a researcher not have to identify and apply safeguards?
No; if a threat is small enough to be considered at an acceptable level, the researcher would not need to apply safeguards.
Is all SEC guidance contained within the Codification, and is SEC guidance considered authoritative for all entities?
Not all SEC guidance is contained within the Codification. While the guidance is suggested for all entities, it is not authoritative for governmental and non-public entities.
Describe two ways the SEC responded to the FASB's issuance of revised revenue guidance.
Observed activities of the Transition Resource Group as it worked through implementation concerns. Reviewed drafts of industry guidance being prepared by the AICPA Reached out to firms to review draft firm guidance related to the revised standard.
Following is an example from ASC 350-20 (Intangibles-Goodwill) showing the organization of select paragraphs within the Subsequent Measurement section. If you find guidance you are looking for under the header "Goodwill Impairment Testing and Disposal of All or a Portion of a Reporting Unit When the Reporting Unit is Less Than Wholly Owned", which other two headers should you read (at a minimum)?
Overview section and the Scope section to ensure that he has a basic understanding of the topic and that it actually applies to the researched topic
Differentiate between a preliminary views document and an exposure draft. What is another name for (or variation of) each?
Preliminary Views Document is used to solicit consituent feedback on the Board's direction. Exposure Draft is used to be the formal vehicle for soliciting public comments on proposed guidance.
What type of entity is permitted to apply accounting alternatives in the Codification? If a company elects to apply a given accounting alternative, does it mean the company must apply all of the available accounting alternatives? Explain.
Private companies are permitted to apply accounting alternatives in the Codification. No. The company can choose to apply one, all, or none of the available alternatives. The alternative options were created to simplify GAAP and other standards issued by the FASB for private companies. Thus, is all an election that the company can make, but is not required to.
What are two key purposes of the FASB's Conceptual Framework? What two other names are used to describe this guidance?
Provides practitioners with key objectives and principles to consider in the preparation of financial statements. •statements of financial accounting concepts (SFAC) • FASB concepts statement (CON
what does the first division of the SEC corporation finance do?
Reviews the financial statements and disclosures of all companies with publicly traded securities and monitors FASB
What two organizations give the FASB the authority to establish "authoritative" accounting guidance? Explain.
SEC and AICPA . The SEC (which draws its authority from SOX and the Securities Exchange Act) establishes the authority of the FASB by designating the FASB as the private sector standard setter with the authority to establish GAAP. The AICPA, which governs auditors, states in their Code of Conduct that auditors cannot offer unqualified opinions unless the financial statements are in reasonable accordance with GAAP. The AICPA recognizes the FASB as the authority to set GAAP (for non-governmental entities), thereby supporting the FASB's authoritative position.
Differentiate between the Red and Blue Books.
The IFRS Blue book is published in December each year. It includes the full text of all the Standards that have an application date of the 1 January of that year only.The IFRS Red book is published in March each year. It includes the full text of all the Standards as from the 1 January regardless of application date, and therefore includes Standards that have a later application date.
On the SEC website, what form type is used to describe SEC comment letters and responses?
The form type can either be UPLOAD to view sec comments or CORRESP to view company responses plus sec comments
Which type of standard should an accountant apply, if he or she is performing a financial statement review for a client? Also, what specific standard number provides a framework for performing review engagements?
The guidance for reviews can be found in AR-C 90, Review of Financial Statements. AR-C 90 is part of the AICPA's Statements on Standards for Accounting and Reporting Services (SSARS).
Describe the purpose and authority of the IASB's Conceptual Framework.
The primary purpose of the Conceptual Framework was to assist the IASB in the development of future IFRSs and in its review of existing IFRSs. The Conceptual Framework may also assist preparers of financial statements in developing accounting policies for transactions or events not covered by existing standards
In the following template for a Codification reference, what does each group of letters represent? FASB ASC XXX-YY-ZZ-PP
Topic, subtopic, section, paragraph
What are the three levels of responsibility defined in PCAOB Rule 3101? What are the words that may be used (such as "must" and "should") within the guidance to indicate these types of responsibility?
Unconditional Responsibility: The words "must," "shall," and "is required" indicate unconditional responsibilities. The auditor must fulfill responsibilities of this type in all cases in which the circumstances exist to which the requirement applies. Failure to discharge an unconditional responsibility is a violation of the relevant standard and Rule 3100. Presumptively Mandatory Responsibility: The word "should" indicates responsibilities that are presumptively mandatory. The auditor must comply with requirements of this type specified in the Board's standards unless the auditor demonstrates that alternative actions he or she followed in the circumstances were sufficient to achieve the objectives of the standard. Failure to discharge a presumptively mandatory responsibility is a violation of the relevant standard and Rule 3100 unless the auditor demonstrates that, in the circumstances, compliance with the specified responsibility was not necessary to achieve the objectives of the standard. (3) Responsibility To Consider: The words "may," "might," "could," and other terms and phrases describe actions and procedures that auditors have a responsibility to consider. Matters described in this fashion require the auditor's attention and understanding. How and whether the auditor implements these matters in the audit will depend on the exercise of professional judgment in the circumstances consistent with the objectives of the standard.
Describe a circumstance in which a researcher might refer to the FASB's Conceptual Framework.
When the codification does not fully address certain definitions a researcher might have to look to the FASB's conceptual framework
Are public listed companies permitted to apply IFRS for SMEs? Explain.
Yes. The AICPA's governing Council recognizes the IASB as an accounting body for purposes of establishing international financial accounting and reporting principles. Full IFRS and IFRS for SMEs are not an other comprehensive basis of accounting. Rather, they are generally accepted accounting principles.
what are compilations and do they require independence?
a cpa prepares financial statements using information supplied by management but provides no assurance
List three sources of nonauthoritative guidance that are named in ASC 105-10-05-3.
aPractices that are widely recognized and prevalent either generally or in the industry bFASB Concepts Statements cAmerican Institute of Certified Public Accountants (AICPA) Issues Papers dInternational Financial Reporting Standards of the International Accounting Standards Board ePronouncements of professional associations or regulatory agencies fTechnical Information Service Inquiries and Replies included in AICPA Technical Practice Aids gAccounting textbooks, handbooks, and articles.
What did the cap issue, APB, FASB, Emerging issues task force, DIG, aicpa
accounting research bulletins opinions statements and codifications abstracts and D-topics issues §Statements of Position, Accounting Interpretations, Practice Bulletins, and Audit & Accounting Guides.
How is FASB funded?
accounting support fees based on the size of their market capitalization
How does IFRS differ for SMEs?
allows the easer option certain principles for recognizing and measuring assets, liabilities, income, and expenses have been simplified topics not relevant to smes were omitted significantly fewer disclosures required
What does it mean to analogize to IFRS?
analogizing to IFRS is when researchers pointing to IFRS requirements, in the absence of directly applicable U.S. GAAP
what is non authoritative guidance?
any source of accounting guidance or practice not included in the FASB Codification. Not considered "GAAP" Generally does not - by itself - support a clean audit opinion
What should you do if guidance is not available or applicable?
apply other IFRS's that involve similar issues apply IFRS framework apply pronouncements of other standard standard setting bodies that are consistent with the ifrs framework
What happens if the date of pending content has passed? future?
apply the pending content take not of the guidance for future period issues
When including a defined term in your research paper, is it better to cite the source for this term as the Master Glossary, or the glossary located within an Individual Codification topic? Explain
better to cite the source from the glossary located within an individual Codification topic because it identifies the term within the correct guidance context rather than within a list of terms
§How do you know whether your search effort was exhaustive?
browse search synonyms and relavant leads master glossary guidance for similar transactions
How is a public entity defined in the Cod.? What do private companies complain about?
business or not-for-profit entity that either files financial statements with sec issue publicly traded debt or equity provide financial statements for issuing any class of securities that the GAAP is too burdensome (PCC- private company accounting alternatives - works with FASB in the codification)
What are examples of nonauthoritative resources in applying IFRS?
deloitte's IAS plus web site Ifrs vs us gaap comparison guides firm ifrs accounting manuals or guidebooks model IFRS financial statements training modules
What is FRG for SMEs
financial reporting framework for small and medium size entities- intended to streamline the preparation of financial statements where a clean audit opinion is not required non-GAAP framework or other comprehensive basis of accounting
When is IFRS relevant in the US?
foreign private issuers' filings in the United States us nonpublic companies can technically choose to apply **ifrs or ifrs for smes if you are in the us and uk you do not have to file two you can file using ifrs **
How is the IFRS foundation organized? What are the two standard-setting bodies? What are their intentions?
foundation trustees and monitoring board issues full ifrs and ifrs for sme, approves issuance IASB and IFRS interpretations committee all funding is voluntary intended to respond in a timely manner to issues that arise regarding the clarity or application of IFRS
What is the meaning of the term "authoritative"
it means that the codification establishes GAAP
What are concerns raised by the SEC about IFRS?
funding of the of the IFRS is not sufficiently developed not consistently applied not sufficient involvement by regional and national standard setting bodies how much cost and effort would be required to adopt ifrs is the guidance developed enough
What do the PCAOB rules do?
govern the pcaob and establish certain auditing standards
You are preparing a memo on your company's stock compensation accounting and identify assumptions that appear to be judgmental. What resource(s) might offer you additional discussion of these assumptions? You are unsure how to apply consolidation guidance from ASC 810 but you want to apply this topic in the spirit intended by the FASB. What resource might you consult? Your company has just received insurance proceeds from a facility fire; you've been asked whether to classify the proceeds as "revenue" or "gain." Assume Cod guidance is not available. You are seeking interpretive guidance on an ASU that was just issued. Where might you find this?
guidebook- firm interpretation asu/pre codification- basis of conclusion concept statements white paper or aicpa
When is accounting research performed? Why? Can research be performed at any time a transaction is executed?
ideally before a transaction occurs impact on earnings management acceptable financial statement impacts review anticipated accounting treatment with auditors comply with appropriate documents yes- company may have limited accounting resources, new info, confidential or time sensitive transaction, contract terms differing
What is the conceptual framework approach for the professional code of conduct?
identify threats to compliance evaluate significance if an unacceptable level, identify, and apply safeguards if safeguards do not reduce threats, remove yourself
What is the typical standard-setting due process?
interested parties submit agenda topics board votes and approves items for agenda initial deliberations on the issue public roundtables to gather input issues an exposure draft issues final standard transition resource group can be formed
the international federation of accountants have four standard setting boards, what are they?
international public sector accounting standards board international auditing and assurance sb international ethics standards board for accountants international accounting education standards board
How are statements on auditing standards organized?
into au-c sections 200-900 section- introduction objective requirements (must, should) - you should reference this first application and explanatory material
What are some possible benefits to a researcher reviewing the Implementation Guidance section (55) when conducting research?
it offers illustrations and example of how the guidance applies in real scenarios
What do companies whose financial statements comply fully with IFRS do?
make an explicit unreserved statement of compliance in footnotes of fs.
What were some criticisms of early standard setting boards ( Committee on accounting procedure cap & Accounting principles board APB). what happened as a result?
no conceptual framework part time board members not independent and acted for the needs of their full time employers cap was replaced by apb and apb by fasb
Are Accounting Standards Updates authoritative literature?
no, they set forth changes that will be made within the authoritative codification
Which additional areas in the guidance are considered "required reading" for a researcher who has found general guidance in the Initial Measurement section, but who needs to be sure his or her search was thorough? (Name three other areas the researcher should consider.)
overview scope additional guidance from SEC
For the following topics list the area you would start in- discontinued operations good will gross vs. net revenue capitalization of poultry derivatives
presentation assets revenue equity broad transaction
how do you properly cite nonauthoritative?
quote and analyze Codification requirements first. Next, cite nonauthoritative guidance if it is expected to enhance a reader's understanding of the Codification requirements. Not ideal but may be cited by itself, when authoritative guidance is not available. Example: FASB Concepts Statement No. 6, Elements of Financial Statements (CON 6), defines assets as: "Quote," (par. 25). • §Required elements: -Type of standard (FASB Concepts Statement) -Full title of standard, in italics -Paragraph number -Abbreviation to be used in future references (CON 6) Example: Deloitte's publication, A Roadmap to Applying the New Leasing Standard (2019), Section 6.10, states: "Quote," (page 247).
Explain how the professional code of conduct is organized. et 1.200.001
references to the code begin with et for ethics part number topic or subtopic section number
What do parts 1 and 2 include in the professional code of conduct? what three separate frameworks exist within the code?
rules and interpretations conceptual framework nonauthoritative guidance cf for members in practice, independence, and business
Considering the section descriptions provided in the chapter, identify the section that you would consult to determine: · Whether lease guidance applies to natural resources, such as land with mineral deposits? · How entities should present basic EPS for continuing operations on the income statement · What disclosures are required for companies preparing consolidated financial statements How to measure the effects of inventory obsolescence
scope and scope exceptions other presentation matters Disclosures derecognition
Which organization has the authority to determine whether IFRS is adopted for use in the United States?
sec
What does ISA 200 do?
sets forth guidance on the proper use and application of ISAs in an audit
What standards compromise the IFRS?
standards - ifrs (this is everything since 2001) and ias interpretations- IFRIC conceptual framework- establishes concepts for the development of accounting standards
Explain the role of industry-specific guidance in the Codification. Does it apply instead of other general Codification guidance?
the construction industry is considered unique because of the long period of time it takes to complete projects. As a result, special guidance is needed to determine how these types of expenses, revenues, etc. are to be treated.
How do you know that content in the code is connected with the SEC authoritative motives for public companies? Have all SEC requirements been incorporated in the code?
there is an S that will precede it no
What is the purpose of the IASB's framework?
to assist the IASB in the development of new standards to assist practitioners in applying judgement in the preparation of financial statements, in the absence of more specific guidance
What is the purpose of the codification? how is it updated?
to simplify research effective since 2009 updated by fasb through ASU's or accounting standards updates
When should a researcher rely on guidance shown under "Pending Content" instead of existing content?
when the guidance they are looking for is for future application. For example, if I were researching how to apply guidance to a topic for three years in the future, and I see that there is pending content that will be issued in two years to replace the current content, I would want to research and apply the pending content (rather than the current content) because that is what will be applicable in three years when I need the guidance.
What are Resources for monitoring emerging guidance?
§Accounting firm resources ØSubscribe to free weekly email alerts to receive publications, summaries of current events, and webcast invites ØFirm webcasts can also be located on Google. Search "EY Q3 Webcast", for example. You can receive free CPE credits and stay informed. §FASB/IASB ØTechnical plan & project updates ØFASB "Action Alerts"/IFRS email alerts §AICPA ØJournal of Accountancy Free email service: "CPA Letter Daily"
Once you have located relevant IFRS or IAS guidance, what interpretive guidance should you also look for?Where can a researcher find guidance regarding which countries around the world apply IFRS?
§Apply other IFRSs that involve similar or related issues. §Apply the IFRS Framework. Apply pronouncements of other standard setting bodies that are consistent with the IFRS Frameworkaround the world- accounting standards jurisdiction
Why do certain parties monitor emerging guidance?
§Auditors: ØTo ensure clients are compliant with new guidance ØTo inform clients about upcoming changes to accounting rules ØTo influence standards while they're in the development phase §Corporate accountants: ØFor forecasting (long-range planning) - analysts don't want surprises ØTo prepare management for changes in current transaction accounting ØTo influence standards ØPublic companies must disclose expected impacts of newly-issued guidance in their financial statements (SAB 74 disclosures). §Analysts: ØTo influence policy in a way that serves their interests (often, they want more disclosure) ØTo update their models when guidance changes
Describe the global standard setting environment prior to 2001 and describe what the role of the IASC was in the years prior to 2001.
§Beginning in 1973, the International Accounting Standards Committee (IASC) began issuing guidance that was largely voluntary. ØGoal: To harmonize global accounting standards. ØTook on a new momentum in 2000, when EU announced plans to adopt. §In 2001, the IASB replaced the IASC. ØToday, over 140 countries require or permit the use of IFRS. ØSome significant economies have not yet (fully) adopted IFRS: for example, China, India, and the U.S. ØSome countries have adopted IFRS but retained their national standard setters, and reserve the right to carve out guidance they do not want to adopt.
What does it mean to stay current?
§It means recognizing that accounting, auditing, and regulatory standards are continually changing, and making a conscious effort to keep up. ØFinal standards as well as emerging guidance
Identify the sources of AICPA audit guidance that are considered "interpretive publications".
ØAuditing interpretations of GAAS (included in AU-C sections) ØAuditing guidance included in AICPA Audit and Accounting Guides ØAICPA Auditing Statements of Position (SOP) Ø
How do you cite an AU-C section? do you use a dash or period
ØThe type of standard is named: "AU-C section XXX" ØThe title of the standard is fully written out, and italicized ØThe paragraph number is provided ØExcerpts from the guidance are "quoted" Example: AU-C section 700, Forming an Opinion and Reporting on Financial Statements (par. 27), states that audit reports "should describe management's responsibility for the preparation and fair presentation of the financial statements. *make sure you italicize title period