Case Studies in Accounting: Chapter 14 Studyguide

Name two sources that provide comprehensive weekly updates on standard setters.

CPA Letter Daily, CFO Direct, AccountingLink

Name an example of a free firm webcast that you might view in order to receive CPE and stay current.

Deloitte Q1 Webcast is CPE eligible and is a free firm webcast.

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.

Name four organizations who regularly engage in standard setting, and who apply some variation of the due process describe in this chapter.

1. FASB 2. GASB 3. IASB 4. PCAOB 5. SEC

Briefly, describe a typical standard-setting "due process"

1. Interested parties submit agenda topics to the Board for consideration 2. The Board votes on and approves items for inclusion on its agenda, considering pre-agenda research performed by the staff. The Board explains its rationale for topics not added. 3. The Board has initial deliberations on the issue, in some cases releasing a Preliminary Views document or a Discussion Paper to solicit constituent feedback on the Board's direction 4. The Board meets with its working groups, advisory bodies, and other constituents through public roundtables, as necessary, to gather additional input on the project. 5. After reaching tentative decisions on an issue, the Board then issues an Exposure Draft (i.e., a proposed standard). This is the formal vehicle for soliciting public comments on the proposed guidance, 6. The Board reviews feedback, redeliberates, then issues a final standard. 7. For major standards, a transition resource group of individuals such as preparers, auditors, and users meets to discuss questions related to implementation of the new standard. This can result in the issuance of additional interpretive guidance to support or clarify the standard. 8. Post-implementation review activities are conducted to assess whether the standard's objectives were achieved and to understand costs and benefits associated with adoption and ongoing compliance with the new standard.

As a public company auditor, describe some of the resources you might monitor to stay current.

1. Subscribe to Weekly Email Updates: CPA Letter Daily, CFO Direct, AccountingLink 2. Register for Free Firm Webcasts: Deloitte's Quarterly Accounting Roundup webcast. 3. Visit the FASB's Website, Subscribe to "Action Alerts": FASB Action Alert 4. Visit the IFRS Website, Subscribe to Email Alerts 5. Read the Journal of Accountancy

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 are some reasons that an auditor might need to stay current?

I need to ensure that my clients comply with all newly effective guidance It's also important to inform my clients about emerging changes in standards Finally, my firm may choose to comment on standards being developed

What are some of the reasons that a financial statement preparer would need to stay current with emerging and recently-issued guidance?

It means recognizing that accounting standards are continually changing and making a conscious effort to keep up. Financial statement preparer has a huge responsibility for preparing financial statements of an organization. Financial statements are the image of an organization and these need to be prepared with due care and diligence. Other rules and regulations must also be followed as prescribed by GAAP and IFRS. Financial statement preparer would need to stay current with emerging and recently issued guidelines as these guidelines play a huge role in the preparation of financial statements. Such guidelines are always issued to make financial statements more reliable and easy to understand. Financial statement preparation is needed to be a breast here as his made financial statements would be the company's financial statements and would be the image of the company for every outsider such as an investor, creditors, stakeholder etc.

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.

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.

At what level should you, as a professional, begin to monitor emerging guidance? Why?

While some view "ermerging accounting" as a partner- or director-level matter, the truth is that professionals at all levels will see significant advantages in their careers from staying current.