March 29, 2022

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FASB Staff Issues FAQ Document on Credit Losses

The FASB staff has issued a document that responds to frequently asked questions (FAQ) about its recently proposed Accounting Standards Update (ASU), Financial Instruments-Credit Losses (Subtopic 825-15). The FAQ document addresses common questions posed by stakeholders about the Exposure Draft.

The FAQ document is available here.

The proposed ASU on credit losses is available here.

FASB Reaches Decisions

The FASB met on March 28, 2013, and reached the following decisions:

  • Extended the comment period on its proposed Accounting Standards Update, Financial Instruments-Credit Losses (Subtopic 825-15), from April 30, 2022 to Friday, May 31, 2013.
  • Approved the following consensuses (a and b) and consensus-for-exposure (c) reached at the March 14, 2013, Emerging Issues Task Force meeting:
    • Issue No. 12-B, "Not-for-Profit Entities: Services Received from Personnel of an Affiliate";
    • Issue No. 12-G, "Accounting for the Difference between the Fair Value of the Assets and the Fair Value of the Liabilities of a Consolidated Collateralized Financing Entity"; and
    • Issue No. 13-B, Accounting for Investments in Qualified Affordable Housing Projects."

Financial Fraud Case Study Published

The Anti-Fraud Collaboration, a collaboration of the Center for Audit Quality (CAQ), Financial Executives International (FEI), The Institute of Internal Auditors (IIA), and the National Association of Corporate Directors (NACD) (together, the Collaboration), has published a case study of a potential material fraud at a fictitious public company in order to raise awareness of environments in which financial reporting fraud might flourish. The case study, the “Hollate Manufacturing Case Study,” and a companion discussion guide provide a roadmap to help audit committees, financial executives and internal and external auditors engage in interactive discussions on what could have been done to mitigate the risk of fraud.

The CAQ, FEI, the IIA and NACD formed the Anti-Fraud Collaboration to develop thought leadership, awareness programs, educational opportunities and related resources to promote the deterrence and detection of financial reporting fraud. The Hollate Manufacturing Case Study represents the first in a series of anti-fraud case studies that the Collaboration is working on.

The case study is intended to demonstrate the conditions that could allow financial reporting fraud to occur and what could be done to mitigate the risks. The discussion guide provides a framework for interactive dialogue relating to the key learning objectives of the case.

The Collaboration modeled the case study and discussion guide after the Harvard Business School (HBS) case study method, in consultation with HBS faculty members. The Collaboration also developed a series of videos on leading discussions using the HBS method.

The Hollate Manufacturing Case Study, discussion guide and videos are available on the CAQ website and can be accessed through the Collaboration’s website as well.

The Hollate Manufacturing Case Study is available here.
The press release and case study are also available on the Anti-Fraud Collaboration website here.

CAQ Publishes Guide on How Public Companies Manage Financial Reporting Risks

The Center for Audit Quality (CAQ) has issued a Guide to Internal Control Over Financial Reporting (ICFR), a new publication for investors and the general public that describes the process used by U.S. public companies to enhance the reliability of their financial statements by reducing the risk of material errors or misstatements.

The Guide to ICFR provides a high level explanation of the financial reporting controls that are designed to provide reasonable assurance that the company's financial statements are reliable and prepared in accordance with generally accepted accounting principles. The publication describes management's responsibility for implementing an effective internal control process and the audit committee's oversight of ICFR as part of its financial reporting responsibilities.

The Guide to ICFR is the latest in a CAQ series of introductory guides on auditing and capital market topics of interest to investors and is available free of charge in the Publications section of the CAQ's website.

A CAQ Press Release on the Guide to ICFR is available here.

The Guide to ICFR is available here.

PCAOB Issues a Proposal for the Reorganization of Auditing Standards

The PCAOB has issued for public comment a proposal for the reorganization of PCAOB auditing standards, as well as certain related amendments to its rules and standards. Comments on the proposal are due by May 28, 2013.

The proposal provides a potential framework for reorganizing the PCAOB's existing interim and PCAOB-issued auditing standards into a topical structure with a single integrated numbering system. The proposed reorganization is intended to present the standards in a logical order that generally follows the flow of the audit process and serves as a first step in changes designed to help users navigate the PCAOB standards more easily. The proposal includes certain conforming amendments to Rule 3101, Certain Terms Used in Auditing and Related Professional Practice Standards, and Rule 3200T, Interim Auditing Standards.

The PCAOB intends the proposed reorganization to help avoid confusion between the PCAOB's standards and the recently reorganized standards of the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) under the Clarity Project. The proposed reorganization is also intended to facilitate comparison of the PCAOB standards with those of the ASB and International Auditing and Assurance Standards Board (IAASB), but not to mirror them.

The proposed reorganization does not redraft existing PCAOB standards or make substantive changes or add new audit requirements to those standards, although it rescinds certain auditing standards the PCAOB believes are no longer necessary. To implement the reorganization, the PCAOB has also proposed a number of amendments to update reference numbers and cross references under the new structure.

Among the proposed changes, all PCAOB auditing standards would be grouped into the following categories:

  • General auditing standards on broad auditing principles, concepts, activities, and communications;
  • Audit procedures, including standards for planning and performing audit procedures and obtaining audit evidence;
  • Auditor reporting, consisting of standards for auditors' reports;
  • Matters relating to filings under federal securities laws, including standards on auditor responsibilities for SEC offerings and reviews of interim financial information; and
  • Other matters associated with audits, including standards for other work performed with an audit of an issuer or a broker-dealer.

Under the new, integrated referencing system, auditing standards would be identified with an "AS" prefix, and each standard would be assigned a unique section number based on a four-digit numbering system to facilitate the grouping of auditing standards into logical categories and subcategories. Appendix 1 of the PCAOB Proposed Framework lists the standards as reorganized, including categories and subcategories.

The PCAOB's News Release on this proposal is available here.

The PCAOB's proposal is available here.

Our strategic partnership with CCH, a Wolters Kluwer business, has enabled us to craft our Audit & Accounting eAlert. The articles have been selected from CCH’s Accounting Research Manager Daily and/or Weekly Summary and we hope you find them valuable and relevant. Please feel free to contact ParenteBeard LLC at if you have any questions related to these stories or ParenteBeard's services.

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