On the Horizon: AICPA guidance on attest engagements under two standard sets

Contents FASB posts highlights from May 24 meeting AICPA issues guidance on attest engagements under two standard sets Comment letter issued

FASB posts highlights from May 24 meeting All decisions reached at Board meetings are tentative and may be changed at future meetings.

The FASB met on May 24 to discuss the results of staff research on the reporting performance and cash flows subtopics in Chapter 4 of the Invitation to Comment, Agenda Consultation. The discussions were educational and no decisions were made.

The Board also discussed the potential new projects summarized below.

Segment reporting The Board discussed potential improvements to segment reporting related to the aggregation criteria and the disclosure requirements. The Board asked the staff to consult with financial statement preparers to better understand their segment reporting processes as well as the impact of narrow-scope improvements to these areas.

Performance statement – structure and disaggregation The Board discussed alternatives to operating performance measures related to the structure of the income statement, and asked the staff to further study developing an operating performance measure.

The Board also asked the staff to research operating income measures used by both financial entities and nonfinancial entities and to determine which items are currently being included and excluded from those measures.

Alternative ways to require more disaggregation of performance information, through either presentation in the performance statement or disclosures related to the performance statement, were also discussed. The Board asked the staff to provide additional analysis on the following alternative approaches:

  • To disaggregate functional lines into natural components
  • To redefine infrequency of occurrence
  • To define and separate remeasurements
  • To describe the aggregation process

Cash flow statement – structure and classification The Board discussed whether to revise the definitions of operating, investing, and financing activities, but requested no additional research on the topic.

Improvements to the classification guidance related to certain types of cash flows for which the existing guidance is either unclear or does not exist were also discussed, and the Board directed the staff to prepare an agenda request for a potential new project on targeted cash-flow classification improvements.

Articulation The Board discussed how information was articulated in the financial statements and how improved presentation could make the interrelationships between the individual financial statements more apparent. The Board did not request that any additional work be performed on this subject, but stated that it might revisit this area, depending on the level of progress on the structure of the performance statement.

AICPA issues guidance on attest engagements under two standard sets The AICPA recently issued Attest Interpretation 4, Performing and Reporting on an Attestation Engagement Under Two Sets of Attestation Standards. The interpretation is intended to address dual reporting situations that may arise similar to the circumstances noted in the AICPA’s release of Statements on Auditing Standards 131, Amendment to Statement on Auditing Standards No. 122 Section 700, Forming an Opinion and Reporting on Financial Statements. The interpretation provides guidance on performing and reporting on attestations engagements under, for example, the AICPA standards and those of the PCAOB. The interpretation also includes illustrative report language for these engagements.

Comment letter issued On May 19, the firm issued a comment letter in response to an exposure draft issued by the AICPA’s Professional Ethics Executive Committee, which proposes two new interpretations of rules contained in the AICPA Code of Professional Conduct. Each interpretation is titled Responding to Non-Compliance with Laws and Regulations.

© 2017 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.