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AICPA Audit and Accounting Guide State and Local Governments

  • ID: 4450655
  • Book
  • 944 Pages
  • John Wiley and Sons Ltd
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With all the recent changes in state and local government audit and accounting, including changes to some of the more complex areas such as pensions and postemployment benefits other than pensions (OPEB), you can′t afford to be without the most current guidance.
This authoritative guide provides complete coverage of audit and accounting considerations critical for both preparers and auditors. This 2017 edition includes a new chapter on best practices for OPEB accounting, reporting, and auditing. It also provides insights, comparisons, and best practices for financial reporting and the financial reporting entity, revenue and expense recognition, capital asset accounting, the elements of net position, accounting for fair value, and much more.
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1 Overview and Introduction 01–24

Scope and Purpose  01–08

GAAP for State and Local Governments  09–14

Applicable Auditing Standards and Requirements  15–20

Guidance in Other AICPA Audit and Accounting Guides and Statements of Position  21–22

Other Sources of Guidance  23

Organization of This Guide  24

2 Financial Reporting 01–97

Introduction and Overview  01–06

Historical Perspective  02–06

Governmental Financial Statements  07–53

Management s Discussion and Analysis  09–10

Government–Wide Financial Statements  11–25

Fund Financial Statements  26–44

Notes to the Financial Statements  45–48

Required Supplementary Information Other Than MD&A  49–52

Special–Purpose Governments  53

Other Financial Reporting Issues  54–59

Other Information and Supplementary Information  54

Prior–Period Comparative Financial Information  55–56

Government Combinations and Disposals of Government Operations  57–59

Fair Value Measurement  60–85

General Principles of Fair Value  61–68

Valuation Techniques  69–71

Inputs to Valuation Techniques  72–75

Fair Value Hierarchy  76–79

Guidance for Fair Value Measurement in Special Circumstances  80–85

Auditing Considerations  86–96

Compliance Requirements  87

Fund and Activity Classifications  88

Major Funds  89

Restricted Assets  90

Notes to the Financial Statements  91–92

Required Supplementary Information, Supplementary Information, and Other Information  93–94

Other Financial Reporting Considerations  95

Accounting and Financial Reporting Alternatives  96

Appendix A Accounting and Financial Reporting Alternatives in GASB Statement No. 34, as Amended  97

3 The Financial Reporting Entity 01–39

Introduction  01–03

GASB s Financial Reporting Entity Standards  04–29

Definition of the Financial Reporting Entity  05–12

Financial Statement Presentation  13–22

Disclosures  23–25

Other Financial Reporting Requirements  26–29

Auditing Considerations  30–39

Reporting Entity  30

Internal Control Over Financial Reporting  31

Audit Procedures  32–33

Separate Component Unit Auditor  34

Presentation of Less Than a Complete Financial Reporting Entity  35

Departures of Component Unit Information From GAAP  36

Nongovernmental Component Unit Use of Private–Sector Standards  37

Changes in the Financial Reporting Entity  38

Other Component Unit Auditing Considerations  39

4 General Auditing Considerations 01–138

Introduction  01–02

General Principles and Responsibilities  03–29

Overall Objectives  03

Terms of Engagement  04–08

Laws and Regulations  09–22

Auditor s Communication With Those Charged With Governance  23–27

Communicating Internal Control Related Matters  28–29

Auditor s Risk Assessment and Response to Assessed Audit Risk  30–66

Planning an Audit  30–34

Audit Strategy  35–40

Understanding the Entity, Its Environment, and Its Internal Control  41–66

Materiality in Planning and Performing an Audit  67–93

GASB Guidance to Preparers on Materiality Determinations  69–70

Auditor Materiality Determinations  71–87

Performing Further Audit Procedures  88–93

Related Parties and Transactions  94

Group Audit Engagements  95–121

Definition of a Component  98–99

Opinion Units  100–103

Identifying Components in State and Local

Governments Group Audits  104–107

Materiality  108–109

Using the Work of Others  110–118

Subsequent Events  119–121

Other Audit Considerations  122–127

Subcontracting Arrangements  122

Independence Requirements  123–127

Required Supplementary Information, Supplementary Information, and Other Information  128–137

Audit Scope Includes Required Supplementary Information or Supplementary Information  131–132

Required Supplementary Information  133

Supplementary Information  134–136

Other Information  137

Appendix A Consideration of Fraud in a Financial Statement Audit  138

5 Investments, Certain Equity Interests, and Derivatives 01–131

Part I Accounting, Financial Reporting, and Auditing Considerations for Investments and Certain Equity Interests  04–05

Nature of Transactions  06–17

Compliance Requirements and Deposit and Investment Policies  06–10

Deposit and Investment Risk  11

Internal Investment Pools  12

Reverse Repurchase Agreements  13

Securities Lending Transactions  14

Investment Arrangements, Including External Investment Pools  15–17

Accounting and Financial Reporting Considerations  18–55

General Recognition Standards  18–55

Auditing Considerations for Investments and Certain Equity Investments  56–99

Risk Assessment  57

Overall Considerations Relating to Investments and Certain Equity Interests  58–59

Identification of Material Classes of Transactions, Account Balances, and Disclosures  60–63

Identification of Significant Risks Related to Valuation  64–67

Determining Audit Strategy for Testing Investments at Fair Value  68–70

Management s Specialist and the Use of Others in Fair Value Measurement  71–99

Part II Accounting, Financial Reporting, and Auditing Considerations for Derivative Instruments  100–131

Nature of Transactions  100–113

Accounting and Financial Reporting Considerations Derivative Instruments  114–120

Auditing Considerations Derivative Instruments  121–131

6 Revenues and Receivables 01–101

Introduction  01–02

Nature of Transactions  03–09

Accounting and Financial Reporting Considerations  10–88

Accounting  11–68

Activity Statement Classifications  69–85

Financial Position Statement Classifications  86–87

Disclosures  88

Auditing Considerations  89–101

Confirmations  94–97

Estimates  98–99

Confidential Records  100

Other Auditing Procedures  101

7 Capital Assets 01–91

Nature of Transactions  01–09

Capital Asset Management  03–08

Compliance Considerations  09

Accounting and Financial Reporting Considerations  10–74

Accounting and Financial Statement Presentation Government–Wide Financial Statements  13–30

Accounting and Financial Statement Presentation Governmental Funds  31–32

Accounting and Financial Statement Presentation Proprietary Funds  33

Accounting and Financial Statement Presentation Fiduciary Funds  34

Capital Leases  35–38

Capital Asset Impairment  39–44

Modified Approach for Infrastructure Assets  45–53

Specified Conditions Approach for Internally Generated Intangible Assets Other Than Computer Software  54–55

Specified Conditions Approach for Internally Generated Computer Software  56–59

Interfund Movements and Intra–Entity Transfers of Capital Assets  60–62

Capital Assets Used in Landfills  63

Capital Assets Used in Pollution Remediation  64

Service Concession Arrangements  65–70

Disclosures  71–72

Management s Discussion and Analysis  73–74

Auditing Considerations  75–91

Capital Asset Records  78–80

Ownership of Infrastructure Assets  81

Useful Lives of Infrastructure Assets  82

Modified Approach for Infrastructure Assets  83–91

8 Expenses or Expenditures and Liabilities 01–132

Introduction  01

Nature of Transactions  02–10

Accounting and Financial Reporting Considerations  11–120

General Recognition Standards  11–17

Specific Recognition and Financial Reporting Standards  18–72

Expenses Resulting From Previously Incurred Disbursements  73–77

Liabilities  78–105

Activity Statement Classifications  106–113

Financial Position Statement Classifications  114–115

Disclosures  116–118

Management s Discussion and Analysis  119–120

Auditing Considerations  121–132

9 Interfund, Internal, and Intra–Entity Activity and Balances 01–35

Introduction  01

Nature of Transactions  02–05

Nature of Interfund Activity and Balances  02–03

Nature of Internal Activity and Balances  04

Nature of Intra–Entity Activity and Balances  05

Accounting and Financial Reporting Considerations  06–35

Reporting Interfund Activity and Balances  06–15

Reporting Internal Balances and Activity  16–20

Reporting Intra–Entity Activity and Balances  21–26

Differing Year Ends  27

Auditing Considerations  28–35

10 Net Position and Financial Statement Reconciliations 01–31

Nature of Transactions  01–04

Financial Reporting Considerations  05–24

Government–Wide Net Position  06–08

Proprietary Fund Net Position  09

Governmental Fund Balances  10–18

Reconciliations Net Position and Changes in Net Position  19–21

Fiduciary Fund Net Position  22

Disclosures  23–24

Auditing Considerations  25–31

11 The Budget 01–26

Introduction  01–03

Budgetary Processes  04–11

Types of Budgets  04–06

Legal Level of Budgetary Control  07–08

Encumbrances  09–10

Budgetary Basis  11

Financial Reporting Considerations  12–16

Budgetary Comparison Schedules or Statements  12–13

Disclosures  14–16

Auditing Considerations  17–26

Internal Control Considerations  18

Presentation of Budgetary Comparison Information  19–21

Audit Support for Financial Statement Assertions  22–24

Budgetary Compliance Considerations  25–26

12 Special–Purpose and State Governments 01–123

Introduction  01–03

Financial Reporting Requirements for Special–Purpose Governments  04–09

Compliance Requirements  10

Specific Guidance for Special–Purpose Governments  11–89

Hospitals and Other Health Care Providers  11–13

School Districts  14–20

Airports  21–23

Public Housing Authorities  24–27

Financing Authorities  28–35

Transportation Systems  36–37

Utilities  38–39

Postemployment Benefit Plans  40–45

Public Entity Risk Pools  46–50

External Investment Pools  51–58

Colleges and Universities  59–89

Specific Guidance for Indian Tribes  90–93

Specific Guidance for State Governments  94–123

Nature and Organization of State Governments  95–98

Specialized Reporting Requirements  99

Reporting Entity Definition  100

Separate Fund, Departmental, Agency, and Program Audits  101

Medicaid  102–104

Food Stamps  105

Unemployment Compensation Benefit Plans  106

Lotteries  107–112

Escheat Property  113–116

State Tuition Programs  117–118

Multistate Legal Settlements, Including Tobacco Settlement Resources  119–123

13 Defined Benefit Pension Plans (Plan & Employer Considerations) 01–182

Introduction  01–06

Nature of Transactions  07–15

Types of Defined Benefit Pension Plans  07–08

Number of Defined Benefit Pension Plans  09–10

Relevance of Census Data  11–15

Part I Plan Accounting, Financial Reporting, and Auditing

Considerations for Defined Benefit Pension Plans Administered Through a Qualifying Trust  16–95

Accounting and Financial Reporting Considerations  16–43

Auditing Considerations for the Pension Plan  44–95

Part II Employer Accounting, Financial Reporting, and Auditing Considerations: Single and Agent Employers  96–142

Accounting and Financial Reporting Considerations  96–108

Auditing Considerations for Single and Agent Employers  109–142

Part III Employer Accounting, Financial Reporting, and Auditing Considerations Cost–Sharing Employers  143–180

Accounting and Financial Reporting Considerations  143–165

Auditing Considerations for Cost–Sharing Employers  166–180

Appendix A Governmental Employer Participation in Agent Multiple–Employer Plans: Issues Related to

Information for Employer Reporting  181

Appendix B Governmental Employer Participation in Cost–Sharing Multiple–Employer Plans: Issues Related to Information for Employer Reporting  182

14 Defined Benefit Postemployment Benefits Other Than Pensions (Plan & Employer Considerations) 01–218

Introduction  01–05

Nature of Transactions  06–16

Types of Defined Benefit OPEB Plans  06–08

OPEB Financing (Risk Management) and Administrative Arrangements  09–11

Number of Defined Benefit OPEB Plans OPEB Plans Administered Through a Qualifying Trust  12–13

Relevance of Census Data  14–16

Part I Plan Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans Administered Through a Qualifying Trust  17–102

Accounting and Financial Reporting Considerations  17–47

Auditing Considerations for OPEB Plans Administered

Through a Qualifying Trust  48–102

Part II Employer Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans Administered Through a Qualifying Trust: Single and Agent Employers  103–149

Accounting and Financial Reporting Considerations  103–115

Auditing Considerations for Single and Agent Employers Administered Through a Qualifying Trust  116–149

Part III Employer Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans Administered Through a Qualifying Trust: Cost–Sharing Employers  150–187

Accounting and Financial Reporting Considerations  150–172

Auditing Considerations for Cost–Sharing Employers  173–187

Part IV Employer Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans That Are Not Administered Through a Qualifying Trust  188–218

Accounting and Financial Reporting Considerations  188–201

Auditing Considerations for Employers When the Plan Is Not Administered Through a Qualifying Trust  202–218

15 Concluding the Audit 01–49

Introduction  01

Misstatements and Audit Adjustments  02–06

Litigation, Claims, and Assessments  07–09

Written Representations  10–14

Related–Party Transactions  15–18

Going Concern Considerations  19–30

Subsequent Events  31–41

Analytical Procedures  42

Communicating With Those Charged With Governance  43–45

Audit Documentation  46–49

16 Audit Reporting 01–103

Introduction  01–03

Materiality  04–11

Specific Issues in Reporting on the Audits of Governmental Financial Statements  12–62

Basic Financial Statements  12

The Auditor s Report  13–35

Special Situations  36–62

Required Supplementary Information, Supplementary Information, and Other Information  63–86

Audit Scope Includes Required Supplementary Information, Supplementary Information, or Other Information  65

Required Supplementary Information  66–73

Supplementary Information  74–79

Other Information  80–86

Other Financial Presentations  87–102

Individual Fund Financial Statements  87–90

Departmental, Agency, and Program Financial Statements  91

Special–Purpose Regulatory Presentations  92

Summary Financial Information  93–102

Appendix A Illustrative Auditor s Reports  103

17 Financial Statements Prepared in Accordance With a Special–Purpose Framework 01–18

Accounting and Financial Reporting Considerations  01–06

Auditing Considerations  07–16

Auditor s Reports  14–16

Appendix A Illustrative Auditor s Reports  17

Appendix B Overview of Reporting Requirements for Special–Purpose Financial Statements  18

18 Auditor Involvement With Municipal Securities Filings 01–23

Introduction  01–06

Auditor Involvement  07–11

Conditions Affecting Auditor Involvement  07–11

Using Government Auditing Standards Reports and References in the Official Statement  12

Letters for Underwriters  13–17

Auditing Interpretations Regarding Governmental Official Statements  18–22

Attestation Engagements Related to Municipal Securities Issuances  23

Supplement Statement of Position 98–2

Appendix

A Acronyms and Abbreviations

B Category B Guidance

C Overview of Statements on Quality Control Standards

D Schedule of Changes Made to the Text From the Previous Edition

Index of Pronouncements and Other Technical Guidance

Subject Index

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