Financial Institutions Industry Developments: Including Depository and Lending Institutions and Brokers and Dealers in Securities - Audit Risk Alert

The AICPA Audit Risk Alerts are developed to present issues that auditors may face in their current audits, focusing on emerging practice issues and current economic, accounting and auditing developments. Find out about important issues affecting the financial institutions industry, including depository and lending institutions and brokers and dealers in securities, and how these developments affect auditing in this industry. This Financial Institutions Audit Risk Alert discusses emerging practice issues and current economic, accounting, and auditing developments. This alert also provides you with regulatory updates for the FDIC, the Federal Reserve, the OCC, the NCUA, the SEC and the CFTC among others.

New regulatory, accounting and auditing guidance and exposure drafts that are particularly significant to this alert and covered in just the right amount of detail include:

• Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loan and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties
• OCC Guidance on Accounting and Reporting Requirements for Troubled Debt Restructurings
• FASB ASU No. 2012-06, Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution (a consensus of the FASB Emerging Issues Task Force).
• The AICPA Clarity Project
• SEC’s Division of Corporation Finance: Disclosure Guidance on Cybersecurity, European Sovereign Debt Exposures, and Smaller Financial Institutions

This alert also includes information on emerging issues such as:

• Proposed and final regulatory developments as result of the Dodd-Frank Wall Street Reform and Consumer Protection Act
• U.S. implementation of Basel III
• Proposed amendments to the SEC’s broker-dealer financial reporting rule included in SEC Rule 17a-5
• PCAOB proposed auditing standards for broker-dealers

To comply with the professional standards, auditors need to understand the industry, regulatory, and other external factors that affect the entity and its environment. This helps you identify those factors and how they may be a source of risk. You’ll not only find targeted discussion of new developments and considerations, but also a look at what’s in the pipeline that may affect your engagements.

This Alert is intended to be used in conjunction with the Audit Risk Alert General Accounting and Auditing Developments—2012/13 (product no. ARAGEN12P), which explains important issues that affect all entities in all industries in the current economic climate. General topics include recently issued guidance and emerging audit risks resulting from external economic factors.