0
0
New 2008 edition coming June 6
This Audit and Accounting Guide provides the latest information on accounting and auditing issues affecting the construction industry. Updated with conforming changes as of March 1, 2008, it includes guidance in planning and performing audits under the risk assessment standards (SAS Nos. 104-111). This edition of the guide has also been conformed to reflect the Defining Professional Requirements standards (SAS No. 102 and SSAE No. 13). Furthermore, it provides additional guidance on the auditor’s responsibilities as set forth in SAS Nos. 112-114, including identifying and reporting internal control deficiencies, understanding the link between the auditor’s consideration of fraud and the auditor’s assessment of risk, dating of the management representation letter, and the auditor’s communications with those charged with governance.
The guide summarizes applicable requirements and practices, and delivers "how-to" advice for handling audit and accounting issues common to the construction industry. It describes accounting requirements for construction-type contracts and accounting and consolidation requirements for joint ventures and variable interest entities, and includes discussion of other relevant financial statement considerations. The appendices include examples of computing income earned under the percentage-of-completion method, illustrative financial statements (one for contractors using the completed contract method and one for contractors using the percentage-of-completion method), and an entire re-print of SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. The guide covers the following new accounting and auditing pronouncements:
For a topical listing of subject matter by chapter, click on the Table of Contents tab.
Content refers to previous edition
Content refers to previous edition
Purpose and Applicability
This Guide applies to financial reporting and auditing in the construction industry, although the guidance provided may be useful in other industries for companies whose business involves construction-type contracts. It has been prepared
To provide background information on the nature and characteristics of the construction industry.
To update the AICPA industry Audit Guide, Audits of Construction Contractors, which was published in 1965, to cover all pertinent pronouncements to date of the APB, FASB, SEC, and other standard-setting bodies.
To assist contractors in applying generally accepted accounting principles.
To assist the independent auditor in applying generally accepted auditing standards and his knowledge of generally accepted accounting principles to his determination of whether generally accepted accounting principles have been applied by management, which has the primary responsibility for financial statements.
Auditing Guidance Included in This Guide
In March 2006, the ASB issued Statements on Auditing Standards (SAS) No. 104–111 (the “risk assessment standards”). Collectively, the risk assessment standards establish standards and provide guidance concerning the auditor’s assessment of the risks of material misstatement (whether caused by fraud or error) in a nonissuer financial statement audit; design and performance of tailored audit procedures to address assessed risks; audit risk and materiality; planning and supervision; and audit evidence. The most significant changes to existing practice that the auditor will be required to perform are as follows:
Obtain a more in-depth understanding of the audited entity and its environment, including its internal control;
Perform a more rigorous assessment of the risks of where and how the financial statements could be materially misstated (defaulting to a maximum control risk is no longer permitted); and
Provide a linkage between the auditor’s assessed risks and the nature, timing, and extent of audit procedures performed in response to those risks.
The statements are effective for audits of financial statements for periods beginning on or after December 15, 2006. Early adoption is permitted. See Appendix L in this Guide for a more detailed comparison between the risk assessment standards and the existing standards.
This Guide has been conformed to the new risk assessment standards to indicate, at a minimum, where these standards need to be applied. Additional implementation guidance, specific to this industry, is being developed and will be incorporated in the 2008 edition.
For additional guidance on the risk assessment standards, please refer to the AICPA Audit Guide Assessing and Responding to Audit Risk in a Financial Statement Audit and the AICPA Audit Risk Alert Understanding the New Auditing Standards Related to Risk Assessment.
Customer Service
Customer Service
Customer Service
Back to Browsing Products