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Common Interest Realty Associations — AICPA Audit and Accounting Guide

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Description

This Audit and Accounting Guide provides the latest information on accounting and auditing issues affecting the common interest realty association industry. Updated with conforming changes as of May 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, SSAE No. 13, and SSARS No. 16). 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. An expanded discussion of management representation letters includes more industry specific guidance.

The guide summarizes applicable requirements and practices, and delivers "how-to" advice for handling audit and accounting issues in the common interest realty association industry. Included in the appendices are illustrative financial statements and engagement and representation letters. There is also a full reprint of SOP No. 93-5, Reporting on Required Supplementary Information Accompanying Compiled or Reviewed Financial Statements of Common Interest Realty Associations. The guide covers the following new accounting pronouncements:

  • Expanded discussion of FASB Statement No. 157, Fair Value Measurements, including the related FASB Staff Positions recently issued, and FASB Statement No. 159, Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115
  • SSARS No. 15, Elimination of Certain References to Statements on Auditing Standards and Incorporation of Appropriate Guidance Into Statements on Standards for Accounting and Review Services
  • Introduction to SSARS No. 17, Omnibus Statement on Standards for Accounting and Review Services - 2008
For a topical listing of subject matter by chapter, click on the Table of Contents tab.

Table of Contents

  • Chapter 1 - Industry Background and Unique Characteristics
    • General Description and History
      • Condominiums
      • Planned Unit Developments
      • Cooperatives
      • Time-Share Developments
    • Regulatory Framework
      • General State Statutes
      • Specific State Statutes
      • Declarations and Master Deeds
      • Membership Agreements and Proprietary Leases
      • Articles of Incorporation
      • Bylaws
      • Board of Directors’ Actions
    • Federal Legislation and Regulatory Considerations
    • Creation and Governance of CIRAs
    • Management of CIRAs
    • Unique Characteristics of CIRAs
    • Users of Financial Statements of CIRAs
  • Chapter 2 - Reporting on Common Property .01-.28
    • Methods of Acquisition of Common Property
      • Property Transferred by the Developer
      • Property Bought by CIRAs
      • Property Acquired by Buying Leasehold Interests
    • Kinds of Common Real Property
    • Prevalent Industry Practice for Recognizing Common Real Property as Assets
      • Real Property Directly Associated With the Units
      • Real Property Not Directly Associated With the Units
    • Personal Property
    • Measurement of Common Property Recognized as Assets
      • Fair Value Measurements
      • Disclosures
      • Fair Value and CIRA Accounting
    • Impairment or Disposal of Long-Lived Assets
    • Disclosure
    • Depreciation
    • Expenditures for Major Repairs or Replacements and Acquisition of Assets
  • Chapter 3 - Future Major Repairs and Replacements
    • Reporting Considerations
  • Chapter 4 - Financial Statement Presentation
    • General Method of Presentation
    • Method of Accounting
    • Financial Statements
      • Balance Sheet
      • Deferred Revenue
      • Statement of Revenues and Expenses
      • Statement of Changes in Fund Balances
      • Statement of Cash Flows
    • Comparative Financial Statements
    • Accompanying Information
    • Note Disclosures
      • Related Parties
      • Significant Sources of Revenue
      • Common Property
      • Future Major Repairs and Replacements
      • Required Supplementary Information
  • Chapter 5 - Budgets
    • The Budget Process
    • Format and Components of a Budget
      • Operations
      • Future Major Repairs and Replacements
      • Other Expenditures
      • Presentation of Budget Information in Financial Statements
  • Chapter 6 - Income Tax Considerations .01-.10 Methods of Filing
    • Federal Forms 1120 and 1120–C
    • Federal Form 1120H
    • Federal Form 990
    • Specific Areas for Review
      • Basis for Contributed Property
      • Developer Settlements
      • Recognition of Receipts as Current Revenue Versus Capital Contributions
  • Chapter 7 - Audit Considerations
    • Scope of This Chapter
    • Planning and Other Auditing Considerations
      • Audit Planning
      • Establishing an Understanding of the Engagement
      • Independence
      • Auditor’s Communication With Those Charged With Governance
      • Audit Risk
      • Planning Materiality
      • Related Parties
    • Use of Assertions in Obtaining Audit Evidence
    • Understanding the Entity, Its Environment, and Its Internal Control
      • Risk Assessment Procedures
      • Discussion Among the Audit Team
      • Understanding of the Entity and Its Environment
      • Understanding of Internal Control
    • Identifying and Evaluating Control Deficiencies
    • Assessment of Risks of Material Misstatement and the Design of Further Audit Procedures
      • Assessing the Risks of Material Misstatement
      • Designing and Performing Further Audit Procedures
    • Evaluating Misstatements
    • Consideration of Fraud in a Financial Statement Audit
      • The Importance of Exercising Professional Skepticism
      • Discussion Among Engagement Personnel Regarding the Risks of Material Misstatement Due to Fraud
      • Obtaining the Information Needed to Identify the Risks of Material Misstatement Due to Fraud
      • Identifying Risks That May Result in a Material Misstatement Due to Fraud
      • Assessing the Identified Risks After Taking Into Account an Evaluation of the Entity’s Programs and Controls That Address the Risks
      • Responding to the Results of the Assessment
      • Evaluating Audit Evidence
      • Responding to Misstatements That May Be the Result of Fraud
      • Communicating About Possible Fraud to Management, Those Charged With Governance, and Others
      • Documenting the Auditor’s Consideration of Fraud
      • Practical Guidance
    • Budgets
    • Audit Procedures for CIRAs
      • Assessment Revenues
      • Assessments Receivable
      • Investments
      • Contracts
      • Insurance
      • Future Major Repairs and Replacements
    • Additional Auditing Considerations
      • Auditor’s Communications Related to Internal Control Matters
      • Representation Letters
      • Audit Documentation
      • Auditor’s Report
      • Reporting on Required Supplementary Information
  • Chapter 8 - Review and Compilation Engagements
    • Engagement Letters for Compilation and Review Engagements
    • Performance and Reporting Requirements for Compilation Engagements
    • Performance and Reporting Requirements for Review Engagements
    • Representation Letters
    • Documentation in a Review Engagement
    • Certain Disclosure Requirements for Compiled or Reviewed Financial Statements of CIRAs
    • Future Major Repairs and Replacements
    • Uncertainties, Including an Uncertainty About an Entity’s Ability to Continue as a Going Concern
    • Reporting on Required Supplementary Information Accompanying Compiled or Reviewed Financial Statements of CIRAs
  • Chapter 9 - Cooperative Housing Corporations
    • Balance Sheet
    • Statement of Operations
    • Statement of Changes in Shareholders’ Equity
    • Statement of Cash Flows
    • Notes to Financial Statements
    • Income Tax Considerations
    • Financial Statements
    • Auditor’s Report
  • Appendix A - Illustrative Financial Statements
  • Appendix B - Illustrative Engagement and Representation Letters
  • Appendix C - Statement of Position 93-5, Reporting on Required Supplementary Information Accompanying Compiled or Reviewed Financial Statements of Common Interest Realty Associations Contents
  • Appendix D - Information Sources
  • Appendix E - Comparison of Key Provisions of the Risk Assessment Standards to Previous Standards
  • Appendix F - Schedule of Changes Made to the Text From the Previous Edition
  • Glossary

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Excerpts

Purpose and Applicability

This Audit and Accounting Guide has been prepared

  • to provide background information on the nature and characteristics of common interest realty associations (CIRAs);
  • to assist management, which has the primary responsibility for the financial statements, in applying generally accepted accounting principles; and
  • to assist independent public accountants in conducting compilations, reviews, and audits of financial statements of CIRAs.

This guide also describes conditions and procedures unique to the industry and illustrates the form and content of the financial statements of CIRAs as well as informative disclosures relating to such statements.

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Paperback 2008
Product# 012578
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