Auditing Fair Value Measurements and Disclosures: Applying SAS No. 101

• Chapter 0 - Overview
  • Organization
  • The FASB Accounting Standards Codification™
    • Key Items Regarding the FASB ASC
    • Population of FASB ASC
    • Essential and Nonessential Content
    • Topical Structure
    • Referencing the FASB ASC
    • A Helpful Tool
• Chapter 1 - Audit Developments and Fair Value Guidance
  • Learning Objectives
  • Introduction
  • The AICPA Auditing Standards Board Clarity Project
  • The AICPA Audit Standards Board’s Convergence Plan with International Audit and Attest Standards
  • SEC Clarifications on Fair Value Accounting
    • Can Management’s Internal Assumptions (e.g., Expected Cash Flows) Be Used to Measure Fair Value When Relevant Market Evidence Does Not Exist?
    • How Should the Use of “Market” Quotes (e.g., Broker Quotes or Information from a Pricing Service) Be Considered When Assessing the Mix of Information Available to Measure Fair Value?
    • Are Transactions That Are determined to Be Disorderly Representative of Fair Value? When Is a Distressed (Disorderly) Sale Indicative of Fair Value?
    • Can Transactions in an Inactive Market Affect Fair Value Measurements?
    • What Factors Should Be Considered in Determining Whether an Investment Is Other-Than- Temporarily Impaired?
  • The SEC’s Study on Mark-to-Market Accounting
  • The SEC’s Best Practices for Fair Value Management Discussion and Analysis Disclosures
  • Conclusion
• Chapter 2 - Key Concepts Related to Fair Value Measurements
  • Learning Objectives
  • Introduction
  • Fair Value as Defined by FASB ASC 820 (SFAS No. 157)
    • Price
    • Fair Value vs. Market Price
    • Principal (or Most Advantageous) Market
    • Market Participants
    • Fair Value at Initial Recognition
    • Valuation Techniques
    • Using Multiple Valuation Techniques
    • Fair Value Hierarchy
  • Conclusion
  • Questions
• Chapter 3 - Using the Work of a Valuation Specialist as Part of the Audit Process
  • Learning Objectives
  • Introduction
  • Valuation Specialists
    • When to Hire a Specialist
    • Competence
    • Understanding the Nature of the Work
    • Objectivity
    • Using the Findings of the Specialist
    • Effect of the Specialist’s Work on the Auditor’s Report
    • Reference to the Specialist in the Auditor’s Report
    • Valuation Specialist Credentials
    • Management Considerations in Selecting a Fair Value Measurement Specialist
    • Valuation Specialist Professional Standards and Best Practices
    • The FASB’s Valuation Resource Group
    • Appraisal Issues Task Force
    • The Appraisal Foundation’s Best Practices Working Group
    • AICPA Fair Value Resource Panel
  • Understanding the Critical Components of Fair Value as Viewed by the Valuation Specialist
    • The Standard of Value
    • Asset by Asset and Situation by Situation
    • Control Value
    • Synergies
    • Tax Amortization Benefit
    • Net of “Cost of Sale” (Exit Price)
    • Market Participants
    • Useful Life of an Asset
  • Conclusion
  • Questions
• Chapter 4 - Auditing Fair Value Measurements and Disclosures
  • Learning Objectives
  • Introduction
  • Background
  • Standards of Fieldwork
    • Understanding the Entity’s Process for Determining Fair Value Measurements and Disclosures
    • Evaluating Conformity of Fair Value Measurements and Disclosures with U.S. GAAP
    • Guidance in Difficult Circumstances
    • Testing the Entity’s Fair Value Measurements and Disclosures
    • Testing Management’s Significant Assumptions, the Valuation Model, and the Underlying Data
  • Final Audit Procedures Related to Fair Values
    • Reviewing Subsequent Events and Transactions
    • Disclosures about Fair Values
    • Evaluating the Results of Audit Procedures
    • Management Representations
    • Communication with Audit Committees
    • Auditing Interests in Trusts Held By a Third-Party Trustee and Reported at Fair Value
  • PCAOB Staff Audit Practice Alert No. 2 – Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists
    • Auditing Fair Value Measurements
    • Classification within the Fair Value Hierarchy under FASB ASC 820 (SFAS No. 157)
    • Using the Work of Specialists
    • Use of a Pricing Service
  • Guidance from the SEC and Other Organizations
  • Auditing Fair Value Measurements and Disclosures: A Toolkit for Auditors
  • Conclusion
  • Questions
• Chapter 5 - Case Study: Audit Procedures Relative to the Purchase Price Allocation of Terra Firma, L.P.
  • Learning Objectives
  • Introduction
  • Terra Firma, L.P.
    • Background
  • Planning the Audit
  • Substantive Testing of Fair Value Measurements
    • Opinion Letter
    • Introduction
  • Industry Conditions
    • Overview
  • Allocation of Fair Value
    • Purchase Price
    • Financial Assets
    • Tangible Assets
    • Intangible Assets
  • Income Approach
    • Discounted Future Income Methods
  • Conclusion
• Chapter 6 - Latest Developments
• Appendix A - CAQ Comment Letter on SEC Study of “Mark-to-Market” Accounting
• Appendix B - Draft Issues Paper – FASB Statement No. 157 Valuation Considerations for Interests in Alternative Investments
• Appendix C - Alternative Investments – Audit Considerations
• Appendix D - Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists
• Appendix E - Auditing Fair Value Measurements and Disclosures

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