AICPA Audit and Accounting Manual

• How to Use This Reporter
• AAM1000 Introduction
  • 1100 Introduction
  • 1200 How to Use the Audit and Accounting Manual
• AAM2000 Compilation and Review
  • 2100 Introduction
  • 2200 Engagement Planning andAdministration
  • 2300 Compilation Engagements
  • 2400 Review Engagements
  • 2500 Form and Content of Financial Statements
  • 2600 Reporting
  • 2610 Accountants' Reports on Compilation of Financial Statements of a Nonpublic Entity
  • 2620 Accountants' Reports on Review of Financial Statements of a Nonpublic Entity
  • 2700 SpecialAreas
  • 2710 Accountants' Reports on Prescribed Forms, Specified Elements,Personal Financial Statements, and OCBOA Financial Statements
• AAM3000 Engagement Planning andAdministration
  • 3100 Planning the Engagement
  • 3105 Understanding theAssignment
  • 3110 Assigning Personnel to the Engagement and Supervision
  • 3115 Independence
  • 3120 Understanding the Entity and Its Environment
  • 3125 Understanding of Internal Control
  • 3130 Assessing the Risks ofMaterialMisstatement
  • 3140 Audit Risk andMateriality
  • 3145 Fraud
  • 3150 IllegalActs
  • 3155 Analytical Procedures
  • 3160 AuditAssignment Controls
  • 3165 Sample Engagement Letters
• AAM4000 Internal Control
  • 4100 Introduction
  • 4200 Internal Control Framework
  • AAM5000 Designing and Performing Further Audit Procedures
  • 5100 Designing FurtherAudit Procedures
  • 5200 Performing Tests of Controls
  • 5300 Performing Substantive Procedures
  • 5400 Audit Sampling Considerations
  • 5500 Suggested Supplemental Reference Materials
• AAM 6000 Audit Documentation
  • 6100 Audit Documentation--General
  • 6200 Form, Content, and Extent ofAudit Documentation
  • 6300 Organization and Filing (Indexing)
• AAM7000 Correspondence, Confirmations & Representations
  • 7100 Control of Confirmations and Correspondence
  • 7200 Requests for Confirmations and Related Materials
  • 7300 Inquiries to Legal Counsel
  • 7400 Management Representations and Representation Letters
  • 7500 CommunicationWith Those Charged With Governance
  • 7600 Reliance Letter
  • 7700 Proposal Letter
• AAM8000 Alerts
  • 8010 Audit RiskAlert--2007/08
  • 8015 Compilation and ReviewAlert--2007/08
  • 8030 Health Care Industry Developments--2007/08
  • 8040 Insurance Industry Developments--2007/08
  • 8050 Bank, Credit Union, and Other Depository and Lending Institution Industry Developments--2007/08
  • 8060 Employee Benefit Plans Industry Developments--2008
  • 8070 State and Local Governmental Developments--2008
  • 8080 Common Interest RealtyAssociations Industry Developments--2006/07
  • 8090 Construction Contractors Industry Developments--2007/08
  • 8100 Investment Companies Industry Developments--2007/08
  • 8110 Securities Industry Developments--2007/08
  • 8120 Not-for-Profit Organizations Industry Developments--2008
  • 8130 High-Technology Industry Developments--2007/08
  • 8140 Real Estate Industry Developments--2007/08
  • 8220 Government Auditing Standards and Circular A-133Audits--2007
  • 8240 Independence and EthicsAlert--2007/08
  • 8260 SEC and PCAOBAlert--2007/08
  • 8290 Understanding the NewAuditing Standards Related to Risk Assessment
  • 8300 Understanding SAS No. 112 and Evaluating Control Deficiencies
• AAM9000 Accountants' Reports
  • 9100 Format ofAccountants' Reports
  • 9210 Unqualified Opinions
  • 9220 Adverse Opinions
  • 9230 Disclaimers of Opinion
  • 9240 Qualified Opinions
  • 9245 Information Accompanying Audited Financial Statements
  • 9250 Engagements to Report on Internal Control
  • 9260 Special Reports
  • 9270 Unaudited Financial Statements of a Public Entity
  • 9280 Lack of Independence
  • 9300 Review of Interim Financial Information
  • 9400 Accountants' Reports on Condensed Financial Statements and Selected Financial Data
  • 9500 Reports on Personal Financial Statements
  • 9600 Reports on Employee Benefit Plans
  • 9650 Reports on Financial Statements of Brokers and Dealers in Securities
  • 9700 Reports for Investment Companies
• AAM10,000 Quality Control
  • 10,100 Quality Control--General
  • 10,200 PracticeAid for Establishing andMaintaining a System of Quality Control for a CPAFirm's Accounting and Auditing Practice--Revised for the Issuance of Statement on Quality Control Standards No. 7, A Firm's System of Quality Control
  • 10,250 Statement on Quality Control Standards
  • 10,280 Interpretation No. 101-14 of Rule 101, Independence
  • 10,300 Sample Quality Control Forms

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Overview

1. The Audit and AccountingManual (AAM) is designed to provide practitioners with the tools needed to help plan, perform, and report on audit, review, and compilation engagements. The AAM is not intended to serve as a complete or comprehensive quality control system, and is not intended to be used in connection with the audits of entities that are required to be audited under standards set by the Public Company Accounting Oversight Board. The AAM is comprised of the following sections:

Section	Section Name
2000 3000 4000 5000 6000 7000 8000 9000 10,000	Compilation and Review Engagement Planning and Administration Internal Control Designing and Performing Further Audit Procedures Audit Documentation Correspondence, Confirmations, and Representations Alerts Accountants' Reports Quality Control

Audits

2. To perform an engagement in accordance with generally accepted auditing standards (GAAS) an auditor must comply with the General Standards, the Standards of Field Work, the Standards of Reporting, and the Quality Control Standards.
3. The general standards are concerned with the qualifications of the auditor and the qualitative aspect of the work performed. They specifically address the auditor's training and proficiency, independence, and due care in the performance of work.
4. The Standards of Field Work address the manner used by the auditor to perform the audit. This standard begins with the appointment of the auditor and ends with the auditor communicating to those responsible for the oversight of financial reporting of the entity being audited.
5. The Standards of Reporting are concerned with the opinion the auditor renders on the client's financial statements.
6. The AAM will assist the auditor in performing an audit, in accordance with GAAS, in the following ways:
1. AAM section 10,000, Quality Control, includes sample forms which can be used by a firm to document its adherence to the AICPA requirement for a system of quality control for a CPA firm.
2. AAM section 3000, Engagement Planning and Administration, provides guidance in the planning stage. Included in this section are various formats of audit assignment controls and engagement letters.
3. AAM section 4000, Internal Control, conforms to the Internal Control--Integrated Framework, pub- lished by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO report) and AU section 314, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (AICPA, Professional Standards, vol. 1). This section provides guidance in evaluating internal control by utilizing checklists, questionnaires, and other generalized aids.
4. AAM section 5000, Designing and Performing Further Audit Procedures, explains how the auditor should design and perform tests of controls, substantive procedures, or both, that are responsive to the assessed risks of material misstatement.
5. AAM section 6000, Audit Documentation, provides the auditor with a general discussion of the purpose of audit documentation.
6. AAM section 7000, Correspondence, Confirmations, and Representations, provides the auditor with numerous examples of confirmations, illustrative inquiries to legal counsel, representation letters, communications with audit committees, as well as a reliance letter.
7. AAM section 9000, Accountants' Reports, addresses the format of the accountants' report and numerous examples of the auditor's report.

Compilation and Review Services

7. To perform either a review or a compilation engagement in accordance with Statements on Standards for Accounting and Review Services (SSARS), an accountant must comply with the standards promulgated by theAccounting and ReviewServices Committee.As of the date of thismanual, there have been 17 SSARSs issued. Refer to paragraph .10 of AAM section 2100, Introduction, for a complete list of the SSARSs that have been codified in the AICPA's Professional Standards.
8. The AAM will assist the accountant in performing compilation and review engagements in accor- dance with SSARS in the following ways:
1. AAM section 2200, Engagement Planning and Administration, provides guidance in the planning stage. Addressed are engagement letters, changes in the level of service for the engagement, sample acceptance form, sample information form, and sample engagement letters.
2. AAM section 2300, Compilation Engagement, provides sample procedures for compilation engage- ments, representation letters, and checklists.
3. AAM section 2400, Review Engagement, provides sample procedures for review engagements, representation letters, and checklists.
4. AAM section 2500, Form and Content of Financial Statements, provides guidance on the statements, notes, supplementary information, and subsequent discovery of facts.
5. AAM section 2600, Reporting, provides guidance on the basic reporting fundamentals for compi- lation and review engagements.
6. AAM section 2610, Accountants' Reports on Compilation of Financial Statements of a Nonpublic Entity, and section 2620, Accountants' Reports on Review of Financial Statements of a Nonpublic Entity, include examples of several reports for compilation and review engagements.
7. AAM section 2700, Special Areas, section addresses other comprehensive bases of accounting, prescribed forms, and specified elements.

Alerts

9. It is suggested that the accountant also review the following areas when performing compilation and review engagements for additional guidance:
• Correspondence, Confirmations, and Representations (AAM section 7000)
• Quality Control (AAM section 10,000)

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