2006 Pension Protection Tax Act: Sweeping Retirement Savings Incentives and More

• Chapter 0 - Overview
  • Course Objectives
  • Background of SAS 112
    • Purpose
    • Exposure Draft
    • Relation to AS No. 2
  • Summary of SAS 112
    • Key Requirements
    • Effective Date
    • Application
    • Effects on Audits
  • Comparison of SAS 112 and SAS 60
    • Points of Comparison
  • About This Course
    • Contents
    • Conventions
• Chapter 1 - The Context for SAS 112
  • Learning Objectives
  • Introduction
  • Changes in Definition of Internal Control over Financial Reporting
    • Evolution of the Internal Control Definition
    • SAS 109 Changes
    • SAS 55 Definition of Internal Control
    • SAS 109 Definition of Internal Control
  • Consideration of Internal Control in Financial Statement Audits
    • Overview
    • Audit Consideration of IC under SAS 55
    • Audit Consideration of IC under SAS 109 and SAS 110
  • Interaction of Effective Dates
    • Risk Assessment SASs
    • SAS 112
    • Interaction
  • Summary
• Chapter 2 - SAS 112: Concepts and Definitions
  • Learning Objectives
  • Introduction
  • What Are Control Deficiencies?
    • Purpose
    • Definition
    • Does Not Allow
    • Management or Employees
    • Normal Course of Performing Assigned Functions
    • Timely Basis
  • What Are the Types of Control Deficiencies?
    • Purpose
    • Deficiency in Design
    • Importance of Recognizing Deficiencies in Design
    • Deficiency in Operation
    • Examples
    • Practice
    • Suggested Solutions
  • How to Identify Control Deficiencies
    • Relation to the Audit
    • Audit Activities Likely to Identify Control Deficiencies
    • Where in the Accounting System Control Deficiencies May be Identified
    • The Five Interrelated Components of Internal Control
    • Financial Statement Level
    • Examples
  • What are Relevant Assertions?
    • Relevant Assertions
    • Examples
    • Types of Assertions
    • Identifying Relevant Assertions
  • What are Significant Risks?
    • Significant Risks
    • Example
    • Identification
    • Potential Significant Risks from Nonroutine Transactions
    • Potential Significant Risks from Judgmental Matters
    • Internal Controls for Significant Risks
    • Example
  • What Are Risks for Which Substantive Procedures Alone Do Not Provide Sufficient Appropriate Audit Evidence?
    • Purpose
    • Examples
    • Identification
  • Practice: Identifying Control Deficiencies
    • Suggested Solutions
  • Summary
• Chapter 3 - Evaluating Deficiencies
  • Learning Objectives
  • A Framework for Complying with SAS 112
    • Other Resources
  • What Is the Likelihood of a Potential Misstatement?
    • Purpose
    • Definition
    • SAS 112's Two Ranges of Likelihood
    • The Threshold between Remote and More than Remote
    • Illustration
  • How to Assess the Likelihood of a Potential Misstatement
    • Factors to Consider
    • "Potential" Over What Time Period?
  • Practice: Assessing Likelihood of Deficiency
    • Suggested Solutions
  • What Is the Magnitude of a Potential Misstatement?
    • Purpose
    • Definition
    • Three Ranges of Magnitude
    • Illustration
    • Components
  • What is Materiality?
    • Definition
    • Observation
  • What Is the Magnitude of "Material" Potential Misstatements at the Financial Statement Level?
    • Quantitative Factors
    • Qualitative Factors to Consider
    • Illustration
  • What Is the Magnitude of "Material" Misstatements for Particular Items?
    • Definition
    • Considerations in Determining Materiality for Particular Items
    • Examples
  • What Is the Magnitude of "Inconsequential" Misstatements?
    • Definition
    • The Range of "Inconsequential," Before Qualitative Factors
    • Qualitative Factors to Consider
    • Illustration
  • What Is the Magnitude of "More Than Inconsequential"?
    • More than Inconsequential
    • The Range of "More than Inconsequential," Before Qualitative Factors
    • Illustration
    • Qualitative Factors to Consider
  • What Are the Qualitative Factors to Consider?
    • Purpose
    • List of Factors
  • How to Assess the Magnitude of a Potential Misstatement
    • Basic Approach
    • Other Considerations
  • Practice: Assessing Likelihood and Magnitude of Potential Misstatements
    • Situation
    • Questions
    • Suggested Solution
  • What Are Revisions to the Magnitude of "Material"?
    • Purpose
    • The Problem
    • The Solution
  • Practice: Revising the Materiality Threshold
    • Suggested Solution
  • What Is the Severity of a Deficiency?
    • Purpose
    • Definitions
    • Three Categories
    • Illustration
    • Relations between a Deficiency of Control's Severity, Likelihood, and Magnitude
  • How to Categorize Deficiencies by Severity
    • Criteria for Material Weakness
    • Criteria for Significant Deficiency
    • Example
  • Practice: Categorizing Deficiencies by Severity
    • Suggested Solution
  • What Deficiencies Are Presumed to be Significant?
    • Purpose
  • Presumed Significant Deficiencies in Specified Areas
    • Description
  • What Deficiencies Are Strong Indicators of Material Weakness?
    • List
  • What Are Compensating Controls?
    • Purpose
    • Definition
    • Criteria for Consideration of the Compensating Control
    • Example
  • What Is the Prudent Official Test?
    • Description
    • Officials
    • The Wall Street Journal Test
  • What Are Combined Deficiencies?
    • Purpose
    • Definition
  • Practice: Combination of Several Deficiencies
    • Situation
    • Suggested Solution
  • FAQ: Does Assessing the Control Risk as High Trigger a Deficiency Requiring a SAS 112 Communication?
    • Background
    • SAS 112 Requirements
  • Framework Stages Requiring a High Degree of Judgment
  • Practice: Assessing Control Deficiencies
    • Lack of Segregation of Duties
    • Lack of Client Expertise in Financial Accounting and Reporting
    • Inventory-Related Control Deficiencies
    • Failure to Review Modifications of Standard Sales Contracts to Evaluate Their Effect on the Timing and Amount of Revenue Recognition
    • Frauds Involving Cash
    • Control Testing Exceptions
    • Lack of a Formal Process for Changes in Application Controls
  • Summary
• Chapter 4 - Communicating Deficiencies
  • Learning Objectives
  • Introduction
  • Who Is the Required Addressee of a SAS 112 Communication?
    • Importance
    • Definitions
  • How to Identify the Addressee in Governance
    • Importance
    • Selecting the Appropriate Person among Those Charged with Governance
    • Communication with a Governance Subgroup
  • How to Communicate with Management
    • Communication with Management
    • When All of Those Charged with Governance Are in Management
  • What Should Be the Date of the Communication?
    • Standard
    • Report Release Date
    • Interim Communications
    • Practical Matters
  • What Are the Contents of the SAS 112 Communication?
    • Requirements
    • Prior Year Matters Not Communicated in Writing
    • Prior Year matters Not Remedied Due to Cost Benefit Considerations
    • Illustrative Communication Containing a Significant Deficiency or Material Weakness
    • Need for Planning
    • Option to Include Additional Language in the Communication
    • Language Describing Inherent Limitations of Controls
    • Language Explaining Management Override of Controls
    • Language Describing Auditor's Consideration of Internal Control
    • Determining Whether Additional Language Should Be Used
  • Communication for Submission to Governmental Authorities or Other Specified Parties
    • Applicability
    • Requisite Conditions
    • Practice Note
    • Illustrative Communication for Submission to Governmental Authorities
  • Prohibition against Issuing a "No Significant Deficiency" Communication
  • Management's Written Response to Auditor's SAS 112 Communication
    • Requirement
    • Desirability of the Management's Written Communication
    • Practice Note
    • Need for Planning
  • What Other Communications Regarding Internal Control Matters Are Available?
  • Summary
• Chapter 5 - Practice Issues
  • Learning Objectives
  • Accounting Services and Deficiencies in Controls over Financial Reporting
    • Overview
    • Practice Exercise
    • Suggested Solution
    • Analysis
    • Responses to Consider
  • The Need for Planning and Communication with the Client
  • SAS 112's Effect on the Audit
    • The Challenge
    • Areas Demanding a High Degree of Judgment
    • Other Challenges
    • Challenges and Opportunities for Practitioners
    • Changing the Client's Perception
    • Changing Your Own Perception
    • Opportunities and Cautions
  • Summary
• Chapter 6 - Ethics Focus: Accounting and Auditing
  • Ethics Overview
  • Recent Developments
  • Spotlight on Independence
  • Key Ethical Dilemmas
  • Addressing Ethical Dilemmas
  • Available Resources
• Chapter 7 - Latest Developments
• Appendix A - SAS 112
• Appendix B - Commentary on Lists of Strong Indicators and Presumed Deficiencies
• Deficiencies in Specified Areas that are Presumed to Ordinarily be at Least Significant Deficiencies
  • Controls over Selection and Application of Accounting Principles
  • Antifraud Programs and Controls
  • Controls over Non-Routine and Nonsystematic Transactions
  • Controls over the Period-End Financial Reporting Process
• Indicators of Deficiencies that Should Be Regarded at Least as Significant Deficiencies
  • Ineffective Oversight of the Entity's Financial Reporting and Internal Control by Those Charged
    With Governance
  • Restatement of Previously Issued Financial Statements to Reflect the Correction of a Material
    Misstatement
  • Auditor Finds a Material Misstatement
  • Ineffective Internal Audit or Risk Assessment Functions
• Ineffective Regulatory Compliance Function
• Fraud by Senior Management
• Failure of Management to Assess and/or Remediate Known Significant Deficiencies
• An Ineffective Control Environment

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