January 2016 Update of the AICPA Professional Literature ALERTS AND GUIDES The 2015/16 edition of the following alert has been released: Government Auditing Standards and Single Audit Developments (ara‐sga) This alert will help you identify significant risks that may affect your audits performed under Government Auditing Standards and the Office of Management and Budget (OMB) Uniform Guidance or OMB Circular A‐
133. You will find a discussion of the impact of the Uniform Guidance for Federal Awards on a single audit, issues you may face in your current audits, and a look at what’s in the pipeline that may affect your engagements. Filled with critical information on audit risk effecting current year audits, this is an indispensable companion to the Audit Guide Government Auditing Standards and Single Audits. Key benefits include the following: 
Discusses important aspects of the Uniform Guidance, including major program determination 
Provides an update on current developments related to single audits 
Highlights frequent violations relating to single audits identified by the AICPA Peer Review division This alert will assist accounting firms of all sizes, as well as not‐for‐profit entities and other entities receiving federal funds subject to a single audit, in identifying and understanding current developments and emerging practice issues related to their engagements. The following guide has been updated: Preparation, Compilation, and Review Engagements (aag‐crv) “Illustrative Engagement Letters” in chapters 1‐5 have been updated. The following guides contain minor editorial changes: Construction Contractors (aag‐con) Employee Benefit Plans (aag‐ebp) Government Auditing Standards and Single Audits (aag‐gas) Health Care Entities (aag‐hco) Investment Companies (aag‐inv) Life and Health Insurance Entities (aag‐lhi) Not‐for‐Profit Entities (aag‐npo) Property and Liability Insurance Entities (aag‐pli) State and Local Governments (aag‐slv) Page 1 of 3 BEST PRACTICES IN PRESENTATION AND DISCLOSURE No updates for January 2016. CHECKLISTS AND ILLUSTRATIVE FINANCIAL STATEMENTS No updates for January 2016. PCAOB STANDARDS AND RELATED RULES No updates for January 2016. PEER REVIEW PROGRAM MANUAL The following section contains minor editorial changes: 3300, Report Acceptance Body Handbook PRACTICE AIDS The following practice aid is being released: Applying Special Purpose Frameworks in State and Local Governmental Financial Statements (pra‐ocb) This practice aid is intended to provide accounting and auditing professionals with guidelines and best practices to promote consistency and resolve the difficult questions of special purpose framework application, specifically for the financial statements of state and local governments. Although this practice aid is the best source for such guidance, it is nonauthoritative and should not be used as a substitute for the preparer’s professional judgment. This publication is not intended for use by governments that are required by law, regulation, contract, or policy to prepare financial statements in accordance with generally accepted accounting principles. PRINCIPLES AND CRITERIA FOR XBRL‐FORMATTED INFORMATION No updates for January 2016. PROFESSIONAL STANDARDS U.S. Auditing Standards (Clarified) [AU‐C] This update issues Statement on Auditing Standards (SAS) No. 131, Amendment to Statement on Auditing Standards No. 122 Section 700, Forming an Opinion and Reporting on Financial Statements (AU‐C sec. 700), which is effective for audits of financial statements for periods ending on or after June 15, 2016; however, application of the SAS before the effective date is permitted. SAS No. 131 clarifies the format of the auditor’s report that should be issued when the auditor conducts an audit in accordance with the standards of the PCAOB, but the audit is not under the jurisdiction of the PCAOB. Page 2 of 3 An audit is “under the jurisdiction of the PCAOB” if, to perform that audit, the auditor is required to be registered with, and subject to inspection by, the PCAOB. This is required of auditors of certain entities, including issuers and non‐issuer brokers and dealers registered with the SEC. When the audit is under the jurisdiction of the PCAOB, the AICPA Code of Professional Conduct requires members to conduct the audit in accordance with the standards of the PCAOB, and the audit is not required to also be conducted in accordance with GAAS. However, when the audit is not under the jurisdiction of the PCAOB but the entity desires, or is required by an agency, by a regulator, or by contractual agreement, to obtain an audit conducted under PCAOB standards, the AICPA Code of Professional Conduct requires the auditor to also conduct the audit in accordance with GAAS. Examples of entities whose audits are not within the jurisdiction of the PCAOB include clearing agencies and futures commission merchants registered with the Commodity Futures Trading Commission (CFTC), as well as certain other entities registered with the CFTC that are not also SEC‐registered brokers and dealers. SAS No. 131 addresses the different reporting requirements of GAAS and the auditing standards of the PCAOB. When the auditor refers to the standards of the PCAOB in addition to GAAS in the auditor’s report, SAS No. 131 requires the auditor to use the form of report required by the standards of the PCAOB, amended to state that the audit was also conducted in accordance with GAAS. This update also adds AU‐C section 700A, Forming an Opinion and Reporting on Financial Statements, to retain the currently effective version of SAS No. 122 section 700 until SAS No. 131 becomes effective. Accounting and Review Services (Clarified) [AR‐C] Exhibit, “Illustrative Engagement Letter,” in AR‐C Section 70, Preparation of Financial Statements, has been updated. Exhibit A, “Illustrative Engagement Letters,” in AR‐C Section 90, Review of Financial Statements, has been updated. TECHNICAL QUESTIONS AND ANSWERS No updates for January 2016. TRUST SERVICES PRINCIPLES AND CRITERIA No updates for January 2016. SUPPORTING DOCUMENT COLLECTION This update includes the following document: Accounting and Review Services Committee Meeting Highlights (April 28‐30, 2015) Page 3 of 3