GAAP, GAAS, & SSARS: Changes to the Changes
Since July of 2009, almost every single professional standard for Certified Public Accountants has changed.
• In 2009 the Financial Accounting Standards Board (FASB) released its Accounting Standards Codification.
• In 2012 the Financial Accounting Foundation (FAF) authorized the formation of the Private Company Council (PCC) for nonissuing (privately held) entities.
• Shortly thereafter, the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) completed its Clarity Project with the release of SAS 122.
• Included as part of the Clarity Project was the release as clarified Statement on Quality Control Standards (SQCS).
• The Accounting and Review Services Committee issued Statement on Standards for Accounting and Review Services No. 19.
• Peer Review Standards were also revised to reflect changes to professional accounting and auditing standards.
• In 2012 the Committee of Sponsoring Organizations (COSO) released the revised and updated version of the COSO Report on internal controls.
• COSO also released a series of “Thought Papers” ranging in subjects from cloud computing to risk analysis changes.
• In 2014 the Professional Ethics Executive Committee released the revised AICPA Code of Professional Ethics.
• In 2014 the Accounting and Review Services Committee (ARSC) released Statement on Standards for Accounting and Review Services (SSARS) No. 21 which introduced “Preparation Engagements”.
• In 2015 the AICPA issued the reformatted Code of Professional Conduct for CPAs.
• In August of 2015 the Chair of the FASB spoke of a change in the direction of the FASB towards International Financial Reporting Standards.
• In 2015 the Chief Accountant of the Securities and Exchange Commission (SEC) also announced that the SEC would not be mandating that issuing entities should be using IFRS for financial reporting.
• In 2016 the FASB releases the remaining two Accounting Standard Updates of the “Big Three Project” namely Financial Instruments and Leases.
• During 2015 and 2016 our organization, the AICPA, announced after deliberations and AICPA Council approval, the potential merger with CIMA and the AICPA.
As we stand in 2016, one must be thinking, “What’s next?” As we look to the future, there are interesting changes on the horizon. First, let’s discuss briefly the FASB.
The FASB has an ongoing program of reducing complexity and simplifying GAAP. To that end the Chair, Mr. Golden, has orchestrated significant changes. These changes range from providing accounting alternatives to accounting issues, to simplifying the way an accounting problem is approached, to just eliminating or doing away with a standard. Further, the FASB will continue to converge US and international GAAP where feasible, reasonable, and possible. As of now the FASB is making changes to the new changes for simplicity and reasonableness. The more recent 2016 ASU Updates reflect those changes.
The AICPA’s ASB is continuing to issue auditing standards using the clarity matrix previously used in the Clarity Project. This will provide consistency and clarity with new standards. Additionally, the AICPA’s PEEC is continuing to review and update the new revised Code of Professional Conduct as the situations warrant. Technology is representing major challenges to the profession; and the AICPA is attempting to stay current in the various disciplines from auditing, to reviews, to compilations, to preparations, and to other areas. This includes CPE, professional tools, and international involvement. Further, the increase in membership by adding professionals from CIMA will give the AICPA members a platform for change in those areas where non CPA professionals are. Further involvement with the International Auditing and Assurance Standards Board for international convergence and monitoring will help the global alignment of professional auditing standards. Also, working with the Private Company Accounting Oversite Board (PCAOB) will keep and alignment with issuing and nonissuing entities.