Boston-based Feeley & Driscoll, P.C. Offers 2008 Audit and Accounting Guidelines Bulletin

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Boston-based certified public accounting and business consulting firm Feeley & Driscoll, P.C. (F&D) published several articles on new and revised audit issues and standards. This release provides a summary of each issue followed by a link to the full guidance.

Boston-based certified public accounting and business consulting firm Feeley & Driscoll, P.C. (F&D) published several articles on new and revised audit issues and standards. A summary of each issue is below, followed by a link to the full guidance:

SFAS 157 - Fair Value Measurements (as amended)

The purpose of SFAS 157 is to provide a revised definition of fair value and to incorporate this new definition into all GAAP where fair values are required in order to improve consistency and comparability. It does not apply to fair value under SFAS 123[R], the practicability exceptions to fair value measurements in existing standards and statements that involve values that are similar to fair value, but not actual fair value, such as with valuing inventories. The Statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Embedded in this definition are certain presumptions that need to be understood when calculating fair value.

Click here to read the full article: http://www.fdcpa.com/Audit/0108AuditNews-FAS-157.htm

SFAS 158 - Employers' Accounting for Defined Benefit Pension and Other Post-Retirement Plans

There are two primary changes in financial reporting as a result of SFAS 158 that will affect businesses: 1. The over funded / under funded status of a Defined Benefit plan must be recorded as an asset / liability on the company's balance sheet; 2. The funded status of a plan must be measured as of a company's reporting date. 1. The over funded / under funded status of a Defined Benefit plan is measured as the difference between the plan assets at fair value and the projected benefit obligation (PBO). The over / under funded amount should be booked on the company's balance sheet and recognized as other comprehensive income, net of tax. 2. The measurement date for the over / under funded status must be the reporting date for the Company. In other words, businesses with a calendar year plan and a September fiscal year must have an actuarial evaluation performed mid year (at the reporting date) to value the over/ under funded status.

Click here to read the full article: http://www.fdcpa.com/Audit/1207AuditNews-FAS-158.htm

SFAS 159 - The Fair Value Option for Financial Assets and Financial Liabilities (as amended)

The purpose of SFAS 159 (effective for fiscal years beginning after November 15, 2007) is to expand the use of fair value measurements for financial instruments that are not otherwise required to be stated at fair value. It does not change any previous standards that require the use of fair value. The use of fair value is optional and applies to non-for-profits as well as for-profit entities. An entity's decision to apply fair value under this statement is made at certain defined election dates on an item-by-item basis. Therefore, an entity could have several identical assets and liabilities of which some are measured at fair value and the remaining at some other value. However, once the choice is made to apply fair value under this statement, it is irrevocable. Lastly, the gains and losses from changes in fair value resulting from applying this statement are recognized in income.

Click here to read the full article: http://www.fdcpa.com/Audit/0108AuditNews-FAS-159.htm

The New Risk Assessment Standards

The Auditing Standards Board ("ASB") of the American Institute of Certified Public Accountants ("AICPA") recently issued eight Statements on Auditing Standards on risk assessment in a financial statement audit (collectively, the "Risk Assessment Standards"). The Risk Assessment Standards are effective for audits of financial statements for periods ending on or after December 15, 2006 (2007 calendar year audits in most cases).

The Risk Assessment Standards establish standards and provide guidance for the auditor's assessment of risks of material misstatement (whether caused by fraud or error) in a financial statement audit. In developing the Risk Assessment Standards the ASB had the overriding goal of improving audit quality. The ASB strived to accomplish this goal with the following three objectives for auditors: obtain a more in-depth understanding of the audited entity and its environment, including internal control; complete a more thorough assessment of the risk of where and how the financial statements could be materially misstated; and improve the relation between the auditor's assessed risks and the nature, timing and extent of audit procedures performed in response to those risks.

Click here to read the full article: http://www.fdcpa.com/Audit/1207AuditNews-Risk-Assessment-Standards.htm

FIN 48 Summary

At its November 7, 2007 board meeting, SFAS elected to delay the effective date of FIN 48, Accounting for Uncertainty in Income Taxes, for nonpublic entities to fiscal years beginning after December 15, 2007. FIN 48 requires Companies to analyze the technical merits of their tax positions and determine the likelihood that these positions will be sustained if they were ever examined by the taxing authorities. If Companies determine that it is unlikely that their tax positions will be sustained, a corresponding liability is created and the tax benefit of such position is reduced for financial reporting purposes.

Click here to read the full article: http://www.fdcpa.com/Audit/0108AuditNews-FIN48.htm

About Feeley & Driscoll:
Feeley & Driscoll, P.C. is a 130 person public accounting and business consulting firm with offices in Boston, Massachusetts and Nashua, New Hampshire. For over 30 years, Feeley & Driscoll has focused its expertise to build profitability for its clients. The firm has provided high-quality assurance, tax and business consulting services to an array of industries, including construction, architects and engineers, not-for-profit organizations, health care, manufacturing and distribution, biotechnology, and information technology. For more information about Feeley & Driscoll, call 1-800-392-6192 or visit http://www.fdpca.com.

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Thomas M. Feeley
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