Auditing Special Purpose Frameworks - Part 8: Stock-based Comp, Business Combinations, and More
Continuing to lay a foundation for developing audit strategies and audit plans, this article presents more comparisons of significant requirements in US GAAP and the AICPA’s Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs).
- Stock-based Compensation Plans
- Consolidation and Subsidiaries
- Business Combinations
- Push-Down Accounting
- A fair value accounting method when it can be reasonably determined.
- Calculated value method if it can be reasonably estimated.
- Intrinsic value method when neither of these methods can be used.
- The terms of awards under the plan.
- Vesting requirements.
- The maximum terms of options granted.
- Separate disclosures for multiple plans.
General disclosures include:
- Consolidation policy.
- When consolidated, the names of all subsidiaries, income from each, and the percentage of ownership.
- Descriptions of the periods for subsidiaries’ financial statements that don’t coincide with the parent’s reporting date, along with any significant events or transactions in the intervening periods.
- When financial statements are not consolidated, method of accounting for its subsidiaries, descriptions, names, carrying amounts, income, and percentage of ownership for each.