By Frank Byrt
The American Institute of CPAs (AICPA) recently released an updated guide that aids auditors in assessing the fair value of financial instruments.
The new guide, Special Considerations in Auditing Financial Instruments, was developed by leading auditing and financial instrument experts in public practice and replaces and expands the previous guide, Auditing Derivative Instruments, Hedging Activities, and Investments in Securities, the AICPA said.
The publication provides CPAs with background information and a discussion of audit considerations relating to financial instruments and also provides material that accounting firms can use in developing training programs for staffers.
Detailed implementation guidance is provided for assessing and responding to the risk of material misstatement related to financial instruments as well as guidance on reporting considerations. It includes a series of case studies to illustrate how to apply the concepts.
The audit guide is based on new standards resulting from the AICPA's Clarity Project and incorporates clarified auditing standards that enable auditors to begin updating their audit methodologies, resources, and tools.
The clarified auditing standards are effective for audits of financial statements for periods ending on or after December 15, 2012, including calendar year 2012 audits.
The information provided is relevant to entities of all sizes, the AICPA said, because all entities may be subject to the risks of material misstatement when using financial instruments.
The publication, which costs $60 for AICPA members and $75 for nonmembers, is available in paperback or as an eBook. You can place your order on the AICPA website.