Investment Companies, 2017
About AICPA Audit and Accounting Guides
This AICPA Audit and Accounting Guide has been developed by the AICPA Investment Companies Guide Task Force to assist management in the preparation of their financial statements in conformity with U.S. generally accepted accounting principles (GAAP) and to assist practitioners in performing and reporting on their audit and attestation engagements.
This guide describes operating conditions and auditing procedures unique to the investment company industry and illustrates the form and content of investment company financial statements and related disclosures. Because many investment companies are subject to regulation under the Investment Company Act of 1940, rules under that act are discussed extensively in this guide. However, the rules, regulations, practices, and procedures of the investment company industry have changed frequently and extensively in recent years. The independent practitioner should keep abreast of those changes as they occur.
AICPA Guides may include certain content presented as “Supplement,” “Appendix,”or “Exhibit.” A supplement is a reproduction, in whole or in part, of authoritative guidance originally issued by a standard setting body (including regulatory bodies) and applicable to entities or engagements within the purview of that standard setter, independent of the authoritative status of the applicable AICPA Guide. Both appendixes and exhibits are included for informational purposes and have no authoritative status.
The Financial Reporting Executive Committee (FinREC) is the designated senior committee of the AICPA authorized to speak for the AICPA in the areas of financial accounting and reporting. Conforming changes made to the financial accounting and reporting guidance contained in this guide are approved by the FinREC Chair (or his or her designee). Updates made to the financial accounting and reporting guidance in this guide exceeding that of conforming changes are approved by the affirmative vote of at least two-thirds of the members of FinREC.
This guide does the following:
Identifies certain requirements set forth in FASB Accounting
Standards Codification® (ASC).
Describes FinREC’s understanding of prevalent or sole industry practice concerning certain issues. In addition, this guide may indicate that FinREC expresses a preference for the prevalent or sole industry practice, or it may indicate that FinREC expresses
a preference for another practice that is not the prevalent or sole industry practice; alternatively, FinREC may express no view on the matter.
Identifies certain other, but not necessarily all, industry practices concerning certain accounting issues without expressing Fin- REC’s views on them.
Provides guidance that has been supported by FinREC on the accounting, reporting, or disclosure treatment of transactions or events that are not set forth in FASB ASC.
Accounting guidance for nongovernmental entities included in an AICPA Guide is a source of nonauthoritative accounting guidance. As discussed later in this preface, FASB ASC is the authoritative source of U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the SEC. Accounting guidance for governmental entities included in an AICPA Guide, and cleared by GASB, is a source of authoritative GAAP described in category B of the hierarchy of GAAP for state and local governmental entities, as defined in GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. AICPA members should be prepared to justify departures from GAAP, as discussed in the “Accounting Principles Rule” (AICPA, Professional Standards, ET sec. 1.320.001). AICPA Audit and Accounting Guides also include guidance from AICPA Technical Questions and Answers. These questions and answers are not sources of established authoritative accounting principles as described in FASB ASC, the authoritative source of GAAP for nongovernmental entities. This material is
based on selected practice matters identified by the staff of the AICPA’s Technical Hotline and various other bodies within the AICPA and has not been approved, disapproved, or otherwise acted upon by any senior technical committee of the AICPA.
An AICPA Guide containing auditing guidance related to generally accepted auditing standards (GAAS) is recognized as an interpretive publication as defined in AU-C section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards (AICPA, Professional Standards). Interpretive publications are recommendations on the application of GAAS in specific circumstances, including engagements for entities in specialized industries.
Interpretive publications are issued under the authority of the AICPA Auditing Standards Board (ASB) after all ASB members have been provided an opportunity to consider and comment on whether the proposed interpretive publication is consistent with GAAS. The members of the ASB have found the auditing guidance in this guide to be consistent with existing GAAS.
Although interpretive publications are not auditing standards, AU-C section 200 requires the auditor to consider applicable interpretive publications in planning and performing the audit because interpretive publications are relevant to the proper application of GAAS in specific circumstances. If the auditor does not apply the auditing guidance in an applicable interpretive publication, the auditor should document how the requirements of GAAS were complied with in the circumstances addressed by such auditing guidance.
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