Recently Issued Technical Questions and Answers

Below, the AICPA will post recent questions and answers issued since July 2016. The questions and answers in this section are not sources of established authoritative principles. 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 committee of the AICPA. Consult AICPA Technical Questions and Answers for all technical staff questions and answers issued by the AICPA.

If you have specific questions about information contained here, contact the AICPA's Technical Hotline.

Auditing Questions and Answers

Section 9160.31, Following Accounting Standards as Promulgated by FASB by a State or Local Governmental Entity (Issue Date: July 2017)

Inquiry — How should an auditor determine whether an entity (or component thereof, such as a component unit) is a state or local government for purposes of determining whether the entity is following the appropriate accounting standards?

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Section 9160.32, Reporting on Accounting Standards as Promulgated by FASB by a State or Local Government (Issue Date: July 2017)

Inquiry — An entity (or a component thereof, such as a component unit) that meets the definition of a state or local government prepares its financial statements in accordance with accounting standards as promulgated by FASB. How should an auditor report on such financial statements?

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Section 9160.33, Engagement Acceptance When a State or Local Government Elects to Follow a Special Purpose Framework (Issue Date: July 2017)

Inquiry — An entity (or a component thereof) that meets the definition of a state or local government elects to prepare its financial statements in accordance with a special purpose framework (SPF). What are the auditor’s responsibilities concerning the acceptability of the SPF used by management?

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Section 9160.34, Accounting Standards as Promulgated by FASB as a Special Purpose Framework (Issue Date: July 2017)

Inquiry — An entity (or a component thereof) that meets the definition of a state or local government elects to prepare its financial statements in accordance with accounting standards as promulgated by FASB. Because the appropriate accounting standards are those promulgated by GASB, can the accounting standards as promulgated by FASB be considered a special purpose framework?

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Section 9160.35, Reporting on Indian Tribe Financial Statements Prepared in Accordance With Accounting Standards as Promulgated by FASB (Issue Date: July 2017)

Inquiry — An Indian tribe (or a component thereof, such as a business component functioning like a commercial entity) that meets the GAAP definition of a state or local government prepares its financial statements in accordance with accounting standards as promulgated by FASB. In such situations, may an auditor report on whether the entity’s financial statements are presented, in all material respects, in accordance with both the appropriate GAAP framework (that is, accounting standards as promulgated by GASB) and accounting standards as promulgated by FASB?

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Accounting Questions and Answers

Section 2220.28, Definition of Readily Determinable Fair Value and Its Interaction With the NAV Practical Expedient (Issue Date: November 2017)

Inquiry— What is readily determinable fair value and how does it interact with the NAV practical expedient?
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Section 7100.01, Use of the Term “Security” in the Definition of a Public Business Entity
(Issue Date: October 2017)

Inquiry—The FASB ASC glossary definition of a PBE uses the term “security.” ASU No. 2013-12 does not reference a specific definition of “security.” How should entities evaluate whether their financing instruments are securities?
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Section 7100.02, Types of Securities Included in the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—The FASB ASC glossary definition of a PBE uses the term “security.” Are all forms of securities included or only certain forms (for example, equity securities) included?
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Section 7100.03 Use of the Term “Over-the-Counter Market” in the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Criterion (d) of the FASB ASC glossary definition of a PBE states that a business entity (an entity other than a not-for-profit entity within the scope of FASB ASC 958, Not-for-Profit Entities, or an employee benefit plan accounted for under FASB ASC 960, Plan Accounting—Defined Benefit Pension Plans; FASB ASC 962, Plan Accounting—Defined Contribution Pension Plans; or FASB ASC 965, Plan Accounting—Health and Welfare Benefit Plans) that “has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market” is a PBE. How should an entity evaluate whether its securities (or securities for which it is a conduit bond obligor) meet this criterion?
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Section 7100.04, Use of the Term “Conduit Bond Obligor” in the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—What is the meaning of the term “conduit bond obligor” within the FASB ASC glossary definition of a PBE? Are all entities that are conduit bond obligors considered PBEs?
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Section 7100.05, FINRA TRACE and MSRB EMMA Data and a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Are the Financial Industry Regularity Authority (FINRA) Trade Reporting and Compliance Engine (TRACE) or Municipal Securities Rulemaking Board (MSRB) Electronic Municipal Market Access (EMMA) considered OTC markets? Should financial statements available in EMMA be considered under criterion (e) of the FASB ASC glossary definition of a PBE? 
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Section 7100.06, Use of the Phrase “Contractual Restriction on Transfer” and a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Criteria (c) and (e) within the FASB ASC glossary definition of a PBE use the phrase “contractual restriction on transfer;” what types of restrictions would be included?
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Section 7100.07, Use of the Terms “Prepare,” “Publicly Available,” “Financial Statements,” and “Periodic Basis” in the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Criterion (e) within the FASB ASC glossary definition of a PBE uses the terms “prepare,” “publicly available,” “financial statements,” and “periodic basis.” How are each of those defined?
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Section 7100.08, Application of the Definition of a Public Business Entity When Entities are Organized in Tiered Organizational Structures (Parent, Consolidated Subsidiaries, Nonconsolidated Entities, Guarantors, Equity Method Investees) 
(Issue Date: October 2017)

Inquiry—Should the FASB ASC glossary definition of a PBE be applied on an entity-by-entity basis, or should entities look through, or evaluate the organizational structure in totality, when applying the definition of a PBE?
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Section 7100.09, Financial Statements or Financial Information Filed With the SEC and Considerations for Effective Dates and the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Are there any effective date accommodations available to PBE entities that otherwise would not meet the definition of a PBE, except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC?
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Section 7100.10, Accounting Standard Update Effective Dates and the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Do non-PBEs always receive deferred effective dates?
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Section 7100.11, Evaluating the Definition of Public Business Entity for Financial Institutions Subject to Section 36 of the Federal Deposit Insurance Act and Part 363 of the FDIC Rules and Regulations  
(Issue Date: October 2017)

Inquiry—Is a financial institution subject to the Federal Deposit Insurance Corporation Improvement Act (FDICIA) always a PBE?
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Section 7100.12, Mutual Depository Institutions and the Definition of a Public Business Entity
(Issue Date: October 2017)

Inquiry—Does the FASB ASC glossary definition of a PBE affect entities such as credit unions or mutual thrifts?
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Section 7100.13, Brokered Certificates of Deposit and the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—How would a brokered certificate of deposit (CD) be evaluated under the FASB ASC glossary definition of a PBE?
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Section 7100.14, Private Resales (Rule 144 and Rule 144A) and the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—How are private resales under SEC Rules 144 or 144A (Rule 144 and Rule 144A securities) analyzed under the FASB ASC glossary definition of a PBE?
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Section 7100.15, Insurance Companies and the Definition of Public Business Entity 
(Issue Date: October 2017)

Inquiry—Is an insurance entity considered a PBE under the FASB ASC glossary definition?
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Section 7100.16, Brokers, Dealers, and Futures Commission Merchants and the Definition of a Public Business Entity 
(Issue Date: October 2017)

Inquiry—Is a broker, dealer, or future commission merchant considered a PBE?
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