The AICPA on May 23, 2017, released the updated versions of its Audit and Accounting Guides (AAG) AAG: Life and Health Insurance Entities (aag-lhi) and AAG: Property and Liability Insurance Entities (aag-pli) to reflect the application of its audit guidance for financial reporting frameworks other than U.S. GAAP.
The guidance is found in AU-C Section 800, “Special Considerations—Audits of Financial Statements Prepared in Accordance With Special Purpose Frameworks,” formerly AU Section 544, which was amended in February 2017 with the publication of Statement on Auditing Standards (SAS) No. 132, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (AU Section 570).
The AICPA said the updates to the insurance AAGs address application of its guidance to insurers’ financial statements that are prepared on a statutory basis, which insurance companies are required to provide to regulators.
SAS No. 132 requires auditors to obtain the evidence they need to assess management’s use of the going concern basis of accounting. Auditors are also asked to evaluate the ability of a business or organization to continue as a going concern and whether the entity’s financial reporting and disclosures properly reflect its financial condition.
The standard was also issued to promote consistency between the auditing standards and financial reporting frameworks such as U.S. GAAP and the GASB’s guidance for state and local governments that impose a requirement on management to evaluate their ability to continue as a going concern.
Separately the AICPA also updated the AAG: Prospective Financial Information (aag-pro) to reflect the addition of indexes. It previously issued the guide’s annual update to reflect the incorporation of guidance from standards such as Standards for Attestation Engagements (SSAE) No. 18, Attestation Standards: Clarification and Recodification, and Statement on Standards for Accounting and Review Services (SSARS) No. 23, Omnibus Statement on Standards for Accounting and Review Services—2016. SSAE No. 18 redrafted the attestation standards in the clarified format and superseded most existing attestation guidance. SSARS No. 23 put all compilation and review engagements within the scope of the AICPA’s accounting and review guidance.
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