Sources of authoritative literature. (literature sources on complex accounting issues)by Strawser, Robert H.
The increasingly complex environment facing professional accountants, whether in public practice, industry, or government, often presents problems requiring the in-depth consideration of numerous and complex accounting and auditing issues. Resolving complex accounting and auditing issues requires professional judgment and a thorough consideration of each problem. The practitioner must know where to look for answers, and which sources have authority over others.
Authoritative Accounting Literature
The levels of authority in accounting literature are listed in Figure 1.
A number of useful reference services are available to assist the practitioner in locating the authoritative sources. These reference services include:
1. AICPA Professional Standards;
2. FASB Accounting Standards;
3. AICPA Index to Accounting and Auditing Technical Pronouncements;
4. AICPA Technical Practice Aids;
5. The Accountant's Index and the AICPA Library; and
6. Computerized Information Retrieval Services. These services assist the practitioner in remaining current regarding pronouncements, interpretations, and guidelines concerning today's complex practice environment. They are described below.
AICPA Professional Standards. The creation of the AICPA Professional Standards loose-leaf subscription service in 1974 established an excellent resource for use by professional accountants. It is also available in an annually updated (June 1) paperback edition. The loose- leaf service has the advantage of being continually updated. It consists of two volumes: Volume 1 contains the U.S. Auditing Standards (SASs and Auditing Interpretations) while Volume 2 has eight major divisions. Figure 2 details the organization of the Professional Standards. The Professional Standards features a topical index. For example, if the researcher has a question concerning auditor's opinions, the index under "U.S. Auditing" may be consulted rather than scanning all the SASs and Interpretations. In addition to this index, each volume includes a number of helpful appendices. For example, an appendix in the U.S. Auditing section lists the industry audit guides.
There has been some confusion regarding the use of the Professional Standards. It includes section numbers in place of original pronouncement numbers. For example, SAS No. 39, "Audit Sampling," is listed as AU Sec. 350. The use of section numbers facilitates indexing. The indexing system provides for referencing specific sections within a section. For example, AU Sec. 350.03 refers to the third paragraph of Sec. 350. Also, the auditing Interpretations are numbered in the 9000s, and the last three numbers specify the SAS section to which the Interpretation relates. For example, AU Sec. 9642 indicates that the Interpretation concerns AU Sec. 642.
FASB Accounting Standards. FASB Accounting Standards consists of two volumes:
1. Original Pronouncements includes the unabridged original text of AICPA Accounting Research Bulletins; APB Opinions and Interpretations; and a companion volume of FASB Statements of Standards, Statements of Concepts, Interpretations and Technical Bulletins. The Original Pronouncements also provide background information comments by dissenting Board members, and the basis for conclusions. This information may be important at times to have a complete understanding of the impact of the pronouncement.
2. Current Text presents key material from the Original Pronouncements arranged in the format of a dictionary or encyclopedia. Subjects are arranged alphabetically in two major divisions: general standards and industry standards.
AICPA Index to Accounting and Auditing Technical Pronouncements. The AICPA Index to Accounting and Auditing Technical Pronouncements enables the researcher to rapidly locate the professional standards, official pronouncements, and technical guides that impact on accounting and auditing questions. This reference service includes all authoritative materials issued by the AICPA, FASB, GASB, SEC, International Accounting Standards Committee, International Federation of Accountants, CASB, and National Council on Governmental Accounting.
This Index is revised annually (as of July 1). It features an excellent cross-referencing system to assist the researcher in locating important material. For a particular topic, it directs the reader to the related pronouncements.
AICPA Technical Practice Aids. The AICPA Technical Practice Aids contains authoritative examples and commentary. It consists of two volumes. Volume 1 includes the Technical Information Service (TIS), a compilation of practical questions and responses. This compilation is organized by major topic areas: 1) financial statement presentation; 2) assets; 3) liabilities and deferred credits; 4) capital; 5) revenue and expense; 6) special industry problems; 7) special organizational problems; 8) audit field work; and, 9) audit reports.
The TIS does not evaluate either tax or legal questions. Rather, it is concerned with accounting and auditing problems encountered by practitioners. The TIS is not an authoritative pronouncement, but provides an expert opinion, based on references to authoritative sources where appropriate. Volume 1, which contains the TIS, also features two indexes. The first is a cross-reference between official pronouncements referred to in the volume and the section number where the pronouncement is cited. The second index is a keyword topic index.
Volume 2 of the Technical Practice Aids includes: 1) Statements of Position (SOPs) of the Accounting Standards Division and the Auditing Standards Division; 2) Practice Bulletins of the Accounting Standard Executive Committee (AcSEC); 3) Issues Papers of the Accounting Standards Division; and, 4) a Voluntary Quality Control Review Program.
Accountant's Index and the AICPA Library. The Accountant's Index provides a summary of new publications in accounting, tax, and management advisory services. Publications are indexed by author and topic area. This Index lists the titles of all publications added to the AICPA Library (in New York) during the period included in each volume. The Index is published annually and updated by quarterly supplements.
The AICPA Library houses books and journals relating to auditing, accounting, financial reporting, financial management, investments and securities, data processing, taxation, management and related topics. These books and journals are available for loan to AICPA members.
Computer Databases. Numerous computer databases are currently available for the use of researchers. During the period 1979 to 1988, the number of databases increased from 400 to 3,893 in the Directory of Online Databases (New York, Cudra/Elsevier, 1988). Many of these sources are very useful to accounting practitioners:
1. VSCOM. Cost accounting database system.
2. NAARS. Financial statements from over 4,200 annual reports.
3. Business Periodicals Index. Over 300 business periodicals are cited.
4. Accountants. Corresponds to Accountants' Index.
5. Business Software Database. Contains descriptions of approximately 10,000 software packages available for micro-, mini-, and mainframe computers.
6. Fortune. Fortune magazine text.
7. Financial World. Financial World magazine text. Figure 3 provides specific details of these seven databases. For example, type of file may be reference or source. Subjects include corporate financial information (e.g., NAARS) or government regulations. Sources range from the AICPA for NAARS to Time, Inc. for Fortune. The online service firm is Mead Data Central, Inc., for NAARS and Comshare, Inc., for VSCOM. Contents are varied. Time span is the period of time of the database (e.g., the most current five year period). Update indicates the frequency of updating (e.g., daily or weekly).
Computerized databases are expected to become increasingly useful research tools for the practicing accountant. The expanding volume of data that impacts accounting and auditing issues may be manipulated and searched more efficiently in a computerized database. The computerized information retrieval services that have been discussed provide the busy practitioner with ready access to business-related databases. Databases are also becoming available on CD-ROMs (see The CPA Journal, The Practitioner & The Computer, March 1990).
In addition, there are several sources that report developments in accounting practice. These include:
1. Technical Practice Aids, published by the AICPA. This service includes inquiries and responses describing actual problems encountered in practice. The response includes the interpretation and recommendations, as well as the relevant standards and authoritative sources. The AICPA also provides guidance in handling audit and accounting problems through its technical hotline. This hotline service, including the phone call, is free to all AICPA members. The toll free number is (800) 223-4158 and in New York (800) 522-5430.
2. Accounting Trends & Techniques, published annually by the AICPA. It illustrates current reporting practices.
3. National Automated Accounting Research System (NAARS), maintained by the AICPA. NAARS is a full-text, computerized information retrieval system. It includes the annual reports of over 4,200 publicly-held corporations. NAARS also includes all current and superseded authoritative and semi-authoritative literature from the AICPA, FASB, GASB, and the SEC. (The CPA Letter, AICPA, June 26, 1989, indicates additional information on NAARS may be obtained from the AICPA by calling (212) 575-6393.)
The Research Library
The professional library of every practitioner should include several basic reference volumes. A number of basic reference sources have already been identified and discussed; however, there are additional sources which may be of assistance to the practitioner in his or her research efforts. The AICPA publication, Management of an Accounting Practice Handbook, includes a list of publications to guide the practitioner in establishing a basic reference library. Selected items from this list are included in Figure 4. The Handbook also provides a list of possible supplements to this basic library. Figures 1 to 4 Omitted
Jeffrey R. Miller, PhD, CPA; L. Murphy Smith, DBA, CPA; and Robert H. Strawser, DBA, CPA, all of Texas A&M University
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