The Basic Accounting and Auditing Library

Every practicing CPA's library must include current professional standards and the authoritative GAAP applicable to the nature of his or her practice. The starting point is the AICPA's Professional Standards, which include Statements on Auditing Standards (SAS) and Statements on Standards for Accounting and Review Services (SSARS) and the Current Text, which includes FASB statements of standards and interpretations, opinions issued by the Accounting Principles Board (APB), and AICPA Accounting Research Bulletins still in effect.

Professional Standards and Current Text are published in loose-leaf binders and Table 1 shows ordering information. If you order the looseleaf subscription, the AICPA will send changes as they are adopted. You can also order these publications annually in paperback, and Professional Standards is available on diskette.

A second level of accounting guidance is provided by FASB technical bulletins and AICPA industry audit and accounting guides and statements of position. A firm may be selective, but every firm should have references appropriate for their clients in this second tier of GAAP.

The Technical Bulletins are part of the AICPA Current Text. An annual Current Text subscription will assure up-to-date Technical Bulletins.

The purpose of the industry audit and accounting guides is to organize all accounting principles and audit considerations for a single industry into one reference manual. Each guide includes a discussion of practices presently being followed by the industry and procedures unique to that industry.

All guides and audit and accounting practice aides are included in the AICPA Audit and Accounting Guide Service, listed in Table 4, or they can be purchased separately in paperback. The guides in this service are continuously updated to reflect matters affecting their subject matters, including yearly audit risk alerts. Once a year (usually May 1) each guide is printed and is available for ordering on an individual basis. Table 2 lists the most recent editions of each paperback guide.

Additions for Governmental Work

The library for CPA firms that serve governments must include guidance on accounting principles and auditing standards for governments. SAS No. 69, The Meaning of "Present Fairly in Conformity with Generally Accepted Accounting Principles" in the Independent Auditor's Report, established a separate accounting hierarchy for state and local governments. The AICPA's Statements on Auditing Standards and Auditing Interpretations, and the AICPA Code of Professional Conduct are generally applicable to audits of governmental units. AICPA literature includes some documents unique to governments. In addition, specific governmental auditing literature has been issued by the Congress, the General Accounting Office (GAO), and the Office of Management and Budget (OMB). Much of this additional literature also applies to audits of non-profit organizations receiving Federal financial assistance. Refer to Table 3 for a fist of the publications necessary for working with government clients.

Interpreting the Standards: Manuals and Programs

On-site peer and quality reviewers have found firms with acceptable quality controls have more than the basics discussed above in their accounting and auditing libraries. They often use materials or manuals that interpret and integrate GAAP and GAAS.

Manuals are used in three important ways. First, they help to locate and interpret GAAP relevant to a particular engagement. Second, manuals with step-by-step programs, checklists, and workpapers enhance quality control in an engagement. And, third, they provide sample disclosures and financial statement formats.

Manuals are published by a number of sources including Practitioner's Publishing Company, the AICPA, and networks of firms such as McGladrey and Pullen. However, Practitioner's Publishing Company (PPC) in Fort Worth, Texas, seems to be dominating the market. Their advertising literature claims use by 45,000 accounting firms nationwide.

The PPC accounting and auditing publications are loose-leaf volumes, one or more to a topic. The manuals present relevant GAAP along with sample correspondence with clients, checklists, audit programs, and financial statements for a programmed approach to accounting and auditing engagements. After buying the volumes on a particular topic, annual updates for those volumes are available for a reduced price.

The AICPA publishes a manual on accounting and auditing, emphasizing the audit process for small and medium-sized accounting firms, and another on financial-statement preparation. The AICPA sends additional and substitute pages for their manuals quarterly to assure the latest pronouncements are incorporated.

Table 4 shows accounting and auditing manuals available from PPC, AICPA, and two other publishers: only those most widely advertised have been included.

We suggest you examine manuals on a test basis from one or more publishers, and choose those most applicable to your practice. Ask if the manuals have been peer reviewed. Your goal of quality control, regardless of your choice of publisher, is achieved by carefully following the program guidance provided by the manual in each engagement.

The Electronic Option

Accounting and auditing lags behind tax for convenient and cost- effective electronic reference services. Although many firms have on- line tax research services, few use electronic media for accounting and auditing research. Practitioners without special training have found searching the literature via key words cumbersome and frustrating. This criticism, and the cost, because electronic storage is usually an addition to, not a replacement for, paper volumes, has slowed widespread adoption of computerized systems for accounting and auditing.

Two relatively new services may change the picture, however. Both are designed to be loaded onto your hard disk for ready access and easy updates.

The FASB offers its Financial Accounting Research System (FARS). FARS requires 11 MB of hard disk storage and includes FASB statements, interpretations, technical bulletins, concept statements, EITF abstracts, staff implementation guides, the Current Text, AICPA accounting research bulletins, APB opinions and statements, accounting interpretations, accounting terminology bulletins, and a topical index. There are three ways to locate information through FARS--tables of contents, topical index references, and word searches.

PPC has entered the computerized accounting and auditing market with Guideview and Guideware. Guideview includes disk storage of all their manuals bundled with retrieval software. Guideware, when combined with WordPerfect, allows access to the practice aides. Working from a menu, a user can choose and print the checklists, worksheets, and correspondence appropriate for a particular engagement.

Staff Time and Maintenance

Common library planning and maintenance problems experienced by firms include making the best selection of library materials, duplicate purchases, disappearing materials, and filing.

These problems can usually be solved by placing responsibility for the accounting and auditing portion of the library with a professional staff member. This person should be responsible for the final approval on purchase orders, maintaining (or supervising the maintenance of) a list of library materials purchased and their location in the firm, supervising filing, and ordering updates according to a renewal schedule.

Other Library Resources

The AICPA Technical Information Service (800-862-4272-Dept.#2) offers free advice on practical problems of accounting, auditing, financial reporting, and accounting and review services. Materials may be borrowed from the AICPA library (800-TO-AICPA). AICPA members may request materials through the mail and may request on-line searches from various databases on a fee basis.

Guidelines to an Effective Library

As you plan and choose materials for your accounting and auditing library, keep the following four guidelines in mind:

a) Ordering annual subscriptions to the Current Text and Professional Standards should be your first priority.

b) Specialized needs for individual engagements can be met by borrowing materials but your library should provide for interpretation and guidance for serving your continuing clients.

c) You should choose one publisher of interpretive manuals and make a commitment to use their programs consistently.

d) One professional staff person should be assigned responsibility for maintaining the library.

TABLE 1

REQUIRED IN ALL LIBRARIES

Title

Professional Standards, Vol. I & II FASB Current Text, Vol. I & II

Publisher AICPA Order Department P.O. Box 2209 Jersey City, NJ 07303- 2209 800-862-4272

Published annually. Professional Standards is also available as part of a subscription service from the AICPA. For non-AICPA members, the Current Text is available from

Richards D. Irwin Inc. 1818 Ridge Road Homewood, IL 60430

TABLE 2

AICPA AUDIT AND ACCOUNTING GUIDES

Industry Guides:

* Agricultural Procedures and Agricultural Cooperatives

* Airlines

* Banks

* Brokers and Dealers in Securities

* Casinos

* Certain Nonprofit Organizations

* Colleges and Universities

* Common Interest Realty Associations

* Construction Contractors

* Credit Unions

* Employee Benefit Plans

* Entities with Oil and Gas Producing Activities

* Federal Government Contractors

* Finance Companies

* Investment Companies

* Property Liability Insurance Companies

* Providers of Health Care Services

* Savings Institutions

* State and Local Government Units

* Stock Life Insurance Companies

* Voluntary Health & Welfare Organizations

General Guides:

* Audit Sampling

* Computer-Assisted Audit Techniques

* Consideration of the Internal Control Structure in a Financial Statement Audit

* Guide for Prospective Financial Statements

* Personal Financial Statements

* Real Estate Appraisal Information

Publisher

* AICPA

TABLE 3

ADDITIONS FOR GOVERNMENTAL WORK

Publisher Governmental Accounting Standards Board 401 Merritt 7, P.O. Box 5116 Norwalk, Connecticut 06856-5116 203-847-0700

Title Codification of Governmental Accounting and Reporting Standards GASB Original Pronouncements

Publisher AICPA

Title State and Local Governmental Units Including Audits of Federal Financial Assistance

Publisher Superintendent of Documents US Government Printing Office Washington, DC 20401 202-783-3238

Title Government Auditing Standards (Under revision) #020-000-00243-3

TABLE 4

MANUALS AND INTERPRETIVE LITERATURE

ACCOUNTING AND AUDITING

Publisher Practitioners Publishing Company (PPC) P.O. Box 966 Forth Worth, TX 76101-0966 1-800-323-8724

Titles

Audits of Small Businesses Auditors' Reports Homeowners Associations and Other Common Interest Realty Associations Construction Contractors Compilation & Review Engagements Accounting for Income Taxes Preparing Financial Statements Forecasts & Projections Physicians and Other Health Care Professionals Accounting & Auditing Update Quality Control Audits of Financial Institutions Audits of Employee Benefit Plans Restaurants & Bars Retail Shops Write-Up Services

Publisher AICPA

Titles

Audit & Accounting Manual, 2 vols. Audit and Accounting Guide Service, 2 vols. Technical Practice Aids, Vol. I & II Accounting Trends & Techniques

Publisher Warren, Gorham & Lamont 210 South Street Boston, MA 02111 1-800-950-1213

Titles

Accounting and Auditing Disclosure Manual GAAP Practice Manual Handbook of Accounting and Auditing Modern Accounting and Auditing Checklists Accounting and Auditing for Employee Benefit Plans Handbook of EDP Auditing Construction Accounting Manual Real Estate Accounting and Reporting Manual

Publisher Matthew Bender DM Department, 1275 Broadway Albany, NY 12204 1-800-833-3630

Titles

Applying GAAP and GAAS

GOVERNMENTAL AND NONPROFIT:

Publisher Practitioners' Publishing Company

Titles

Audits of Local Governments Audits of Nonprofit Organizations

Publisher AICPA

Titles

Local Government Audit & Accounting Manual Local Government Accounting Trends ad Techniques

Publisher Thompson Publishing Group 1725 K Street NW, Suite 200 Washington, DC 20006 202-872-1766

Title

Single Audit Information Service

Publisher US Government Printing Office Washington, DC 20402 202-783- 3238

Title

Catalog of Federal Domestic Assistance #992-008-00000-1