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More About This Title AICPA Audit and Accounting Guide State and Local Governments
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This authoritative guide provides complete coverage of audit and accounting considerations critical for both preparers and auditors. This 2017 edition includes a new chapter on best practices for OPEB accounting, reporting, and auditing. It also provides insights, comparisons, and best practices for financial reporting and the financial reporting entity, revenue and expense recognition, capital asset accounting, the elements of net position, accounting for fair value, and much more.
English
1 Overview and Introduction 01-24
Scope and Purpose 01-08
GAAP for State and Local Governments 09-14
Applicable Auditing Standards and Requirements 15-20
Guidance in Other AICPA Audit and Accounting Guides and Statements of Position 21-22
Other Sources of Guidance 23
Organization of This Guide 24
2 Financial Reporting 01-97
Introduction and Overview 01-06
Historical Perspective 02-06
Governmental Financial Statements 07-53
Management’s Discussion and Analysis 09-10
Government-Wide Financial Statements 11-25
Fund Financial Statements 26-44
Notes to the Financial Statements 45-48
Required Supplementary Information Other Than MD&A 49-52
Special-Purpose Governments 53
Other Financial Reporting Issues 54-59
Other Information and Supplementary Information 54
Prior-Period Comparative Financial Information 55-56
Government Combinations and Disposals of Government Operations 57-59
Fair Value Measurement 60-85
General Principles of Fair Value 61-68
Valuation Techniques 69-71
Inputs to Valuation Techniques 72-75
Fair Value Hierarchy 76-79
Guidance for Fair Value Measurement in Special Circumstances 80-85
Auditing Considerations 86-96
Compliance Requirements 87
Fund and Activity Classifications 88
Major Funds 89
Restricted Assets 90
Notes to the Financial Statements 91-92
Required Supplementary Information, Supplementary Information, and Other Information 93-94
Other Financial Reporting Considerations 95
Accounting and Financial Reporting Alternatives 96
Appendix A—Accounting and Financial Reporting Alternatives in GASB Statement No. 34, as Amended 97
3 The Financial Reporting Entity 01-39
Introduction 01-03
GASB’s Financial Reporting Entity Standards 04-29
Definition of the Financial Reporting Entity 05-12
Financial Statement Presentation 13-22
Disclosures 23-25
Other Financial Reporting Requirements 26-29
Auditing Considerations 30-39
Reporting Entity 30
Internal Control Over Financial Reporting 31
Audit Procedures 32-33
Separate Component Unit Auditor 34
Presentation of Less Than a Complete Financial Reporting Entity 35
Departures of Component Unit Information From GAAP 36
Nongovernmental Component Unit Use of Private-Sector Standards 37
Changes in the Financial Reporting Entity 38
Other Component Unit Auditing Considerations 39
4 General Auditing Considerations 01-138
Introduction 01-02
General Principles and Responsibilities 03-29
Overall Objectives 03
Terms of Engagement 04-08
Laws and Regulations 09-22
Auditor’s Communication With Those Charged With Governance 23-27
Communicating Internal Control Related Matters 28-29
Auditor’s Risk Assessment and Response to Assessed Audit Risk 30-66
Planning an Audit 30-34
Audit Strategy 35-40
Understanding the Entity, Its Environment, and Its Internal Control 41-66
Materiality in Planning and Performing an Audit 67-93
GASB Guidance to Preparers on Materiality Determinations 69-70
Auditor Materiality Determinations 71-87
Performing Further Audit Procedures 88-93
Related Parties and Transactions 94
Group Audit Engagements 95-121
Definition of a Component 98-99
Opinion Units 100-103
Identifying Components in State and Local
Governments Group Audits 104-107
Materiality 108-109
Using the Work of Others 110-118
Subsequent Events 119-121
Other Audit Considerations 122-127
Subcontracting Arrangements 122
Independence Requirements 123-127
Required Supplementary Information, Supplementary Information, and Other Information 128-137
Audit Scope Includes Required Supplementary Information or Supplementary Information 131-132
Required Supplementary Information 133
Supplementary Information 134-136
Other Information 137
Appendix A—Consideration of Fraud in a Financial Statement Audit 138
5 Investments, Certain Equity Interests, and Derivatives 01-131
Part I—Accounting, Financial Reporting, and Auditing Considerations for Investments and Certain Equity Interests 04-05
Nature of Transactions 06-17
Compliance Requirements and Deposit and Investment Policies 06-10
Deposit and Investment Risk 11
Internal Investment Pools 12
Reverse Repurchase Agreements 13
Securities Lending Transactions 14
Investment Arrangements, Including External Investment Pools 15-17
Accounting and Financial Reporting Considerations 18-55
General Recognition Standards 18-55
Auditing Considerations for Investments and Certain Equity Investments 56-99
Risk Assessment 57
Overall Considerations Relating to Investments and Certain Equity Interests 58-59
Identification of Material Classes of Transactions, Account Balances, and Disclosures 60-63
Identification of Significant Risks Related to Valuation 64-67
Determining Audit Strategy for Testing Investments at Fair Value 68-70
Management’s Specialist and the Use of Others in Fair Value Measurement 71-99
Part II—Accounting, Financial Reporting, and Auditing Considerations for Derivative Instruments 100-131
Nature of Transactions 100-113
Accounting and Financial Reporting Considerations—Derivative Instruments 114-120
Auditing Considerations—Derivative Instruments 121-131
6 Revenues and Receivables 01-101
Introduction 01-02
Nature of Transactions 03-09
Accounting and Financial Reporting Considerations 10-88
Accounting 11-68
Activity Statement Classifications 69-85
Financial Position Statement Classifications 86-87
Disclosures 88
Auditing Considerations 89-101
Confirmations 94-97
Estimates 98-99
Confidential Records 100
Other Auditing Procedures 101
7 Capital Assets 01-91
Nature of Transactions 01-09
Capital Asset Management 03-08
Compliance Considerations 09
Accounting and Financial Reporting Considerations 10-74
Accounting and Financial Statement Presentation—Government-Wide Financial Statements 13-30
Accounting and Financial Statement Presentation—Governmental Funds 31-32
Accounting and Financial Statement Presentation—Proprietary Funds 33
Accounting and Financial Statement Presentation—Fiduciary Funds 34
Capital Leases 35-38
Capital Asset Impairment 39-44
Modified Approach for Infrastructure Assets 45-53
Specified Conditions Approach for Internally Generated Intangible Assets—Other Than Computer Software 54-55
Specified Conditions Approach for Internally Generated Computer Software 56-59
Interfund Movements and Intra-Entity Transfers of Capital Assets 60-62
Capital Assets Used in Landfills 63
Capital Assets Used in Pollution Remediation 64
Service Concession Arrangements 65-70
Disclosures 71-72
Management’s Discussion and Analysis 73-74
Auditing Considerations 75-91
Capital Asset Records 78-80
Ownership of Infrastructure Assets 81
Useful Lives of Infrastructure Assets 82
Modified Approach for Infrastructure Assets 83-91
8 Expenses or Expenditures and Liabilities 01-132
Introduction 01
Nature of Transactions 02-10
Accounting and Financial Reporting Considerations 11-120
General Recognition Standards 11-17
Specific Recognition and Financial Reporting Standards 18-72
Expenses Resulting From Previously Incurred Disbursements 73-77
Liabilities 78-105
Activity Statement Classifications 106-113
Financial Position Statement Classifications 114-115
Disclosures 116-118
Management’s Discussion and Analysis 119-120
Auditing Considerations 121-132
9 Interfund, Internal, and Intra-Entity Activity and Balances 01-35
Introduction 01
Nature of Transactions 02-05
Nature of Interfund Activity and Balances 02-03
Nature of Internal Activity and Balances 04
Nature of Intra-Entity Activity and Balances 05
Accounting and Financial Reporting Considerations 06-35
Reporting Interfund Activity and Balances 06-15
Reporting Internal Balances and Activity 16-20
Reporting Intra-Entity Activity and Balances 21-26
Differing Year Ends 27
Auditing Considerations 28-35
10 Net Position and Financial Statement Reconciliations 01-31
Nature of Transactions 01-04
Financial Reporting Considerations 05-24
Government-Wide Net Position 06-08
Proprietary Fund Net Position 09
Governmental Fund Balances 10-18
Reconciliations—Net Position and Changes in Net Position 19-21
Fiduciary Fund Net Position 22
Disclosures 23-24
Auditing Considerations 25-31
11 The Budget 01-26
Introduction 01-03
Budgetary Processes 04-11
Types of Budgets 04-06
Legal Level of Budgetary Control 07-08
Encumbrances 09-10
Budgetary Basis 11
Financial Reporting Considerations 12-16
Budgetary Comparison Schedules or Statements 12-13
Disclosures 14-16
Auditing Considerations 17-26
Internal Control Considerations 18
Presentation of Budgetary Comparison Information 19-21
Audit Support for Financial Statement Assertions 22-24
Budgetary Compliance Considerations 25-26
12 Special-Purpose and State Governments 01-123
Introduction 01-03
Financial Reporting Requirements for Special-Purpose Governments 04-09
Compliance Requirements 10
Specific Guidance for Special-Purpose Governments 11-89
Hospitals and Other Health Care Providers 11-13
School Districts 14-20
Airports 21-23
Public Housing Authorities 24-27
Financing Authorities 28-35
Transportation Systems 36-37
Utilities 38-39
Postemployment Benefit Plans 40-45
Public Entity Risk Pools 46-50
External Investment Pools 51-58
Colleges and Universities 59-89
Specific Guidance for Indian Tribes 90-93
Specific Guidance for State Governments 94-123
Nature and Organization of State Governments 95-98
Specialized Reporting Requirements 99
Reporting Entity Definition 100
Separate Fund, Departmental, Agency, and Program Audits 101
Medicaid 102-104
Food Stamps 105
Unemployment Compensation Benefit Plans 106
Lotteries 107-112
Escheat Property 113-116
State Tuition Programs 117-118
Multistate Legal Settlements, Including Tobacco Settlement Resources 119-123
13 Defined Benefit Pension Plans (Plan & Employer Considerations) 01-182
Introduction 01-06
Nature of Transactions 07-15
Types of Defined Benefit Pension Plans 07-08
Number of Defined Benefit Pension Plans 09-10
Relevance of Census Data 11-15
Part I—Plan Accounting, Financial Reporting, and Auditing
Considerations for Defined Benefit Pension Plans Administered Through a Qualifying Trust 16-95
Accounting and Financial Reporting Considerations 16-43
Auditing Considerations for the Pension Plan 44-95
Part II—Employer Accounting, Financial Reporting, and Auditing Considerations: Single and Agent Employers 96-142
Accounting and Financial Reporting Considerations 96-108
Auditing Considerations for Single and Agent Employers 109-142
Part III—Employer Accounting, Financial Reporting, and Auditing Considerations Cost-Sharing Employers 143-180
Accounting and Financial Reporting Considerations 143-165
Auditing Considerations for Cost-Sharing Employers 166-180
Appendix A—Governmental Employer Participation in Agent Multiple-Employer Plans: Issues Related to
Information for Employer Reporting 181
Appendix B—Governmental Employer Participation in Cost-Sharing Multiple-Employer Plans: Issues Related to Information for Employer Reporting 182
14 Defined Benefit Postemployment Benefits Other Than Pensions (Plan & Employer Considerations) 01-218
Introduction 01-05
Nature of Transactions 06-16
Types of Defined Benefit OPEB Plans 06-08
OPEB Financing (Risk Management) and Administrative Arrangements 09-11
Number of Defined Benefit OPEB Plans—OPEB Plans Administered Through a Qualifying Trust 12-13
Relevance of Census Data 14-16
Part I—Plan Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans Administered Through a Qualifying Trust 17-102
Accounting and Financial Reporting Considerations 17-47
Auditing Considerations for OPEB Plans Administered
Through a Qualifying Trust 48-102
Part II—Employer Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans Administered Through a Qualifying Trust: Single and Agent Employers 103-149
Accounting and Financial Reporting Considerations 103-115
Auditing Considerations for Single and Agent Employers Administered Through a Qualifying Trust 116-149
Part III—Employer Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans Administered Through a Qualifying Trust: Cost-Sharing Employers 150-187
Accounting and Financial Reporting Considerations 150-172
Auditing Considerations for Cost-Sharing Employers 173-187
Part IV—Employer Accounting, Financial Reporting, and Auditing Considerations for Defined Benefit OPEB Plans That Are Not Administered Through a Qualifying Trust 188-218
Accounting and Financial Reporting Considerations 188-201
Auditing Considerations for Employers When the Plan Is Not Administered Through a Qualifying Trust 202-218
15 Concluding the Audit 01-49
Introduction 01
Misstatements and Audit Adjustments 02-06
Litigation, Claims, and Assessments 07-09
Written Representations 10-14
Related-Party Transactions 15-18
Going Concern Considerations 19-30
Subsequent Events 31-41
Analytical Procedures 42
Communicating With Those Charged With Governance 43-45
Audit Documentation 46-49
16 Audit Reporting 01-103
Introduction 01-03
Materiality 04-11
Specific Issues in Reporting on the Audits of Governmental Financial Statements 12-62
Basic Financial Statements 12
The Auditor’s Report 13-35
Special Situations 36-62
Required Supplementary Information, Supplementary Information, and Other Information 63-86
Audit Scope Includes Required Supplementary Information, Supplementary Information, or Other Information 65
Required Supplementary Information 66-73
Supplementary Information 74-79
Other Information 80-86
Other Financial Presentations 87-102
Individual Fund Financial Statements 87-90
Departmental, Agency, and Program Financial Statements 91
Special-Purpose Regulatory Presentations 92
Summary Financial Information 93-102
Appendix A—Illustrative Auditor’s Reports 103
17 Financial Statements Prepared in Accordance With a Special-Purpose Framework 01-18
Accounting and Financial Reporting Considerations 01-06
Auditing Considerations 07-16
Auditor’s Reports 14-16
Appendix A—Illustrative Auditor’s Reports 17
Appendix B—Overview of Reporting Requirements for Special-Purpose Financial Statements 18
18 Auditor Involvement With Municipal Securities Filings 01-23
Introduction 01-06
Auditor Involvement 07-11
Conditions Affecting Auditor Involvement 07-11
Using Government Auditing Standards Reports and References in the Official Statement 12
Letters for Underwriters 13-17
Auditing Interpretations Regarding Governmental Official Statements 18-22
Attestation Engagements Related to Municipal Securities Issuances 23
Supplement Statement of Position 98-2
Appendix
A Acronyms and Abbreviations
B Category B Guidance
C Overview of Statements on Quality Control Standards
D Schedule of Changes Made to the Text From the Previous Edition
Index of Pronouncements and Other Technical Guidance
Subject Index
