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PPC’s Guide to Audits of Financial Institutions provides guidance and practice aids on financial statement audits, supervisory committee audits, directors’ examinations, integrated audits (internal control examination integrated with the audit of the financial statements), trust department engagements, and federal student loan engagements. This Guide covers all key areas of a financial institution audit, including loan reviews, sampling, confirmation procedures, investments in marketable equity and debt securities, foreclosed assets and real estate investments, and income tax provisions. Rather than just telling you what the standards say, this Guide includes real-life scenarios, examples, and practical considerations that reduce the technical language of official pronouncements to easy-to-understand advice and procedures, helping you address almost every situation you might encounter in a financial institution audit engagement. There is no other source available on the market today that provides the same level of practical, yet thorough, guidance found in this Guide.
TOC for AFI
INTRODUCTORY MATERIAL
PREFACE
PEER REVIEW OF THIS GUIDE
HOW TO USE THE GUIDE
ACKNOWLEDGMENTS
ACKNOWLEDGMENT OF COPYRIGHTS
ABOUT THE AUTHORS . . .
LIST OF SUBSTANTIVE CHANGES AND ADDITIONS
CHAPTER 1: INTRODUCTION AND INDUSTRY OVERVIEW
100 INTRODUCTION
101 AUTHORITATIVE LITERATURE
Generally Accepted Accounting Principles
FASB Codification Project
Resulting Changes.
Project Timing.
Changes to This Guide for the Codification.
Generally Accepted Auditing Standards
Auditing Standards.
Interpretive Publications.
Other Auditing Publications.
Clarity Project of the Auditing Standards Board
102 THE PPC AUDIT PROCESS
Organization of This Guide
Chapters.
Practice Aids.
Electronic Tools.
Complying with Professional Standards
103 OVERVIEW OF THE RISK ASSESSMENT STANDARDS
Introduction
What Is Risk Assessment?
Planning Is the Key.
Risk Assessment Standards
Key Provisions of the Standards.
Terminology
Audit Strategy.
Audit Plan.
Relevant Assertions.
Significant Risks.
Risk Assessment Procedures.
Risk of Material Misstatement.
Further Audit Procedures.
Other Terms.
104 INDUSTRY OVERVIEW
What Financial Institutions Are Covered by This Guide?
105 THE BUSINESS OF FINANCIAL INSTITUTIONS--MANAGEMENT OF RISKS
Credit and Other Asset Quality Risk
Interest Rate Risk
Liquidity Risk
Asset-liability Management
Processing Risk
Fiduciary Risk
106 SERVICES PROVIDED BY CPAS
Audit Services
FDICIA Audit Requirements.
OTS Audit Regulations.
Audit Requirements for Credit Unions.
Additional Requirements for Banks and Savings Institutions with Total Assets of $1 Billion or More
Alternatives to Audits for Banks and Savings Institutions with Total Assets of Less Than $500 Million
Agreed-upon Procedures Engagement for a Trust Department
Student Loan Compliance Examinations
Other Services
107 HIGH RISK NATURE OF FINANCIAL INSTITUTION AUDITS
Nature of the Industry
State of the Economy
AICPA Audit Risk Alert.
Beige Book.
Other Resources.
Liability to Financial Statement Users
108 REGULATORY STRUCTURE
Office of Comptroller of the Currency (OCC)
Federal Reserve System (FRS) and Federal Reserve Board (FRB)
Federal Reserve Regulations.
Federal Deposit Insurance Corporation (FDIC)
Insurance Fund.
FDIC Examinations.
Failed Banks.
Office of Thrift Supervision (OTS)
National Credit Union Administration (NCUA)
Federal Financial Institutions Examination Council (FFIEC)
Securities and Exchange Commission (SEC)
State Regulators
Other Agencies
109 LAWS AFFECTING FINANCIAL INSTITUTIONS AND THEIR AUDITORS
Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)
FDIC Improvement Act of 1991 (FDICIA)
Overview of FDICIA.
FDICIA-mandated Management Reporting and Related Audit Requirements.
FDICIA-mandated Prompt Corrective Action by Regulators.
Proposed Amendments to Annual Audit and Reporting Requirements.
Credit Union Membership Access Act of 1998 (CUMAA)
Sarbanes-Oxley Act of 2002
Independence.
Requirements for All Entities.
Regulatory Requirements.
Credit Union Stabilization Legislation
110 SOURCES OF REGULATORY INFORMATION
CHAPTER 2: PRE-ENGAGEMENT ACTIVITIES
200 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
Regulatory Requirements
201 CLIENT ACCEPTANCE AND CONTINUANCE
Risk-based Perspective
Client Acceptance: A Step-by-step Process
Prospective Client's Reputation
Sources of Information.
Regulatory Examination Reports.
Communications from Regulators.
Communications with the Audit Committee.
Communication with a Predecessor.
Assessment of Required Services
Independence
Nonattest Services.
Should Proposing Journal Entries and Preparing Financial Statements in Connection with an Audit be Viewed as Bookkeeping and, Therefore, Nonattest Services?
Additional Questions in Applying Interpretation 101-3.
Meeting Other Professional Standards and Requirements
Technical Expertise and Available Resources.
Integrity and Objectivity.
Adequacy of Fees.
Opportunity for Practice Development.
Specialized Procedures When Using the Work of Another Accountant.
Special Considerations for Savings Institutions.
Engagement Acceptance Forms
Annual Evaluation for Continuing Engagement
202 ESTABLISHING TERMS OF THE ENGAGEMENT
Documenting the Understanding with the Client
Benefits of an Engagement Letter
Suggested Content of Engagement Letter
Regulatory Considerations
Limitation of Liability Provisions.
Privacy Considerations under the Gramm-Leach-Bliley Act and Related Regulations
Multi-year Engagement Letters
Sample Engagement Letter
Early Communication with Those Charged with Governance
203 SPECIAL CONSIDERATIONS FOR FDICIA ENGAGEMENTS
Required Services
Qualifications of Auditors
Engagement Letters
Reporting Changes of Auditors
Reporting the Termination or Resignation of an Auditor by the Institution.
Auditor Reporting of Termination or Resignation.
Reasons for the Change.
Reporting Disagreements.
Selection of Auditors.
204 USING THE WORK OF A SPECIALIST
205 SPECIAL CONSIDERATIONS IN AN INITIAL ENGAGEMENT
Audit Objectives in an Initial Engagement
Preliminary Knowledge of Client.
Reasonableness of Opening Balances.
Consistency.
Balance Sheet Only Initial Audit.
Replacing a Predecessor Auditor
Consideration of Predecessor's Reputation and Independence.
Review of the Predecessor's Workpapers.
Consideration of Reporting Options.
No Reliance on a Predecessor Auditor
Previous Audit by a Predecessor.
Predecessor Performed a Directors' Examination or Supervisory Committee Engagement.
No Previous Accounting or Auditing Services.
Newly Chartered Institutions.
206 USE OF INTERNAL AUDITORS
Assessing the Competence and Objectivity of Internal Auditors
Using Internal Auditors Directly
Using Internal Auditors Indirectly
Coordination with Internal Audit.
Documentation
Caution about Overusing the Work of Internal Auditors
207 USE OF SERVICE ORGANIZATIONS
Use of Service Organizations
Types of Service Auditor's Reports.
Using a Service Auditor's Report.
APPENDIX 2A: Interagency Policy Statement on Coordination and Communication between External Auditors and Examiners
APPENDIX 2B: List of Selected AICPA Ethics Interpretations and Rulings Regarding Independence
CHAPTER 3: RISK ASSESSMENT PROCEDURES AND PLANNING
300 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
Objectives of Audit Planning
The Risk Assessment Process
Procedures Performed.
Understanding Obtained.
Decisions and Judgments Made.
Summary of Risk Assessment Process.
The Sequence of Audit Planning
Modifications Made to 2009 PPC Practice Aids
Organization of This Chapter
301 RISK ASSESSMENT AND OTHER PLANNING PROCEDURES
Types of Risk Assessment Procedures
Nature, Timing, and Extent--General Considerations.
Gathering Other Information Needed to Identify Fraud Risks.
Using the Results of Risk Assessment Procedures Performed in Prior Periods.
Specialized Considerations for Financial Institutions.
Inquiries of Management and Others
Matters and Parties of Inquiry.
Fraud-related Inquiries.
Documentation.
Preliminary Analytical Procedures
Using Ratio Analysis.
Using Analytical Procedures When Large Audit Adjustments Are Expected.
The Value of Preliminary Analytical Procedures in Risk Identification.
Analytical Procedures Related to Revenue.
Documentation.
Observation and Inspection
Documentation.
Discussion among the Engagement Team
Matters to be Discussed.
Impact on Significant Audit Areas.
Who Should Attend the Discussion?
When Should the Discussion Occur?
Other Matters That May Be Discussed.
Documentation.
302 UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT
Specialized Considerations for Financial Institutions
Components of the Understanding
Documentation.
Purpose of This Section.
Industry, Regulatory, and Other External Factors
AICPA Audit Risk Alert.
Possible Risk Assessment Procedures and Factors to Consider.
Economic Conditions.
Competitive Conditions.
Regulatory Considerations.
Reporting Requirements.
Nature of the Entity
Risk Assessment Procedures and Factors to Consider.
Organization.
Operating Characteristics.
Objectives, Strategies, and Related Business Risks
Risk Assessment Procedures and Factors to Consider.
Identifying Business Risks.
Measurement and Review of the Entity's Financial Performance
Risk Assessment Procedures and Factors to Consider.
Selection and Application of Accounting Policies
Regulatory Accounting Principles.
Risk Assessment Procedures.
Fraud Risk Factors
Examples of Fraud Risk Factors.
Auditor's Considerations of Fraud Risk Factors.
303 THE UNDERSTANDING OF INTERNAL CONTROL
Components of Internal Control
Nature of the Auditor's Understanding
Extent of the Auditor's Understanding
Understanding Controls Related to Significant Risks and Risks for Which Substantive Procedures Alone Are Not Sufficient
Effect of Information Technology (IT) on Internal Control
Benefits and Risks of IT.
Examples of How IT Affects Internal Control.
Considering Whether Specialized IT Skills Are Needed to Understand Internal Control.
How Are the Results of the Understanding Used?
A Practical Approach for Obtaining an Understanding of Internal Control
Develop an Overall Strategy for Understanding Internal Control.
Perform Scoping Activities.
Evaluate the Design and Implementation of Entity-level Controls.
Evaluate the Design and Implementation of Activity-level Controls.
Document the Understanding of Internal Control.
Considering Control Objectives and Key Controls
Control Objectives.
Key Controls.
Do Not Forget about Complementary Controls and Controls over Spreadsheets.
Consider Segregation of Duties.
304 UNDERSTANDING ENTITY-LEVEL CONTROLS
Control Environment
What Is the Control Environment?
Control Objectives.
Risk Assessment Procedures and Factors to Consider.
Considering Management Control Consciousness.
Impact of the Control Environment in Assessing Risk.
Effect of Information Technology on the Control Environment.
Documentation of the Control Environment.
Risk Assessment
The Entity's Fraud Risk Assessment and Monitoring.
Control Objectives.
Risk Assessment Procedures and Factors to Consider.
Documentation of the Client's Risk Assessment Process.
Information and Communication
Information.
Communication.
Documentation of the Understanding of Information and Communication.
Monitoring
Risk Assessment Procedures and Factors to Consider.
Consideration of Internal Audit Function.
Documentation of the Client's Monitoring Process.
305 UNDERSTANDING ACTIVITY-LEVEL CONTROLS
Financial Reporting System
Identifying Significant Transaction Classes.
Understanding the Flow of Information for Significant Transaction Classes.
Understanding the Financial Close and Reporting Process.
Control Objectives.
Risk Assessment Procedures.
Walkthroughs.
Documentation of the Understanding of the Financial Reporting System.
IT Environment and General Computer Controls
IT Environment.
General Computer Controls.
Documentation of the IT Environment and General Computer Controls.
Control Activities
Obtaining an Understanding of Control Activities.
When Is an Additional Understanding of Control Activities Necessary?
Documenting Activity-Level Controls
Documenting the Financial Reporting System and Walkthroughs.
Documenting the IT Environment and General Computer Controls.
Documenting Control Activities.
306 PLANNING DECISIONS AND JUDGMENTS
Determining Materiality at the Financial Statement Level
Quantifying Planning Materiality.
Desirability of a Single Benchmark.
Benchmarks.
Selecting a Percentage.
Sources of Amounts for Worksheet.
Determining Materiality for Particular Items of Lesser Amounts
Documentation.
Special Considerations for Financial Institutions in Making a Preliminary Judgment.
Determining Tolerable Misstatement
A Practical Approach to Determining Tolerable Misstatement.
Caution on Use of Planning Materiality for Evaluation.
Other Considerations
Effect of Off-balance-sheet Accounts.
Application to Servicing Portfolios.
Relating Planning Materiality and Tolerable Misstatement to Accounts and Transactions
Trivial Misstatements
Assessing Risks of Material Misstatement at the Financial Statement Level
Responding to Risks at the Financial Statement Level.
Documentation.
Establishing an Overall Audit Strategy
Effect of Information Technology (IT) on Audit Strategy.
Other Audit Strategy Considerations.
Timing of Developing the Audit Strategy.
Communicating with Those Charged with Governance.
Documentation.
307 CONSIDERATION OF FRAUD
Types of Misstatements Caused by Fraud
Misstatements Resulting from Fraudulent Financial Reporting.
Misstatements Resulting from Misappropriation of Assets.
The Auditor's Responsibility for Fraud Detection
Immaterial Misstatements Caused by Fraud.
The Importance of Exercising Professional Skepticism
The Auditor's Fraud Risk Assessment Process
Practice Aids for Documenting the Fraud Risk Assessment.
Detection of Illegal Acts
Fraud Consulting Services
308 CONSIDERATION OF THE CLIENT'S COMPLIANCE WITH LAWS AND REGULATIONS
309 TIMING OF FURTHER AUDIT PROCEDURES
310 GENERAL PLANNING PROCEDURES AND FORMS
311 PLANNING THE AUDIT TIME ESTIMATE
Managing Client Assistance to Improve Efficiency
Schedules Prepared by the Client.
APPENDIX 3A: Sources of Information for Financial Institutions
APPENDIX 3B: Accounting, Auditing, and Regulatory Resources on the Internet
APPENDIX 3C: 2009 Form Modifications
APPENDIX 3C-1:
CHAPTER 4: ASSESSING RISKS AND DEVELOPING THE DETAILED AUDIT PLAN
400 INTRODUCTION
401 THE CONCEPT OF FINANCIAL STATEMENT ASSERTIONS
Assertions for Classes of Transactions
Assertions for Account Balances
Assertions for Presentation and Disclosure
Relevant Assertions
Implementation of Assertion Categories
Using the PPC Approach.
402 IDENTIFYING RISKS OF MATERIAL MISSTATEMENT AT THE RELEVANT ASSERTION LEVEL
Gathering Information from Risk Assessment and Other Planning Procedures
Synthesizing the Information
Why Is Synthesis Important?
Synthesis Considerations.
Considering the Type of Risk.
Considering Pervasiveness of the Risk.
Considering What Can Go Wrong at the Assertion Level.
Considering Fraud Conditions.
Considering Magnitude of the Risk.
Synthesis Questions.
Identifying Risks of Material Misstatement
Articulating Risks.
Examples of Synthesis.
Documenting Identified Risks
Assessing Identified Risks
403 ASSESSING RISKS OF MATERIAL MISSTATEMENT AT THE RELEVANT ASSERTION LEVEL
The Audit Risk Model
Risk of Material Misstatement
Assessing the Risk of Material Misstatement at the Relevant Assertion Level
PPC Approach.
General Risk Assessment Factors.
Determining Significant Audit Areas.
Describing Specific Risks of Material Misstatement.
Determining the Documentation Approach to Be Used When Assessing the Risk of Material Misstatement.
Assessing Inherent Risk.
Assessing Control Risk.
Assessing the Combined Risk of Material Misstatement.
Documenting the Risk of Material Misstatement.
Responding to the Risk Assessment.
404 CONSIDERING FRAUD RISKS
Fraud Risk Factors
Identifying Risks of Material Misstatement Due to Fraud
Considering Fraud Conditions.
The Synthesis Process.
Articulating Fraud Risks.
Presumption of Revenue Recognition as a Fraud Risk.
Assessing Risk of Material Misstatement Due to Fraud
Considering Mitigating Controls.
Special Considerations for Small Institutions.
Responding to Fraud Risks
Documenting Risks of Material Misstatement Due to Fraud
405 RESPONDING TO THE RISK ASSESSMENT AND PREPARING THE DETAILED AUDIT PLAN
Determining the Audit Approach
Limited Procedures Approach.
Basic and Extended Approaches (Core).
Basic Procedures.
Extended Procedures (Procedures for Additional Assurance).
Documenting the Response.
Tailoring the Audit Programs
Core Audit Programs Provide a Starting Point.
Initial Audit Programs.
Electronic Tools.
Core Audit Programs.
Initial Audit Programs.
Documentation Requirements
APPENDIX 4A: Specific Inherent Risk Factors for Selected Audit Areas
CHAPTER 5: FURTHER AUDIT PROCEDURES
500 INTRODUCTION
Authoritative Literature
501 SUBSTANTIVE PROCEDURES
Substantive Procedures Required in Every Audit
Material Account Balance, Transaction Class, or Disclosure.
Financial Statement Reporting System.
Significant Risks.
Other Required Audit Procedures.
Choosing Substantive Procedures
Considering the Sufficiency and Appropriateness of Audit Evidence.
Nature, Timing, and Extent of Substantive Procedures.
Selecting Appropriate Substantive Procedures.
Choosing between Analytical Procedures and Substantive Tests of Details.
Examples of Specific Substantive Procedures for Financial Institutions.
Tests of Details
Confusion about Tests of Details of Transactions.
Required Documentation.
Substantive Analytical Procedures
What Are Analytical Procedures?
Purposes of Analytical Procedures.
What Distinguishes Substantive Analytical Procedures?
Determining Whether Circumstances Are Favorable to Substantive Analytical Procedures.
Analytical Procedures and Fraud Detection.
Analytical Procedures and Accounting Estimates.
How to Identify and Evaluate Significant Differences.
Documentation of Substantive Analytical Procedures.
Practice Aids.
Other Issues Related to Substantive Procedures
Responses to Further Address the Risk of Management Override of Controls.
Examining Journal Entries.
Reviewing Accounting Estimates.
Evaluating Significant Unusual Transactions.
Effect on Audit Programs.
Documenting Fraud Risk Responses.
Timing of Substantive Procedures
Evaluating the Practicality of Performing Interim Audit Procedures.
Choosing an Interim Date.
Testing the Remaining Period.
502 TESTS OF CONTROLS
Basic Approach to Tests of Controls
Deciding Whether To Test Controls
The Risk Assessment Includes an Expectation of Operating Effectiveness.
Substantive Procedures Alone Do Not Provide Sufficient Audit Evidence.
Deciding Which Controls To Test
Improperly Designed Controls or Controls Not Implemented.
Tests of Controls versus Processes.
Controls Relevant to Identified Risks.
Key Controls.
Control Activities and Complementary Controls.
Easy-to-test Controls.
Selecting Appropriate Procedures
Nature and Types of Tests of Controls.
Performing Tests of Controls
Timing of Tests of Controls.
Interim Testing of Controls.
Extent of Tests of Controls.
Concurrent Tests of Controls and Substantive Procedures.
Testing IT-Related Control
How a Client's Computer Affects Internal Control.
Types of Computer Control Activities.
Approaches to Testing Computer Controls.
Testing Procedures.
Evaluating Tests of Controls and Assessing Control Risk
Evaluating the Evidence about Operating Effectiveness.
Considering the Amount of Audit Evidence Necessary to Support a Control Risk Assessment.
Effect of the Control Risk Assessment on Substantive Procedures.
Documenting Tests of Controls and the Control Risk Assessment
Practice Aids.
503 TESTS OF CONTROLS FOR LOANS RECEIVABLE AND DEPOSIT ACCOUNTS
General Considerations
Internal Control Characteristics.
Approaches to Testing Controls.
Tests of Controls Relating to Existence of Loans Receivable
Types of Controls.
Basic Tests of Controls.
Additional Tests of Controls to Assess Control Risk as Low.
Tests of Controls Relating to Existence and Accuracy or Classification of Deposit Accounts
Types of Control Procedures.
Basic Tests of Controls.
Additional Tests of Controls to Assess Control Risk as Low.
CHAPTER 6: SAMPLING IN A FINANCIAL INSTITUTION AUDIT ENGAGEMENT
600 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
Considerations for Financial Institution Audits
Definition and Uses of Audit Sampling
Relation of Types of Audit Procedures to Audit Sampling
Substantive Tests of Account Balances.
Substantive Tests of Transactions.
Tests of Controls.
Content of This Chapter
601 REQUIREMENTS THAT APPLY TO ALL SUBSTANTIVE SAMPLES
The Basic Requirements
Representative Selection
Selecting Sample Items.
602 SAMPLING IN SUBSTANTIVE TESTS OF DETAILS
Planning Considerations
Assessing Risk of Incorrect Acceptance.
Assessing Tolerable Misstatement.
Assessing Expected Misstatement.
Considering Population Size.
Relating Factors to Determine Sample Size.
A Practical Approach to Nonstatistical Sampling
Selecting the Sample
Using Data Extraction Software to Select the Sample.
Projecting the Misstatement
Considering Sampling Risk
Considering Qualitative Characteristics
Unacceptable Sampling Risk.
Documentation of Substantive Sampling Applications
603 CONFIRMATION PROCEDURES FOR LOANS RECEIVABLE AND DEPOSIT ACCOUNTS
General Considerations
Positive versus Negative Confirmations.
Documentation Considerations.
Specific Considerations for Confirmation of Loans Receivable
Positive and Negative Confirmations.
Designing Loan Confirmation Requests.
Extent of Positive Confirmation Procedures.
Selecting Loans for Positive Confirmation.
Selecting Loans for Negative Confirmation.
Handling Exceptions.
Performing Alternative Procedures on Nonreplies and Post Office Returns.
Client Requests Not to Confirm.
Confirmation of Loan Participations.
Specific Considerations for Confirmation of Deposit Accounts
Positive versus Negative Confirmations.
Designing Confirmation Requests.
Extent of Positive Confirmation Procedures.
Selecting Deposit Accounts for Positive Confirmation.
Selecting Deposit Accounts for Negative Confirmation.
Handling Exceptions.
Alternative Procedures for Nonreplies and Post Office Returns.
No Mail Accounts.
Confirmation of Customer Relationships.
Interim Confirmations
Confirmation of Member's Loans and Deposit Accounts in Audits of Credit Unions
604 TESTS OF CONTROLS USING AUDIT SAMPLING
Terminology for Sampling in Tests of Controls
Selecting and Performing Tests of Controls
Determine Sample Size
A Recommended Approach for Sampling for Tests of Controls
Selecting a Sample
Evaluating the Results of Tests of Controls Involving Sampling
Documenting Tests of Controls Involving Sampling
605 CASE STUDIES
Loans Receivable Confirmation Procedures
Risk of Material Misstatement.
Tests of Controls.
Determining the Extent of Confirmation Procedures.
Selecting Loans for Confirmation.
Documenting the Results of the Confirmation Procedures.
Deposit Accounts Confirmation Procedures
Determining Whether Negative Confirmations Can Be Used.
Risk of Material Misstatement.
Tests of Controls.
Determining the Extent of Confirmation Procedures.
Selecting Accounts for Confirmation.
Documenting the Results of the Confirmation Procedures.
CHAPTER 7: OTHER AUDIT CONSIDERATIONS
700 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
701 AUDIT DOCUMENTATION
Other Authoritative Literature
Purposes and Basic Requirements of Workpapers
Basic Requirements for Content.
Documenting Specific Items Tested and Other Procedures
Documenting the Identification of Preparer and Reviewer
Documenting Significant Findings or Issues
Documenting Revisions after the Date of the Auditor's Report
Documentation Completion Date.
Assembling and Completing the Audit File.
Retention of Documentation
Ensuring the Integrity of Workpapers
Loss or Destruction of Audit Documentation
Access by Regulators to Workpapers
702 ELECTRONIC (PAPERLESS) WORKPAPERS
Determining Which Documents to Keep in Hardcopy Form
Professional Standards.
Legal Considerations.
Determining What Works Best for the Firm.
Scanned Documents.
Signatures and Sign-offs
Printing Electronic Workpapers
Backing up and Archiving
Saving Changes to Documents.
Backing up Engagements.
Archiving Engagements.
Software Applications.
Retention of Electronic Workpapers
703 AUDITING CONSOLIDATED OR COMBINED FINANCIAL STATEMENTS
Accounting Considerations for Consolidated and Combined Financial Statements
Combined Financial Statements.
Factors Affecting Procedures
Scope of the Auditor's Report.
Number, Size, and Nature of Subsidiaries.
Client Expectations.
Determining Materiality
Consolidated Planning Materiality.
Adjusted Consolidated Planning Materiality.
Individual Subsidiary Planning Materiality.
Intercompany Transactions and Balances
Intercompany Profit.
One-sided Entries.
Audit Considerations.
704 USING THE WORK OF OTHER AUDITORS
Definitions
Authoritative Literature
Decision Not to Make Reference
When Other Auditors Have Ceased Operations
Financial Statements That Include Investments Accounted for by the Equity Method
Procedures Performed by Other Auditors with Respect to Elements, Accounts, or Items of Financial Statements
Using the Work of Predecessor Auditors
705 USING COMPUTERIZED DATA EXTRACTION TECHNIQUES
Introduction
Overview
Improved Audit Efficiency.
Better Quality Audits.
Increased Opportunities to Offer New Consulting Services.
Cautions for Using DES.
Process of Using DES
Planning for the Use of DES.
Obtaining Data from the Client.
Corroboration of Client Data.
Processing of Data.
Documentation of DES Procedures.
Examples of Opportunities to Use DES
Requirements of DES
DES Requirements.
CHAPTER 8: LOANS RECEIVABLE AND LOAN LOSS ALLOWANCE
800 INTRODUCTION
Accounting and Auditing Literature
Accounting Literature.
Auditing Literature.
Regulatory Literature
What This Chapter Covers
801 AUDIT PROCEDURES FOR OBTAINING AUDIT EVIDENCE
Relevant Assertions for Loans Receivable and Related Accounts
Major Categories of Audit Procedures
802 OBTAINING AN UNDERSTANDING OF THE LOAN PORTFOLIO
Types of Loans
Commercial Business Loans.
Real Estate Loans.
Installment Loans.
Automobile Lease Financing.
Other Consumer Loans.
Other Commercial Loans.
Participations
Lending Risks
Documenting the Understanding of the Loan Portfolio
803 OBTAINING AN UNDERSTANDING OF THE CLIENT'S LENDING ACTIVITIES
Origination and Disbursement Activities
Credit Scoring.
Risk-based Lending.
Common Credit Scoring and Risk-based Lending Control Weaknesses.
Online Lending.
Servicing and Accounting Activities
Credit Monitoring and Collection Activities
Internal Loan Review Activities
Loan Evaluation Activities
Documenting the Understanding of Lending Practices
804 ACCOUNTING PRINCIPLES AND PRACTICES REGARDING THE ALLOWANCE FOR LOAN LOSSES
Basic Principles--SFAS No. 5 and the AICPA Industry Audit and Accounting Guide
Accounting Practices of Banks, Savings Institutions, and Credit Unions
Accounting Practices of Banks.
Accounting Practices of Savings Institutions.
Accounting Practices of Credit Unions.
Accounting for Losses Relating to Specific Loans
Accounting for Troubled Debt Restructurings
What Is a Troubled Debt Restructuring?
Has a Troubled Debt Restructuring Occurred?
Is the Debtor Experiencing Financial Difficulty?
Has the Creditor Granted a Concession?
Modification of Loan Terms.
Accounting for a Modification of Loan Terms.
Foreclosures and Other Asset Transfers.
Combination Restructurings.
Example of a Combination Restructuring.
Substitute Borrowers.
Accounting for In-substance Foreclosures
Accounting for Nonaccrual Loans
805 LOAN REVIEWS AND SPECIFIC ALLOWANCES
Overview of Auditing the Allowance for Loan Losses
Loan Reviews
Selecting Loans for Detailed Review
Assessing the Adequacy of the Extent of Detailed Loan Reviews
Loan File Contents
Document Review Procedures
Legal Obligation.
Loan Authorization.
Borrower Performance.
Personal Guarantees.
Collateral.
Assessing the Lender's Rights to Collateral.
Assessing Collateral Value.
Discussions with Loan Officers
Other Loan Documentation
Documentation of Loan Reviews
Limited Document Inspections on Recurring Engagements
Special Considerations for Credit Union Audits
Performing Loan Reviews as Tests of Controls
Estimating Specific Allowances
Determining Whether a Loan Is Impaired.
Estimating Losses on Impaired Loans.
Determining the Recorded Investment in the Loan.
Estimating Loan Losses Using the Fair Value of the Collateral.
Estimating Losses Using the Expected Cash Flows Method.
Example of the Expected Cash Flows Method.
Example of Applying the Expected Cash Flows Method in Subsequent Periods.
Estimating Losses Using Aggregate Collection Experience.
Classifying Impaired Loans.
Specific Allowances for Loans Not Reviewed
806 ASSESSING THE ALLOWANCE FOR LOAN LOSSES OTHER THAN SPECIFIC ALLOWANCES
Estimating Losses on Classified Loans
Determining the Loss Percentage for Substandard Loans.
A Word of Caution.
Using the Client's Substandard Classification for Loans Not Reviewed.
Estimating Losses on Loan Pools
Special Considerations for Insured or Guaranteed Loans.
Special Considerations for Installment Loans Purchased from Dealers.
Estimating the General Component of the Allowance for Loan Losses
Regulatory Guidance Related to the Unallocated Portion of an Allowance Account.
Overall Assessment of the Recorded Allowance
Special Considerations for Credit Union Audits
Considerations for Interim Audit Procedures
807 ACQUISITION, DEVELOPMENT, AND CONSTRUCTION (ADC) LOANS
What Are ADC Loans?
Authoritative Literature
Classifying ADC Arrangements
Evaluating Personal Guarantees
Accounting for ADC Arrangements as Loans
General Considerations for ADC Arrangements Accounted for as Joint Ventures or Investments
Accounting for ADC Arrangements as Joint Ventures
Accounting for an ADC Arrangement as a Direct Investment in Real Estate
Changes in Classification
Construction or Development Loans at Credit Unions
808 PROCEDURES FOR RELATED AUDIT AREAS
Interest Income on Loans
Unearned Discounts on Installment Loans.
Example of Rule of 78s versus Interest Method Amortization.
Accrued Interest Receivable
Loan Fees and Costs
Audit Considerations of Loan Costs and Fees.
Loan Costs and Fees for Credit Unions.
Loans in Process
Advance Payments by Borrowers for Taxes and Insurance (Escrows)
809 CASE STUDY ON AUDITING THE ALLOWANCE FOR LOAN LOSSES
Specific Allowances
Allowance Related to Classified Loans
Allowances for Loan Pools
General Allowance for Other Losses in the Loan Portfolio
Concluding on the Recorded Allowance
APPENDIX 8A: Legal Lending Limit and Loan to Value Ratio Regulations
APPENDIX 8B: Examples of Documentation for Various Types of Collateral
APPENDIX 8C: Assessing Real Estate Appraisals
CHAPTER 9: INVESTMENTS
900 INTRODUCTION
Type of Investments
Accounting Literature
Presentation of Assets and Liabilities.
Fair Value Measurements.
The Fair Value Option.
Consolidating Financial Statements.
Continuing Developments.
Auditing Literature
Auditing Fair Value
Organization of This Chapter
901 OPERATING AND REGULATORY CONSIDERATIONS
Operating Considerations
Liquidity.
Asset Diversification.
Earnings.
Risk-based Capital Requirements.
Qualified Thrift Lender (QTL) Test Requirement.
Other Objectives.
Regulatory Considerations
Investments Allowed
Management and Accounting Practices
Accounting Practices.
Unsuitable Investment Practices.
902 ACCOUNTING FOR INVESTMENT SECURITIES UNDER SFAS NO. 115
Accounting Approach
Investment Categories.
Classifying Debt Securities as Held-to-maturity.
Transfers between Categories.
Impaired Securities.
Interest and Dividend Income.
Accounting for Transfers and Servicing of Financial Assets
Changes in Accounting for Debt Securities and Receivables.
Transfers and Servicing of Financial Assets.
903 UNDERSTANDING AND ACCOUNTING FOR DERIVATIVE INSTRUMENTS
What Is a Derivative?
Underlyings, Notional Amounts, and Payment Provisions.
Initial Net Investment.
Net Settlement.
Contracts Not Subject to SFAS No. 133 (FASB ASC 815).
Identifying Derivatives
Common Uses of Derivatives
Interest Rate Swap.
Options to Establish a Range of Interest Rates.
Embedded Derivatives
General Measurement Considerations
Fair Value Hedges.
Cash Flow Hedges.
Foreign Currency Hedges.
904 AUDIT PROCEDURES FOR OBTAINING AUDIT EVIDENCE
Relevant Assertions for Investments and Derivatives
Substantive Audit Procedures
Testing the Existence and Completeness of Investments
Confirmation.
Physical Inspection.
Vouching Purchase Transactions.
Testing Valuation of Investments
Testing Investment Classifications.
Equity Securities.
Debt Securities.
Determining the Appropriate Valuation for Securities.
Other-than-temporary Impairment
Other Procedures Relating to Investments
Tests of Sales Transactions.
Wash Sales.
Transfers of Financial Assets.
Tests of Interest Income.
Tests of Dividend Income.
Auditing Derivatives and Hedging Activities
Testing Existence and Completeness of Derivatives.
Testing Valuation of Derivatives.
Management Representations.
905 REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
What Are Repurchase Agreements and Reverse Repurchase Agreements?
Risks of Repurchase and Reverse Repurchase Agreements
Regulatory Guidance.
Accounting Principles
Accounting Requirements for Transfers of Financial Assets.
Audit Procedures
Dollar Repurchase and Reverse Repurchase Agreements
Accounting.
Audit Procedures.
906 EQUITY INVESTMENTS
Accounting Methods
Selecting the Proper Accounting Method
Exceptions to the Use of the Equity Method.
Applying the Equity Method
Accounting for an Excess Purchase Price.
Intercompany Profits.
Differences in Fiscal Year Ends.
Audit Procedures
Audits of Investments Accounted for by the Equity Method or Consolidation.
Use of Other Auditors.
APPENDIX 9A: Determining Fair Values of U.S. Government and Agency Bonds Using The Wall Street Journal
CHAPTER 10: FORECLOSED ASSETS AND REAL ESTATE INVESTMENTS
1000 INTRODUCTION
Authoritative Literature
Presentation of Assets and Liabilities.
Fair Value Measurements.
The Fair Value Option.
Organization of This Chapter
1001 AUDIT PROCEDURES FOR OBTAINING AUDIT EVIDENCE
Relevant Assertions for Foreclosed Assets and Real Estate Investments
1002 FORECLOSED ASSETS
Accounting at Foreclosure
Foreclosure under a Second Lien.
Foreclosed Real Estate Previously Sold and Accounted for under SFAS No. 66.
Does SFAS No. 15 (FASB ASC 310-40; 470-60) Apply to All Foreclosures?
Auditing Initial Foreclosures.
Accounting after Foreclosure
Repairs and Physical Improvements.
Accounting for Foreclosed Assets Held for Sale.
Accounting for Foreclosed Assets to Be Held and Used or Held for Disposal Other Than by Sale.
Auditing the Carrying Amount of Foreclosed Assets.
Auditing Sales of Foreclosed Assets
Estimating Future Cash Flows
Types of Future Cash Flows.
1003 COSTS OF REAL ESTATE DEVELOPMENT AND CONSTRUCTION PROJECTS
Cost Capitalization
Preacquisition and Acquisition Costs
Development and Construction Costs
Accounting for Development and Construction Costs.
Cost Capitalization on Project Components.
Effect of Temporary Interruptions on Cost Capitalization.
Interest Costs
Capitalization Method.
Average Accumulated Expenditures.
Interest Capitalization Rate.
Limitation on Capitalized Interest.
Property Taxes and Insurance Costs
Capitalized Costs and Recoverability
Cost Allocation
Specific Identification Method.
Relative Value Methods.
Other Allocation Methods.
Audit Considerations
1004 ACCOUNTING FOR REAL ESTATE SALES--THE METHODS USED
Calculating Gains under SFAS No. 66
What Is Sales Value?
Full Accrual Method
When Is It Used?
How Is Gain Recognized?
Installment Method
When Is It Used?
How Is Gain Recognized?
Additional Gain Recognition.
Installment Method Worksheet.
Deposit Method
When Is It Used?
How Is Gain Recognized?
Example of the Deposit Method.
1005 ACCOUNTING FOR REAL ESTATE SALES--CHOOSING THE RIGHT METHOD
The Primary Conditions for Using the Full Accrual Method
Has the Sale Been Consummated?
Does the Sale Transfer the Risks and Rewards of Ownership?
Does the Seller Have a Superior Lien?
Are the Buyer's Investments Adequate?
What Constitutes the Buyer's Investments?
Assessing the Initial Investment.
What If the Initial Investment Test Is Not Met?
Determining When Recovery Is Reasonably Assured.
Assessing the Continuing Investment.
What Interest Rate Should Be Used?
What Constitutes a Normal Term?
Example of the Continuing Investment Test.
Importance of Collectibility.
What If the Continuing Investment Test Is Not Met?
Changing Accounting Methods
1006 AUDITING REAL ESTATE SALES
Determining the Extent of Testing
Procedures Used to Audit Real Estate Sales
Detailed Approach.
Shortcut Approach
Testing Recognition of Previously Deferred Gains
1007 IMPAIRMENT OF REAL ESTATE INVESTMENTS
Treatment of Asset Groups
Real Estate to Be Disposed of by Sale
Criteria for Classification.
Reporting.
Assessing Impairment.
Frequency of Assessment.
Depreciation of Real Estate to Be Disposed of by Sale.
Reclassification.
Real Estate to Be Disposed of Other Than by Sale
Real Estate to Be Held and Used
Signs of Possible Impairment.
Assessing Impairment.
Recognizing and Measuring Impairment.
Depreciation.
CHAPTER 11: CASH, OTHER ASSETS, AND LIABILITIES
1100 INTRODUCTION
Audit Procedures for Obtaining Audit Evidence
What This Chapter Covers
Presentation of Assets and Liabilities
Fair Value Measurements.
The Fair Value Option.
1101 CASH, DUE FROM BANKS, AND INTEREST-BEARING DEPOSITS
Types of Accounts
Cash on Hand.
Cash Items and Collections.
Clearings and Exchanges.
Balances Due from Banks and Other Financial Institutions.
Interest-bearing Deposits.
Overview of the Process of Clearing Checks through Other Institutions
Receipt of Checks.
Proof and Transit Department.
Clearing Checks through Other Institutions.
Clearing Checks Drawn on the Institution
Audit Procedures for Obtaining Audit Evidence Relating to Cash
Relevant Assertions for Cash.
Cash and Cash Items.
Clearings and Exchanges.
Due from Accounts.
Interest-bearing Deposits.
Surprise Entry Procedures
1102 FEDERAL FUNDS PURCHASED AND SOLD
What Are Federal Funds?
Substantive Audit Procedures
1103 PREMISES AND EQUIPMENT
Audit Procedures for Obtaining Audit Evidence Relating to Premises and Equipment
Relevant Assertions for Premises and Equipment.
Reviewing Changes in Premises and Equipment Accounts
Assessing the Reasonableness of Depreciation Expense
Assessing the Valuation of Premises and Equipment
1104 INTANGIBLE AND OTHER ASSETS
Audit Procedures for Obtaining Audit Evidence Relating to Intangible and Other Assets
Relevant Assertions for Intangible and Other Assets.
Intangible Assets
Intangibles Relating to Acquisition of Another Institution or Branch
Recording Goodwill and Other Intangible Assets.
SFAS No. 72 Goodwill.
Amortization of Goodwill.
Assessing the Impairment of Goodwill.
Frequency of Testing Goodwill for Impairment.
Amortization of Intangible Assets.
Assessing the Impairment of Intangible Assets.
Core Deposits.
Servicing Rights
Amortization Method.
Fair Value Measurement Method.
Reporting.
Audit Considerations
National Credit Union Share Insurance Fund (NCUSIF) Deposit
NCUA Corporate Credit Union Stabilization Program.
Authoritative Guidance.
Contributions Received by Credit Unions
1105 DEPOSIT ACCOUNTS
Types of Accounts
Checking Accounts.
Savings Accounts.
Certificates of Deposit.
Other Deposit Accounts.
Audit Procedures for Obtaining Audit Evidence Relating to Deposits
Relevant Assertions for Deposit Accounts.
Substantive Audit Procedures.
Brokered Deposits.
Dormant Accounts.
Overdrafts.
Interest Expense and Accrued Interest Payable.
1106 AUDIT PROCEDURES FOR OBTAINING AUDIT EVIDENCE RELATING TO LIABILITIES OTHER THAN DEPOSIT ACCOUNTS
Relevant Assertions for Liabilities Other Than Deposit Accounts
1107 BORROWINGS
Types of Borrowings
Government-sponsored Entity Advances.
Correspondent Bank Borrowing.
Agent Loans.
Treasury, Tax, and Loan Notes.
Loans from Corporate Credit Unions.
Other Borrowings.
Substantive Audit Procedures
Special Collateral Verification Procedures for Federal Home Loan Bank Advances
Identifying the Collateral Securing the FHLB Advances.
Testing the Existence of the Collateral.
Determining the Eligibility of the Collateral.
Assessing the Value of the Collateral.
Reviewing the Client's Report.
1108 OFFICIAL CHECKS, ACCOUNTS PAYABLE, AND ACCRUED EXPENSES
Official Checks
What Are Official Checks?
Accounting for Official Checks
Auditing Official Checks
Accounts Payable
Accrued Expenses
CHAPTER 12: INCOME TAXES
1200 OVERVIEW
Accounting Standards
SFAS No. 109.
Regulatory Limits on Deferred Tax Assets.
Other Accounting Literature Relating to Deferred Taxes.
Presentation and Disclosure of Income Tax Expense and Deferred Taxes.
Measurement and Disclosure of Operating Losses.
Special Areas.
How FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FASB ASC 740), Affects Accounting for Income Taxes.
Overview of This Chapter
1201 COMMON PERMANENT AND TEMPORARY DIFFERENCES
Special Internal Revenue Code Sections for Banks and Thrifts
The Taxability of Dividend Income
Cash Dividends from FRB and FHLB.
Stock Dividends from FHLB.
Loan Fees--Prior to 1994 (Generally)
Cash Basis Recognition of Loan Fees.
Old Original Issue Discount Rules.
Fees Must Be More Than De Minimis.
Fees Cannot Be Deductible.
Loan Fees--Post 1993 (Generally)
New OID Rules for Loan Fee Income.
Fees Cannot Be Deductible.
Loan Costs
Securities That Must Be Marked to Market
New Guidance from FSP FAS 115-2 and FAS 124-2.
Deciding Whether the Client Is a Dealer in Securities.
Tax Accounting for Investments by Dealers in Securities.
Tax Accounting for Investments by Institutions That Are Not Dealers in Securities.
Interest Expense Incurred to Carry Tax-exempt Investments
General Rules Regarding Nondeductible Interest Expense.
Qualified Tax-exempt Obligations.
Bad Debt Deductions for Banks and Thrifts
Bad Debt Deductions for Large Banks and Thrifts.
Bad Debt Deductions for Small Banks and Thrifts.
Thrift Definitional Tests
Bad Debt Charge-off Conformity Rules for Banks and Thrifts
Express Determination Requirement.
Making the Conformity Election.
Subchapter S Election
1202 AUDIT PROCEDURES FOR OBTAINING AUDIT EVIDENCE
Relevant Assertions for Income Taxes
Substantive Audit Procedures for Income Taxes
Preliminary Scanning
Computing Current Tax Expense
Assessing the Adequacy of the Current Tax Liability Prior to FIN No. 48
The Tax Cushion.
IRS Access to Workpapers.
Suggested Guidance Regarding Tax Cushions.
Reconciliation of Taxable and Accounting Income
Identifying Permanent and Temporary Differences.
Calculating the Deferred Tax Provision
Categorizing Temporary Differences.
Applicable Tax Rates.
Considering the Need for a Valuation Allowance
Importance of the Valuation Allowance Assessment in Financial Institution Audits.
Positive and Negative Evidence.
Assessing Positive and Negative Evidence.
The Need for Scheduling.
Tax Planning Strategies.
Audit Representations.
Special Considerations for Holding Companies
Presentation and Disclosures
Tax Department Review
1203 EFFECT OF IMPLEMENTING FASB INTERPRETATION NO. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
How FIN No. 48 Affects the Calculation of the Current Tax Provision
How FIN No. 48 Affects Deferred Taxes
Uncertain Tax Positions Related to State Nexus
Interest and Penalties
Financial Statement Disclosures
IRS Access to Workpapers
Audit Considerations
1204 WORKPAPER CONSIDERATIONS
Coordinating Tax Provision Work with Tax Return Preparation
Audit Program
Footnote Disclosures
1205 SPECIAL CONSIDERATIONS FOR AUDITORS OF STATE-CHARTERED CREDIT UNIONS
CUSOs
Form 990-T
Audit Considerations
Federal to State Charter Conversions
APPENDIX 12A: Example Express Determination Letter per Rev. Proc. 92-84
CHAPTER 13: CAPITAL REQUIREMENTS
1300 INTRODUCTION
Why Be Concerned?
Audit Procedures for Obtaining Audit Evidence
Relevant Assertions for Equity.
Troubled Asset Relief Program
Organization of This Chapter
1301 DEFINING CAPITAL RATIOS FOR BANKS AND SAVINGS INSTITUTIONS
Risk-based Capital Ratio
Qualifying Capital.
Interest Rate Risk Component (IRR).
Risk-weighted Assets.
Credit-equivalent Amount of Off-balance-sheet Items.
Calculating Risk-weighted Assets.
Leverage Capital Ratio
Tier 1 Risk-based Capital Ratio
Tangible Equity Ratio
Tangible Equity.
Tangible Capital Ratio
Testing Capital Ratios
1302 CAPITAL CATEGORIES FOR BANKS AND SAVINGS INSTITUTIONS
Background
Capital Categories
Restrictions and Corrective Actions
Undercapitalized Institutions.
Significantly Undercapitalized Institutions.
Critically Undercapitalized Institutions.
Consideration of Proposed Capital Rule Changes.
Regulatory Capital Disclosures
1303 CAPITAL REQUIREMENTS FOR FEDERAL CREDIT UNIONS
Capital Requirements
Background.
Prompt Corrective Action Regulations.
Prompt Corrective Action Categories.
Prompt Corrective Action Measures.
Net Worth Restoration Plans.
Complex Credit Unions.
Risk-based Net Worth Requirement.
Regulatory Capital Testing and Disclosures
APPENDIX 13A: Selected Capital Requirements Laws and Regulations
CHAPTER 14: CONCLUDING THE AUDIT
1400 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
1401 COMMITMENTS AND CONTINGENCIES
Accounting Standards
Audit Procedures
1402 ENVIRONMENTAL REMEDIATION LIABILITIES
Accounting Standards
Audit Procedures
Auditing the Estimated Liability.
Auditing Potential Recoveries.
1403 LAWYERS' LETTERS
Litigation
Unasserted Claims
Client Has Not Consulted a Lawyer
Evaluation of Lawyers' Responses
Dating of Lawyer's Response.
1404 MANAGEMENT REPRESENTATION LETTER
Reasons for Obtaining Letter
Written Representations to Be Obtained
Audit Adjustments
Periods Covered by the Letter
Dating of the Letter
Reliance on Management's Representations
1405 SUBSEQUENT EVENTS REVIEW
Types of Subsequent Events
Subsequent Events Review Procedures
Proposed Guidance on Subsequent Events
Accounting Guidance.
Auditing Guidance.
1406 RELATED PARTIES
Accounting Standards
Audit Procedures
At Start of Audit.
In Connection with Other Procedures.
Final Review.
Substantiating Material Related Party Transactions.
Related Party Transactions and Fraud.
Audit Procedures Related to Laws and Regulations Governing Related Party Transactions
1407 GOING CONCERN CONSIDERATIONS
Evaluating the Entity's Ability to Continue as a Going Concern
Assessing Results of Audit Procedures.
Conditions and Events.
Considering Compliance with Regulatory Capital or Reserve Requirements.
Consideration of Management Plans.
Procedures When There Is Substantial Doubt.
Modification of the Auditor's Report
Unqualified Opinion with Explanatory Paragraph about a Material Uncertainty Related to Regulatory Actions.
Unqualified Opinion with Explanatory Paragraph because of the Existence of Substantial Doubt about the Institution's Ability to Continue as a Going Concern.
Disclaimer of Opinion Due to the Existence of Substantial Doubt about the Institution's Ability to Continue as a Going Concern.
Documentation Requirements
Proposed SFAS on Going Concern
1408 RISKS AND UNCERTAINTIES
Disclosures about Risks and Uncertainties
Nature of Operations.
Use of Estimates.
Certain Significant Estimates.
Identifying Significant Estimates.
Disclosing Significant Estimates.
Current Vulnerability Due to Concentrations.
Identifying Concentrations.
Summary of Disclosure Requirements.
Assessing Severe Impact.
Assessing the Likelihood of Severe Impact.
Examples of Concentrations Disclosures.
Audit Procedures
Risk-reduction Techniques.
Lawyers' Letters.
Current Vulnerability Due to Concentrations.
Wording the Disclosures.
1409 ACCOUNTING ESTIMATES AND FAIR VALUE
Auditing Accounting Estimates
Auditing Fair Value Measurements and Disclosures
1410 CONSIDERING THE ACCUMULATED RESULTS OF AUDIT PROCEDURES
Reevaluating Risk Assessments
Evaluating the Existence of Fraud
Fraud Risk Assessment Is a Cumulative Process.
Required Procedures.
Evaluating Significant Unusual Transactions
Considering the Application of Significant Accounting Principles for Bias
Documentation Requirements
1411 ANALYTICAL REVIEW AND REVIEW OF WORKPAPERS
Analytical Review
Review of Workpapers
Detailed Review of Audit Work.
Supervisory Review.
Review Checklists.
Sole Practitioners.
Tax Department Review.
Engagement Quality Control Review.
Is Workpaper Review Required before Dating the Auditor's Report?
1412 SUMMARIZATION AND EVALUATION
Categories for Evaluation
Audit Differences
Known and Likely Misstatements.
Communication of Misstatements to Management.
Evaluating Audit Differences
Offsetting of Misstatements.
Trivial Misstatements.
Evaluating Estimates.
Different Levels for Different Amounts, Subtotals, or Totals.
Qualitative Considerations.
Overall Evaluation.
Evaluating the Existence of Fraud
Documentation Requirements
Summary of Audit Differences
Treatment of Prior-year Waived Adjustments.
Applying the Rollover and Iron Curtain Methods.
Evaluation of Overall Materiality
Analysis of Audit Time
Consultation on Technical Issues
1413 ENGAGEMENT SUMMARY MEMORANDUM (ESM)
Content of the ESM
Background Information.
Recap of Risk Assessments.
Summary of Operating Results.
Significant Accounting and Auditing Issues.
Review Performed by the Engagement Partner.
Summary of Audit Differences.
Summary of Significant Deficiencies and Material Weaknesses.
Opinion.
Report Release Date and the Documentation Completion Date.
Subsequent Revisions to Workpapers.
Signing the ESM.
1414 SUBSEQUENT DISCOVERY OF FACTS EXISTING AT DATE OF REPORT
Consideration of Omitted Procedures
Documentation Requirements
1415 WORKPAPER FINALIZATION AND RETENTION
Documentation Completion Date
Workpaper Retention
CHAPTER 15: FINANCIAL STATEMENTS AND AUDITOR'S REPORTS
1500 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
Nonauthoritative Guidance
Limited Guidance on Reporting
1501 PREPARING FINANCIAL STATEMENTS
Consolidated Financial Statements
SFAS No. 160.
Statement Titles
Financial Statement Disclosures
Disclosure Checklist.
1502 BALANCE SHEET
Cash and Amounts Due from Depository Institutions
Federal Funds Balances and Repurchase Agreements
Investment Securities
Disclosures for Investment Securities.
Financial Instruments Disclosures.
Other Disclosures.
Investments Accounted for by the Equity Method and Investments in Joint Ventures.
Investments Accounted for by the Cost Method.
Loans
SFAS No. 114 Requirements.
SOP 03-3 (FASB ASC 310-30) Requirements.
Premises and Equipment
Real Estate
Other Assets
Goodwill and Other Intangible Assets.
Disclosures about Servicing Assets.
Deposits and Members' Share Accounts
Borrowings
Income Taxes
Special Considerations for Credit Unions.
Other Liabilities
Transfers of Receivables with Recourse.
Financial Guarantees.
Stockholders' (Members') Equity
Regulatory Capital Disclosures.
Additional Disclosures for Noncompliance with Capital Requirements.
Other Disclosures.
Mandatorily Redeemable Stock and Other Financial Instruments with Characteristics of Liabilities and Equity
Troubled Asset Relief Program.
1503 STATEMENT OF INCOME
Interest Income
Interest Expense
Other Income
Equity in Earnings of Unconsolidated Subsidiaries and Joint Ventures.
Other Expenses
1504 COMPREHENSIVE INCOME
Reporting Comprehensive Income
Classifying Other Comprehensive Income.
Reclassification Adjustments.
Tax Effects Related to Other Comprehensive Income.
Financial Statement Presentation.
Interim Reporting.
Reporting Accumulated Comprehensive Income in the Balance Sheet
1505 STATEMENT OF CASH FLOWS
Defining Cash and Cash Equivalents
Reporting Gross and Net Cash Flows
Cash Flows from Investment Securities
Cash Flows from Loans Held for Sale
Noncash Investing and Financing Activities
1506 OTHER FINANCIAL STATEMENT DISCLOSURES
Commitments and Contingencies
Conversion from Mutual to Stock Association
Disclosures for Impairment of Long-lived Assets
1507 FINANCIAL INSTRUMENTS DISCLOSURES
What Are Financial Instruments?
Authoritative Literature
Disclosures of Credit Risk Concentrations
Determining Whether a Financial Instrument Is Subject to Credit Risk.
Identifying Concentrations of Credit Risk.
Disclosures for Significant Concentrations of Credit Risk.
Disclosure Considerations for Market Risk.
Disclosure Considerations for Underwriting Procedures.
Disclosure of Off-balance-sheet Credit Risk
Fair Value of Financial Instruments (SFAS No. 107)
Institutions Excluded from the Requirements of SFAS No. 107.
Financial Instruments Excluded from the Requirements of SFAS No. 107 (FASB ASC 825-10).
Determining the Fair Value of Financial Instruments.
Cash, Due from Banks, and Interest-bearing Deposits.
Federal Funds Purchased and Sold.
Investment Securities.
Single-family Residential Loans.
Consumer Loans.
Commercial Loans.
Impaired Loans.
Accrued Interest Receivable and Payable.
Deposit Accounts.
Official Checks Outstanding.
Borrowings.
Loan Commitments.
Letters of Credit.
Fair Value Measurement Disclosures (SFAS No. 157)
SFAS No. 157 Effective Date.
Auditing Fair Value Disclosures
Consideration of Voluntary Disclosures.
Financial Guarantees
Derivative Financial Instruments and Hedging Disclosures
SFAS No. 133.
SFAS No. 140 on Transfers and Servicing of Financial Assets
Mandatorily Redeemable Stock and Other Financial Instruments with Characteristics of Liabilities and Equity
1508 AUDITOR'S REPORTS
Audit Report Date
Report Release Date
Reference to PCAOB Standards in an Audit Report of a Nonissuer
Optional Additional Language Related to Internal Control
Additional Information Accompanying the Basic Financial Statements
Audited Financial Statements Included in Another Document
Special Considerations for Credit Unions
Reporting When the Audit Is Performed in Accordance with International Standards on Auditing.
Reporting on Financial Statements Prepared in Conformity with International Financial Reporting Standards.
1509 REPORT ISSUANCE AND CLIENT COMMUNICATIONS
Discussion with Management
Unresolved Issues.
Internal Control Related Matters, Errors, and Fraud.
Other Matters.
Communicating Internal Control Related Matters
Definitions.
Examples of Deficiencies.
Identifying Control Deficiencies.
Evaluating Control Deficiencies.
Aggregation of Deficiencies.
Mitigating Effects of Compensating Controls.
Qualitative Considerations.
Prudent Official Test.
Control Deficiency Evaluation and Aggregation Worksheet.
Control Deficiency Comment and Management Point Development Worksheet.
Practice Issue #1--Can the Auditor Draft the Financial Statements?
Practice Issue #2--What If the Auditor Identifies a Material Misstatement?
Communication Requirements.
Contents of the Communication.
Reporting When There Are No Significant Deficiencies.
Reporting When There Are No Material Weaknesses.
Illustrative Communications.
Management's Response.
Management Letter Comments.
Additional Guidance on SAS No. 115.
Communications with Those Charged With Governance
Matters to Be Communicated.
The Auditor's Responsibilities under GAAS.
Planned Scope and Timing of the Audit.
Significant Findings from the Audit.
Timing of the Communication.
Forms of Communication.
Evaluation of the Adequacy of the Auditor's Communication.
Documentation of Communications.
Considerations for FDICIA Engagements.
Communications about Possible Fraud or Illegal Acts.
Communication about the Institution's Ability to Continue as a Going Concern
APPENDIX 15A: Illustrative Financial Statements for a Savings Institution
APPENDIX 15B: Illustrative Financial Statements for a Credit Union
APPENDIX 15C: Illustrative Financial Statements for a Bank
CHAPTER 16: ATTESTATION ENGAGEMENTS--REPORTING ON INTERNAL CONTROL
1600 INTRODUCTION AND AUTHORITATIVE LITERATURE
Authoritative Literature
AT 101.
SSAE No. 13 (AT 20).
SSAE No. 14 (AT 50).
Current Developments in Internal Control Reporting for Financial Institutions
Integrated Audits for Public Financial Institutions.
Integrated Audits for Nonpublic Financial Institutions.
Organization of the Chapter
1601 AT 501 INTEGRATED EXAMINATION (AUDIT) OF INTERNAL CONTROL
Introduction
Definitions.
Integrated Audit.
Engagement Acceptance
Planning the Engagement
Preliminary Judgments about Materiality and Risk Assessment.
Complexity and Size of the Entity.
Risk of Fraud.
Using the Work of Others.
Using the Top-Down Approach
Identifying Entity-level Controls
Identifying Significant Accounts and Disclosures and Related Relevant Assertions
Selecting Controls to Test
Testing Controls
Controls to be Tested.
Testing Design Effectiveness.
Testing Operating Effectiveness.
Tests of Controls in an Integrated Audit Using Audit Sampling.
Determining the Amount of Evidence to Obtain.
Roll-forward Procedures.
Considerations in Subsequent Years' Audits.
Benchmarking for Tests of Automated Application Controls.
Evaluating the Effectiveness of the Design and Operation of Controls
Evaluating Whether Control Deficiencies Are Significant Deficiencies or Material Weaknesses.
Forming an Opinion on Control Effectiveness.
Management Representations
Required Representations.
Combined Representation Letter.
Considering Subsequent Events
Using Service Organizations
Audit Procedures Related to the Service Organization.
Required Communications
Management's Report on Internal Control
Reporting on Internal Control
Report Modifications.
1602 REPORTING UNDER THE FDIC IMPROVEMENT ACT OF 1991 (FDICIA)
Who Is Subject to the FDICIA Audit Requirements?
Applicability to Holding Company Subsidiaries.
Auditor Independence and Qualifications.
FDICIA Audit Requirements
Engagement Considerations
Integrated Audit.
Reporting Issues
Report on Management's Assertion.
Controls over Regulatory Reporting.
Reporting on Safeguarding Controls.
Holding Company Considerations.
Consideration of Other Information in a Document Containing the Attestation Report.
1603 ATTESTATION ENGAGEMENTS FOR SMALL INSTITUTIONS
Engagement Considerations
Objective of the Engagement.
Engagement Acceptance.
Timing of the Engagement.
Scope of the Engagement.
Engagement Procedures.
Reporting Considerations
APPENDIX 16A: Illustrative Reports for an AT 501 Examination (Integrated Audit)
PPENDIX 16A-1: Separate Report on Management's Assertion about the Effectiveness of the Entity's Internal Control (Report Drafting Illustration)
APPENDIX 16A-2: Separate Report--Adverse Opinion on the Entity's Internal Control (Report Drafting Illustration)
APPENDIX 16A-3: Separate Report--Disclaimer of Opinion on the Entity's Internal Control When There Is a Limitation on the Scope of the Examination (Report Drafting Illustration)
APPENDIX 16A-4: Separate Report on Management's Assertion about the Effectiveness of the Entity's Internal Control When the Auditor's Opinion Is Based in Part on the Report of Another Auditor (Report Drafting Illustration)
APPENDIX 16A-5: Combined Report on Internal Control and on the Financial Statements (Report Drafting Illustration)
APPENDIX 16B: Illustrative Report Under the FDIC Improvement Act of 1991 (FDICIA)
CHAPTER 17: SUPERVISORY COMMITTEE AUDITS
1700 INTRODUCTION
Overview of the NCUA Audit Requirements
Differences between a Financial Statement Audit and an Agreed-upon Procedures Engagement
Auditor's Responsibilities.
Scope of the Procedures Performed.
Timing of the Engagement.
Cost of the Engagement.
Type of Report Issued.
Regulatory Guidelines
Authoritative Literature
AT 101.
AT 201.
1701 PRE-ENGAGEMENT AND PLANNING ACTIVITIES
Pre-engagement Considerations
Obtaining Agreement Regarding the Procedures to Be Performed.
Assessing Whether the Procedures Are Appropriate.
The Importance of an Engagement Letter
Required Elements.
Other Matters.
Checklists and Practice Aids
Is the Preparation of an Agreed-upon Procedures Work Program Necessary?
1702 PERFORMING SUPERVISORY COMMITTEE AUDITS
Summary of the NCUA Supervisory Committee Audit and Accounting Requirements
Accounting Requirements.
General Responsibilities of the Supervisory Committee.
Reports.
Drafting the Agreed-upon Procedures Report.
Engagement Letters.
Workpaper Access.
Sanctions.
Verification of Members' Accounts
CHAPTER 18: OTHER SPECIAL ENGAGEMENTS
1800 INTRODUCTION
1801 ATTESTATION ENGAGEMENTS REGARDING FEDERAL STUDENT LOAN PROGRAMS
Overview of Federal Student Loan Programs
How Does the FFEL Program Work?
Lender Audit Requirements
Who Is Subject to the Requirements?
Engagement Due Dates.
Guidance Related to Other Types of Engagements.
Professional Standards
Attestation Standards.
SSAE No. 10 (AT 101) Minimum Level of Documentation.
SSAE No. 13 (AT 20).
SSAE No. 14 (AT 50).
Yellow Book Standards.
Types of Engagements
Determining the Appropriate Engagement.
Standard Engagements
Engagement Acceptance Considerations.
Written Assertions.
Engagement Letters.
Overview of the Standard Engagement.
Part 1 of the Standard Engagement: The Examination Engagement.
Obtaining an Understanding of the Specified Compliance Requirements.
Planning the Examination Engagement.
Obtaining and Verifying the LaRS.
Use of Internal Auditors.
Materiality.
Obtaining an Understanding of Internal Control over Compliance.
Tests of Controls.
Assessment of Control Risk.
Tests of Compliance.
Determining the Extent of Tests.
Obtaining Management Representations.
Forming an Opinion.
Reporting on the Examination.
Reporting on Material Noncompliance.
Subsequent Events.
Part 2 of the Standard Engagement: The Agreed-upon Procedures Engagement.
Obtaining an Understanding of the Compliance Requirements Regarding Prohibited Inducements.
Planning the Agreed-upon Procedures Engagement.
Performing the Agreed-upon Procedures.
Obtaining Management Representations.
Reporting on the Agreed-upon Procedures Engagement.
Performing Both Portions of the Standard Engagement.
Auditor's Reporting Package.
Corrective Action Plan.
Alternative Engagements
Engagement Acceptance Considerations.
Written Assertions.
Engagement Letters.
Overview of the Agreed-upon Procedures Engagement.
Planning Considerations.
Performing the Agreed-upon Procedures.
Service Organization Attestation Reports.
Scope Limitations.
Obtaining Management Representations.
Reporting on the Agreed-upon Procedures Engagement.
Reporting on Noncompliance.
Subsequent Events of Noncompliance.
Auditor's Reporting Package.
Combined Engagements
1802 TRUST DEPARTMENT (FIDUCIARY ACTIVITIES) AGREED-UPON PROCEDURES ENGAGEMENT
Trust Department Operations
Regulatory Requirements
Authoritative Literature
Engagement Letter
Types of Agreed-upon Procedures That Should Be Performed
Determining Extent of Procedures
Obtaining Client Representations
Drafting the Agreed-upon Procedures Report
1803 DIRECTORS' EXAMINATIONS
Authoritative Literature
Engagement Administration
Assessing Whether the Procedures Are Appropriate.
Checklists and Practice Aids
APPENDIX 18A: Selected Regulatory Audit Guidance for Fiduciary Activities
AFI-CL-2.1: Request for Legal Representation--Lawyer Is Requested to Provide Information
AFI-CL-2.2: Request for Legal Representation--Lawyer Is Requested to Confirm Information Provided by Client
AFI-CL-3: Management Representations
AFI-CL-3.1: Management Representation Letter
AFI-CL-3.2: Management Representation Letter Supplement--AT 501 Examination (Integrated Audit)
AFI-CL-3.3: Updating Management Representation Letter
AFI-CL-4: Internal Control Communications
AFI-CL-4.1: Communication of Significant Deficiencies
AFI-CL-4.2: Communication of Significant Deficiencies and Material Weaknesses
AFI-CL-4.3: Communication of No Material Weaknesses in a Separate Report
AFI-CL-5: Communication with Those Charged with Governance
AFI-CL-5.1: Communication with Those Charged with Governance during Planning
AFI-CL-5.2: Communication with Those Charged with Governance at or near the Conclusion of the Audit
AFI-CL-6: Cash Confirmations and Letters
AFI-CL-6.1: Standard Form to Confirm Account Balance Information with Financial Institutions
AFI-CL-6.2: Receipt for Cash Counted by Auditor
AFI-CL-6.3: Confirmation of Accounts with the Federal Reserve Bank
AFI-CL-6.4: Confirmation of Clearing Items
AFI-CL-6.5: Confirmation of Traveler's Checks Held on Consignment
AFI-CL-7: Receivables Confirmations and Letters
AFI-CL-7.1: Confirmation of Commercial Loan Receivable--Positive
AFI-CL-7.2: Confirmation of Installment Loan Receivable--Positive
AFI-CL-7.3: Confirmation of Mortgage Loan Receivable--Positive
AFI-CL-7.4: Confirmation of Construction Loan Receivable--Positive
AFI-CL-7.5: Confirmation of Commercial Loan Receivable--Negative
AFI-CL-7.6: Confirmation of Installment Loan Receivable--Negative
AFI-CL-7.7: Confirmation of Mortgage Loan Receivable--Negative
AFI-CL-7.8: Confirmation of Mortgage Loan Receivable Accompanying Loan Account Statement--Negative
AFI-CL-7.9: Confirmation of Loan Participations Purchased
AFI-CL-7.10: Confirmation of Loan Participations Sold
AFI-CL-8: Investments and Securities Confirmations and Letters
AFI-CL-8.1: Receipt for Securities Counted by Auditor
AFI-CL-8.2: Confirmation of Securities Held by a Broker
AFI-CL-8.3: Confirmation of Securities Held by a Third Party
AFI-CL-8.4: Confirmation of Securities Purchased under Agreements to Resell
AFI-CL-8.5: Confirmation of Securities Sold under Agreements to Repurchase
AFI-CL-9: Not Used
AFI-CL-10: Payables and Debt Confirmations and Letters
AFI-CL-10.1: Accounts Payable Confirmation
AFI-CL-10.2: Confirmation of Borrowings
AFI-CL-10.3: Confirmation of Mortgage Debt
AFI-CL-10.4: Confirmation of Compensating Balances
AFI-CL-10.5: Confirmation of Line of Credit
AFI-CL-10.6: Confirmation of Contingent Liabilities with Financial Institutions
AFI-CL-11: Benefit Plan Confirmations and Letters
AFI-CL-11.1: Request for Defined Benefit Plan Information
AFI-CL-11.2: Request for Plan Asset Information--Defined Benefit Pension and Other Postretirement Benefit Plans
AFI-CL-12: Other Confirmations and Letters
AFI-CL-12.1: Standard Confirmation Inquiry for Life Insurance Policies
AFI-CL-12.2: Confirmation of Insurance Coverage (Except Life Insurance)
AFI-CL-12.3: Confirmation of Lease Agreement
AFI-CL-12.4: Related Party Confirmation
AFI-CL-12.5: Registrar or Transfer Agent Confirmation
AFI-CL-12.6: Loan Servicing Letter Drafting Form
AFI-CL-12.7: Letter to Regulator
AFI-CL-12.8: Letter to Client About Regulator Access to Audit Documentation
AFI-CL-12.9: Data Request Letter
AFI-CL-13: Predecessor/Successor Communications
AFI-CL-13.1: Request for Predecessor Auditor to Release Information to Successor Auditor
AFI-CL-13.2: Letter Granting Successor Auditors Access to Workpapers
AFI-CL-13.3: Client Consent and Acknowledgment Letter
AFI-CL-13.4: Communication with Predecessor Auditor Prior to Final Engagement Acceptance
AFI-CL-13.5: Letter from Predecessor Auditor to Regulators Regarding Termination of Auditors
AFI-CL-13.6: Letter from Successor Auditor to Board of Directors or Audit Committee
AFI-CL-13.7: Letter from Financial Institution to Regulators for Change of Auditors
AFI-CL-13.8: Communication with Predecessor Auditor Prior to Engagement Proposal
AFI-CL-13.9: Request for Representation from Successor Auditor to Predecessor Auditor--Predecessor's Report Is Reissued
AFI-CL-14: Principal and Other Auditor Communications
AFI-CL-14.1: Request for Representations from Other Auditor Who Audits the Financial Statements of a Subsidiary, Division, or Branch
AFI-CL-14.2: Request for Representations from Other Auditor Who Performs Audit Procedures on Certain Elements, Accounts, or Items in Financial Statements
AFI-CL-14.3: Inquiry of Principal Auditor by Other Auditor
AFI-CL-14.4: Principal Auditor's Response to Inquiries from Other Auditor
AFI-CL-14.5: Letter from Principal Auditor to Other Auditors Regarding Related Parties
AFI-CL-15: Deposit Accounts Confirmations
AFI-CL-15.1: Confirmation of Demand Deposit and Savings Account--Positive
AFI-CL-15.2: Confirmation of Certificate of Deposit--Positive
AFI-CL-15.3: Confirmation of Demand Deposit and Savings Account--Negative
AFI-CL-15.4: Confirmation of Demand Deposit and Savings Account Accompanying Account Statement--Negative
AFI-CL-15.5: Confirmation of Certificate of Deposit--Negative
AFI-CL-15.6: Confirmation of Public Funds Deposited in the Institution
AFI-CL-16: Federal Funds Confirmations
AFI-CL-16.1: Confirmation of Federal Funds Sold
AFI-CL-16.2: Confirmation of Federal Funds Purchased
FIRM POLICIES
AFI-FP-1: Audit Team Members
FINANCIAL INSTITUTION CHECKLISTS AND PRACTICE AIDS
Application of Practice Aids to Engagements
AFI-CX-1: Planning and Preliminary Engagement Activities
AFI-CX-1.1: Engagement Acceptance Form
AFI-CX-1.2: Engagement Continuance Form
AFI-CX-1.3: ET Interpretation 101-3 Documentation Form
AFI-CX-2: Financial Statement Materiality Worksheet for Planning Purposes
AFI-CX-3: Understanding the Entity
AFI-CX-3.1: Understanding the Entity and Identifying Risks
AFI-CX-3.2: Engagement Team Discussion
AFI-CX-3.3: Fraud Risk Inquiries Form
AFI-CX-3.4: Audit Inquiries Summary Form
AFI-CX-4: Understanding Internal Control
AFI-CX-4.1: Understanding the Design and Implementation of Internal Control
AFI-CX-4.2: Financial Reporting System Documentation Forms
AFI-CX-4.2.1: Financial Reporting System Documentation Form--Significant Transaction Classes
AFI-CX-4.2.2: Financial Reporting System Documentation Form--IT Environment and General Computer Controls
AFI-CX-4.3: Walkthrough Documentation Table
AFI-CX-5: Activity and Entity-level Control Forms
AFI-CX-5.1: Entity-level Control Form for Control Environment
AFI-CX-5.2: Entity-level Control Form for Risk Assessment
AFI-CX-5.3: Entity-level Control Form for Information and Communication
AFI-CX-5.4: Entity-level Control Form for Monitoring
AFI-CX-5.5: Control Activities Form for General Computer Controls
AFI-CX-5.6: Control Activities Form for Financial Close and Reporting
AFI-CX-5.7: Control Activities Form for Cash, Due from Banks, and Teller Operations
AFI-CX-5.8: Control Activities Form for Investments, Derivatives, and Interest Income
AFI-CX-5.9: Control Activities Form for Loans Receivable and Interest Income
AFI-CX-5.10: Control Activities Form for Foreclosed Assets and Real Estate Investments
AFI-CX-5.11: Control Activities Form for Premises and Equipment
AFI-CX-5.12: Control Activities Form for Other Assets
AFI-CX-5.13: Control Activities Form for Deposit Accounts and Interest Expense
AFI-CX-5.14: Control Activities Form for Borrowings, Other Liabilities, and Interest Expense
AFI-CX-5.15: Control Activities Form for Income Taxes
AFI-CX-5.16: Control Activities Form for Equity and Regulatory Capital
AFI-CX-5.17: Control Activities Form for Noninterest Income and Expenses
AFI-CX-5.18: Common Control Objectives by Audit Area and Transaction Class
AFI-CX-6: Identifying Risk
AFI-CX-6.1: Entity Risk Factors
AFI-CX-6.2: Fraud Risk Factors
AFI-CX-7: Risk Assessment
AFI-CX-7.1: Risk Assessment Summary Form
AFI-CX-7.2: Inherent Risk Assessment Form
AFI-CX-8: Planning Substantive Procedures
AFI-CX-8.1: Planning Worksheet to Determine Extent of Substantive Procedures
AFI-CX-8.2: Sampling Planning and Evaluation Form--Substantive Procedures
AFI-CX-8.3: Sampling Worksheet for Testing Account Coding and Classifications
AFI-CX-17.4: Confirmation and Correspondence Control
AUDIT PROGRAMS--CORE (AFI-AP)
AFI-AP-1: Audit Program for General Planning Procedures
Other General Planning Procedures
AFI-AP-2: Audit Program for General Auditing and Completion Procedures
Other General Auditing and Completion Procedures
AFI-AP-3: Audit Program for Cash and Due from Banks
AFI-AP-4: Audit Program for Investments and Derivatives, Interest Income, and Accrued Interest Receivable
Other Audit Procedures for Investments and Derivatives, Interest Income, and Accrued Interest Receivable
AFI-AP-5: Audit Program for Loans Receivable, Interest Income, and Accrued Interest Receivable
Other Audit Procedures for Loans Receivable, Interest Income, and Accrued Interest Receivable
AFI-AP-6: Audit Program for Foreclosed Assets and Real Estate Investments
Other Audit Procedures for Foreclosed Assets and Real Estate Investments
AFI-AP-7: Audit Program for Premises and Equipment
Other Audit Procedures for Premises and Equipment
AFI-AP-8: Audit Program for Other Assets
Other Audit Procedures for Other Assets
AFI-AP-9: Audit Program for Deposit Accounts, Interest Expense, and Accrued Interest Payable
Other Audit Procedures for Deposit Accounts, Interest Expense, and Accrued Interest Payable
AFI-AP-10: Audit Program for Borrowings, Other Liabilities, and Interest Expense
Other Audit Procedures for Borrowings, Other Liabilities, and Interest Expense
AFI-AP-11: Audit Program for Income Taxes
AFI-AP-12: Audit Program for Equity and Regulatory Capital
Other Audit Procedures for Equity and Regulatory Capital
AFI-AP-13: Audit Program for Noninterest Income and Expenses
Other Audit Procedures for Noninterest Income and Expenses
AFI-AP-14: Audit Program for Internal Control--AT 501 Examination (Integrated Audit)
Other Audit Procedures for Internal Control
INITIAL AUDIT PROGRAMS (AFI-IA)
AFI-IA-1: Additional General Planning Procedures for an Initial Audit
AFI-IA-2: Additional General Auditing and Completion Procedures for an Initial Audit
AFI-IA-3: Additional Audit Procedures for Cash and Due from Banks Beginning Balance in Initial Audit
AFI-IA-4: Additional Audit Procedures for Investments and Derivatives Beginning Balance in Initial Audit
AFI-IA-5: Additional Audit Procedures for Loans Receivable Beginning Balance in Initial Audit
AFI-IA-6: Additional Audit Procedures for Foreclosed Assets and Real Estate Investments Beginning Balance in Initial Audit
AFI-IA-7: Additional Audit Procedures for Premises and Equipment Beginning Balance in Initial Audit
AFI-IA-8: Additional Audit Procedures for Other Assets Beginning Balance in Initial Audit
AFI-IA-9: Additional Audit Procedures for Deposit Accounts Beginning Balance in Initial Audit
AFI-IA-10: Additional Audit Procedures for Borrowings and Other Liabilities Beginning Balance in Initial Audit
AFI-IA-11: Additional Audit Procedures for Income Taxes Beginning Balance in Initial Audit
AFI-IA-12: Additional Audit Procedures for Equity and Regulatory Capital Beginning Balance in Initial Audit
Continuing Professional Education
CPE & Training Solutions
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INTRODUCTORY MATERIAL
PREFACE
