Audit and Accounting Guide Depository and Lending Institutions
Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies
2nd Edition
Published on 19. December 2017
Book
Paperback/Softback
864 pages
978-1-945498-40-4 (ISBN)
Description
The 2017 edition of this industry standard resource offers clear and practical guidance of audit and accounting issues such as transfers and servicing, troubled debt restructurings, financing receivables and the allowance for loan losses, and fair value accounting. It also provides direction for institutions assessing their operations and internal controls for regulatory considerations as well as discussions on existing regulatory reporting matters. Updates include:
SAS No. 132, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern
SSAE No. 18, Attestation Standards: Clarification and Recodification
Note: FASB ASU No. 2016-13 will have a significant impact on the guide; however, incorporation of guidance will not occur until the 2018 or 2019 edition of the guide.
SAS No. 132, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern
SSAE No. 18, Attestation Standards: Clarification and Recodification
Note: FASB ASU No. 2016-13 will have a significant impact on the guide; however, incorporation of guidance will not occur until the 2018 or 2019 edition of the guide.
More details
Series
Edition
2nd edition
Language
English
Place of publication
New York
United States
Target group
Professional and scholarly
Dimensions
Height: 226 mm
Width: 152 mm
Thickness: 46 mm
Weight
1202 gr
ISBN-13
978-1-945498-40-4 (9781945498404)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
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Audit and Accounting Guide - Depository and Lending Institutions
Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies
Book
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Wiley
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Audit and Accounting Guide Depository and Lending Institutions
Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies
E-Book
09/2017
2nd Edition
Wiley
€76.99
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Aicpa
Audit and Accounting Guide Depository and Lending Institutions
Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies
E-Book
09/2017
2nd Edition
Wiley
€76.99
Available for download
Previous edition
Aicpa
Audit and Accounting Guide Depository and Lending Institutions
Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies
Book
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Wiley
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Person
Founded in 1887, the American Institute of Certified Public Accountants (AICPA) represents the CPA and accounting profession nationally and globally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the accounting profession's technical and ethical standards.
The AICPA's founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.
The AICPA's founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.
Content
1 Industry Overview-Banks and Savings Institutions 01-112
Description of Business 01-07
Regulation and Oversight 08-63
Regulatory Background 15-23
Deposit Insurance Fund 24-30
The Dodd-Frank Act 31-63
Regulatory Capital Matters 64-85
Capital Adequacy 66-74
Prompt Corrective Action 75-85
Annual Independent Audits and Reporting Requirements 86-111
Additional Regulatory Requirements Concerning the Sarbanes-Oxley Act, Corporate Governance, and Services Outsourced to External Auditors 99-111
Other Reporting Considerations 112
2 Industry Overview-Credit Unions 01-62
Description of Business 01-10
The Board of Directors 07
The Supervisory Committee 08-09
The Credit Committee 10
Charters, Bylaws, and Minutes 11-17
Financial Structure 12-13
Credit Union System 14-16
Corporate Credit Unions 17
Regulation and Oversight 18-23
Government Supervision 18-20
NCUA 21-23
Regulatory Capital Matters 24-54
Natural Person Credit Unions 24-44
Corporate Credit Unions 45-54
Annual Audits 55-62
Other Reporting Considerations 62
3 Industry Overview-Finance Companies 01-20
Description of Business 01-11
Debt Financing 08-11
Regulation and Oversight 12-20
4 Industry Overview-Mortgage Companies 01-41
Description of Business 01-20
Regulation and Oversight 21-36
Reporting Considerations 37-41
HUD Programs 37-39
Asset Servicing for Investors 40-41
5 Audit Considerations and Certain Financial Reporting Matters 01-257
Overview 01-09
An Audit of Financial Statements 04-05
Audit Risk 06-09
Terms of Engagement 10-13
Audit Planning 14-15
Materiality 16-20
Performance Materiality 19-20
Use of Assertions in Assessment of Risks of Material Misstatement 21-22
Risk Assessment Procedures 23-75
Risk Assessment Procedures and Related Activities 25-32
Understanding the Entity and Its Environment, Including the Entity's Internal Control 33-75
Risk Assessment and the Design of Further Audit Procedures 76-98
Identifying and Assessing the Risks of Material Misstatement 77-81
Designing and Performing Further Audit Procedures 82-98
Evaluation of Misstatements Identified During the Audit 99-101
Audit Documentation 102-109
Timely Preparation of Audit Documentation 105
Documentation of the Audit Procedures Performed and Audit Evidence Obtained 106-108
Assembly and Retention of the Final Audit File 109
Using the Work of an Auditor's Specialist 110-115
Using the Work of a Management's Specialist 116-119
Processing of Transactions by Service Organizations 120-122
Consideration of Fraud in a Financial Statement Audit 123-151
Professional Skepticism 126-128
Discussion Among the Engagement Team 129-132
Risk Assessment Procedures and Related Activities 133-136
Identification and Assessment of the Risks of Material Misstatement Due to Fraud 137-139
Responses to the Assessed Risks of Material Misstatement Due to Fraud 140-143
Evaluation of Audit Evidence 144-147
Auditor Unable to Continue the Engagement 148
Communications to Management and With Those Charged With Governance 149
Communications to Regulatory and Enforcement Authorities 150
Documentation 151
Compliance With Laws and Regulations 152-162
Responsibility for Compliance With Laws and Regulations 153-156
The Auditor's Consideration of Compliance With Laws and Regulations 157-162
Going-Concern Considerations 163-179
Evaluating Whether Substantial Doubt Exists 165-174
Written Representations 175
Consideration of the Effects on the Auditor's Report 176-178
Documentation 179
Written Representations 180-189
Written Representations as Audit Evidence 181
Management From Whom Written Representations Are Requested 182-183
Written Representations About Management's Responsibilities and Other Written Representations 184-186
Date of, and Period(s) Covered by, Written Representations 187
Form of Written Representations 188
Doubt About the Reliability of Written Representations and Requested Written Representations Not Provided 189
Information Other Than Financial Statements 190-192
Certain Financial Reporting Matters 193-211
Disclosures of Certain Significant Risks and Uncertainties 193-209
Segment Reporting 210-211
Regulation and Supervision of Depository Institutions 212-257
Introduction 212-220
Rule Making 221-222
Examinations 223-228
Enforcement 229-236
Planning 237
Detection of Errors and Fraud 238-239
Evaluation of Contingent Liabilities and Related Disclosures 240
Going-Concern Considerations 241-242
Regulatory Reporting Matters-Interpretation and Reporting Related to GAAP 243-247
Auditor and Examiner Relationship 248-257
6 Cash and Cash Equivalents 01-42
Introduction 01-08
CIPC and Cash Equivalents 02
Deposits With Other Financial Institutions 03-05
Balances With Federal Reserve Banks and FHLBs 06
Federal Funds Sold 07
Cash on Hand 08
Accounting and Financial Reporting 09-33
Definition of Cash and Cash Equivalents 09-11
Classification of Cash Flows 12-22
Acquisition and Sales of Certain Securities and Loans 23-24
Gross and Net Cash Flows 25-28
Cash Receipts and Payments Related to Hedging Activities 29
Financial Statement Presentation and Disclosure 30-33
Auditing 34-42
Objectives 34
Planning 35
Internal Control Over Financial Reporting and Possible Tests of Controls 36-40
Substantive Tests 41-42
7 Investments in Debt and Equity Securities 01-163
Introduction 01-65
U S Government and Agency Obligations 05-07
Municipal Obligations 08-11
Asset-Backed Securities 12-49
Other Structured Credit Products 50-59
Issues of International Organizations and Foreign Governments 60
Other Securities 61
Transfers of Securities 62-65
Regulatory Matters 66-82
Bank Accounting Advisory Series 82
Accounting and Financial Reporting 83-137
Introduction 83-91
OTTI 92-103
Unrealized Gains and Losses 104-106
Premiums and Discounts 107-113
Interest Income 114
Consolidation 115
Special Areas 116-118
Transfers and Servicing of Securities 119-121
Troubled Debt Restructurings 122-124
Loans and Debt Securities Acquired With Deteriorated Credit Quality 125
Financial Statement Presentation and Disclosure 126-137
Auditing 138-163
Objectives 138
Planning 139-143
Internal Control Over Financial Reporting and Possible Tests of Control 144-154
Substantive Tests 155-163
8 Loans 01-230
Introduction 01-56
The Lending Process 02
Credit Strategy 03-04
Credit Risk 05-07
Lending Policies and Procedures 08-16
Types of Lending 17-18
Commercial, Industrial, and Agricultural Loans 19-30
Consumer Loans 31-39
Residential Real Estate Loans 40-43
Lease Financing 44-48
Trade Financing 49-50
CRE and Construction Loans 51-53
Foreign Loans 54
Loans Involving More Than One Lender 55-56
Regulatory Matters 57-88
Real Estate Lending Standards 57-67
Retail Credit Loans and Residential Mortgage Loans 68-70
Troubled Debt Restructurings 71-75
Credit Card Lending 76-77
Nontraditional Mortgage Products 78
Correspondent Concentration Risks 79
Leveraged Lending 80
Income Recognition on Problem Loans 81-82
Credit Union Lending Restrictions 83
Lending Statutes 84
Uniform Commercial Code 85-87
Bank Accounting Advisory Series 88
Accounting and Financial Reporting 89-181
Interest Income, Delinquency Fees, Prepayment Fees, and Rebates 95-100
Loan Fees, Costs, Discounts, and Premiums 101-122
TDRs 123-138
Real Estate Investments 139
Lease Financing 140
Foreign Loans 141-144
Commitments 145-152
Financial Statement Presentation and Disclosure 153-181
Auditing 182-230
Objectives 182
Planning 183-184
Internal Control Over Financial Reporting and Possible Tests of Controls 185-198
Substantive Tests 199-230
9 Credit Losses 01-111
Introduction 01-22
Management's Methodology 04-12
Loan Reviews 13-15
Loans Individually Evaluated for Impairment 16
Loans Collectively Evaluated for Impairment 17-18
Estimating Overall Credit Losses 19-22
Regulatory Matters 23-37
Credit Unions 34-37
Accounting and Financial Reporting 38-61
Sources of Applicable Guidance 38-40
Allowance for Loan Losses 41-47
Loss Contingencies 48-51
Financial Statement Presentation and Disclosure of Loan Impairment and Allowance for Credit Losses 52-61
Auditing 62-111
Objectives 62
Planning and Risk Assessment 63-67
Internal Control Over Financial Reporting and Possible Tests of Controls 68-74
Substantive Tests 75-111
10 Transfers and Servicing and Variable Interest Entities 01-123
Introduction 01-08
Asset-Backed Securitizations 06
Loan Participations and Loan Syndications 07
Loan Servicing 08
Regulatory Matters 09-15
Accounting and Financial Reporting 16-109
Mortgage Loans and MBSs Held for Sale 16-25
Transfers and Servicing of Financial Assets 26-38
Sale of Financial Assets 39-44
Transfers of Loans With Recourse 45-46
Servicing Assets and Liabilities 47-65
Secured Borrowings and Collateral 66-69
Loans Not Previously HFS 70-74
Financial Statement Presentation 75-81
Financial Statement Disclosure 82-92
VIEs 93-109
Auditing 110-123
Objectives 110
Planning 111-114
Internal Control Over Financial Reporting and Possible Tests of Controls 115-121
Substantive Tests 122-123
11 Real Estate Investments, Real Estate Owned, and Other Foreclosed Assets 01-72
Introduction 01-03
Foreclosed Assets 02
Real Estate Investments 03
Regulatory Matters 04-15
Accounting and Financial Reporting 16-54
Foreclosed Assets 16-22
Accounting and Reporting for Long-Lived Assets to Be Disposed of by Sale 23-32
Accounting and Reporting for Long-Lived Assets to Be Held and Used 33-39
Real Estate Investments 40-42
Sale of Real Estate Assets 43-44
Development Costs 45-48
Allocation of Income and Equity Among Parties to a Joint Venture 49-54
Auditing 55-72
Objectives 55
Planning 56
Internal Control Over Financial Reporting and Possible Tests of Controls 57-60
Substantive Tests 61-72
12 Other Assets, Other Liabilities, and Other Investments 01-91
Introduction 01-10
Premises and Equipment, Net 03
FHLB or FRB Stock 04-05
Identifiable Intangibles 06-07
Goodwill 08
Customers' Liabilities on Acceptances 09
Other Miscellaneous Items 10
Regulatory Matters 11-15
Accounting and Financial Reporting 16-76
Premises and Equipment, Net 16-26
FHLB or FRB Stock 27-34
Goodwill and Other Intangible Assets 35-50
Exit or Disposal Activities 51-52
Asset Retirement Obligations 53-56
Customers' Liabilities on Acceptances 57
Mortgage Servicing Advances 58
Impairment of Long-Lived Assets 59
NCUSIF Deposit 60-66
Other Investments 67-72
Contributed Assets 73-76
Auditing 77-91
Objectives 77-78
Planning 79
Internal Control Over Financial Reporting and Possible Tests of Controls 80-82
Substantive Tests 83-91
13 Deposits 01-70
Introduction 01-32
Demand Deposits 04
Savings Deposits 05
Time Deposits 06-10
Brokered Deposits 11-13
Dormant Accounts 14
Closed Accounts 15
Other Deposit Services 16
The Payments Function and Services 17-32
Regulatory Matters 33-40
Limitations on Brokered Deposits 33-38
Classification of Deposits of Credit Unions 39-40
Accounting and Financial Reporting 41-46
Auditing 47-70
Objectives 47
Planning 48-49
Internal Control Over Financial Reporting and Possible Tests of Controls 50-55
Substantive Tests 56-70
14 Federal Funds and Repurchase Agreements 01-69
Introduction 01-25
Federal Funds Purchased 02-03
Repos 04-25
Regulatory Matters 26
Accounting and Financial Reporting 27-47
Auditing 48-69
Objectives 48
Planning 49-53
Internal Control Over Financial Reporting and Possible Tests of Controls 54-58
Substantive Tests 59-69
15 Debt 01-77
Introduction 01-31
Long Term Debt 06-09
Short Term Debt 10-31
Regulatory Matters 32-33
Accounting and Financial Reporting 34-57
Auditing 58-77
Objectives 58
Planning 59
Internal Control Over Financial Reporting and Possible Tests of Controls 60-63
Substantive Tests 64-77
16 Income Taxes 01-36
Introduction 01-13
Banks and Savings Institutions 03-09
Other 10-12
Credit Union 13
Regulatory Matters 14-17
Accounting and Financial Reporting 18-30
Deferred-Tax Assets and Liabilities 21-23
Temporary Differences 24-26
Financial Statement Presentation and Disclosure 27-30
Auditing 31-36
Objectives 31
Planning 32
Internal Control Over Financial Reporting and Possible Tests of Controls 33-34
Substantive Tests 35-36
17 Equity and Disclosures Regarding Capital Matters 01-115
Introduction 01
Banks and Savings Institutions 02-46
Introduction 02
Equity 03-10
Holding Company Equity and Regulatory Capital 11-27
Disclosures for Banks and Savings Institutions 28-37
Disclosure for Holding Companies 38-40
Illustrative Disclosures for Banks and Savings Institutions (The example disclosures that follow are for illustrative purposes only) 41-46
Credit Unions 47-64
Introduction 47
Members' Equity 48-54
New Credit Unions and Low Income Designated Credit Unions 55
Disclosures for Natural Person Credit Unions 56-60
Illustrative Disclosures for Natural Person Credit Unions 61-64
Corporate Credit Unions 65-79
Introduction 65
Equity 66-71
Disclosures for Corporate Credit Unions 72-76
Illustrative Disclosures for Corporate Credit Unions 77-79
Mortgage Companies and Mortgage Banking Activities 80-84
Introduction 80
Disclosure for Mortgage Companies and Mortgage Banking Activities 81-83
Illustrative Disclosures for Mortgage Companies and Mortgage Banking Activities 84
Regulatory Capital Matters for All Entities 85-88
Regulatory Capital Disclosures for Branches of Foreign Institutions 85-86
Regulatory Capital Disclosures for Trust Operations 87-88
Auditing 89-115
Banks, Savings Institutions, and Credit Unions 89-105
Mortgage Companies and Activities 106-115
18 Derivative Instruments: Futures, Forwards, Options, Swaps, and Other Derivative Instruments 01- 101
Introduction 01-69
Risks Inherent in Derivatives 05-13
Types of Derivatives 14-52
Uses of Derivatives to Alter Risk 53-64
Variations on Basic Derivatives 65-69
Regulatory Matters 70-78
Accounting and Financial Reporting 79-100
Financial Statement Disclosures 95-100
Auditing Considerations 101
19 Business Combinations 01-41
Introduction 01
Regulatory Matters 02-07
Accounting and Financial Reporting 08-30
Purchase of a Loan or Group of Loans 18-20
Loans and Debt Securities Acquired With Deteriorated Credit Quality 21
Special Considerations in Applying the Acquisition Method to Combinations of Mutual Entities 22-25
Impairment and Disposal Accounting for Certain Acquired Long Term Customer Relationship Intangible Assets 26-27
Branch Acquisitions 28-30
Auditing Considerations 31-41
20 Fair Value 01-68
Introduction 01
Accounting and Financial Reporting 02-63
Definition of Fair Value 02-27
Valuation Techniques 28-30
Present Value Techniques 31-33
The Fair Value Hierarchy 34-37
Measuring the Fair Value of Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) 38-41
Measuring Fair Value When the Volume or Level of Activity for an Asset or a Liability Has Significantly Decreased 42-47
Using Quoted Prices Provided by Third Parties 48
Disclosures 49-60
Fair Value Option 61-63
Auditing Considerations 64-68
21 Trust and Asset Management Activities 01-30
Introduction 01-12
Personal Trusts 08-09
Corporate Trusts 10
Employee Benefit Trusts 11
Common or Collective Trust Funds 12
Regulatory Matters 13-14
Accounting and Financial Reporting 15-16
Auditing 17-30
Objectives 17
Planning 18
Internal Control Over Financial Reporting and Possible Tests of Controls 19-21
Financial Reporting Controls of the Trust 22
Substantive Tests Related to Financial Statement Audits 23-24
Substantive Procedures Related to the Trust 25-29
Audits of Unit Investment Trusts 30
22 Insurance Activities 01-70
Introduction 01-10
Types of Insurance Coverage 02
Credit Life 03-05
Credit Accident and Health 06
Property and Liability 07
Writing Policies 08-09
Commissions 10
Regulatory Matters 11
Accounting 12-68
Premium Income 13-17
Acquisition Costs 18-50
Investment Portfolios 51-54
State Laws 55
Commissions 56-59
Consolidation Policy 60-64
Financial Statement Presentation 65-68
Auditing 69-70
23 Reporting Considerations 01-38
Introduction 01
Forming an Opinion on the Financial Statements 02-04
Reports 05-37
Unmodified Opinion 05-06
EOM and Other-Matter Paragraphs Added to the Independent Auditor's Report 07-14
Modified Opinions 15-21
Financial Statements Prepared in Accordance With a Special Purpose Framework 22-23
Members' Shares Reported as Equity 24
Communication of Internal Control Related Matters 25-27
Reports on Supervisory Committee Audits 28-33
Example Report on the Application of Agreed-Upon Procedures Performed in Connection With a Supervisory Committee Audit 34
Example Reports on the FDIC Loss Sharing Purchase and Assumption Transactions 35-36
Small Business Lending Fund Auditor Certification Guidance 37
Appendix A-Illustrative Unqualified PCAOB Reports 38
A FDI Act Reporting Requirements
B Regulatory Reporting Matters-Interpretation and Reporting Related to U.S. GAAP
C Information Sources
D Overview of Statements on Quality Control Standards
E The New Revenue Recognition Standard: FASB ASC 606
F The New Leases Standard: FASB ASU No. 2016-02
G Accounting for Financial Instruments
H Schedule of Changes Made to the Text From the Previous Edition
Index of Pronouncements and Other Technical Guidance
Subject Index
Description of Business 01-07
Regulation and Oversight 08-63
Regulatory Background 15-23
Deposit Insurance Fund 24-30
The Dodd-Frank Act 31-63
Regulatory Capital Matters 64-85
Capital Adequacy 66-74
Prompt Corrective Action 75-85
Annual Independent Audits and Reporting Requirements 86-111
Additional Regulatory Requirements Concerning the Sarbanes-Oxley Act, Corporate Governance, and Services Outsourced to External Auditors 99-111
Other Reporting Considerations 112
2 Industry Overview-Credit Unions 01-62
Description of Business 01-10
The Board of Directors 07
The Supervisory Committee 08-09
The Credit Committee 10
Charters, Bylaws, and Minutes 11-17
Financial Structure 12-13
Credit Union System 14-16
Corporate Credit Unions 17
Regulation and Oversight 18-23
Government Supervision 18-20
NCUA 21-23
Regulatory Capital Matters 24-54
Natural Person Credit Unions 24-44
Corporate Credit Unions 45-54
Annual Audits 55-62
Other Reporting Considerations 62
3 Industry Overview-Finance Companies 01-20
Description of Business 01-11
Debt Financing 08-11
Regulation and Oversight 12-20
4 Industry Overview-Mortgage Companies 01-41
Description of Business 01-20
Regulation and Oversight 21-36
Reporting Considerations 37-41
HUD Programs 37-39
Asset Servicing for Investors 40-41
5 Audit Considerations and Certain Financial Reporting Matters 01-257
Overview 01-09
An Audit of Financial Statements 04-05
Audit Risk 06-09
Terms of Engagement 10-13
Audit Planning 14-15
Materiality 16-20
Performance Materiality 19-20
Use of Assertions in Assessment of Risks of Material Misstatement 21-22
Risk Assessment Procedures 23-75
Risk Assessment Procedures and Related Activities 25-32
Understanding the Entity and Its Environment, Including the Entity's Internal Control 33-75
Risk Assessment and the Design of Further Audit Procedures 76-98
Identifying and Assessing the Risks of Material Misstatement 77-81
Designing and Performing Further Audit Procedures 82-98
Evaluation of Misstatements Identified During the Audit 99-101
Audit Documentation 102-109
Timely Preparation of Audit Documentation 105
Documentation of the Audit Procedures Performed and Audit Evidence Obtained 106-108
Assembly and Retention of the Final Audit File 109
Using the Work of an Auditor's Specialist 110-115
Using the Work of a Management's Specialist 116-119
Processing of Transactions by Service Organizations 120-122
Consideration of Fraud in a Financial Statement Audit 123-151
Professional Skepticism 126-128
Discussion Among the Engagement Team 129-132
Risk Assessment Procedures and Related Activities 133-136
Identification and Assessment of the Risks of Material Misstatement Due to Fraud 137-139
Responses to the Assessed Risks of Material Misstatement Due to Fraud 140-143
Evaluation of Audit Evidence 144-147
Auditor Unable to Continue the Engagement 148
Communications to Management and With Those Charged With Governance 149
Communications to Regulatory and Enforcement Authorities 150
Documentation 151
Compliance With Laws and Regulations 152-162
Responsibility for Compliance With Laws and Regulations 153-156
The Auditor's Consideration of Compliance With Laws and Regulations 157-162
Going-Concern Considerations 163-179
Evaluating Whether Substantial Doubt Exists 165-174
Written Representations 175
Consideration of the Effects on the Auditor's Report 176-178
Documentation 179
Written Representations 180-189
Written Representations as Audit Evidence 181
Management From Whom Written Representations Are Requested 182-183
Written Representations About Management's Responsibilities and Other Written Representations 184-186
Date of, and Period(s) Covered by, Written Representations 187
Form of Written Representations 188
Doubt About the Reliability of Written Representations and Requested Written Representations Not Provided 189
Information Other Than Financial Statements 190-192
Certain Financial Reporting Matters 193-211
Disclosures of Certain Significant Risks and Uncertainties 193-209
Segment Reporting 210-211
Regulation and Supervision of Depository Institutions 212-257
Introduction 212-220
Rule Making 221-222
Examinations 223-228
Enforcement 229-236
Planning 237
Detection of Errors and Fraud 238-239
Evaluation of Contingent Liabilities and Related Disclosures 240
Going-Concern Considerations 241-242
Regulatory Reporting Matters-Interpretation and Reporting Related to GAAP 243-247
Auditor and Examiner Relationship 248-257
6 Cash and Cash Equivalents 01-42
Introduction 01-08
CIPC and Cash Equivalents 02
Deposits With Other Financial Institutions 03-05
Balances With Federal Reserve Banks and FHLBs 06
Federal Funds Sold 07
Cash on Hand 08
Accounting and Financial Reporting 09-33
Definition of Cash and Cash Equivalents 09-11
Classification of Cash Flows 12-22
Acquisition and Sales of Certain Securities and Loans 23-24
Gross and Net Cash Flows 25-28
Cash Receipts and Payments Related to Hedging Activities 29
Financial Statement Presentation and Disclosure 30-33
Auditing 34-42
Objectives 34
Planning 35
Internal Control Over Financial Reporting and Possible Tests of Controls 36-40
Substantive Tests 41-42
7 Investments in Debt and Equity Securities 01-163
Introduction 01-65
U S Government and Agency Obligations 05-07
Municipal Obligations 08-11
Asset-Backed Securities 12-49
Other Structured Credit Products 50-59
Issues of International Organizations and Foreign Governments 60
Other Securities 61
Transfers of Securities 62-65
Regulatory Matters 66-82
Bank Accounting Advisory Series 82
Accounting and Financial Reporting 83-137
Introduction 83-91
OTTI 92-103
Unrealized Gains and Losses 104-106
Premiums and Discounts 107-113
Interest Income 114
Consolidation 115
Special Areas 116-118
Transfers and Servicing of Securities 119-121
Troubled Debt Restructurings 122-124
Loans and Debt Securities Acquired With Deteriorated Credit Quality 125
Financial Statement Presentation and Disclosure 126-137
Auditing 138-163
Objectives 138
Planning 139-143
Internal Control Over Financial Reporting and Possible Tests of Control 144-154
Substantive Tests 155-163
8 Loans 01-230
Introduction 01-56
The Lending Process 02
Credit Strategy 03-04
Credit Risk 05-07
Lending Policies and Procedures 08-16
Types of Lending 17-18
Commercial, Industrial, and Agricultural Loans 19-30
Consumer Loans 31-39
Residential Real Estate Loans 40-43
Lease Financing 44-48
Trade Financing 49-50
CRE and Construction Loans 51-53
Foreign Loans 54
Loans Involving More Than One Lender 55-56
Regulatory Matters 57-88
Real Estate Lending Standards 57-67
Retail Credit Loans and Residential Mortgage Loans 68-70
Troubled Debt Restructurings 71-75
Credit Card Lending 76-77
Nontraditional Mortgage Products 78
Correspondent Concentration Risks 79
Leveraged Lending 80
Income Recognition on Problem Loans 81-82
Credit Union Lending Restrictions 83
Lending Statutes 84
Uniform Commercial Code 85-87
Bank Accounting Advisory Series 88
Accounting and Financial Reporting 89-181
Interest Income, Delinquency Fees, Prepayment Fees, and Rebates 95-100
Loan Fees, Costs, Discounts, and Premiums 101-122
TDRs 123-138
Real Estate Investments 139
Lease Financing 140
Foreign Loans 141-144
Commitments 145-152
Financial Statement Presentation and Disclosure 153-181
Auditing 182-230
Objectives 182
Planning 183-184
Internal Control Over Financial Reporting and Possible Tests of Controls 185-198
Substantive Tests 199-230
9 Credit Losses 01-111
Introduction 01-22
Management's Methodology 04-12
Loan Reviews 13-15
Loans Individually Evaluated for Impairment 16
Loans Collectively Evaluated for Impairment 17-18
Estimating Overall Credit Losses 19-22
Regulatory Matters 23-37
Credit Unions 34-37
Accounting and Financial Reporting 38-61
Sources of Applicable Guidance 38-40
Allowance for Loan Losses 41-47
Loss Contingencies 48-51
Financial Statement Presentation and Disclosure of Loan Impairment and Allowance for Credit Losses 52-61
Auditing 62-111
Objectives 62
Planning and Risk Assessment 63-67
Internal Control Over Financial Reporting and Possible Tests of Controls 68-74
Substantive Tests 75-111
10 Transfers and Servicing and Variable Interest Entities 01-123
Introduction 01-08
Asset-Backed Securitizations 06
Loan Participations and Loan Syndications 07
Loan Servicing 08
Regulatory Matters 09-15
Accounting and Financial Reporting 16-109
Mortgage Loans and MBSs Held for Sale 16-25
Transfers and Servicing of Financial Assets 26-38
Sale of Financial Assets 39-44
Transfers of Loans With Recourse 45-46
Servicing Assets and Liabilities 47-65
Secured Borrowings and Collateral 66-69
Loans Not Previously HFS 70-74
Financial Statement Presentation 75-81
Financial Statement Disclosure 82-92
VIEs 93-109
Auditing 110-123
Objectives 110
Planning 111-114
Internal Control Over Financial Reporting and Possible Tests of Controls 115-121
Substantive Tests 122-123
11 Real Estate Investments, Real Estate Owned, and Other Foreclosed Assets 01-72
Introduction 01-03
Foreclosed Assets 02
Real Estate Investments 03
Regulatory Matters 04-15
Accounting and Financial Reporting 16-54
Foreclosed Assets 16-22
Accounting and Reporting for Long-Lived Assets to Be Disposed of by Sale 23-32
Accounting and Reporting for Long-Lived Assets to Be Held and Used 33-39
Real Estate Investments 40-42
Sale of Real Estate Assets 43-44
Development Costs 45-48
Allocation of Income and Equity Among Parties to a Joint Venture 49-54
Auditing 55-72
Objectives 55
Planning 56
Internal Control Over Financial Reporting and Possible Tests of Controls 57-60
Substantive Tests 61-72
12 Other Assets, Other Liabilities, and Other Investments 01-91
Introduction 01-10
Premises and Equipment, Net 03
FHLB or FRB Stock 04-05
Identifiable Intangibles 06-07
Goodwill 08
Customers' Liabilities on Acceptances 09
Other Miscellaneous Items 10
Regulatory Matters 11-15
Accounting and Financial Reporting 16-76
Premises and Equipment, Net 16-26
FHLB or FRB Stock 27-34
Goodwill and Other Intangible Assets 35-50
Exit or Disposal Activities 51-52
Asset Retirement Obligations 53-56
Customers' Liabilities on Acceptances 57
Mortgage Servicing Advances 58
Impairment of Long-Lived Assets 59
NCUSIF Deposit 60-66
Other Investments 67-72
Contributed Assets 73-76
Auditing 77-91
Objectives 77-78
Planning 79
Internal Control Over Financial Reporting and Possible Tests of Controls 80-82
Substantive Tests 83-91
13 Deposits 01-70
Introduction 01-32
Demand Deposits 04
Savings Deposits 05
Time Deposits 06-10
Brokered Deposits 11-13
Dormant Accounts 14
Closed Accounts 15
Other Deposit Services 16
The Payments Function and Services 17-32
Regulatory Matters 33-40
Limitations on Brokered Deposits 33-38
Classification of Deposits of Credit Unions 39-40
Accounting and Financial Reporting 41-46
Auditing 47-70
Objectives 47
Planning 48-49
Internal Control Over Financial Reporting and Possible Tests of Controls 50-55
Substantive Tests 56-70
14 Federal Funds and Repurchase Agreements 01-69
Introduction 01-25
Federal Funds Purchased 02-03
Repos 04-25
Regulatory Matters 26
Accounting and Financial Reporting 27-47
Auditing 48-69
Objectives 48
Planning 49-53
Internal Control Over Financial Reporting and Possible Tests of Controls 54-58
Substantive Tests 59-69
15 Debt 01-77
Introduction 01-31
Long Term Debt 06-09
Short Term Debt 10-31
Regulatory Matters 32-33
Accounting and Financial Reporting 34-57
Auditing 58-77
Objectives 58
Planning 59
Internal Control Over Financial Reporting and Possible Tests of Controls 60-63
Substantive Tests 64-77
16 Income Taxes 01-36
Introduction 01-13
Banks and Savings Institutions 03-09
Other 10-12
Credit Union 13
Regulatory Matters 14-17
Accounting and Financial Reporting 18-30
Deferred-Tax Assets and Liabilities 21-23
Temporary Differences 24-26
Financial Statement Presentation and Disclosure 27-30
Auditing 31-36
Objectives 31
Planning 32
Internal Control Over Financial Reporting and Possible Tests of Controls 33-34
Substantive Tests 35-36
17 Equity and Disclosures Regarding Capital Matters 01-115
Introduction 01
Banks and Savings Institutions 02-46
Introduction 02
Equity 03-10
Holding Company Equity and Regulatory Capital 11-27
Disclosures for Banks and Savings Institutions 28-37
Disclosure for Holding Companies 38-40
Illustrative Disclosures for Banks and Savings Institutions (The example disclosures that follow are for illustrative purposes only) 41-46
Credit Unions 47-64
Introduction 47
Members' Equity 48-54
New Credit Unions and Low Income Designated Credit Unions 55
Disclosures for Natural Person Credit Unions 56-60
Illustrative Disclosures for Natural Person Credit Unions 61-64
Corporate Credit Unions 65-79
Introduction 65
Equity 66-71
Disclosures for Corporate Credit Unions 72-76
Illustrative Disclosures for Corporate Credit Unions 77-79
Mortgage Companies and Mortgage Banking Activities 80-84
Introduction 80
Disclosure for Mortgage Companies and Mortgage Banking Activities 81-83
Illustrative Disclosures for Mortgage Companies and Mortgage Banking Activities 84
Regulatory Capital Matters for All Entities 85-88
Regulatory Capital Disclosures for Branches of Foreign Institutions 85-86
Regulatory Capital Disclosures for Trust Operations 87-88
Auditing 89-115
Banks, Savings Institutions, and Credit Unions 89-105
Mortgage Companies and Activities 106-115
18 Derivative Instruments: Futures, Forwards, Options, Swaps, and Other Derivative Instruments 01- 101
Introduction 01-69
Risks Inherent in Derivatives 05-13
Types of Derivatives 14-52
Uses of Derivatives to Alter Risk 53-64
Variations on Basic Derivatives 65-69
Regulatory Matters 70-78
Accounting and Financial Reporting 79-100
Financial Statement Disclosures 95-100
Auditing Considerations 101
19 Business Combinations 01-41
Introduction 01
Regulatory Matters 02-07
Accounting and Financial Reporting 08-30
Purchase of a Loan or Group of Loans 18-20
Loans and Debt Securities Acquired With Deteriorated Credit Quality 21
Special Considerations in Applying the Acquisition Method to Combinations of Mutual Entities 22-25
Impairment and Disposal Accounting for Certain Acquired Long Term Customer Relationship Intangible Assets 26-27
Branch Acquisitions 28-30
Auditing Considerations 31-41
20 Fair Value 01-68
Introduction 01
Accounting and Financial Reporting 02-63
Definition of Fair Value 02-27
Valuation Techniques 28-30
Present Value Techniques 31-33
The Fair Value Hierarchy 34-37
Measuring the Fair Value of Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) 38-41
Measuring Fair Value When the Volume or Level of Activity for an Asset or a Liability Has Significantly Decreased 42-47
Using Quoted Prices Provided by Third Parties 48
Disclosures 49-60
Fair Value Option 61-63
Auditing Considerations 64-68
21 Trust and Asset Management Activities 01-30
Introduction 01-12
Personal Trusts 08-09
Corporate Trusts 10
Employee Benefit Trusts 11
Common or Collective Trust Funds 12
Regulatory Matters 13-14
Accounting and Financial Reporting 15-16
Auditing 17-30
Objectives 17
Planning 18
Internal Control Over Financial Reporting and Possible Tests of Controls 19-21
Financial Reporting Controls of the Trust 22
Substantive Tests Related to Financial Statement Audits 23-24
Substantive Procedures Related to the Trust 25-29
Audits of Unit Investment Trusts 30
22 Insurance Activities 01-70
Introduction 01-10
Types of Insurance Coverage 02
Credit Life 03-05
Credit Accident and Health 06
Property and Liability 07
Writing Policies 08-09
Commissions 10
Regulatory Matters 11
Accounting 12-68
Premium Income 13-17
Acquisition Costs 18-50
Investment Portfolios 51-54
State Laws 55
Commissions 56-59
Consolidation Policy 60-64
Financial Statement Presentation 65-68
Auditing 69-70
23 Reporting Considerations 01-38
Introduction 01
Forming an Opinion on the Financial Statements 02-04
Reports 05-37
Unmodified Opinion 05-06
EOM and Other-Matter Paragraphs Added to the Independent Auditor's Report 07-14
Modified Opinions 15-21
Financial Statements Prepared in Accordance With a Special Purpose Framework 22-23
Members' Shares Reported as Equity 24
Communication of Internal Control Related Matters 25-27
Reports on Supervisory Committee Audits 28-33
Example Report on the Application of Agreed-Upon Procedures Performed in Connection With a Supervisory Committee Audit 34
Example Reports on the FDIC Loss Sharing Purchase and Assumption Transactions 35-36
Small Business Lending Fund Auditor Certification Guidance 37
Appendix A-Illustrative Unqualified PCAOB Reports 38
A FDI Act Reporting Requirements
B Regulatory Reporting Matters-Interpretation and Reporting Related to U.S. GAAP
C Information Sources
D Overview of Statements on Quality Control Standards
E The New Revenue Recognition Standard: FASB ASC 606
F The New Leases Standard: FASB ASU No. 2016-02
G Accounting for Financial Instruments
H Schedule of Changes Made to the Text From the Previous Edition
Index of Pronouncements and Other Technical Guidance
Subject Index