Guidance on Year 2000 Issued by AICPA [American Institute of Certified Public Accountants]
PR Newswire - November 06, 1997 11:51
[The guide is available at their web site, given in the article.]
NEW YORK, Nov. 6 /PRNewswire/ -- Come January 1, 2000, businesses of all sizes could experience operational problems as computers may fail to accurately process year-date data beyond the year 1999, experts say.
This could happen because programmers in the past took a space-saving shortcut by consistently abbreviating dates by dropping the first two digits of the year. Unless corrected, the shortcut is expected to create widespread problems on January 1, 2000, when some computers may misread that date as the first day of the year 1900 and process data inaccurately -- or stop processing altogether.
Now, the American Institute of Certified Public Accountants (AICPA) has issued a new toolkit to enable the CPA profession to help clients deal with the Year 2000 issue.
Its new publication, "The Year 2000 Issue: Current Accounting and Auditing Guidance," summarizes the various applicable accounting, disclosure, and auditing standards, describes the responsibilities of various parties and clarifies the auditor's role. It also provides guidance to auditors on communicating with client management and describes disclosure considerations and practice management matters relating to the Year 2000 issue. Since the understanding of the potential effects of the Year 2000 issue is evolving continually, additional guidance may be provided in the future.
"Clearly, the Year 2000 problem is not just an accounting issue, but
a business issue with global implications that affects all types of entities," said Alan Anderson, AICPA senior vice president of technical standards and Chairman of the Institute's Year 2000 Task Force. "With this guide, the CPA profession has stepped up to the plate to alert and communicate to managements the potential ramifications of the Year 2000 issue on their business operations as well as their fiduciary responsibility to the investing public,
other stakeholders and regulators."
"Indeed, the Year 2000 issue has the potential to affect any entity's
accounting and information systems, its ability to manufacture products or deliver services, and other aspects of its day-to-day operations. It is critical that every organization assess its preparedness well in advance of Year 2000 to ensure its software and information systems are in compliance," Anderson noted.
The AICPA guide reiterates that it is the management's responsibility to assess and remediate the effects of the Year 2000 issue on all of an organization's systems, not just those that produce financial information. The auditor's responsibility is, and always has been, to plan and perform the audit to detect material misstatements in the financial statements being audited. The Year 2000 issue is just one of many planning issues the auditor may need to consider.
The guide is organized into sections that address financial reporting,
disclosure considerations for public and nonpublic entities, auditing, auditor communications with clients, practice management, and other matters relating to the Year 2000 issue.
For instance, the section on financial reporting provides an overview of current authoritative accounting literature and how it relates to the Year 2000 issue, specifically accounting for costs of modifying computer software, revenue and loss recognition principles, possible impairment issues, and disclosure considerations under the AICPA Statement of Position (SOP) 94-6, "Disclosure of Certain Significant Risks and Uncertainties."
The section on auditing alerts auditors, among others things, to evaluate in their audit plans for 1997 and 1998 the effects of the risks associated with Year 2000 systems modifications and new systems installations that are in progress or will be in progress during those years. Further, the guide suggests that auditors, as a matter of client service, communicate the Year 2000 issue to company senior managements, audit committees, and boards of directors.
The Year 2000 guide can be downloaded from the Institute's website, AICPA Online (www.aicpa.org/members/y2OOO/intro.htm ). Copies can also be ordered after December 5, 1997, by calling the AICPA Order Department toll-free at 800-862-4272, and requesting Product No. 022503. Price is $11 for members, $13.75 for non-members.
The AICPA ( www.aicpa.org ) is the national professional organization of CPAs with more than 331,000 members in public practice, business and industry, government and education.
SOURCE American Institute of Certified Public Accountants
/CONTACT: Dave Dasgupta of AICPA, 212-596-6111, Ddasgupta@aicpa.org /
/Web Site: aicpa.org / |
