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Auditor’s Responsibilities for Subsequent Events Relative to a Conduit Bond Obligor |
Per FASB Accounting Standards Codification 855-10-25, Subsequent Events, a conduit bond obligor for conduit debt securities that are traded in a public market must evaluate subsequent events through the date the financial statements are issued. Financial statements are considered issued when they are widely distributed to shareholders and other financial statement users for general use and reliance in a form and format that complies with generally accepted accounting principles. We believe that the financial statements are widely distributed (and therefore issued) at the time that the entity has distributed the statements to all intended users. Therefore a conduit bond obligor that intends to file its financial statements on the Electronic Municipal Marketing Access (EMMA) system would not have issued its financial statements until it has either filed them on EMMA orposted them to their Web site, which could be at the same time that they are distributed to the governing board.
The National Professional Standards Group has issued Release R10-15, Auditor’s Responsibilities for Subsequent Events Relative to a Conduit Bond Obligor. This Release discusses the auditor’s responsibilities for evaluating the conduit bond obligor’s assertion as to the financial statement issuance date and deciding whether the manner in which the entity has made its financial statements available does or does not constitute issuance for purposes of complying with generally accepted accounting principles and for completing the auditor’s subsequent event procedures. The Release also provides guidance regarding the auditor’s reporting responsibilities in circumstances in which management makes a limited distribution prior to a planned wide distribution, among other matters.
Release R10-15 is available in full to subscribers on the AdvanceCPA Bulletin Board. |