FASB ASC - The Evolution of US GAAP

FASB ASC (Accounting Standards Codifications) replaced the old numerical based rule format of US GAAP (Generally Accepted Accounting Principles) a few years ago now as we continue to deal with the larger issue of how to manage the evolution of US Accounting Standards as an Industry. The dialogue of where we go on the Rules Based US GAAP vs. the Principles based IFRS which is subject to more discretionary judgement than GAAP in reporting continues.

At a later time we will return to the conversation of GAAP vs. IFRS which is an important discussion taking place in the Industry, but for now we are limiting to the scope of GAAP for purposes of this Entry.

US GAAP under FASB updates to Accounting Standards Codifications are prepared in a new layout which moves the Rule Number based system to the Topic driven reference that mirrors your Financials and then branches to Broad Transactions and Industry Standards.

In Overview the (relatively) new Accounting Standards Codifications follows the layout of:

General Principles
Presentation Standards
Assets
Liabilities
Equity
Revenues
Expenses
Broad Transactions
Industry Standards

The Assets, Liabilities and Equity Topic areas of course correspond to your Balance Sheet where the key rule and bedrock of Accounting Truth that Assets = Liabilities + Owners (or Shareholders or Partners) Equity remains constant, Ceterius Paribus - All Other Things Being Equal.

The Revenues and Expense elements reflect your Profit and Loss (P&L) yielding Net Income (or Net Loss where Expenses exceed Revenues).

The surrounding Topics correspond to underlying foundational and overlaying reporting and transactional elements and Introduce Generally Accepted Accounting Principles (GAAP), Guidance on Presentation of Financials, determine approach for Broad Transactions captured in Financials, and cover Industry Specific needs in Accounting.

When taken in the Aggregate and Applied FASB ASC = US GAAP.

The Practice of Accounting includes knowing the Rules, Interpreting them and Applying them to Financials and underlying transactions. Our hands on experience with Business Entities of All Sizes (Fortune 500, Small and Medium in size) allows us to better support your needs in Accounting, Operations, Management and Financial Reporting, Cost Accounting, Budgeting/ Forecasting, Cash Flows Analysis, Profitability, Business Analysis, Accounting Systems implementations and more. We come from the perspective of having owned and produced Financials for operations and which provides additional insight  to connect with the operational accounting perspective and to know the needs of Board Members, CEOs, COOs and key management Financial Decision Making professionals. While all leaders have unique interests we readily adapt our focus to highlight your needs in Management Decision Making support services in Advisory.

DCarsonCPA.com is the web presence of Dean T. Carson II, CPA here to support the line of Financial Decision Making working with Government, Industry, Business, Non Profits and Individuals. Learn more at www.dcarsoncpa.com or e-mail us at info@dcarsoncpa.com .

Federal Home Loan (FHL) Banks Audit Requirements

Part 1274 Financial Statements of the Banks

§ 1274.2 Audit requirements.

(a) Each Bank, the OF, and the FICO shall obtain annually an independent external audit of and an audit report on its individual financial statement.

(b) The OF audit committee shall obtain an audit and an audit report on the combined annual financial statements for the Bank System.

(c) All audits must be conducted in accordance with generally accepted auditing standards and in accordance with the most current government auditing standards issued by the Office of the Comptroller General of the United States.

(d) An independent, external auditor must meet at least twice each year with the audit committee of each Bank, the audit committee of OF, and the FICO Directorate.

(e) FHFA examiners shall have unrestricted access to all auditors' work papers and to the auditors to address substantive accounting issues that may arise during the course of any audit.

As of Read Date 10/28/11 Federal Bank Rules are subject to Change and Update and must be verified as relying or applying. These rules pertain specifically to Federal Home Loan Banks.

DCarsonCPA.com is the Practice of Dean T. Carson II, CPA here to support Business, Non Profits and Individuals on Traditional and Strategic CPA Services as available under applicable Rules and also available for Decision Makers at the Board and Senior Executive Levels. We partner with a team of highly skilled professionals and meet your needs in efficient manners in a time where expenses matter and the value add on knowledge can definitely benefit Financial Decision Makers. Learn more at www.dcarsoncpa.com and /or reach us at info@dcarsoncpa.com .

Credit Unions - NCUA Record Retention Rules

NCUA Rules pertaining to Record Retention:

Appendix A to Part 749—Record Retention Guidelines:

Credit unions often look to NCUA for guidance on the appropriate length of time to retain various types of operational records. NCUA does not regulate in this area, but as an aid to credit unions it is publishing this appendix of suggested guidelines for record retention. NCUA recognizes that credit unions must strike a balance between the competing demands of space, resource allocation and the desire to retain all the records that they may need to conduct their business successfully. Efficiency requires that all records that are no longer useful be discarded, just as both efficiency and safety require that useful records be preserved and kept readily available.

A. What Format Should the Credit Union Use for Retaining Records?

NCUA does not recommend a particular format for record retention. If the credit union stores records on microfilm, microfiche, or in an electronic format, the stored records must be accurate, reproducible and accessible to an NCUA examiner. If records are stored on the credit union premises, they should be immediately accessible upon the examiner's request; if records are stored by a third party or off-site, then they should be made available to the examiner within a reasonable time after the examiner's request. The credit union must maintain the necessary equipment or software to permit an examiner to review and reproduce stored records upon request. The credit union should also ensure that the reproduction is acceptable for submission as evidence in a legal proceeding.

B. Who Is Responsible for Establishing a System for Record Disposal?

The credit union's board of directors may approve a schedule authorizing the disposal of certain records on a continuing basis upon expiration of specified retention periods. A schedule provides a system for disposal of records and eliminates the need for board approval each time the credit union wants to dispose of the same types of records created at different times.

C. What Procedures Should a Credit Union Follow When Destroying Records?

The credit union should prepare an index of any records destroyed and retain the index permanently. Destruction of records should ordinarily be carried out by at least two persons whose signatures, attesting to the fact that records were actually destroyed, should be affixed to the listing.

D. What Are the Recommended Minimum Retention Times?

Record destruction may impact the credit union's legal standing to collect on loans or defend itself in court. Since each state can impose its own rules, it is prudent for a credit union to consider consulting with local counsel when setting minimum retention periods. A record pertaining to a member's account that is not considered a vital record may be destroyed once it is verified by the supervisory committee. Individual Share and Loan Ledgers should be retained permanently. Records, for a particular period, should not be destroyed until both a comprehensive annual audit by the supervisory committee and a supervisory examination by the NCUA have been made for that period.

E. What Records Should Be Retained Permanently?

1. Official records of the credit union that should be retained permanently are:

(a) Charter, bylaws, and amendments.

(b) Certificates or licenses to operate under programs of various government agencies, such as a certificate to act as issuing agent for the sale of U.S. savings bonds.

(c) Current manuals, circular letters and other official instructions of a permanent character received from the NCUA and other governmental agencies.

2. Key operational records that should be retained permanently are:

(a) Minutes of meetings of the membership, board of directors, credit committee, and supervisory committee.

(b) One copy of each financial report, NCUA Form 5300 or 5310, or their equivalent, and the Credit Union Profile report, NCUA Form 4501, or its equivalent as submitted to NCUA at the end of each quarter.

(c) One copy of each supervisory committee comprehensive annual audit report and attachments.

(d) Supervisory committee records of account verification.

(e) Applications for membership and joint share account agreements.

(f) Journal and cash record.

(g) General ledger.

(h) Copies of the periodic statements of members, or the individual share and loan ledger. (A complete record of the account should be kept permanently.)

(i) Bank reconcilements.

(j) Listing of records destroyed.

F. What Records Should a Credit Union Designate for Periodic Destruction?

Any record not described above is appropriate for periodic destruction unless it must be retained to comply with the requirements of consumer protection regulations. Periodic destruction should be scheduled so that the most recent of the following records are available for the annual supervisory committee audit and the NCUA examination. Records that may be periodically destroyed include:

(a) Applications of paid off loans.

(b) Paid notes.

(c) Various consumer disclosure forms, unless retention is required by law.

(d) Cash received vouchers.

(e) Journal vouchers.

(f) Canceled checks.

(g) Bank statements.

(h) Outdated manuals, canceled instructions, and nonpayment correspondence from the NCUA and other governmental agencies.

[66 FR 40579, Aug. 3, 2001, as amended at 74 FR 35769, July 21, 2009]

As of Read Date 10/28/11 ALL NCUA Rules are subject to change and update and must be verified as relying for best results, relevancy and accuracy.

DCarsonCPA.com is the web presence of Dean T. Carson II, CPA we are here to support Businesses, Non Profits and Individuals on Traditional and Strategic CPA Services and have the background expertise of  Hands on Experience with Financial Accounting in Financial Entities and of Providing Hands on support for a Credit Union Director which opened the door for us to learning more about NCUA an supporting Credit Unions needs on Financials, Controls and Advisory for Board Members. The function of a Credit Union is in essence a simplified bank structure with mutual ownership, with key Asset Liability Management to match Deposits and Loans and Reserve Accounting responsibilities that are common to many regulated Financial Entities. We are here to assist, learn more at www.dcarsoncpa.com and / or reach us at info@dcarsoncpa.com .

An Introductory Look at Taxes on Individuals - who exactly is subject to United States Individual Income Taxes?

An Introductory look at Individual Taxation in US Law - extracts from IRC § 1.1-1 Taxation of Individuals.

General Rule - The Code Imposes an Income Tax on every Individual who is a citizen or resident of the United States.

The Code Defines who is a Citizen.

Limited citation omitting Examples for simplicity in overview of Principle:

§ 1.1-1 Income tax on individuals.

(a) General rule. (1) Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to the extent provided by section 871(b) or 877(b), on the income of a nonresident alien individual. For optional tax in the case of taxpayers with adjusted gross income of less than $10,000 (less than $5,000 for taxable years beginning before January 1, 1970) see section 3. The tax imposed is upon taxable income (determined by subtracting the allowable deductions from gross income). The tax is determined in accordance with the table contained in section 1. See subparagraph (2) of this paragraph for reference guides to the appropriate table for taxable years beginning on or after January 1, 1964, and before January 1, 1965, taxable years beginning after December 31, 1964, and before January 1, 1971, and taxable years beginning after December 31, 1970. In certain cases credits are allowed against the amount of the tax. See part IV (section 31 and following), subchapter A, chapter 1 of the Code. In general, the tax is payable upon the basis of returns rendered by persons liable therefor (subchapter A (sections 6001 and following), chapter 61 of the Code) or at the source of the income by withholding. For the computation of tax in the case of a joint return of a husband and wife, or a return of a surviving spouse, for taxable years beginning before January 1, 1971, see section 2. The computation of tax in such a case for taxable years beginning after December 31, 1970, is determined in accordance with the table contained in section 1(a) as amended by the Tax Reform Act of 1969. For other rates of tax on individuals, see section 5(a). For the imposition of an additional tax for the calendar years 1968, 1969, and 1970, see section 51(a).

(b) Citizens or residents of the United States liable to tax. In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States. Pursuant to section 876, a nonresident alien individual who is a bona fide resident of a section 931 possession (as defined in §1.931–1(c)(1) of this chapter) or Puerto Rico during the entire taxable year is, except as provided in section 931 or 933 with respect to income from sources within such possessions, subject to taxation in the same manner as a resident alien individual. As to tax on nonresident alien individuals, see sections 871 and 877.

(c) Who is a citizen. Every person born or naturalized in the United States and subject to its jurisdiction is a citizen. For other rules governing the acquisition of citizenship, see chapters 1 and 2 of title III of the Immigration and Nationality Act (8 U.S.C. 1401–1459). For rules governing loss of citizenship, see sections 349 to 357, inclusive, of such Act (8 U.S.C. 1481–1489), Schneider v. Rusk, (1964) 377 U.S. 163, and Rev. Rul. 70–506, C.B. 1970–2, 1. For rules pertaining to persons who are nationals but not citizens at birth, e.g., a person born in American Samoa, see section 308 of such Act (8 U.S.C. 1408). For special rules applicable to certain expatriates who have lost citizenship with a principal purpose of avoiding certain taxes, see section 877. A foreigner who has filed his declaration of intention of becoming a citizen but who has not yet been admitted to citizenship by a final order of a naturalization court is an alien.

(d) Effective/applicability date. The second sentence of paragraph (b) of this section applies to taxable years ending after April 9, 2008.

[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 7332, 39 FR 44216, Dec. 23, 1974; T.D. 9391, 73 FR 19358, Apr. 9, 2008]

As of Read Date 10/28/11 ALL Tax Rules are subject to change and must be confirmed as file or relied upon.

DCarsonCPA.com is the web presence of Dean T. Carson II, CPA a Traditional and Strategic CPA Practice, here to support Businesses, Non Profits and Individuals on Accounting, Taxes, Advisory and More. We work with broad ranging knowledge of Accounting and hands on skills in Accounting from Regulated Financial Services Entities with 15+ years experience. The Role of the Accountant revolves around Financial Decision Making information for Leaders (whether your leadership role is in Business, Non Profit or Family Finances we treat your needs the same - we are here to support you on services and we value your Business). You can learn more about us at www.dcarsoncpa.com or send us an e-mail at  info@dcarsoncpa.com .

FAF - FASB & GASB The Framework of Accounting for Corporations and State and Local Financials.

FAF is the Financial Accounting Foundation, while their website appears to be temporarily out of commission at the time of this write up. We will return in the future to update this link.

FAF is the oversight body for FASB & GASB:

FASB is the Financial Accounting Standards Board most responsible for Public Company Accounting Standards that we call US GAAP (United States Generally Accepted Accounting Principles). You can find FASB at http://www.fasb.org/home

GASB is a closely related but less accessible set of Standards referred to as Governmental Accounting Standards Board. GASB is less accssible due to a lesser degree of Funding and we encourage you to contribute to GASB Funding to better facilitate online access to refrence sources that are key to understanding State and Local Financials. GASB is NOT the standard setter for Our National Government, the US National GAAP for Government Standards are promulgated by the FASAB which we will cover at some later point.

GASB - Governmental Accounting Standards Board can be found at http://gasb.org/

Whether considering FASB or GASB, you are dealing with the Authoritative Rule sets for Accounting and Reporting in related Financial statements.   This is only an introduction so check back with us soon for more as we expand on our coverage of ALL Manners of Accounting, Reporting, Analysis, Compliance and Technologies that pertain to our Industry in the Aggregate.

We are DCarsonCPA.com the web presence of Dean T. Carson II, CPA your Solution Set for Business, Non Profit and Individual Accounting, Taxation, Compliance, Advisory and more. We focus Our skills on connecting the Line of Government, Industry, Business, Non Profit and Financial Decision Making - it all matters and it all roles into your Family Finances at the end of the day, for better or worse. Learn more at www.dcarsoncpa.com or e-mail us at info@dcarsoncpa.com