Audit and Accounting Guide Depository and Lending Institutions Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies 2019

Table of Contents xv

1 Industry Overview — Banks and Savings Institutions .01-.108

Description of Business .01-.07

Regulation and Oversight .08-.59

Regulatory Capital Matters .60-.81

Annual Independent Audits and Reporting Requirements .82-.107

Other Reporting Considerations .108

2 Industry Overview — Credit Unions .01-.62

Description of Business .01-.10

Charters, Bylaws, and Minutes .11-.17

Regulation and Oversight .18-.23

Regulatory Capital Matters .24-.54

Annual Audits .55-.62

3 Industry Overview — Finance Companies .01-.19

Description of Business .01-.11

Regulation and Oversight .12-.19

4 Industry Overview — Mortgage Companies .01-.42

Description of Business .01-.20

Regulation and Oversight .21-.37

Reporting Considerations .38-.42

HUD Programs .38-.40

Asset Servicing for Investors .41-.42

5 Audit Considerations and Certain Financial Reporting Matters .01-.267

Overview .01-.09

Terms of Engagement .10-.13

Audit Planning .14-.15

Materiality .16-.20

Use of Assertions in Assessment of Risks of Material Misstatement .21-.22

Risk Assessment Procedures .23-.75

Risk Assessment and the Design of Further Audit Procedures .76-.98

Evaluation of Misstatements Identified During the Audit .99-.101

Audit Documentation .102-.108

Using the Work of an Auditor’s Specialist .109-.114

Using the Work of a Management’s Specialist .115-.118

Processing of Transactions by Service Organizations .119-.121

Consideration of Fraud in a Financial Statement Audit .122-.150

Compliance With Laws and Regulations .151-.161

Going-Concern Considerations .162-.189

Written Representations .175

Information Other Than Financial Statements .200-.202

Certain Financial Reporting Matters .203-.221

Regulation and Supervision of Depository Institutions .222-.267

6 Cash and Cash Equivalents .01-.42

Introduction .01-.08

Accounting and Financial Reporting .09-.33

Auditing .34-.42

7 Investments in Debt and Equity Securities .01-.166

Introduction .01-.65

Regulatory Matters .66-.82

Accounting and Financial Reporting .83-.140

Auditing .141-.166

8 Loans .01-.230

Introduction .01-.56

Regulatory Matters .57-.88

Accounting and Financial Reporting .89-.181

Auditing .182-.230

9 Credit Losses .01-.111

Introduction .01-.22

Regulatory Matters .23-.37

Accounting and Financial Reporting .38-.61

Auditing .62-.111

10 Transfers and Servicing and Variable Interest Entities .01-.123

Introduction .01-.08

Regulatory Matters .09-.15

Accounting and Financial Reporting .16-.109

Auditing .110-.123

11 Real Estate Investments, Real Estate Owned, and Other Foreclosed Assets .01-.72

Introduction .01-.03

Regulatory Matters .04-.15

Accounting and Financial Reporting .16-.54

Auditing .55-.72

12 Other Assets, Other Liabilities, and Other Investments .01-.93

Introduction .01-.10

Regulatory Matters .11-.15

Accounting and Financial Reporting .16-.78

Auditing .79-.93

13 Deposits .01-.70

Introduction .01-.32

Regulatory Matters .33-.40

Accounting and Financial Reporting .41-.46

Auditing .47-.70

14 Federal Funds and Repurchase Agreements .01-.69

Introduction .01-.25

Regulatory Matters .26

Accounting and Financial Reporting .27-.47

Auditing .48-.69

15 Debt .01-.77

Introduction .01-.31

Regulatory Matters .32-.33

Accounting and Financial Reporting .34-.57

Auditing .58-.77

16 Income Taxes .01-.36

Introduction .01-.13

Regulatory Matters .14-.17

Accounting and Financial Reporting .18-.30

Auditing .31-.36

17 Equity and Disclosures Regarding Capital Matters .01-.115

Introduction .01

Banks and Savings Institutions .02-.46

Credit Unions .47-.64

Corporate Credit Unions .65-.79

Mortgage Companies and Mortgage Banking Activities .80-.84

Regulatory Capital Matters for All Entities .85-.88

Auditing .89-.115

18 Derivative Instruments: Futures, Forwards, Options, Swaps, and Other Derivative Instruments .01-.101

Introduction .01-.69

Regulatory Matters .70-.78

Accounting and Financial Reporting .79-.100

Auditing Considerations .101

19 Business Combinations .01-.41

Introduction .01

Regulatory Matters .02-.07

Accounting and Financial Reporting .08-.30

Auditing Considerations .31-.41

20 Fair Value .01-.71

Introduction .01

Accounting and Financial Reporting .02-.66

Auditing Considerations .67-.71

21 Trust and Asset Management Activities .01-.30

Introduction .01-.12

Regulatory Matters .13-.14

Accounting and Financial Reporting .15-.16

Auditing .17-.30

22 Insurance Activities .01-.70

Introduction .01-.10

Regulatory Matters .11

Accounting .12-.68

Auditing .69-.70

23 Reporting Considerations .01-.37

Introduction .01

Forming an Opinion on the Financial Statements .02-.04

Reports .05-.37

Appendix A — Illustrative Unqualified PCAOB Reports .37

Appendix

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 Leases Standard: FASB ASC 842

F Accounting for Financial Instruments

G New Auditing Standards to Change the Auditor’s Report

H Schedule of Changes Made to the Text From the Previous Edition

Index of Pronouncements and Other Technical Guidance

Subject Index

The American Institute of CPAs (AICPA) is the world's largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the procession.