Wednesday, June 12, 2013

What is the Main Focus of FAR

As I have mentioned a few blog posts back, the American Institute of Certified Public Accountant (AICPA) tells us what is going to be on each section of the Uniform CPA Examination. As a CPA candidate you should get familiar with the Content Specification Outline and Skills Specification Outline (CSO/SSO) for the four sections. The CSO/SSO is a pdf document put together by AICPA examination board. I'm going to take the time to highlight some of the main foci of the Financial Accounting Reporting (FAR) section.By the way the four sections of the Uniform CPA examination are Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Regulations (REG), and Business Environment and Concepts (BEC).

The FAR section of the Uniform CPA Examination tests your knowledge and understanding of the financial reporting framework used by business enterprises, not-for-profit organizations, and governmental entities. You should know how the standard setting bodies, such as FASB, GASB, IASB, FASAB, SEC, etc., set standards for accounting and reporting financial information for each respective organization type (public companies, government entities, non-for-profits, etc.). The Accounting Standard Codification (ASC) system should be familiar to you. The ASC is now the sole authority for GAAP for public companies. An awareness of International Financial Reporting Standards (IFRS) will also be helpful--IFRS is set by the International Accounting Board (IASB)

ContentAndSkills CSOs-SSOs-Effective.Jan2013

The CSO/SSO document provides suggested reference sources for CPA candidates to use to further study the topics skill requirements covered in FAR and the other sections.  The areas of the FAR section are listed below:

Conceptual Framework, Standards, Standard Setting, and Presentation of Financial Statements (17% - 23%)

Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures (27% - 33%)

Specific Transactions, Events and Disclosures: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures (27% - 33%)

Governmental Accounting and Reporting (8% - 12%)

Not-for-Profit (Nongovernmental) Accounting and Reporting (8% - 12%)

Suggested References for Financial Accounting and Reporting: 

• Financial Accounting Standards Board (FASB) Accounting Standards Codification
• Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards
• Standards Issued by the U. S. Securities and Exchange Commission (SEC):
o Regulation S-X of the Code of Federal Regulations (17 CFR Part 210)
o Financial Reporting Releases (FRR)/Accounting Series Releases (ASR)
o Interpretive Releases (IR)
o SEC Staff Guidance in Staff Accounting Bulletins (SAB)
o SEC Staff Guidance in EITF Topic D and SEC Staff Observer Comments
o Regulation S-K of the Code of Federal Regulations
• International Accounting Standards Board (IASB) International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations
• AICPA Auditing and Accounting Guides
• Codification of Statements on Auditing Standards
o AU-C Section 800, Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
• Current textbooks on accounting for business enterprises, not-for-profit organizations, and governmental entities
• FASB Concept Statements
• GASB Concept Statements
• The IASB Conceptual Framework for Financial Reporting

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