Kentucky Administrative Regulations › Title 201 - GENERAL GOVERNMENT CABINET › Chapter 1 - Board of Accountancy › Section 201 KAR 1:290 - Standards of Practice

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				325.240,
				325.340(1)(c)
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				325.240(2) authorizes the
				Kentucky State Board of Accountancy to promulgate administrative regulations to
				establish and maintain a high standard of integrity and dignity in the
				profession of public accounting. This administrative regulation is necessary to
				ensure licensees follow specific accounting standards and principles that are
				nationally and internationally recognized and in some instances required by
				federal law, when performing a regulated activity. The Single Audit Act
				Amendments of 1996, 31 U.S.C. 75 and 2 C.F.R. Subtitle A Chapter II Part 200,
				require Generally Accepted Government Auditing Standards be adhered to when
				performing of audits of state and local governments and nonprofit entities that
				receive federal awards. 2 C.F.R. Subtitle A Chapter II Part 200 Subpart F of
				the Office of Management and Budgets Uniform Administrative Requirements, Cost
				Principles, and Audit Requirements for Federal Awards, provides the
				government-wide guidelines and policies on conducting audits to comply with the
				Single Audit Act, and reiterates the requirement to use Generally Accepted
				Government Auditing Standards. The Sar-banes-Oxley Act of 2002, 15 U.S.C. 98,
				authorizes the Public Company Accounting Oversight Board to establish standards
				that licensees shall follow when performing audits of U.S. publicly traded
				companies.
				31 U.S.C.
				330 authorizes the Secretary of the United
				States Treasury Department to regulate licensees who practice before the
				Internal Revenue Service. 31 C.F.R. Subtitle A, Part 10 contains the procedures
				that licensees shall follow when practicing before the IRS. A CPA shall comply
				with the reporting requirements in The Employee Retirement Security Act of
				1974, 29 U.S.C. 18, when performing an audit of an employee retirement plan
				created under the act. This administrative regulation establishes the standards
				of practice for CPAs and public accounting firms.
Section 1. Definitions.
(1) "AICPA" means the American Institute of
			 Certified Public Accountants. (
www.aicpa.org
)
(2) "Audit" means an engagement performed in
			 accordance with generally accepted auditing standards (GAAS) promulgated by the
			 American Institute of Certified Accountants (AICPA) to obtain reasonable
			 assurance about whether the financial statements as a whole are free from
			 material misstatement, whether due to fraud or error, thereby enabling the
			 licensee to express an opinion on whether the financial statements are
			 presented fairly, in all material respects, in accordance with an applicable
			 financial reporting framework.
(3)
			 "Board" is defined by
			 KRS
			 325.220(2).
(4) "Client" means a person or entity that
			 retains a licensee to provide a regulated activity as defined in
			 KRS 325.220(9)
			 (a).
(5) "Compilation" means an engagement to
			 apply accounting and financial reporting expertise to assist management in the
			 presentation of financial statements and report in accordance with the
			 Statements on Standards for Accounting and Review Services without undertaking
			 to obtain or provide any assurance that there are no material modifications
			 that should be made to the financial statements in order for them to be in
			 accordance with the applicable financial reporting framework.
(6) "DOL" means the United States Department
			 of Labor. (
www.dol.gov
.)
(7) "Financial statement" means a
			 presentation of financial data, including accompanying notes, derived from
			 accounting records and intended to communicate an entity's economic resources
			 and obligations at a point in time, or the changes therein for a period of
			 time, in accordance with generally accepted accounting principles (GAAP) or
			 another financial reporting financial framework. General use financial
			 statements, financial forecasts, projections, and similar presentations are
			 considered financial statements.
(8) "GAAP" means generally accepted
			 accounting principles that describe accepted accounting practices at a
			 particular time and include broad guidelines of general applications and
			 detailed practices and procedures that provide a standard by which to measure
			 financial presentations.
(9) "GAAS"
			 means generally accepted auditing standards.
(10) "GAO" means the Government
			 Accountability Office. (
www.gao.gov
).
(11) "IAASB" means the International Auditing
			 and Assurance Standards Board. (
www.iaasb.org
)
(12) "IFAC" means the International
			 Federation of Accountants. (
www.ifac.org
)
(13) "Licensee" is defined by
			 KRS
			 325.220(6).
(14) "PCAOB" means the Public Accounting
			 Standards Board. (
www.pcaobus.org
)
(15) "Regulated activity" is defined by
			 KRS 325.220(9)
			 (a).
(16) "Review" means an engagement to obtain
			 limited assurance as a basis for reporting whether the licensee is aware of any
			 material modifications that should be made to the financial statements for them
			 to be in accordance with generally acceptable accounting principles or other
			 financial reporting framework, primarily through the performance of inquiry and
			 analytical procedures.
(17) "SEC"
			 means the United States Securities and Exchange Commission. (
www.sec.gov
.)