AITF issues new auditing interpretation related to SFAS No. 140. (accounting & auditing news).

An auditing interpretation, "The Use of Legal Interpretations As Evidential Matter to Support Management's Assertion That a Transfer of Financial Assets Has Met the Isolation Criterion in Paragraph 9(a) of Financial Accounting Standards Board Statement No. 140," of Statement on Auditing Standards No. 73, Using the Work of a Specialist, has been issued by the Audit Issues Task Force.

The guidance has been expanded and updated to reflect changes in accounting guidance that have occurred since a previous interpretation (superseded by this one) was issued early in 1998. Most of the new auditing guidance relates to examples of legal opinions that auditors will need to obtain and review with regard to transfers of financial assets by banks subject to receivership or conservatorship under provisions of the Federal Deposit Insurance Act.

The interpretation is effective for auditing procedures related to transfers of financial assets that are required to be accounted for under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, as amended by FASB Technical Bulletin No. 01-1, Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 Related to the Isolation of Transferred Financial Assets. Its text has been marked to show changes from the text of the superseded interpretation to facilitate comparison with the original.

For a copy of the interpretation, visit the AICPA Web site for a downloadable PDF file (using Adobe Acrobat) at www.aicpa.org/members/div/auditstd/anno unce/index.htm. It also is scheduled to appear in an upcoming issue of the Journal of Accountancy.