Statement on auditing standards, 018

              Statement on
Auditing Standards
Issued by the Auditing Standards Executive Committee
Al American Institute of
Certified Public Accountants
Unaudited Replacement Cost Information
Replacement Cost Information Required in Filings
With the Securities and Exchange Commission
1. Although generally accepted accounting principles do not re­quire
the presentation of replacement cost information in financial
statements, certain companies are required by Regulation S- X of the
Securities and Exchange Commission ( the Commission) to include
specified replacement cost information in a note or a separate section
of audited financial statements filed with the Commission. Compa­nies
supplying such information are to disclose the methods used in
determining the amounts and are to furnish any additional informa­tion
necessary, in the opinion of management, to prevent the infor­mation
from being misleading.
2. The replacement cost information ordinarily is developed by
management, using assumptions and techniques that have not yet
been standardized, and consequently may differ from company to
company and from year to year. Accordingly, the various approaches
to calculating the replacement cost information must be viewed as
experimental at the present time.
3. The Commission does not require that the replacement cost
information be audited but has urged that appropriate standards be
developed concerning the involvement of the auditor. This State-
Copyright © 1977 by the
American Institute of Certified Public Accountants, Inc.
1211 Avenue of the Americas, New York, N. Y. 10036
May 1977
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