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Accounting Research Manager(TM)
Weekly Summary of Developments
August 6-10, 2007
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Accounting Research Manager subscriber,
The Accounting Research Manager database now contains this week's weekly summary of developments. Click the link below to access and print the fully-formatted Weekly Summary:
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If you do not have immediate Internet access to the Accounting Research Manager database, below is the text of this week's Weekly Summary.
Accounting and SEC Headlines
Accounting for Income Taxes -- Interpretations of Statement 109 Updated and Added to Our Publication
Reporting Cash Flows -- Interpretations of Cash Flow Reporting Updated
Prior-Year Misstatements -- FASB Discusses Quantifying Errors and Other Matters at August 1, 2007 Meeting
Significant Deficiency -- SEC Issues Final Rules Defining Term
Regulation S-K -- SEC Updates Staff Interpretations Related to Executive Compensation and Related Party Transactions
International Reporting -- SEC Issues Concept Release Seeking Views on Allowing U.S. Issuers to Prepare Financial Statements in Accordance with International Financial Reporting Standards
Regulation D -- Revising Limited Offering Exemptions in Regulation D
Auditing and Internal Controls Headlines
Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement -- Additional Interpretive Guidance
Government Headlines
Intangible Assets -- Discussion of GASB Statement No. 51
GASB Report Issued -- Comments on Derivatives Proposal Requested
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ACCOUNTING AND SEC HEADLINES:
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Accounting for Income Taxes -- Interpretations of Statement 109 Updated and Added to Our Publication
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We have updated our publication, Accounting for Income Taxes - Interpretations of FASB Statement 109, to include updates on interpretations primarily covering FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes and intraperiod tax allocation. In addition, the "Recent Developments" section of this publication has been updated to reflect the current status of projects and related activities at the FASB that may affect the accounting for income taxes.
See our Literature Update for complete details of this update.
Reporting Cash Flows -- Interpretations of Cash Flow Reporting Updated
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We have updated our publication, Interpretation of FASB Statements No. 95 and 102, Statement of Cash Flows, primarily to incorporate changes related to FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. We have added Topic 35, "Fair Value Option for Financial Assets and Financial Liabilities," to discuss proper classification of cash receipts and cash payments related to trading securities and financial assets and financial liabilities for which the fair value option has been elected. Statement 159 also amends FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities. These changes are reflected in Topic 27, "Auction Rate Securities," Topic 30, "Investments in Debt and Equity Securities" and Topic 33, "Interests that Continue to Be Held in Securitized Loans."
Prior-Year Misstatements -- FASB Discusses Quantifying Errors and Other Matters at August 1, 2007 Meeting
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As reported in its "Action Alert" publication, the FASB met on August 1, 2007, and began its redeliberations of proposed FASB Staff Position 154-a, "Considering the Effects of Prior-Year Misstatements When Quantifying Misstatements in Current-Year Financial Statements." The FASB decided not to issue a final FSP and removed the project from its agenda. This project was added to the FASB's agenda to effectively provide guidance to private companies that exists in SEC Staff Accounting Bulletin No. 108, Quantifying Financial Statement Misstatements.
The Action Alert also indicates that the FASB will hold an educational, non-decision-making session on August 15, 2007 to discuss topics that are anticipated to be discussed at a future Board meeting.
Significant Deficiency -- SEC Issues Final Rules Defining Term
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The SEC has published a final definition of "significant deficiency" for use in evaluations and communications under Sections 302 and 404 of the Sarbanes-Oxley Act of 2002. The SEC defined this term as follows:
A deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant's financial reporting.
The final definition has been discussed further in our hot topic dated July 26, 2007:
For detail, please contact info@zy-cpa.com
The rule change is effective September 10, 2007.
Regulation S-K -- SEC Updates Staff Interpretations Related to Executive Compensation and Related Party Transactions
The SEC's Division of Corporation Finance (Corp Fin) issues certain compliance and disclosure interpretations on specific reporting issues that have been raised by constituents or the SEC staff. Corp Fin has updated certain compliance and disclosure interpretations of Item 402, "Executive Compensation" and Item 404, "Transactions with Related Parties" of Regulation S-K. Regulation S-K governs the nonfinancial information requirements for registrant filings. In broad terms, the specific topics covered by the most recent update include issues associated with:
Item 402:
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-Reporting salary and bonus forgone at the election of an executive;
-Perquisites or other personal benefits with no incremental cost to the registrant;
-Reversing previously expensed FAS 123R equity compensation;
-Determining accrued amounts of "all other compensation;"
-Incentive awards denominated in dollars, but payable in stock;
-Reporting performance-based awards;
-Using "accrued value" to report accumulated benefit for a cash balance plan;
-Items deemed "earnings" for purposes of compensation disclosures;
-Calculating the value of accelerated options (termination or change-in-control);
-Reporting the impact of change-in-control provisions;
-Charitable matching programs available to all employees;
-Successor and predecessor compensation in a merger;
-Compensation reporting of shell companies merging with an operating company;
-Stock dividends on unvested restricted stock;
-Reporting stock option grants that permit for immediate exercise; and
-Using a triggering event versus reporting possible scenarios.
Item 404:
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-Amounts to be considered in analyzing and reporting employment arrangement transactions; and
-Disclosing compensation of immediate family employed by a registrant.
International Reporting -- SEC Issues Concept Release Seeking Views on Allowing U.S. Issuers to Prepare Financial Statements in Accordance with International Financial Reporting Standards
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The SEC has issued a Concept Release for public comment that seeks constituent views on allowing U.S. registrants to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). In the Concept Release, the SEC acknowledges the growing number of jurisdictions mandating or allowing the use of IFRS, as well as the ongoing convergence projects between global accounting standard setting bodies, including the FASB and the IASB. Accordingly, the SEC is seeking feedback on, among other things, whether two sets of accounting standards can coexist for use by U.S. registrants and their independent auditors.
Comments on the Concept Release are due 90 days after the release is published in the Federal Register.
On July 2, 2007, the SEC issued a related proposal that would eliminate the current requirement that foreign private registrants reconcile financial statements prepared in accordance with IFRS to U.S. GAAP. Comments on this proposal are due September 24, 2007.
Regulation D -- Revising Limited Offering Exemptions in Regulation D
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On August 3, 2007, the SEC issued for public comment proposed rules that would revise the limited offering exemptions in Regulation D. This regulation provides certain exemptions from the SEC's registration requirements and requires less detailed information be provided to the public. Among other things, the SEC's proposal would:
-Create a new registration exemption for "large accredited investors" and also allow limited advertising of these offerings;
-Revise the term "accredited investor" to better clarify the qualification standards on who can rely on the Regulation D exemptions;
-Shorten the time offers and sales before or after a Regulation D offering can be made in reliance of the integration safe harbor to 90 days, from 6 months; and
-Condition Regulation D exemptions on uniform bad actor disqualification provisions.
Comments on the proposal are due October 9, 2007.
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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement -- Additional Interpretive Guidance
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We have added a GAAS Update Service that focuses on practical issues relating to Statement on Auditing Standards No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, by using a "Question & Answer" format designed to provide practical discussion, advice, and specific implementation guidance. The Q & As address various issues including: (a) the critical issues that should be covered in the engagement team's discussion of the susceptibility of the financial statements to material misstatements; (b) the auditor's understanding and assessment of the entity's internal control system, including factors that typically would increase the auditor's concern about the effectiveness of an entity's control environment; (c) the risk assessment procedures the auditor performs to obtain an understanding of the entity and its environment, including its internal control; and (d) factors that the auditor might consider in determining whether a professional with information technology skills is needed on the audit team.
Some of the documents listed above may not be accessible under your current subscription. For information about upgrading your subscription to include additional content, click here:
For detail, please contact info@zy-cpa.com