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Accounting Research Manager(TM)
Weekly Summary of Developments
September 10-14, 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:
For detail, please contact info@zy-cpa.com
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
EITF Meeting Results -- Tentative Conclusions Reached
Accounting for Contingencies -- FASB Adds a Technical Project to Its Agenda and Changes Prior Decision on Contingencies Recognized in a Business Combination
International Financial Reporting -- IASB Issues Agenda For September Meeting
Financial Assets and Liabilities -- Interpretations of FASB Statement No. 140 Updated
Airline Guide -- Proposed Revisions to Airline Audit and Accounting Guide Issued
Joint Arrangements -- IASB Issues Proposed IFRS on Accounting For Jointly Controlled Entities
Auditing and Internal Controls Headlines
The Auditor's Communication with Those Charged with Governance -- Additional Interpretive Guidance
Airline Guide -- Proposed Revisions to Airline Audit and Accounting Guide Issued
Government Headlines
Derivatives -- GASB Issues Exposure Draft
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ACCOUNTING AND SEC HEADLINES:
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EITF Meeting Results -- Tentative Conclusions Reached
For detail, please contact info@zy-cpa.com
As described in detail in our "EITF Flash Report," the Emerging Issues Task Force (EITF) discussed the following issues at its September 11, 2007 meeting:
-Issue No. 07-1, "Accounting for Collaborative Arrangements;"
-Issue No. 07-4, "Application of the Two-Class Method under FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships;"
-Issue No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock;"
-Issue No. 07-6, "Accounting for the Sale of Real Estate When the Agreement Includes a Buy-Sell Clause."
Specifically, the EITF reached tentative conclusions on Issues 07-1, 07-4 and 07-6 at this meeting. As an example, the tentative conclusion reached by the EITF on Issue 07-6, would allow a seller of real estate to evaluate the "facts and circumstances" relating to a contract that includes a "buy-sell" clause to determine whether that clause constitutes an option or other prohibited form of continuing involvement that precludes partial sale and profit recognition prescribed by FASB Statement No. 66, Accounting for Sales of Real Estate.
The FASB will consider ratification of these EITF tentative conclusions at its September 26, 2007 meeting. If ratified by the FASB, the tentative conclusions will be exposed for public comment. Thereafter, the EITF must consider any comments received on its final consensus and the FASB must ratify the final consensus before it becomes GAAP. The next EITF meeting is scheduled for November 28-29, 2007.
Prior to the EITF meeting this week, the FASB distributed additional meeting materials relating to Issue 07-6: For detail, please contact info@zy-cpa.com.
Accounting for Contingencies -- FASB Adds a Technical Project to Its Agenda and Changes Prior Decision on Contingencies Recognized in a Business Combination
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As reported in its "Action Alert" publication, the FASB met on September 6, 2007, and decided to add a technical project to its agenda to comprehensively reconsider the accounting for contingencies. Currently, contingencies are accounted for under FASB Statement No. 5, Accounting for Contingencies. As part of this project, the Board will consider enhancing the disclosure requirements about contingencies to ensure timely disclosures are required and being made by companies.
The Board also changed its previous decision to measure assets and liabilities arising from contingencies that are recognized in a business combination at fair value in subsequent periods. The Board decided that such assets and liabilities should be subsequently measured as follows:
-Assets - at the lower of: (a) its acquisition-date fair value or (b) the best estimate of its future settlement amount.
-Liabilities - at the higher of: (a) its acquisition-date fair value or (b) the amount that would be recognized by applying Statement 5.
The Action Alert also indicated that the FASB will hold a meeting on September 19, 2007 to discuss the following items:
-Subsequent events and going concern and liquidation basis of accounting;
-Mergers and acquisitions by a not-for-profit organization;
-Conceptual framework: reporting entity.
International Financial Reporting -- IASB Issues Agenda For September Meeting
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The IASB will discuss the following agenda items at its September 18, 19 and 21, 2007 meeting:
-Annual improvements process;
-Conceptual framework;
-Cost of investment in a subsidiary (IFRS No. 1, First Time Adoption of International Financial Reporting Standards);
-Earnings per share;
-Fair value measurement;
-Financial instruments puttable at fair value;
-IFRIC update;
-Post-employment benefits;
-Related party transactions;
-Small and medium-sized entities;
-Technical plan.
Financial Assets and Liabilities -- Interpretations of FASB Statement No. 140 Updated
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We have updated our publication, Financial Assets and Liabilities -Sales, Transfers, and Extinguishments: Interpretations of FASB Statement 140. The Update reflects additional interpretations related to the following topics:
-Defining a "consolidated affiliate of a servicer" for purposes of paragraph 13(c) of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities;
-SEC's view on a servicer's ability to modify securitized residential mortgage loans owned by a special purpose entity when default is reasonably foreseeable;
-Statement 140's practicability exception for fair value estimation does not apply to a transferee's accounting;
-FASB Staff Position (FSP) 46R-7, "Application of FASB Interpretation No. 46(R) to Investment Companies."
In addition, we have updated the "Recent Developments" section of this publication to reflect recent deliberations by the FASB on a variety of relevant projects. See our Literature Update for complete details.
Airline Guide -- Proposed Revisions to Airline Audit and Accounting Guide Issued
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The AICPA has issued for public comment a proposed revision to the Audit and Accounting Guide, Airlines. This is the first comprehensive "rewrite" of an industry guide since the FASB decided in October 2002 that the AICPA's Accounting Standards Executive Committee (AcSEC, the senior technical body of the AICPA on financial reporting matters) should no longer issue GAAP guidance once work on existing projects was completed. The accounting issues addressed in this proposed Guide include treatment of "breakage" in revenue transactions, accounting for airline ticket change fees, and the accounting for frequent flyer programs.
It should be noted that the prior edition of this Guide was cleared by the FASB and as a result is level "b" guidance. However, this guide, when finalized, will result in level "d" guidance. The AICPA indicates that the accounting principles from the 2003 Guide that were cleared by the FASB have been retained in the updated Guide.
Comments on the proposed revised airline guide are due December 15, 2007. Any comments received by the AICPA will be considered by AcSEC at future meetings.
Joint Arrangements -- IASB Issues Proposed IFRS on Accounting For Jointly Controlled Entities
For detail, please contact info@zy-cpa.com
The IASB has issued for public comment an Exposure Draft (ED), Joint Arrangements, aimed principally at remedying two aspects of International Accounting Standard (IAS) 31, Interests in Joint Ventures. Specifically, the ED would eliminate proportionate consolidation and require parties in a joint arrangement to recognize their respective contractual rights and obligations arising from the arrangement. The ED also requires disclosures about the nature and extent of an entity's operations conducted through joint arrangements.
Comments on the ED are due by January 11, 2008.
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:
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AUDITING AND INTERNAL CONTROLS HEADLINES:
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The Auditor's Communication with Those Charged with Governance -- 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 (SAS) No. 114, The Auditor's Communication with Those Charged with Governance, 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 appropriate party within the entity's governance structure with whom the auditor should communicate the matters required under SAS 114; (b) matters that the auditor might address when communicating with those charged with governance, his or her views about the qualitative aspects of the entity's significant accounting practices; (c) whether the auditor may discuss with management significant matters related to the audit before communicating them to those charged with governance; and (d) factors that the auditor might consider in determining whether to communicate matters to those charged with governance orally or in writing.
Airline Guide -- Proposed Revisions to Airline Audit and Accounting Guide Issued
For detail, please contact info@zy-cpa.com
As discussed above in our Accounting and SEC Summaries, the AICPA has issued for public comment a proposed revision to the Audit and Accounting Guide, Airlines. This is the first comprehensive "rewrite" of an industry guide since the FASB decided in October 2002 that the AICPA's Accounting Standards Executive Committee (AcSEC, the senior technical body of the AICPA on financial reporting matters) should no longer issue GAAP guidance once work on existing projects was completed. The accounting issues addressed in this proposed Guide include treatment of "breakage" in revenue transactions, accounting for airline ticket change fees, and the accounting for frequent flyer programs.
It should be noted that the prior edition of this Guide was cleared by the FASB and as a result is level "b" guidance. However, this guide, when finalized, will result in level "d" guidance. The AICPA indicates that the accounting principles from the 2003 Guide that were cleared by the FASB have been retained in the updated Guide.
Comments on the proposed revised airline guide are due December 15, 2007. Any comments received by the AICPA will be considered by AcSEC at future meetings.
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
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GOVERNMENT HEADLINES:
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Derivatives -- GASB Issues Exposure Draft
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We have added a Governmental GAAP Update Service that discusses the GASB's recently issued Exposure Draft (ED), Accounting and Financial Reporting for Derivative Instruments. The ED would require that the fair value of derivatives and changes in such fair value from period-to-period, be reported in the financial statements. However, if a derivative is effectively hedging an identified risk, changes in the derivative's fair value would be deferred and reported in a government's balance sheet. The ED also proposes several disclosure requirements.
Comments on the ED are due October 26, 2007. The GASB will also hold a public hearing and roundtable regarding the ED on November 1, 2007. Details on how to participate in the public hearing is contained in the Governmental GAAP Update Service.
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