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Accounting Research Manager(TM)
Weekly Summary of Developments
November 26-30, 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
Fair Value Measurements -- Minutes of Valuation Resource Group Meeting
EITF Meeting Results -- Tentative Conclusions Reached
Fair Value Measurements -- FASB Discusses Statement 157 Implementation Issues and Other Matters at November 14, 2007 Meeting
Conceptual Framework -- FASB Discusses its Conceptual Framework Project and Other Matters at November 21, 2007 Meeting
Leasing Transactions -- Proposed FASB Staff Position Issued
Intangible Assets -- Proposed FASB Staff Position Issued
Risk Alerts -- AICPA Issues Audit Risk Alerts Including a Compilation and Review Alert and a Real Estate Industry Alert
Securities Registration -- SEC Proposes Amendment for Mutual Funds Registering Securities
Auditing and Internal Controls Headlines
Compilations and Reviews -- Proposed Statement on Standards for Accounting and Review Services
Risk Alerts -- AICPA Issues Audit Risk Alerts Including a Compilation and Review Alert and a Real Estate Industry Alert
Government Headlines
Letter of Transmittal and MD&A -- Common Financial Reporting Deficiencies Addressed
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ACCOUNTING AND SEC HEADLINES:
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Fair Value Measurements -- Minutes of Valuation Resource Group Meeting
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We have added minutes of the November 9, 2007 meeting of the Valuation Resource Group (VRG). The FASB established the VRG to provide the FASB with input on potential clarifying guidance on issues relating to the application of the principles of FASB Statement No. 157, Fair Value Measurements. This input may also include alternative views and practical solutions to such issues.
At this meeting, the VRG discussed the following topics:
-Potential Deferral of Statement 157;
-Potential FASB Guidance on Development of Market Participant Assumptions;
-Unit of Valuation/Exit Markets;
-Measurement of Liabilities;
-Applicability of Statement 157 Disclosures to Plan Assets of Pension or Other Postretirement Benefit Plans;
-Use of Net Asset Value in Fund of Funds Investments;
-Fair Value of a Liability with Third-Party Guarantees;
-Allocation of Basket Purchase Price When Land Is Best Used as a Vacant Lot;
-Definition of "Significant" in Evaluating Inputs for Fair Value Hierarchy Classification; and
-Accounting for Transaction Costs When Investments Are Carried at Fair Value
Refer to the minutes for complete details. The VRG meeting was held shortly before the FASB voted to partially defer the effective date in Statement 157 as described in our hot topic dated November 14, 2007:For detail, please contact info@zy-cpa.com.
EITF Meeting Results -- Tentative Conclusions Reached
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As described in detail in our "EITF Flash Report," the Emerging Issues Task Force (EITF) discussed the following issues at its November 29, 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;" and
-Issue No. 07-6, "Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66, Accounting for Sales of Real Estate, When the Agreement Includes a Buy-Sell Clause."
Specifically, the EITF reached a final consensus on both Issue 07-1 and Issue 07-6. The final consensus on Issue 07-1 is generally consistent with the consensus-for-exposure reached at the September 2007 EITF meeting. The EITF reached a final consensus on issue 07-6 that is generally consistent with the draft abstract included as Appendix 07-6A to Issue Summary No. 1, Supplement No. 1, included in the materials distributed for the meeting. The EITF reached a consensus-for-exposure on Issue 07-4 that is different from the consensus-for-exposure exposed after the September 2007 meeting. The new consensus-for-exposure reflects View B' in Issue Summary No. 1, Supplement No. 1, and results in both the excess of current period earnings over cash distributions (i.e., undistributed earnings) and the excess of cash distributions over current period earnings (i.e., undistributed loss) being allocated based on the sharing of net income or loss provided for in the partnership agreement.
In addition, the EITF reopened EITF Issue No. 98-5, "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios," to consider revisions proposed by the FASB staff. The revisions are due to the issuance of EITF Issue No. 00-27, "Application of Issue No. 98-5 to Certain Convertible Instruments," and FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.
The next EITF meeting is schedule in March 2008.
Prior to the EITF meeting this week, the FASB distributed additional meeting materials on the following issues:
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-Issue No. 98-5, "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios" (Proposed EITF Issue Clarification);
-Issue No. 06-4, "Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements" (Comment Letter);
-Issue No. 07-4, "Application of the Two-Class Method under FASB Statement No. 128 to Master Limited Partnerships" (Example to illustrate the informal comment); and
-Issue No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock" (Education Session Materials).
Fair Value Measurements -- FASB Discusses Statement 157 Implementation Issues and Other Matters at November 14, 2007 Meeting
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As reported in its "Action Alert" publication, the FASB met on November 14, 2007, and discussed the following issues:
-Agenda requests: Effective date of FASB Statement No. 157, Fair Value Measurements, and certain implementation issues;
-Financial statement presentation; and
-FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, implementation - repurchase financing agreements.
The FASB discussed three issues related to the implementation of Statement 157 and decided the following: (a) not to add a project to its agenda to issue a FASB Staff Position (FSP) to provide guidance related to determining the unit of valuation and the exit market concepts within Statement 157; (b) to issue an FSP to provide guidance that would clarify the principles in Statement 157 on the measurement of liabilities; and (c) affirmed that the fair value disclosures in paragraph 32 of Statement 157 do not apply to plan assets of a pension or other postretirement benefit plan in financial statements of the plan sponsor. The FASB did decide to add a short term project to its agenda to expand the disclosures about plan assets under FASB Statement No. 132(R), Employers' Disclosures about Pensions and Other Postretirement Benefits.
Conceptual Framework -- FASB Discusses its Conceptual Framework Project and Other Matters at November 21, 2007 Meeting
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As reported in its "Action Alert" publication, the FASB met on November 21, 2007, and addressed the following projects or topics:
-Conceptual framework: measurements;
-Financial guarantee insurance.
In addition to its action at the November 21, 2007 meeting, the FASB will discuss the following matters at its December 5, 2007 meeting:
-Income taxes;
-Derivative disclosures.
The FASB will discuss the following five remaining issues prior to drafting an exposure document to converge the accounting for income taxes between the FASB and IASB: (a) definition of tax basis; (b) realizability of deferred tax assets; (c) change in tax status; (d) distributed versus undistributed tax rate; and (e) comment period, effective date, and transition for any new guidance.
Leasing Transactions -- Proposed FASB Staff Position Issued
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The FASB issued proposed FASB Staff Position (FSP) FAS 157-a, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions." This proposed FSP would amend Statement 157 to exclude FASB Statement No. 13, Accounting for Leases, and its related interpretive accounting pronouncements that address leasing transactions. The term "fair value" is defined differently in Statement 13 and will remain unchanged as a result of this proposed FSP. The FASB believes that lease accounting provisions and the long-standing valuation practices common within the leasing industry should not be changed by Statement 157 without a comprehensive reconsideration of the accounting for leasing transactions. The FASB currently has a project on its agenda to reconsider the guidance in Statement 13.
If adopted as proposed, this FSP would be effective upon the initial adoption of Statement 157. Comments on the proposed FSP are due January 4, 2008.
Intangible Assets -- Proposed FASB Staff Position Issued
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The FASB has issued for public comment proposed FASB Staff Position (FSP), FAS 142-f, "Determination of the Useful Life of Intangible Assets." The proposed FSP would modify the factors that should be considered in developing renewal or extension assumptions used to determine useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. Specifically, the proposed FSP would allow an entity determining the useful life of an intangible asset to consider its own historical experience in renewing or extending similar arrangements as long as such assumptions are consistent with the entity's intended use of the asset. The proposed FSP also includes new disclosure requirements aimed at providing financial statement users with information regarding the extent to which the expected future cash flows associated with the intangible asset are affected by the entity's intent and/or ability to renew or extend the arrangement.
If adopted, the proposed guidance would generally be effective for financial statements issued for fiscal years beginning after June 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. Comments on the proposed FSP are due January 16, 2008.
Risk Alerts -- AICPA Issues Audit Risk Alerts Including a Compilation and Review Alert and a Real Estate Industry Alert
The AICPA has issued the following five 2007/2008 Audit Risk Alerts:
-Compilation and Review Alert;
For detail, please contact info@zy-cpa.com
-Independence and Ethics Alert;
For detail, please contact info@zy-cpa.com
-Construction Contractors Industry Developments;
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-Investment Companies Industry Developments; and
For detail, please contact info@zy-cpa.com
-Real Estate Industry Developments.
For detail, please contact info@zy-cpa.com
AICPA Audit Risk Alerts provide users with a detailed overview of recent industry, technical, regulatory, or professional developments. Topics covered in each Alert include: (a) legislative and regulatory activities (SEC, PCAOB, and other government agencies); (b) economic and industry developments or trends; (c) recent auditing and attestation pronouncements and related guidance; (d) recent AICPA independence and ethics pronouncements; and (e) future or emerging issues to monitor. In addition, each Alert includes a section listing applicable resources practitioners may find useful.
Securities Registration -- SEC Proposes Amendment for Mutual Funds Registering Securities
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The SEC has issued for public comment proposed rule, Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies. The proposal modifies the form used by mutual funds to register under the Investment Company Act of 1940 and to offer their securities under the Securities Act of 1933. Specifically, mutual funds would be required to provide investors with enhanced plain-English disclosures of key information at the front of the mutual fund statutory prospectus. The proposal would also permit satisfaction of applicable mutual fund prospectus delivery obligations by sending or giving the key information directly to investors in the form of a summary prospectus and providing the statutory prospectus on an Internet website.
Comments on the proposal are due February 28, 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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Compilations and Reviews -- Proposed Statement on Standards for Accounting and Review Services
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We have added a GAAS Update Service that provides discussion and analysis of a proposed Statement on Standards for Accounting and Review Services (SSARS) entitled, "Omnibus Statement on Standards for Accounting and Review Services - 2008." The proposed Statement includes several revisions to existing standards related to accounting and review services and conforms terminology to that utilized by other standard setters (e.g., the Auditing Standards Board). Among other matters, the proposed Statement would: (a) replace the term "nonpublic entity" with the term "nonissuer"; (b) clarify the objectives of compilation and review engagements; (c) require that management's representations, in a review engagement, be made as of the date of the accountant's review report; (d) provide guidance with respect to an accountant's consideration of the entity's ability to continue as a going concern during the performance of compilation or review procedures; and (e) provide guidance with respect to an accountant's consideration of subsequent events in a compilation or review engagement.
Certain sections of the proposed SSARS would be effective upon issuance. Other sections of the proposed SSARS would be effective for compilations and reviews of financial statements for periods ending on or after December 15, 2008.
Risk Alerts -- AICPA Issues Audit Risk Alerts Including a Compilation and Review Alert and a Real Estate Industry Alert
As discussed above in our Accounting and SEC Summaries, the AICPA has issued the following five 2007/2008 Audit Risk Alerts:
-Compilation and Review Alert;
For detail, please contact info@zy-cpa.com
-Independence and Ethics Alert;
For detail, please contact info@zy-cpa.com
-Construction Contractors Industry Developments;
For detail, please contact info@zy-cpa.com
-Investment Companies Industry Developments; and
For detail, please contact info@zy-cpa.com
-Real Estate Industry Developments.
For detail, please contact info@zy-cpa.com
AICPA Audit Risk Alerts provide users with a detailed overview of recent industry, technical, regulatory, or professional developments. Topics covered in each Alert include: (a) legislative and regulatory activities (SEC, PCAOB, and other government agencies); (b) economic and industry developments or trends; (c) recent auditing and attestation pronouncements and related guidance; (d) recent AICPA independence and ethics pronouncements; and (e) future or emerging issues to monitor. In addition, each Alert includes a section listing applicable resources practitioners may find useful.
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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Letter of Transmittal and MD&A -- Common Financial Reporting Deficiencies Addressed
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We have added a Governmental GAAP Update Service that explores and addresses the most common financial reporting deficiencies found in the annual reports of state and local governments as identified by the Government Finance Officers Association (GFOA) Certificate of Excellence in Financial Reporting program. The publication annually revisits common deficiencies in order to better prepare financial statement preparers for the end of the calendar year reporting process. Many of the common deficiencies for the letter of transmittal or the management's discussion and analysis (MD&A) have not significantly changed from the prior year.
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