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Accounting Research Manager(TM)
Weekly Summary of Developments
May 5-9, 2008
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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

Revenue Recognition -- FASB to Discuss Revenue Recognition, Reporting Discontinued Operations and Other Matters
Financial Instruments -- EITF Materials Issued for June 12, 2008 Meeting
Business Combinations -- SEC Proposes Revisions to its Cross-Border Tender Offer and Business Combination Rules

Auditing and Internal Controls Headlines

Peer Reviews -- AICPA Revises Standards for Performing and Reporting on Peer Reviews
Audit Documentation -- AICPA Issues Proposed Standard on Audit Documentation
Auditor Communications -- AICPA Issues Proposed Standard on Auditor's Communication with Those Charged with Governance

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ACCOUNTING AND SEC HEADLINES:
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Revenue Recognition -- FASB to Discuss Revenue Recognition, Reporting Discontinued Operations and Other Matters
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As reported in its "Action Alert" publication, the FASB is scheduled to meet on May 14, 2008, and discuss: (a) revenue recognition; and (b) reporting discontinued operations (DISCOs). The FASB is expected to discuss a draft chapter of a revenue recognition discussion paper that examines two alternative measurement approaches (current exit price and customer consideration) for the proposed revenue recognition model. The FASB will be asked to express a preliminary view in favor of one of these measurement approaches or a hybrid of the two approaches.

The FASB also plans to discuss the proposed converged definition (with the IASB) of a discontinued operation and related disclosures for all components of an entity that have been (or will be) disposed of.

As also indicated in its Action Alert publication, the FASB met on April 30, 2008, and discussed the following topics or items:

-Disclosures about credit derivatives;
-Hedging under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities;
-Mergers and acquisitions by a not-for-profit organization; and
-Agenda decision - definition of a public company.

The FASB decided to amend Statement 133 to require disclosures about credit derivatives that would be similar to the disclosures currently required to be made by guarantors under FASB Interpretation (FIN) No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The FASB also decided to amend FIN 45 to require an additional disclosure about the current status of the guarantee. A proposed FASB staff position is expected to be issued that would be effective for all fiscal years and interim periods ending after November 15, 2008.

The FASB also made the following decisions regarding technical aspects of Statement 133:

-When calculating the fair value of the perfect derivative in a cash flow hedge, an entity should use the credit risk adjustment for the nonperformance risk of the party in a liability position that is used for calculating the fair value of the actual derivative hedging instrument.

-If an entity designates a group of transactions expected to occur within a specific time frame as the hedged forecasted transaction in a cash flow hedge, the perfect derivative could be a derivative that settles on a single date if the hedge ineffectiveness that is expected to result from the timing differences between settlement of the actual derivative and the forecasted transaction is minimal.

-If an entity designates a purchased option as the hedging instrument in a cash flow hedge to provide one-sided offset against the hedged risk, the perfect derivative used for measuring ineffectiveness could be an option that includes total changes in the option's cash flows. The initial time value component of the option's fair value should be reclassified to earnings on a rational basis.

The FASB chairman also announced the removal of a project to create a single definition of a public company to be used throughout GAAP.

Financial Instruments -- EITF Materials Issued for June 12, 2008 Meeting
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The FASB has issued the following materials for the EITF meeting scheduled for June 12, 2008:

-EITF Agenda Committee Report;
-Issue No. 07-5, "Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock" (Comment Letters);
-Issue No. 08-3, "Accounting by Lessees for Maintenance Deposits under Lease Agreements" (Comment Letters); and
-Issue No. 08-4, "Transition Guidance for Conforming Changes to Issue No. 98-5" (Comment Letters).

The EITF plans to discuss comment letters received from constituents regarding draft abstracts of EITF Issues 07-5, 08-3, and 08-4. These draft abstracts reflect the consensuses-for-exposure reached at the EITF meeting held on March 12, 2008.

Business Combinations -- SEC Proposes Revisions to its Cross-Border Tender Offer and Business Combination Rules
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The SEC has issued for public comment proposed rule, Revisions to the Cross-Border Tender Offer, Exchange Offer, and Business Combination Rules and Beneficial Ownership Reporting Rules for Certain Foreign Institutions. The SEC believes the proposal addresses areas of conflict or inconsistency with foreign regulations and practice that acquirors frequently encounter in cross-border business combination transactions. Many of the rule changes included in the proposal represent a codification of existing interpretive SEC staff positions and exemptive orders in the cross-border area. Specific proposed rule changes included in this proposal are:

-Refinement of the tests for calculating U.S. ownership of the target company for purposes of determining eligibility to rely on the cross-border exemptions in both negotiated and hostile transactions;

-Expanding relief under Tier I for affiliated transactions subject to Rule 13e-3, Going Private Transactions by Certain Issuers or Their Affiliates, for transaction structures not covered under the current cross-border exemptions;

-Extending the specific relief afforded under Tier II to tender offers not subject to Sections 13(e) or 14(d) of the Securities Exchange Act of 1934 (Exchange Act);

-Expanding the relief afforded under Tier II in several ways to eliminate recurring conflicts between U.S. and foreign law and practice;

-Codifying existing exemptive orders with respect to the application of Rule 14e-5, Prohibiting Purchases Outside of a Tender Offer, for Tier II tender offers;
Expanding the availability of early commencement to offers not subject to Section 13(e) or 14(d) of the Exchange Act;

-Requiring that all Form CBs and the Form F-Xs that accompany them be filed electronically;

-Modifying the cover pages of certain tender offer schedules and registration statements to list any cross-border exemptions relied upon in conducting the relevant transactions; and

-Permitting foreign institutions to report on Schedule 13G to the same extent as their U.S. counterparts, without individual no-action relief.

Comments on the proposal are due June 23, 2008.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Peer Reviews -- AICPA Revises Standards for Performing and Reporting on Peer Reviews

The AICPA has issued revised standards for performing and reporting on peer reviews, AICPA Standards for Performing and Reporting on Peer Reviews. The new standards are intended to produce simpler, more readable reports that will provide greater transparency to state boards of accountancy, federal agencies such as the Government Accountability Office, and the private sector. The AICPA believes the new standards are more principles-based and, among other things, eliminate letters of comment and the old three-tier system of unmodified, modified and adverse grades given to firms by reviewers. The new standards require a simple pass, pass with deficiencies, or fail grade.

The revised standards are effective for peer reviews commencing on or after January 1, 2009. Early implementation of these standards is not permitted.

PR Section 100: Standards for Performing and Reporting on Peer Reviews:
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PR Section 9100: Peer Review Standards Interpretations:
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Audit Documentation -- AICPA Issues Proposed Standard on Audit Documentation
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The AICPA's Auditing Standards Board (ASB) has published for public comment, Proposed Statement on Auditing Standards for No. 103 (Redrafted), Audit Documentation. The proposals are aimed at applying the ASB's clarity drafting conventions and to converge with International Standards on Auditing. Significant changes to current audit documentation requirements include:

-Several requirements that are either duplicative or addressed in other ASB guidance have been deleted;
-New factors for the auditor to consider when determining the form, content, and extent of audit documentation have been added;
-Matters not engagement specific (e.g., auditor independence and staff training) may be documented either centrally within a firm or in the audit documentation for an audit engagement. Matters specific to a particular engagement should be included in the audit file for the specific engagement; and
-The requirement to document who reviewed the audit work performed does not imply a need for each specific working paper to include evidence of review.

As proposed, this proposal would supersede Statement on Auditing Standards (SAS) No. 103, Audit Documentation, and would be effective for audits of financial statements for periods beginning after December 15, 2010.

Comments on this proposal are due June 30, 2008.

Auditor Communications -- AICPA Issues Proposed Standard on Auditor's Communication with Those Charged with Governance
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The ASB has published for public comment, Proposed Statement on Auditing Standards for No. 114 (Redrafted), The Auditor's Communication with Those Charged with Governance. The proposals are aimed at applying the ASB's clarity drafting conventions and to converge with International Standards on Auditing. Significant changes to current rules governing auditor communications with those charged with governance include:

The auditor must communicate with those charged with governance matters related to the financial statement audit that are, in the auditor's professional judgment, significant and relevant to the responsibilities of those charged with governance in overseeing the financial reporting process;
If the entity includes other information in documents containing audited financial statements, the auditor should communicate with those charged with governance the auditor's responsibility with respect to such other information, any procedures performed relating to the other information, and the results; and
The requirement that an auditor should request changes to financial statements when necessary has been deleted as duplicative of other ASB guidance.

As proposed, this proposal would supersede Statement on Auditing Standards (SAS) No. 114, The Auditor's Communication with Those Charged with Governance, and would be effective for audits of financial statements for periods beginning after December 15, 2010.

Comments on this proposal are due June 30, 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:
For detail, please contact info@zy-cpa.com