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Accounting Research
Manager(TM)
Weekly Summary of
Developments
May 26-30, 2008
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Accounting Research
Manager subscriber,
The Accounting Research
Manager database now contains this week's weekly summary of developments. Click
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If you do not have immediate Internet access
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Weekly Summary.
Accounting and SEC
Headlines
Insurance Contracts -- FASB Issues Statement 163 Covering
Financial Guarantee Insurance Contracts
Conceptual Framework -- FASB and IASB Publish Two Consultative
Documents for Public Comment
Financial Assets -- FASB to Discuss Statement 140 and
Other Matters
Revenue Recognition -- FASB Discusses Revenue Recognition and
Other Matters
Proxy Materials -- SEC Staff Publishes Small Entity
Compliance Guide on Internet Availability of Proxy Material Rules
PCAOB Rules -- SEC Seeks Comments on PCAOB Rule
Amendments on Providing Tax Services
IASB Update -- IASB Discusses Annual Improvements
Process and Other Matters at May 19-23, 2008 Meeting
Auditing and Internal
Controls Headlines
Financial Statements -- PCAOB Auditing Standard on Evaluating
Consistency of Financial Statements Discussed
PCAOB Rules -- SEC Seeks Comments on PCAOB Rule
Amendments on Providing Tax Services
Government Headlines
Governmental Accounting -- Applicability of FASB Pronouncements
to State and Local Governments Discussed
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ACCOUNTING AND SEC HEADLINES:
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Insurance Contracts --
FASB Issues Statement 163 Covering Financial Guarantee Insurance Contracts
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The FASB issued FASB
Statement No. 163, Accounting for Financial Guarantee Insurance Contracts.
This new standard clarifies how FASB Statement No. 60, Accounting and
Reporting by Insurance Enterprises, applies to financial guarantee
insurance contracts issued by insurance enterprises, including the recognition
and measurement of premium revenue and claim liabilities. It also requires
expanded disclosures about financial guarantee insurance contracts.
Statement 163 is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and all interim periods within those fiscal years, except for disclosures
about the insurance enterprise's risk-management activities, which are
effective the first period (including interim periods) beginning after May 23,
2008. Except for the required disclosures, earlier application is not
permitted.
Conceptual Framework --
FASB and IASB Publish Two Consultative Documents for Public Comment
The FASB and IASB have
undertaken a joint project to develop a common conceptual framework for
financial reporting. As part of this joint process, the FASB and IASB have
issued the following two consultative documents seeking input from interested
parties on specific proposed aspects of the common framework being developed:
-Preliminary Views (PV), Conceptual
Framework for Financial Reporting: The Reporting Entity; and
For detail, please contact info@zy-cpa.com
-Exposure Draft (ED), Conceptual
Framework for Financial Reporting: The Objective of Financial Reporting and
Qualitative Characteristics and Constraints of Decision-Useful Financial
Reporting Information.
For detail, please contact info@zy-cpa.com
The PV document considers
issues for purposes of developing a reporting entity concept for inclusion in
the common conceptual framework. Among other things, the PV discusses the
following areas or topics related to the reporting entity concept:
-General issues associated
with the reporting entity concept;
-Describing the reporting
entity broadly vs. precisely defining it;
-Not limiting the reporting
entity concept to business activities that are structured as legal entities;
-Presenting two entities as
one reporting entity based on the relationship between those entities
(including a discussion of the meaning of control);
-Three approaches to
determining the composition of a group reporting entity: (a) the
controlled entity model; (b) the common control model; and (c)
the risks and rewards model; and
-General purpose financial
reports of a parent entity.
The ED provides two draft
chapters on: (1) the objective of financial reporting; and (2) qualitative
characteristics and constraints of decision-useful financial reporting
information. The ED proposes that the objective of financial reporting is to
provide financial information that is useful to present and potential equity
investors, lenders and other creditors in making decisions in their capacity as
capital providers. It also presents an improved description of 'faithful
representation', one of the qualitative characteristics that financial
information should possess if it is to provide a useful basis for economic
decisions.
Comments on both the PV and
ED are due September 29, 2008.
Financial Assets -- FASB
to Discuss Statement 140 and Other Matters
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As reported in its
"Action Alert" publication, the FASB is scheduled to meet on June 4,
2008, to discuss the following matters:
-Implementation issues
associated with FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities;
-Reconsideration of FASB
Interpretation (FIN) No. 46 (Revised 2003), Consolidation of Variable
Interest Entities, and Statement 140 implementation: transfers of financial
assets; and
-Not-for-profit endowments.
The FASB is expected to
discuss the following issues associated with Statement 140:
-Whether to require a minimum
amount of beneficial interests that must be held by third parties for a
transferor to account for a transfer as a sale;
-Whether to continue the
exception that permits reclassification of mortgage backed loans to securities
under FASB Statement No. 115, Accounting for Certain Investments in Debt and
Equity Securities, if 100% of the beneficial interests continue to be held by
a transferor; and
-Whether to continue the
exception that permits an entity to recognize a servicing asset or liability in
a guaranteed mortgage securitization when the transferor continues to hold 100%
of the beneficial interests.
As also reported in its
Action Alert publication, the FASB held a meeting on May 21, 2008, and
discussed Statement 140 implementation issues. Specifically, the FASB discussed
how to initially measure interests that a transferor continues to hold
following a sale of financial assets. The FASB decided that beneficial
interests received by a transferor, in connection with a sale of an entire
financial asset to an entity that is not consolidated by the transferor, should
be considered proceeds of the sale and initially measured at fair value. The
FASB also decided that a participating interest in a financial asset that
continues to be held by a transferor should be initially measured at its
allocated carrying amount in accordance with the existing measurement guidance
in paragraph 10 of Statement 140.
At the May 21, 2008 meeting,
the FASB chairman announced a project that will consider subsequent accounting
of acquired intangible assets that the acquirer intends not to use or to use in
a way other than its highest and best use was added to the FASB's
agenda. The chairman also announced a project that will address technical
corrections to various FASB standards was added to the FASB's
agenda.
Revenue Recognition --
FASB Discusses Revenue Recognition and Other Matters
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As reported in its
"Action Alert" publication, the FASB met on May 14, 2008 and
discussed the following matters:
-Revenue recognition;
-Reporting discontinued
operations; and
-Agenda decision
announcement-measurement of liabilities.
The FASB discussed a draft of
Chapter 5, "Measurement of the Contract," for an upcoming Discussion
Paper on revenue recognition. The FASB suggested a number of changes for both
the structure and the content of the chapter. In addition, the FASB voted on
the two measurement approaches and expressed a preliminary view in favor of the
"customer consideration approach." This approach: (a) measures
performance obligations at the price (or value of the consideration) promised
by the customer at contract inception; and (b) subsequently remeasures performance obligations
only if they become onerous.
The FASB also decided the
following regarding the reporting of discontinued operations:
-A new converged definition
of discontinued operations will be adopted that relies on the definition of an
operating segment under FASB Statement No. 131, Disclosures about Segments
of an Enterprise and Related Information;
-The tentative disclosure
requirements for all components of an entity that have been (or will be)
disposed of, including those reported as a discontinued operation, will be
revised to reflect noncontrolling interests guidance
in FASB Statement No. 160, Noncontrolling
Interest in Consolidated Financial Statements; and
-The amendments to FASB
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, related to discontinued operations should be effective for financial
statements issued for fiscal years beginning after December 15, 2009, and
interim periods within those years. Earlier adoption would be permitted. The
Board also decided that the amendments to Statement 144 related to discontinued operations should be applied retrospectively to
all periods presented.
As also reported in the
Action Alert publication, the FASB chairman announced that the FASB's project to consider whether assets held for sale
should be measured at fair value instead of fair value less cost to sell, as
currently required under Statement 144 was removed from the FASB agenda. That
decision was based on the results of staff analysis and the IASB's
decision to remove a similar project from its agenda.
Proxy Materials -- SEC
Staff Publishes Small Entity Compliance Guide on Internet Availability of Proxy
Material Rules
For detail, please contact info@zy-cpa.com
The SEC has published a small
entity compliance guide regarding its adopted proxy rule amendments, Shareholder
Choice Regarding Internet Availability of Proxy Materials. This Guide
summarizes and explains the SEC's adoption of amendments to its proxy rules
that require companies and other soliciting parties to make their proxy
materials available on an Internet site (other than the SEC's EDGAR web site).
The Guide includes the following sections:
-Introduction;
-Notice only option;
-Full set delivery option;
-Other resources; and
-Contacting the SEC.
In general, small entities
(i.e., entities that are not large accelerated filers) are required to comply
with the amendments for proxy solicitations commencing on or after January 1,
2009.
PCAOB Rules -- SEC Seeks
Comments on PCAOB Rule Amendments on Providing Tax Services
For detail, please contact info@zy-cpa.com
The SEC has published for
public comment, Public Company Accounting Oversight Board; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Delaying Implementation
Schedule of Rule 3523, Tax Services for Persons in Financial Reporting Oversight
Roles. This release includes an adjustment of the implementation schedule
for Rule 3523, Tax Services for Persons in Financial Reporting Oversight
Roles. Specifically, the PCAOB will not apply Rule 3523 to tax services
provided on or before December 31, 2008, when those services are provided
during the audit period and are completed before the professional engagement
period begins.
Under applicable law, the
proposed rule change is currently effective. However, the SEC has the authority
to revoke the rules at anytime within 60 days of filing.
Comments on the proposal are
due 21 days from publication in the Federal Register.
IASB Update -- IASB
Discusses Annual Improvements Process and Other Matters at May 19-23, 2008
Meeting
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As reported in its "IASB
Update" publication, the IASB met on May 19-23, 2008, and discussed the
following projects or topics:
-Annual improvements process;
-IFRS for private entities
(small and medium-sized entities);
-First-time adoption of IFRSs;
-IAS 33, Earnings per
Share;
-IAS 39, Financial
Instruments: Recognition and Measurement;
-Revenue recognition;
-Liabilities;
-Fair value measurement;
-Update on IFRIC activities;
and
-Emissions trading schemes.
Some of the documents
listed above may not be accessible under your current subscription. For
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click here:
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=======================================
AUDITING AND INTERNAL
CONTROLS HEADLINES:
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Financial Statements --
PCAOB Auditing Standard on Evaluating Consistency of Financial Statements
Discussed
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We have added a GAAS Update
Service that discusses PCAOB Auditing Standard (AS) No. 6, Evaluating
Consistency of Financial Statements, and an accompanying set of conforming
amendments to the PCAOB's interim auditing standards.
AS 6 updates the auditor's responsibilities to evaluate and report on the
consistency of an entity's financial statements and align the auditor's
responsibilities with FASB Statement No. 154, Accounting Changes and Error
Corrections. In addition, AS 6 clarifies that auditor reports should
indicate whether an adjustment to previously issued financial statements
results from a change in accounting principle or the correction of a
misstatement.
If approved by the SEC, AS 6
would become effective 60 days after such date of approval.
PCAOB Rules -- SEC Seeks
Comments on PCAOB Rule Amendments on Providing Tax Services
For detail, please contact info@zy-cpa.com
As discussed above in our
Accounting and SEC Summaries, the SEC has published for public comment, Public
Company Accounting Oversight Board; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change Delaying Implementation Schedule of Rule
3523, Tax Services for Persons in Financial Reporting Oversight Roles. This
release includes an adjustment of the implementation schedule for Rule 3523, Tax
Services for Persons in Financial Reporting Oversight Roles. Specifically,
the PCAOB will not apply Rule 3523 to tax services provided on or before
December 31, 2008, when those services are provided during the audit period and
are completed before the professional engagement period begins.
Under applicable law, the
proposed rule change is currently effective. However, the SEC has the authority
to revoke the rules at anytime within 60 days of filing.
Comments on the proposal are
due 21 days from publication in the Federal Register.
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
======================
GOVERNMENT HEADLINES:
======================
Governmental Accounting --
Applicability of FASB Pronouncements to State and Local Governments Discussed
For detail, please contact info@zy-cpa.com
We have added a Governmental
GAAP Update Service that discusses GASB Statement No. 20, Accounting and
Financial Reporting for Proprietary Funds and Other Governmental Entities That
Use Proprietary Fund Accounting. GASB 20 applies to proprietary funds
(i.e., enterprise and internal service funds) and governmental entities
following proprietary fund accounting, including, but not limited to: (a)
public benefit corporations and authorities; (b) governmental utilities;
and (c) governmental hospital or other health care activities. GASB 20
provides that proprietary funds and government entities using proprietary fund
principles must follow:
-All applicable GASB
pronouncements; and
-Applicable FASB Statements,
Interpretations, Accounting Principles Board (APB) Opinions, and Accounting
Research Bulletins (ARBs) of the Committee on
Accounting Procedure issued on or before November 30, 1989, unless those
pronouncements conflict with or contradict GASB pronouncements.
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