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Accounting Research Manager(TM)
Weekly Summary of Developments
June 16-20, 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

Share-Based Payments -- FASB Staff Issues Guidance on When Share-Based Payment Awards are Participating Securities
Financial Assets and Liabilities -- Updated Interpretations of Statement 140 Added
Conceptual Framework -- FASB to Discuss Conceptual Framework and Other Matters
Securities Registration -- SEC Staff Publishes Legal Bulletin Covering Certain Exemptions from the Securities Act
SEC Filings -- SEC Staff Publishes Views on Its Comment Letter and Filing Review Process
International Accounting -- IASB Issues Agenda for the June 23-24, 2008 Standards Advisory Council Meeting

Auditing and Internal Controls Headlines

Compilations and Reviews -- 2008/2009 Edition of Compilations and Reviews Publication Added
Internal Controls -- AICPA Publishes Proposals on Examining Internal Control over Financial Reporting and Communicating Internal Control Related Matters

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ACCOUNTING AND SEC HEADLINES:
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Share-Based Payments -- FASB Staff Issues Guidance on When Share-Based Payment Awards are Participating Securities
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On June 16, 2008, the FASB issued FASB Staff Position (FSP) EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.

The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform with the provisions in this FSP. Early application of this FSP is prohibited.

Financial Assets and Liabilities -- Updated Interpretations of Statement 140 Added
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We have published updates to our interpretation, Financial Assets and Liabilities - Sales, Transfers, and Extinguishments: Interpretations of FASB Statement 140. We have updated the section entitled, “Recent Developments,” for recent deliberations at the FASB on a variety of relevant projects.

To reflect the issuance of FASB Staff Position (FSP) FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions, we have:

-Added Interpretation 9-17, "Statement 140 Presumes Symmetry Between Transferor and Transferee Accounting," to explain that FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, presumes that the transferor and the transferee account for a transfer of a financial asset symmetrically; and

-Added Interpretation 15-2, "Repurchase Financing Presumed to Be a Linked Transaction," to explain that a repurchase agreement that relates to a previously transferred financial asset (i.e., a repurchase financing) is presumed to be a linked transaction that should be accounted for in combination with the initial transfer of the financial asset.

To reflect the issuance of FASB Staff Position (FSP) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), we have:

-Updated Interpretation 16-2, "Determining Whether a Modification or Exchange of a Debt Instrument Is an Extinguishment," to explain that the interaction of that guidance with FSP APB 14-1;

-Updated Interpretation 16-4, "Conversion of a Debt Instrument That Became Convertible Upon the Issuer's Exercise of a Call Option," to explain that EITF Issue No. 05-1, "Accounting for the Conversion of an Instrument That Became Convertible upon the Issuer's Exercise of a Call Option," does not apply to debt instruments within the scope of FSP APB 14-1.

See our Literature Update for complete details.

Conceptual Framework -- FASB to Discuss Conceptual Framework and Other Matters
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As reported in its "Action Alert" publication, the FASB is scheduled to meet on June 25, 2008, to discuss: (a) conceptual framework: elements and recognition; and (b) FASB ratification of EITF consensuses and tentative conclusions. The FASB is expected to continue discussion of the definition of a liability and consider: (a) when a statute gives rise to a liability; (b) how to deal with uncertainty about the existence of a liability (and an asset); and (c) additional examples to test the robustness of the working definition of a liability.

The FASB will also consider the ratification of the decisions reached at the June 12, 2008 EITF meeting. See our EITF Flash Report for details of actions taken at that meeting.

The FASB is scheduled to hold an open education session on June 25, 2008, following the FASB meeting. In addition, the following meetings are also scheduled:

-On June 24, 2008, the Financial Accounting Standards Advisory Council will meet to discuss: (a) current business and financial reporting issues related to international convergence; (b) recent studies and proposals on restatements; and (c) contingency disclosures.

-On June 27, 2008, the Small Business Advisory Council will meet to discuss: (a) convergence - the move to IFRS; and (b) contingency disclosures.

As also reported in its Action Alert publication, the FASB met on June 11, 2008, and discussed:

-Mergers and acquisitions by a not-for-profit organization;
-Reconsideration of FASB Interpretation (FIN) No. 46 (Revised 2003), Consolidation of Variable Interest Entities; and
-Implementation of Statement No. 140: transfers of financial assets.

The FASB discussed options for guidance for determining the primary beneficiary in a variable interest entity in FIN 46R. The Board reaffirmed its earlier decision, which would require an enterprise (including its related party and de facto agents) to determine whether it is the primary beneficiary primarily through a thorough qualitative assessment. If an enterprise is unable to determine if a primary beneficiary exists (or does not exist) through the qualitative assessment, the enterprise would perform the current quantitative analysis currently described in FIN 46R. In making the qualitative assessment, an enterprise will assess if it has both: (1) the power to direct matters that significantly affect the activities and success of the entity; and (2) the right to receive benefits that could potentially be significant or the obligation to absorb losses that could potentially be significant.

The FASB chairman announced several agenda decisions. Specifically, to better align the FASB's agenda with the objectives established in the Memorandum of Understanding (MoU) between the FASB and the IASB updated last April, the following projects have been removed from the FASB's agenda:

-Insurance Risk Transfer - The FASB plans to consider at a future date whether to address insurance accounting in a joint project with the IASB.

-Accounting for Certain Nonfinancial Liabilities: Recognition and Measurement (Phase 2) - The issues previously addressed by that project related to the recognition and measurement of contingent liabilities are being examined by the IASB in a project to potentially amend IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The FASB will monitor the development of the IASB's project to consider whether similar changes would be appropriate for U.S. GAAP.

-Accounting for Defensive Intangible Assets - The issues previously included in that project will be deferred to the EITF agenda.

Securities Registration -- SEC Staff Publishes Legal Bulletin Covering Certain Exemptions from the Securities Act
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The SEC staff has published, Staff Legal Bulletin No. 3A: Section 3(a)(10) Exemption from the Securities Act. This SEC staff legal bulletin provides the Division of Corporation Finance's (Corp Fin) views regarding the Section 3(a)(10) exemption from the registration requirements under the Securities Act of 1933 (Securities Act). The bulletin also expresses Corp Fin's views regarding the Securities Act resale status of securities that are received in certain transactions exempt from registration pursuant to Section 3(a)(10). The bulletin includes guidance in the following areas or topics:

-Overview of the exemption from registration provided by Section 3(a)(10);
-Timing of no-action requests;
-Timing of security holders' votes; and
-Corp Fin's analysis of the requirements underlying the Section 3(a)(10) exemption.

This legal bulletin supersedes all previously issued legal bulletins covering the Section 3(a)(10) exemption.

SEC Filings -- SEC Staff Publishes Views on Its Comment Letter and Filing Review Process
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The SEC staff has issued a document entitled, Filing Review Process. This document highlights key aspects of the SEC staff's review process for filings (e.g., Form 10-K, 10-Q) and related comment letter process. The SEC staff selectively reviews registrant filings to monitor and enhance compliance with the applicable disclosure and accounting requirements. This document includes a discussion of the following topics:

-Required and selective reviews;
-Levels of review;
-Staff comments;
-Company response to comments;
-Closing a filing review; and
-Reconsideration process for legal and textual disclosure matters, and accounting and financial disclosure matters.

International Accounting -- IASB Issues Agenda for the June 23-24, 2008 Standards Advisory Council Meeting
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The IASB's Standards Advisory Council is scheduled to discuss the following agenda items at its June 23-24, 2008 meeting:

-Chairman update;
-Recent market events-steps the IASB is taking;
-Off balance sheet concerns-the IASB projects on consolidation and derecognition;
-The FASB/IASB "Memorandum of Understanding" - an update on the significance of progress to be achieved by mid 2011;
-Discussion of IASB and IFRIC work programs;
-Agenda proposals on liabilities/equity; and
-Session with trustees - review of constitution.

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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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Compilations and Reviews -- 2008/2009 Edition of Compilations and Reviews Publication Added
For detail, please contact info@zy-cpa.com

We have published the 2008/2009 edition of our interpretation, Compilations & Reviews. The primary objective of this publication is to provide practitioners with a fundamental, real-world approach for conducting high quality compilations and reviews. This publication provides a discussion of the relevant professional standards and guides the practitioner through the planning, performance, documentation, and reporting involved in compilation and review engagements.

This edition of the publication has been updated to reflect:

-AICPA Statement on Quality Control Standards (SQCS) No. 7, "A Firm's System of Quality Control";
-AICPA Accounting and Review Services Standards (SSARS) No. 15, "Elimination of Certain References to Statements on Auditing Standards and Incorporation of Appropriate Guidance into Statements on Standards for Accounting and Review Services";
-SSARS No. 16, "Defining Professional Requirements in Statements on Standards for Accounting and Review Services"; and
-SSARS No. 17, "Omnibus Statement on Standards for Accounting and Review Services - 2008."

In addition, this edition of Compilations & Reviews includes an expanded discussion of independence issues related to compilations and reviews, additional examples for management representations to be obtained in a review engagement, and expanded discussion of procedures to follow upon subsequent discovery of facts existing at the financial statement date.

See our Literature Update for complete details.

Internal Controls -- AICPA Publishes Proposals on Examining Internal Control over Financial Reporting and Communicating Internal Control Related Matters

The AICPA has published for public comment the following two exposure drafts:

-Proposed Statement on Standards for Attestation Engagements (SSAE), An Examination of an Entity's Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements; and
For detail, please contact info@zy-cpa.com

-Proposed Statement on Auditing Standards (SAS), Communicating Internal Control Related Matters Identified in an Audit.
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The proposals are being issued to converge the standards practitioners use for reporting on a nonissuer's internal control over financial reporting with PCAOB Auditing Standard No. 5, An Audit of Internal Control That is Integrated with an Audit of Financial Statements. In addition, the proposals are intended to establish consistent definitions of the various types of deficiencies in internal control and related guidance between the two proposals.

The proposed SSAE would be effective for integrated audits for dates or periods ending on or after December 15, 2008. The proposed SAS would be effective for audits of financial statements for periods ending on or after December 15, 2009. Earlier implementation is permitted under both proposals.

Comments on both proposals are due August 12, 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