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Accounting Research Manager(TM)
Weekly Summary of Developments
July 28 - August 1, 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:

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

Accounting for Business Combinations -- Interpretive Guidance Revised and Added
PCAOB Registration -- PCAOB Issues Rules on Registration Status for Succeeding Audit Firms
PCAOB Rules -- SEC Seeks Comments on PCAOB Rule for Evaluating Consistency of Financial Statements
Investment Companies -- SEC Reopens Public Comment Period for Proposal to Enhance Disclosure and Prospectus Delivery Option
SEC Enforcement -- Update to Topical Index of SEC Accounting and Auditing Enforcement Releases Published
Derivatives -- FASB to Discuss Disclosures About Credit Derivatives and Other Matters
EITF Materials -- Materials on Accounting for Liabilities Measured at Fair Value and Other Matters Issued for September 10, 2008 EITF Meeting
Financial Instruments -- IASB Issues Amendment to IAS 39 for Designating Hedged Items
IASB Update -- IASB Discusses Non-Current Assets Held for Sale and Discontinued Operations at July 21-25, 2008 Meeting

Auditing and Internal Controls Headlines

Audit Manual -- GAO and PCIE Publish Updated Financial Audit Manual
HUD Audits -- HUD Publishes Updated Consolidated Audit Guide for Audits of HUD Programs
PCAOB Registration -- PCAOB Issues Rules on Registration Status for Succeeding Audit Firms
PCAOB Rules -- SEC Seeks Comments on PCAOB Rule for Evaluating Consistency of Financial Statements
Internal Controls -- Institute of Internal Auditors Publishes Global Technology Audit Guide on Business Continuity Management
Internal Controls -- Institute of Internal Auditors Publishes Global Technology Audit Guide

Government Headlines

Audit Manual -- GAO and PCIE Publish Updated Financial Audit Manual
HUD Audits -- HUD Publishes Updated Consolidated Audit Guide for Audits of HUD Programs

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ACCOUNTING AND SEC HEADLINES:
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Accounting for Business Combinations -- Interpretive Guidance Revised and Added
For detail, please contact info@zy-cpa.com

We have revised and updated our publication, Accounting for Business Combinations, Goodwill, and Other Intangible Assets - Interpretations of U.S. and International Accounting Standards. Various interpretations were added or revised in this update, including those impacted by the following guidance:

-FASB Statement No. 141 (Revised 2007), Business Combinations;
-FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements;
-IFRS 3, Business Combinations;
-IAS 27, Consolidated and Separate Financial Statements;
-FASB Staff Position (FSP) 157-2, Effective Date of FASB Statement No. 157; and
-FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets.

See our Literature Update for complete details.

PCAOB Registration -- PCAOB Issues Rules on Registration Status for Succeeding Audit Firms
For detail, please contact info@zy-cpa.com

The PCAOB has issued, Rules on Succeeding to the Registration Status of a Predecessor Firm. The rules and corresponding PCAOB Form 4 govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in legal form of the registered firm.

Under Section 102(a) of the Sarbanes-Oxley Act of 2002 and PCAOB rules, a public accounting firm must be registered with the PCAOB in order to prepare or issue audit reports for public companies or to play a substantial role in the preparation or furnishing of such audit reports. To become registered, a public accounting firm files an application for registration on PCAOB Form 1, which the PCAOB may approve or disapprove. The new rules and Form 4 identify the circumstances in which the registration status of a registered firm may continue in effect even after the firm's legal form has changed or the firm has combined with another firm, without the new legal entity needing to apply for registration on Form 1.

The PCAOB is expected to submit the rules to the SEC for approval. If approved by the SEC, the rules would be effective 60 days after such approval.

PCAOB Rules -- SEC Seeks Comments on PCAOB Rule for Evaluating Consistency of Financial Statements
For detail, please contact info@zy-cpa.com

The SEC has published for public comment, Public Company Accounting Oversight Board; Notice of Filing of Proposed Rule on Auditing Standard No. 6, Evaluating Consistency of Financial Statements and Conforming Amendments. This release 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, this proposal 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, these rules would become effective 60 days after such date of approval.

Comments on the proposal are due 21 days from publication in the Federal Register.

Investment Companies -- SEC Reopens Public Comment Period for Proposal to Enhance Disclosure and Prospectus Delivery Option
For detail, please contact info@zy-cpa.com

The SEC has reopened the period for public comment on its proposed rule, Enhancing Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies. This proposal would require key information to appear in plain English in a standardized order at the front of the mutual fund prospectus. In addition, the proposal would permit a person to satisfy its mutual fund prospectus delivery obligations under Section 5(b)(2) of the Securities Act of 1933 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 Web site.

The SEC reopened the public comment period for this proposal to allow constituents to review additional public documents and information it has released (available on its website) as a result of investor focus groups held by a consultant hired by the SEC. Specifically, the SEC has made available the following additional items regarding this proposal:

-A consultant's report concerning focus group testing of the hypothetical summary prospectus and related disclosures;
-Transcripts of focus groups relating to the hypothetical summary prospectus and related disclosures;
-Disclosure examples used in these focus groups; and
-An excerpt from the consultant's report concerning the telephone survey of individual investors.

Comments on the proposal are due August 29, 2008.

SEC Enforcement -- Update to Topical Index of SEC Accounting and Auditing Enforcement Releases Published
For detail, please contact info@zy-cpa.com

We have updated our Topical Index of the SEC's Accounting and Auditing Enforcement Releases (AAERs) to reflect releases by the SEC through June 30, 2008 (release number 2842 ). The SEC's Division of Enforcement periodically issues AAERs to reflect civil lawsuits brought by the SEC in federal court and notices and orders concerning the institution and (or) settlement of administrative proceedings. We reviewed each AAER and identified specific accounting and reporting issues addressed by the SEC and listed them in the Topical Index. Users of Accounting Research Manager may find this Index useful when learning the views of the SEC and its staff on specific accounting or reporting topics.

Our Topical Index includes the following 11 categories (each of which has additional sub categories):

-Revenue Recognition Issues;
-Recognition of Losses/Expenses;
-Reporting Issues;
-Consolidated and Combined Financial Statements;
-Business Combinations;
-Asset Valuation;
-Financial Instruments;
-Fraudulent Activities by the Company;
-Internal Controls and Reporting Deficiencies - Company;
-Audit or Audit Firm Deficiencies; and
-SEC Rules and Regulations.

See our Literature Update for complete details.

Derivatives -- FASB to Discuss Disclosures About Credit Derivatives and Other Matters
For detail, please contact info@zy-cpa.com

As reported in its "Action Alert" publication, the FASB is scheduled to meet on August 6, 2008, to discuss disclosures about credit derivatives. The FASB is expected to begin redeliberations and discuss comments received on proposed FASB Staff Position (FSP) FAS 133-b and FIN 45-c, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45. Specifically, the FASB is scheduled to discuss issues related to scope, disclosures, and effective date.

As also reported in its Action Alert publication, the FASB met on July 23, 2008, and discussed: (a) leases; and (b) reporting discontinued operations. The FASB decided the following regarding its leases project:

-To defer development of a new accounting model for lessors for coordination with related projects such as revenue recognition. As a result, the current leases project will address only the development of a standard of accounting for lessees.

-To use an overall approach under which lessees would generally apply the finance lease model in IAS 17, Leases, to all leases, adapted where necessary.

-To include options to extend or terminate a lease in the measurement of a right-of-use asset and a lease obligation based on the best estimate of the expected lease term.

-Contractual factors, noncontractual factors, and business factors should be considered when determining the lease term.

-To require lessees to include contingent rentals in the measurement of the right-of-use asset and the lease obligation based on their best estimate of expected lease payments.

-Both the right-of-use asset and the lease obligation should be initially measured at the present value of the best estimate of expected lease payments for all leases.

-To require the best estimate of expected lease payments to be discounted using the lessee's secured incremental borrowing rate.

In its deliberations regarding discontinued operations, the FASB decided to amend the proposed definition of discontinued operations to include acquired businesses (as defined in FASB Statement No. 141 (Revised 2007), Business Combinations) that meet the criteria to be classified as held for sale on the acquisition date. The FASB also decided not to include an additional criterion that would limit businesses meeting the criteria to be classified as held for sale on acquisition to be reported in discontinued operations only when the sale is required by law or regulation. In addition, the FASB made several decisions on required disclosures for discontinued operations.

EITF Materials -- Materials on Accounting for Liabilities Measured at Fair Value and Other Matters Issued for September 10, 2008 EITF Meeting
For detail, please contact info@zy-cpa.com

The FASB has issued the following materials for the September 10, 2008 EITF meeting:

-Agenda committee report; and
-EITF Issue No. 08-5 (Draft Abstract), "Issuer's Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement" (Comment Letters).

Financial Instruments -- IASB Issues Amendment to IAS 39 for Designating Hedged Items
For detail, please contact info@zy-cpa.com

The IASB has issued, Eligible Hedged Items, an amendment to IAS 39, Financial Instruments: Recognition and Measurement. This amendment clarifies how the existing principles underlying hedge accounting should be applied to the designation of: (a) a one-sided risk in a hedged item; and (b) inflation in a financial hedged item. The amendment provides that since a designated one-sided risk does not contain the time value of a purchased option hedging instrument, there will be no offset between the cash flows relating to the time value of the option premium paid and the designated hedged risk. As a result, a purchased option designated in its entirety as the hedging instrument of a one-sided risk will not be perfectly effective.

The amendment also provides that unless the inflation portion is a contractually specified portion of cash flows and other cash flows of the financial instrument are not affected by the inflation portion, inflation is not separately identifiable and reliably measurable and is not eligible for designation as a hedged risk or portion of a financial instrument.

The amendment must be applied retrospectively for annual periods beginning on or after July 1, 2009. Earlier application is permitted.

IASB Update -- IASB Discusses Non-Current Assets Held for Sale and Discontinued Operations at July 21-25, 2008 Meeting
For detail, please contact info@zy-cpa.com

As reported in its "IASB Update" publication, the IASB met on July 21-25, 2008, and discussed the following projects or topics:

-Amendments to IFRS 5, Non-current Assets Held for Sale and Discontinued Operations;
-Agenda proposals;
-Consolidation;
-Fair value measurement;
-Financial instruments with characteristics of equity;
-Financial statement presentation;
-IFRS for private companies (formerly small and medium sized entities);
-Income taxes;
-Leases;
-Management commentary;
-Revenue recognition;
-Standards Advisory Council report;
-Update on IFRIC activities; and
-Valuing financial instruments in markets that are no longer active.

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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Audit Manual -- GAO and PCIE Publish Updated Financial Audit Manual
For detail, please contact info@zy-cpa.com

The Government Accountability Office (GAO) and the President's Council on Integrity and Efficiency (PCIE) released their updated, Financial Audit Manual (FAM), to incorporate significant changes that have occurred in auditing financial statements in the U.S. government since the last major revisions to the FAM in July 2004. The FAM presents a methodology to perform financial statement audits of federal entities in accordance with professional standards. Volume 1 contains the audit methodology and Volume 2 contains audit tools.

The revisions to the FAM are primarily due to changes in: (a) professional auditing and attestation standards of the Auditing Standards Board of the AICPA; (b) Government Auditing Standards issues by the GAO; (c) audit and reporting guidance issued by the Office of Management and Budget (OMB); (d) accounting standards issued by the Federal Accounting Standards Advisory Board (FASAB); and (e) laws.

FAM Volumes 1 and 2 incorporate the following changes:

-AICPA Statement of Auditing Standards Nos. 100 through 114, which include the audit risk standards;
-Government Auditing Standards (July 2007 Revision);
-Audit guidance in OMB Bulletin No. 07-04, Audit Requirements for Federal Financial Statements;
-Financial reporting guidance in revised OMB Circular No. A-136, Financial Reporting Requirements; and
-The effects on financial audits of FASAB accounting concepts and standards issued through May 31, 2007.

FAM Volumes 1 and 2 supersede previously issued versions of FAM Volumes 1 and 2 and can be used to audit federal entity financial statements for the fiscal year ending September 30, 2008.

HUD Audits -- HUD Publishes Updated Consolidated Audit Guide for Audits of HUD Programs
For detail, please contact info@zy-cpa.com

The Department of Housing and Urban Development (HUD) has updated its publication, Consolidated Audit Guide for Audits of HUD Programs. This Guide is issued to assist independent auditors in performing program-specific audits of participants in selected HUD Housing and Ginnie Mae programs. These audits must be performed in accordance with the standards for financial audits of the GAO's Government Auditing Standards, issued by the Comptroller General of the United States. The Guide includes updates to the following chapters or appendix:

-Reporting requirements and sample reports;
-HUD multifamily housing programs;
-HUD multifamily hospital program;
-Insured development cost certification audit guidance;
-Ginnie Mae issuers of mortgaged-backed securities audit guidance;
-HUD-approved Title II nonsupervised mortgage and loan correspondents audit guidance;
-HUD-approved Title I nonsupervised lenders and loan correspondents audit guidance; and
-Appendix- HUD regional inspector generals for audit.

PCAOB Registration -- PCAOB Issues Rules on Registration Status for Succeeding Audit Firms
For detail, please contact info@zy-cpa.com

As discussed above in our Accounting and SEC Summaries, the PCAOB has issued, Rules on Succeeding to the Registration Status of a Predecessor Firm. The rules and corresponding PCAOB Form 4 govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in legal form of the registered firm.

Under Section 102(a) of the Sarbanes-Oxley Act of 2002 and PCAOB rules, a public accounting firm must be registered with the PCAOB in order to prepare or issue audit reports for public companies or to play a substantial role in the preparation or furnishing of such audit reports. To become registered, a public accounting firm files an application for registration on PCAOB Form 1, which the PCAOB may approve or disapprove. The new rules and Form 4 identify the circumstances in which the registration status of a registered firm may continue in effect even after the firm's legal form has changed or the firm has combined with another firm, without the new legal entity needing to apply for registration on Form 1.

The PCAOB is expected to submit the rules to the SEC for approval. If approved by the SEC, the rules would be effective 60 days after such approval.

PCAOB Rules -- SEC Seeks Comments on PCAOB Rule for Evaluating Consistency of Financial Statements
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 of Proposed Rule on Auditing Standard No. 6, Evaluating Consistency of Financial Statements and Conforming Amendments. This release 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, this proposal 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, these rules would become effective 60 days after such date of approval.

Comments on the proposal are due 21 days from publication in the Federal Register.

Internal Controls -- Institute of Internal Auditors Publishes Global Technology Audit Guide on Business Continuity Management
For detail, please contact info@zy-cpa.com

We have published IIA Global Technology Audit Guide No. 10, Business Continuity Management. This Guide describes the knowledge needed by members of governing bodies, executives, and internal auditors to address the effectiveness of business recovery capabilities and the impact they have on business. Other professionals may find the guidance useful and relevant as well. This guide provides information related to assessing Business Continuity Management (BCM) capabilities and describes the different parts of a comprehensive program and how to establish the correct plan for an organization.

Chapters included in this Guide cover the following areas:

-Introduction and overview of BCM;
-Building a business case for BCM;
-Business risks;
-BCM requirements;
-Emergency response;
-BCM standards and guidelines;
-Crisis management; and
-BCM Capability Maturity Model.

Internal Controls -- Institute of Internal Auditors Publishes Global Technology Audit Guide
For detail, please contact info@zy-cpa.com

We have published IIA Global Technology Audit Guide No. 11, Developing the IT Audit Plan. This Guide seeks to assist internal auditors on how to best approach a comprehensive company assessment of Information Technology (IT) risks and controls within the scope of their overall assurance and consulting services. Specifically, this Guide can help internal auditors and others: (a) identify audit areas in the IT environment that are part of the IT audit universe; (b) understand the organization and the level of IT support received; (c) define and understand the IT environment; (d) Identify the role of risk assessment in determining the IT audit universe; and (e) formalize the annual IT audit plan.

Chapters included in this Guide cover the following areas:

-Understanding the business;
-Defining the IT audit universe;
-Performing a risk assessment; and
-Formalizing the IT audit plan.

The Guide also provides an example of a hypothetical organization to show internal auditors and others how to execute the steps necessary to define the IT audit universe.

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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Audit Manual -- GAO and PCIE Publish Updated Financial Audit Manual
For detail, please contact info@zy-cpa.com

As discussed above in our Auditing and Internal Controls Summaries, the Government Accountability Office (GAO) and the President's Council on Integrity and Efficiency (PCIE) released their updated, Financial Audit Manual (FAM), to incorporate significant changes that have occurred in auditing financial statements in the U.S. government since the last major revisions to the FAM in July 2004. The FAM presents a methodology to perform financial statement audits of federal entities in accordance with professional standards. Volume 1 contains the audit methodology and Volume 2 contains audit tools.

The revisions to the FAM are primarily due to changes in: (a) professional auditing and attestation standards of the Auditing Standards Board of the AICPA; (b) Government Auditing Standards issues by the GAO; (c) audit and reporting guidance issued by the Office of Management and Budget (OMB); (d) accounting standards issued by the Federal Accounting Standards Advisory Board (FASAB); and (e) laws.

FAM Volumes 1 and 2 incorporate the following changes:

-AICPA Statement of Auditing Standards Nos. 100 through 114, which include the audit risk standards;
-Government Auditing Standards (July 2007 Revision);
-Audit guidance in OMB Bulletin No. 07-04, Audit Requirements for Federal Financial Statements;
-Financial reporting guidance in revised OMB Circular No. A-136, Financial Reporting Requirements; and
-The effects on financial audits of FASAB accounting concepts and standards issued through May 31, 2007.

FAM Volumes 1 and 2 supersede previously issued versions of FAM Volumes 1 and 2 and can be used to audit federal entity financial statements for the fiscal year ending September 30, 2008.

HUD Audits -- HUD Publishes Updated Consolidated Audit Guide for Audits of HUD Programs
For detail, please contact info@zy-cpa.com

As discussed above in our Auditing and Internal Controls Summaries, the Department of Housing and Urban Development (HUD) has updated its publication, Consolidated Audit Guide for Audits of HUD Programs. This Guide is issued to assist independent auditors in performing program-specific audits of participants in selected HUD Housing and Ginnie Mae programs. These audits must be performed in accordance with the standards for financial audits of the GAO's Government Auditing Standards, issued by the Comptroller General of the United States. The Guide includes updates to the following chapters or appendix:

-Reporting requirements and sample reports;
-HUD multifamily housing programs;
-HUD multifamily hospital program;
-Insured development cost certification audit guidance;
-Ginnie Mae issuers of mortgaged-backed securities audit guidance;
-HUD-approved Title II nonsupervised mortgage and loan correspondents audit guidance;
-HUD-approved Title I nonsupervised lenders and loan correspondents audit guidance; and
-Appendix- HUD regional inspector generals for audit.

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