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Accounting Research Manager(TM)
Weekly Summary of Developments
October 20-24, 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

Fair Value Accounting -- Publication Discussing Current Financial Market Crisis and Fair Value Accounting Added
Executive Compensation -- SEC's Director of Corporation Finance Speaks about Executive Compensation Disclosures
Auditing Standards -- PCAOB Publishes Proposed Auditing Standards on Auditor's Assessment of and Responses to Risk
Postretirement Benefit Plans -- FASB to Discuss Disclosures About Plan Assets and Other Matters
Health Care Industry -- AICPA Audit Risk Alert Published

Auditing and Internal Controls Headlines

Auditing Standards -- PCAOB Publishes Proposed Auditing Standards on Auditor's Assessment of and Responses to Risk
Attestation Engagements -- Publication on Attestation and Other Special Engagements Updated
Health Care Industry -- AICPA Audit Risk Alert Published

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ACCOUNTING AND SEC HEADLINES:
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Fair Value Accounting -- Publication Discussing Current Financial Market Crisis and Fair Value Accounting Added
For detail, please contact info@zy-cpa.com

We have added a Hot Topic discussing fair value accounting and the financial market crisis. This publication discusses the increased scrutiny on FASB Statement No. 157, Fair Value Measurements, as a result of the recent financial market crisis. Specifically, this publication discusses the various responses to the financial market crisis by Congress, the FASB and the SEC, including;

-The Emergency Economic Stabilization Act of 2008;
-A letter from the SEC staff on applying Statement 157 when preparing Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) disclosure, which adds to its letter of March 2008;
-An SEC-FASB letter entitled: “SEC Office of the Chief Accountant and FASB Staff Clarifications on Fair Value Accounting”; and
-FASB Staff Position (FSP) FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.

See our Hot Topic for complete details.

Executive Compensation -- SEC's Director of Corporation Finance Speaks about Executive Compensation Disclosures
For detail, please contact info@zy-cpa.com

We have added a speech given by John W. White, the Director in the Division of Corporation Finance (Corp Fin) of the SEC, “Executive Compensation Disclosure: Observations on Year Two and a Look Forward to the Changing Landscape for 2009.” In his remarks, Mr. White provided his observations on executive compensation disclosures and provided his thoughts on what he hopes to see in the coming proxy season. Mr. White also discussed recent developments in the current financial markets that are likely to affect executive compensation disclosures going forward.

Mr. White indicated that most comments provided by Corp Fin on executive compensation disclosures during year two were in the following three areas: (1) the need for more analysis; (2) disclosure of performance targets; and (3) disclosure relating to benchmarking.

Auditing Standards -- PCAOB Publishes Proposed Auditing Standards on Auditor's Assessment of and Responses to Risk
For detail, please contact info@zy-cpa.com

The PCAOB has published for public comment a proposed rule, Proposed Auditing Standards Related to the Auditor's Assessment of and Response to Risk and Conforming Amendments to PCAOB Standards. This proposal includes a suite of seven new auditing standards related to the auditor’s assessment of and responses to risk and related conforming amendments. The standards included in this proposal would supersede the PCAOB’s interim auditing standards related to audit risk and materiality, audit planning and supervision, consideration of internal control in an audit of financial statements, audit evidence, and performing tests of accounts and disclosures before year end.

The proposed standards would establish requirements and provide direction on audit procedures performed throughout the audit, from the initial planning stages through the evaluation of the audit results in forming the opinions in the auditor’s report. The proposals build upon and attempt to improve the existing framework for risk assessment by, among other things, taking account of improvements in risk assessment methodologies, enhancing the integration of the risk assessment standards with the PCAOB’s standard for the audit of internal control over financial reporting, emphasizing the auditor’s responsibilities for consideration the risk of fraud as being a central part of the audit process, and reducing unnecessary differences with the risk assessment standards of other auditing standard setters.

The proposed risk assessment standards are as follows:

-Audit Risk in an Audit of Financial Statements. This proposed standard describes the components of audit risk and the auditor's responsibilities for reducing audit risk to an appropriately low level in order to obtain reasonable assurance in an audit of financial statements.
-Audit Planning and Supervision. This proposed standard describes the auditor's responsibilities for planning the audit, including assessing matters that are important to the audit, and establishing an appropriate audit strategy and audit plan. The proposed standard also describes the responsibilities of the engagement partner and other engagement team members for supervising and reviewing the work of the engagement team.
-Identifying and Assessing Risks of Material Misstatement. This proposed standard describes the auditor's responsibilities for identifying and assessing risks of material misstatement. The risk assessment process discussed in the proposed standard includes information-gathering procedures to identify risks (e.g., obtaining an understanding of the company, its environment, and its internal control) and analysis of the identified risks.
-The Auditor's Responses to the Risks of Material Misstatement. This proposed standard sets forth the auditor's responsibilities for responding to the risks of material misstatement in the general conduct of the audit and specific audit procedures.
-Evaluating Audit Results. This proposed standard describes the auditor's responsibilities regarding the process of evaluating the results of the audit in order to form the opinion(s) to be presented in the auditor's report. This process includes evaluating uncorrected misstatements and control deficiencies identified during the audit.
-Consideration of Materiality in Planning and Performing an Audit. This proposed standard sets forth the auditor's responsibilities for applying the concept of materiality, as described by the federal securities laws, in planning the audit and determining the scope of the audit procedures.
-Audit Evidence. This proposed standard sets forth the auditor's responsibilities regarding designing and applying audit procedures to obtain sufficient appropriate evidence to support the opinion(s) in the auditor's report. In particular, it discusses the principles for determining the sufficiency and appropriateness of audit evidence.

Comments on the proposal are due February 18, 2009. Any new auditing standard or amendment to a PCAOB standard that is adopted will be submitted to the SEC for approval.

Postretirement Benefit Plans -- FASB to Discuss Disclosures About Plan Assets 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 October 29, 2008, to discuss: (a) disclosures about plan assets; and (b) assets and liabilities arising from contingencies in a business combination. The FASB is expected to continue redeliberations of FASB Staff Position (FSP) FAS 132(R)-a, Employers’ Disclosures about Postretirement Benefit Plan Assets. Specifically, the FASB is expected to discuss disclosure requirements relating to fair value measurements of plan assets, transition, and effective date. In addition, the FASB is scheduled to discuss issues raised by constituents on the accounting for assets and liabilities arising from contingencies in a business combination and whether to issue a proposed FSP that would amend FASB Statement No. 141 (Revised 2007), Business Combinations, to address those issues.

As also reported in its Action Alert publication, the FASB met on October 15, 2008, and discussed the applicability of FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes. As discussed in our Hot Topic dated October 17, 2008, the FASB voted to issue a proposed FSP that would expand the scope of its limited deferral of FIN 48. See our Hot Topic for complete details.

Health Care Industry -- AICPA Audit Risk Alert Published
For detail, please contact info@zy-cpa.com

The AICPA has issued an "Audit Risk Alert" publication, Health Care Industry Developments. This publication is intended to provide auditors of financial statements with an overview of recent economic, industry, technical, regulatory, and professional developments that may affect the audits and other engagements they perform in the health care industry. This publication also includes a section discussing current and future rulemaking or other activities that may impact these particular areas in the near future.

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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Auditing Standards -- PCAOB Publishes Proposed Auditing Standards on Auditor's Assessment of and Responses to Risk
For detail, please contact info@zy-cpa.com

As discussed above in our Accounting and SEC Summaries, the PCAOB has published for public comment a proposed rule, Proposed Auditing Standards Related to the Auditor's Assessment of and Response to Risk and Conforming Amendments to PCAOB Standards. This proposal includes a suite of seven new auditing standards related to the auditor’s assessment of and responses to risk and related conforming amendments. The standards included in this proposal would supersede the PCAOB’s interim auditing standards related to audit risk and materiality, audit planning and supervision, consideration of internal control in an audit of financial statements, audit evidence, and performing tests of accounts and disclosures before year end.

The proposed standards would establish requirements and provide direction on audit procedures performed throughout the audit, from the initial planning stages through the evaluation of the audit results in forming the opinions in the auditor’s report. The proposals build upon and attempt to improve the existing framework for risk assessment by, among other things, taking account of improvements in risk assessment methodologies, enhancing the integration of the risk assessment standards with the PCAOB’s standard for the audit of internal control over financial reporting, emphasizing the auditor’s responsibilities for consideration the risk of fraud as being a central part of the audit process, and reducing unnecessary differences with the risk assessment standards of other auditing standard setters.

The proposed risk assessment standards are as follows:

-Audit Risk in an Audit of Financial Statements. This proposed standard describes the components of audit risk and the auditor's responsibilities for reducing audit risk to an appropriately low level in order to obtain reasonable assurance in an audit of financial statements.
-Audit Planning and Supervision. This proposed standard describes the auditor's responsibilities for planning the audit, including assessing matters that are important to the audit, and establishing an appropriate audit strategy and audit plan. The proposed standard also describes the responsibilities of the engagement partner and other engagement team members for supervising and reviewing the work of the engagement team.
-Identifying and Assessing Risks of Material Misstatement. This proposed standard describes the auditor's responsibilities for identifying and assessing risks of material misstatement. The risk assessment process discussed in the proposed standard includes information-gathering procedures to identify risks (e.g., obtaining an understanding of the company, its environment, and its internal control) and analysis of the identified risks.
-The Auditor's Responses to the Risks of Material Misstatement. This proposed standard sets forth the auditor's responsibilities for responding to the risks of material misstatement in the general conduct of the audit and specific audit procedures.
-Evaluating Audit Results. This proposed standard describes the auditor's responsibilities regarding the process of evaluating the results of the audit in order to form the opinion(s) to be presented in the auditor's report. This process includes evaluating uncorrected misstatements and control deficiencies identified during the audit.
-Consideration of Materiality in Planning and Performing an Audit. This proposed standard sets forth the auditor's responsibilities for applying the concept of materiality, as described by the federal securities laws, in planning the audit and determining the scope of the audit procedures.
-Audit Evidence. This proposed standard sets forth the auditor's responsibilities regarding designing and applying audit procedures to obtain sufficient appropriate evidence to support the opinion(s) in the auditor's report. In particular, it discusses the principles for determining the sufficiency and appropriateness of audit evidence.

Comments on the proposal are due February 18, 2009. Any new auditing standard or amendment to a PCAOB standard that is adopted will be submitted to the SEC for approval.

Attestation Engagements -- Publication on Attestation and Other Special Engagements Updated
For detail, please contact info@zy-cpa.com

We have updated our publication, Attestation and Other Special Engagements. This publication provides practitioners guidance on the most cost-effective approach for conducting the many types of attestation and other special engagements and includes practical explanations of the most common types of engagements.

Among other things, our update to this publication incorporates significant changes including the replacement of PCAOB Auditing Standards (AS) No. 2, An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements, with AS No. 5, An Audit of Internal Control over Financial Reporting that is Integrated with an Audit of Financial Statements. Our update includes revisions to over 100 workpapers, exhibits and practice aids to incorporate the most current attestation and related engagement standards.

See our Literature Update for complete details.

Health Care Industry -- AICPA Audit Risk Alert Published
For detail, please contact info@zy-cpa.com

As discussed above in our Accounting and SEC Summaries, the AICPA has issued an "Audit Risk Alert" publication, Health Care Industry Developments. This publication is intended to provide auditors of financial statements with an overview of recent economic, industry, technical, regulatory, and professional developments that may affect the audits and other engagements they perform in the health care industry. This publication also includes a section discussing current and future rulemaking or other activities that may impact these particular areas in the near future.

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