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Accounting Research
Manager(TM)
Weekly Summary of
Developments
December 8-12, 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
Financial Assets -- FASB Requiring Additional Disclosures
in 2008 for Public Companies About Transfers of Financial Assets and Interests
in Variable Interest Entities
SEC and PCAOB Activities -- 2008 AICPA Year-End SEC and PCAOB
Conference
SEC Guidance -- Staff of SEC's Division of Corporation
Finance Publishes Financial Reporting Manual
Division of Corporation
Finance -- Key
Achievements and Major Areas of Future Focus Highlighted
Financial Crisis -- Discussion of Legislative Response to
the Ongoing Economic Crisis Added
Financial Crisis -- PCAOB Issues Staff Audit Practice
Alert on Audit Considerations in the Current Economic Environment
Derivatives and Hedging -- Interpretations of Statement 133
Updated
Income Taxes -- Accounting for Income Taxes
Interpretations Updated
Conceptual Framework -- FASB Discusses Its Conceptual
Framework Project and Other Matters
State-Controlled Entities -- IASB Publishes Proposed Amendments to
IAS 24
International Financial
Reporting -- IASB Issues
Agenda for December 15-19, 2008 Meeting
Auditing and Internal
Controls Headlines
Financial Crisis -- PCAOB Issues Staff Audit Practice
Alert on Audit Considerations in the Current Economic Environment
Internal Controls -- New Edition of SOX 404 Guide Added
Internal Controls -- New Edition of Guide on Audit
Committees for Directors, Management and Consultants Added
Financial Crisis -- GAO Publishes Two Reports on the TARP
Program
Examinations -- Examining Internal Controls over
Financial Reporting under SSAE 15 Discussed
Government Headlines
GASB Pronouncements -- GASB Staff's Comprehensive Guide on
the Implementation and Application of GASB Pronouncements Discussed
Financial Crisis -- GAO Publishes Two Reports on the TARP
Program
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ACCOUNTING AND SEC HEADLINES:
=============================
Financial Assets -- FASB
Requiring Additional Disclosures in 2008 for Public Companies About Transfers
of Financial Assets and Interests in Variable Interest Entities
For detail, please contact info@zy-cpa.com
The FASB has issued FASB
Staff Position (FSP) FAS 140-4 and FIN 46(R)-8, Disclosures by Public
Entities (Enterprises) about Transfers of Financial Assets and Interests in
Variable Interest Entities. This FSP requires additional disclosures by
public companies about transfers of financial assets and interests in variable
interest entities. The FSP amends both FASB Statement 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
and FASB Interpretation (FIN) No. 46 (Revised December 2003), Consolidation
of Variable Interest Entities, to require:
-Additional disclosures about
transferors’ continuing involvements with transferred financial assets;
-Additional disclosures about
a public entities' (including sponsors) involvement with variable interest
entities;
-Disclosures by a public
enterprise that is: (a) a sponsor of a qualifying special-purpose entity
(SPE) that holds a variable interest in the qualifying SPE but was not the
transferor of financial assets to the qualifying SPE; and (b) a servicer of a qualifying SPE that holds a significant
variable interest in the qualifying SPE but was not the transferor of financial
assets to the qualifying SPE.
This FSP is effective for
reporting periods (quarterly and annual) that end after December 15, 2008.
SEC and PCAOB Activities -- 2008 AICPA Year-End SEC and PCAOB
Conference
For detail, please contact info@zy-cpa.com
We have added an Overview of the 2008 AICPA
Year-End SEC and PCAOB Conference held on December 8-10, 2008, in
Other major topics covered at
the conference included:
-Global accounting and
auditing standards and initiatives;
-Results of the U.S.
Department of the Treasury’s Advisory Committee on the Auditing Profession;
-Final recommendations by the
SEC’s Advisory Committee on Improvements to Financial Reporting;
-Application and
implementation issues associated with FASB Statement 141 (Revised 2007), Business
Combinations.
See our Literature Update for
compete details.
SEC Guidance -- Staff of SEC's Division of
Corporation Finance Publishes Financial Reporting Manual
For detail, please contact info@zy-cpa.com
The staff of the SEC’s Division of
Corporation Finance (Corp Fin) has published, Financial Reporting Manual.
The manual represents informal guidance prepared for the Corp Fin staff.
Readers may find the guidance useful in preparing filings with the SEC.
Topics covered in the manual
are:
-Registrant financial
statements;
-Other required financial
statements;
-Pro forma financial
information;
-Smaller reporting companies;
-Foreign private issuers and
foreign businesses;
-Related party matters;
-Non-GAAP measures of
financial performance, liquidity and net worth;
-Management’s Discussion and
Analysis of Financial Position and Results of Operations;
-Reverse acquisitions and
recapitalizations;
-Subsequent events;
-Tender offers;
-Employee stock benefit
plans; and
-Multijurisdictional
disclosure system.
Corp Fin plans to
periodically update this manual and alert users when
such changes are made. We also understand that the intent of this manual is to
replace the Staff Training Manual that was last issued in 2000.
Division of Corporation
Finance -- Key
Achievements and Major Areas of Future Focus Highlighted
For detail, please contact info@zy-cpa.com
John W. White, Director of
the SEC’s Corp Fin, gave a speech entitled, Don’t Throw Out the Baby with
the Bathwater Keynote Address at the ABA Section of Business Law Fall Meeting.
In his remarks, Mr. White discussed key achievements within Corp Fin,
including:
-Sarbanes-Oxley Section 404;
-Executive compensation
disclosures;
-International initiatives;
-Technology; and
-Small business capital
raising and private offering reform.
Mr. White also discussed the
following five major areas that he believes needs to be addressed in the
future:
-International Financial
Reporting Standards for U.S. issuers;
-Addressing the remaining
recommendations from the SEC’s Advisory Committee on Improvements to Financial
Reporting;
-Proxy matters;
-Technology; and
-Beneficial ownership.
Mr. White concluded by
expressing his view of the importance of preserving the role of Corp Fin in any
regulatory changes made in the future.
Financial Crisis --
Discussion of Legislative Response to the Ongoing Economic Crisis Added
For detail, please contact info@zy-cpa.com
We have published a comprehensive discussion
entitled, "The Other Bailout: How the Fed is Financing the Financiers, and
Related SEC Disclosure." In this paper, we discuss the legislative
response to the ongoing economic crisis that took the form of the Emergency
Economic Stabilization Act of 2008. This Act greatly enhanced the powers of
both the Federal Reserve Board and the U.S. Treasury Department to implement
specific plans to stabilize the domestic economy.
This publication also
addresses the fact that the use by financial institutions of the Fed’s lending
facilities gives rise to a number of considerations that impact these firms’
financial disclosures under the securities laws. Under the federal securities
laws and regulations, reporting obligations may involve periodic reports,
management discussion and analysis (MD&A), risk factors, accounting rules,
asset-backed securities, and Investment Company Act rules regarding money
market funds.
See our Literature Update for
complete details.
Financial Crisis -- PCAOB
Issues Staff Audit Practice Alert on Audit Considerations in the Current
Economic Environment
For detail, please contact info@zy-cpa.com
The PCAOB staff has issued
Staff Audit Practice Alert No. 3, Audit Considerations in the Current
Economic Environment. This Alert is intended to assist auditors in
identifying matters related to the current economic environment that might
affect audit risk and require additional emphasis. The Alert is not intended to
identify all areas that might affect audit risk in the current economic
environment or serve as a substitute for the relevant auditing standards. All
audits of issuers must be conducted in accordance with the standards of the
PCAOB.
The Alert is organized into
the following six sections:
-Overall audit
considerations;
-Auditing fair value measurements;
-Auditing accounting
estimates;
-Auditing the adequacy of
disclosures;
-Auditor's consideration of a
company's ability to continue as a going concern; and
-Additional audit
considerations for selected financial reporting areas.
Derivatives and Hedging --
Interpretations of Statement 133 Updated
For detail, please contact info@zy-cpa.com
We have updated our publication, Derivatives
and Hedging - Interpretations of Statement 133. This publication provides
guidance and examples on the application of FASB Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities. We have updated this
publication to reflect the issuance of:
-FASB Staff Position (FSP)
FAS 157-3, Determining the Fair Value of a Financial Asset When the Market
for That Asset Is Not Active;
-FSP FAS 133-1 and FIN 45-4, Disclosures
about Credit Derivatives and Certain Guarantees - An Amendment of FASB
Statement No. 133 and FASB Interpretation No. 45; and Clarification of the
Effective Date of FASB Statement No. 161;
-FASB Statement No. 163, Accounting
for Financial Guarantee Insurance Contracts; and
-FASB Statement No. 141
(Revised 2007), Business Combinations.
See our Literature Update for
complete details.
Income Taxes -- Accounting
for Income Taxes Interpretations Updated
For detail, please contact info@zy-cpa.com
We have updated our publication, Accounting
for Income Taxes - Interpretations of FASB Statement 109. Specifically, we
have updated numerous additional interpretations to reflect guidance in FASB
Statement No. 141 (Revised 2007), Business Combinations. Statement 141R
is effective for a calendar year-end company beginning January 1, 2009.
See our Literature Update for
complete details.
Conceptual Framework -- FASB Discusses Its Conceptual
Framework Project and Other Matters
For detail, please contact info@zy-cpa.com
As reported in its "Summary of Board
Decisions" publication, the FASB met on December 10, 2008, and discussed:
(a) its Conceptual Framework project; and (b) the reporting
entity. The FASB staff presented a summary of comments received from
constituents on both of these issues, but made no decisions.
The FASB's
next board meeting is scheduled for December 15, 2008.
The FASB's
"Summary of Board Decisions" publication replaces the FASB's "Action Alerts," which have been
discontinued by the FASB. This new summary publication is provided for the
information and convenience of FASB constituents who want to follow its
deliberations. All of the conclusions reported are tentative and may be changed
at future FASB meetings.
State-Controlled Entities -- IASB Publishes Proposed Amendments
to IAS 24
For detail, please contact info@zy-cpa.com
The IASB has published for
public comment an Exposure Draft (ED), Relationships with the State.
This ED proposes to amend IAS 24, Related Party Disclosures, to exempt
state-controlled entities from providing disclosures about transactions with
other state-controlled entities if specified conditions are met. Unlike
previous proposals on this topic, this ED would not require state-controlled
entities to assess the extent of state influence, but rather it would exempt
such entities from providing full details about transactions with other
state-controlled entities and the state. Under the ED, state-controlled
entities would be required to provide general disclosures about the types and
extent of significant transactions.
As proposed, the guidance
does not specify a date the provisions of the ED would become effective.
Comments on this proposal are
due March 13, 2009.
International Financial
Reporting -- IASB
Issues Agenda for December 15-19, 2008 Meeting
For detail, please contact info@zy-cpa.com
The IASB is scheduled to
discuss the following agenda items at its December 15-19, 2008 meeting:
-Agenda proposal:
rate-regulated activities;
-Annual Improvements project;
-Conceptual framework - phase
A;
-Derecognition;
-Fair value measurement;
-Fair value measurement and
the measurement of liabilities;
-Financial instruments;
-Group cash-settled payments
transactions under IFRS 2, Share-based Payment;
-IFRS for Private Entities
-Amendments to IAS 37, Provisions,
Contingent Liabilities and Contingent Assets;
-Sweep issues (to be
confirmed).
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
=======================================
AUDITING AND INTERNAL
CONTROLS HEADLINES:
=======================================
Financial Crisis -- PCAOB
Issues Staff Audit Practice Alert on Audit Considerations in the Current
Economic Environment
For detail, please contact info@zy-cpa.com
As discussed above in our
Accounting and SEC Summaries, the PCAOB staff has issued Staff Audit Practice
Alert No. 3, Audit Considerations in the Current Economic Environment.
This Alert is intended to assist auditors in identifying matters related to the
current economic environment that might affect audit risk and require
additional emphasis. The Alert is not intended to identify all areas that might
affect audit risk in the current economic environment or serve as a substitute
for the relevant auditing standards. All audits of issuers must be conducted in
accordance with the standards of the PCAOB.
The Alert is organized into
the following six sections:
-Overall audit
considerations;
-Auditing fair value
measurements;
-Auditing accounting
estimates;
-Auditing the adequacy of
disclosures;
-Auditor's consideration of a
company's ability to continue as a going concern; and
-Additional audit
considerations for selected financial reporting areas.
Internal Controls -- New Edition of SOX 404 Guide Added
For detail, please contact info@zy-cpa.com
We have published the 2009
edition of SOX for Small, Publicly Held Companies, which provides
information that management needs to assess the effectiveness of a company’s
internal control over financial reporting and its disclosure controls. The 2009
edition has been updated to reflect a discussion of the PCAOB’s
Auditing Standard No. 5, An Audit of Internal Control Over Financial
Reporting That Is Integrated with An Audit of Financial Statements; and a
discussion of the Government Accountability Office report, “Sarbanes-Oxley Act:
Consideration of Key Principles Needed in Addressing Implementation for Smaller
Public Companies.”
See our Literature Update for
complete details.
Internal Controls -- New Edition of Guide on Audit
Committees for Directors, Management and Consultants Added
For detail, please contact info@zy-cpa.com
We have published the Fifth Edition of Audit
Committees: A Guide for Directors, Management, and Consultants. This
publication combines real-world audit committee experience with expert
knowledge of materiality, internal control, fraud and illegal acts, and the
latest requirements from the New York Stock Exchange, National Association of
Securities Dealers Automated Quotations, and the SEC, including the
Sarbanes-Oxley Act of 2002.
New and updated subject
matter in this edition includes:
-Convergence of U.S. and
international accounting standards;
-Expanded discussion of the
audit committee’s responsibilities as contrasted to those of the board of
directors in the areas of risk assessment and risk management;
-Responsibilities of the
external auditor under PCAOB Auditing Standard No. 5, An Audit of Internal
Control over Financial Reporting That Is Integrated with An Audit of Financial
Statements;
-Discussion of the audit
committee’s legal liability; and
-Overview of the Institute of
Internal Auditor’s new "International Professional Practices
Framework" effective January 2009.
See our Literature Update for
complete details.
Financial Crisis -- GAO
Publishes Two Reports on the TARP Program
The GAO has published the
following two reports on the Troubled Asset Relief Program:
-Troubled Asset Relief
Program: Additional Actions Needed to Better Ensure Integrity, Accountability,
and Transparency; and
For detail, please contact info@zy-cpa.com
-Troubled Asset Relief
Program: Status of Efforts to Address Defaults and Foreclosures on Home
Mortgages.
For detail, please contact info@zy-cpa.com
On October 3, 2008, the Emergency
Economic Stabilization Act was signed into law. The act established the Office
of Financial Stability (OFS) within the Department of the Treasury and
authorized the Troubled Asset Relief Program (TARP). Every 60 days, the U.S.
Comptroller General is required to report on a variety of areas associated with
oversight of TARP. The reports referenced above are issued under this
requirement.
The first report on
additional actions needed reviews: (a) the activities that have been
undertaken through TARP as of November 25, 2008; (b) the structure of
OFS, its use of contractors, and its system of internal controls; and (c)
preliminary indicators of TARP's performance.
The second GAO report
discusses the dramatic increase in mortgage loan defaults and foreclosures as
one of the key contributing factors to the current downturn in the
Examinations -- Examining
Internal Controls over Financial Reporting under SSAE 15 Discussed
For detail, please contact info@zy-cpa.com
We have added a GAAS Update
Service that provides discussion and analysis of AICPA Statement on Standards
for Attestation Engagements (SSAE) No. 15, An Examination of an Entity’
Internal Control over Financial Reporting That Is Integrated with an Audit of
Its Financial Statements, which supersedes existing AT Section 501, Reporting
on an Entity’s Internal Control over Financial Reporting. SSAE 15 was
issued to converge the standards practitioners use for reporting on a nonissuer’s internal control over financial reporting
(ICFR) with PCAOB Auditing Standard No. 5, An Audit of Internal Control That
Is Integrated with an Audit of Financial Statements. One of the most
significant provisions of SSAE 15 is that it is applicable only to examinations
of the design and operating effectiveness of an entity’s ICFR that is
integrated with an audit of the entity’s financial statements (integrated
audit).
This GAAS Update Service
covers the following topics:
-Planning the examination
engagement;
-Using a top-down approach to
select the controls to test;
-Testing controls; and
-Evaluating identified
deficiencies.
SSAE 15 is effective for
integrated audits for periods ending on or after December 15, 2008. Early
implementation is permitted.
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:
======================
GASB Pronouncements -- GASB Staff's Comprehensive Guide on
the Implementation and Application of GASB Pronouncements Discussed
For detail, please contact info@zy-cpa.com
We have added a Governmental
GAAP Update Service that discusses the GASB staff's publication of its
2008-2009 edition of the Comprehensive Implementation Guide. This Guide
was developed to assist financial statement preparers and auditors in the
implementation and application of GASB pronouncements and is a consolidation of
previously issued guides. Topics discussed in this edition of the Guide
address: (a) issues raised by GASB constituents in due process; (b)
questions resulting from the subsequent application of a new standard or technical
inquiry of the GASB staff; and (c) issues anticipated by the GASB staff.
This edition of the Guide
implements a number of changes and additions, including:
-Deletions of (or) amendments
to certain questions from the prior year’s guide because the guidance has been
superseded by new pronouncements;
-New questions added based on
inquiries addressed by the GASB staff over the past year, including questions
related to environmental liabilities, capital assets, other postemployment
benefits, and impairment of capital assets; and
-Questions dealing with the
implementation of certain new pronouncements, including GASB Statement No. 50, Pension
Disclosures, and GASB Statement No. 51, Accounting and Financial
Reporting for Intangible Assets.
Financial Crisis -- GAO
Publishes Two Reports on the TARP Program
As discussed above in our
Auditing and Internal Controls Summaries, the GAO has published the following
two reports on the Troubled Asset Relief Program:
-Troubled Asset Relief
Program: Additional Actions Needed to Better Ensure Integrity, Accountability,
and Transparency; and
For detail, please contact info@zy-cpa.com
-Troubled Asset Relief
Program: Status of Efforts to Address Defaults and Foreclosures on Home
Mortgages.
For detail, please contact info@zy-cpa.com
On October 3, 2008, the
Emergency Economic Stabilization Act was signed into law. The act established
the Office of Financial Stability (OFS) within the Department of the Treasury
and authorized the Troubled Asset Relief Program (TARP). Every 60 days, the U.S.
Comptroller General is required to report on a variety of areas associated with
oversight of TARP. The reports referenced above are issued under this
requirement.
The first report on
additional actions needed reviews: (a) the activities that have been
undertaken through TARP as of November 25, 2008; (b) the structure of
OFS, its use of contractors, and its system of internal controls; and (c)
preliminary indicators of TARP's performance.
The second GAO report
discusses the dramatic increase in mortgage loan defaults and foreclosures as
one of the key contributing factors to the current downturn in the
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