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Accounting Research
Manager(TM)
Weekly Summary of
Developments
January 12-16, 2009
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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
Impairments -- FASB Issues Impairment Guidance
Applicable to 2008 Year-End Reporting
Pensions -- Defined Benefit Plans and Other
Postretirement Benefit Obligations Discussed
EITF Meeting Results -- EITF Discusses Statement 160
Implementation Questions
Leases -- FASB Discusses Lease Accounting and
Other Matters
Securities -- SEC Publishes Final Rule on Insurance
Contracts
Securities Registration -- SEC Amends Rules for Mutual Funds
Registering Securities
Derivatives and Hedging
Activities -- FASB
Publishes Proposed Revisions to Statement 133 Implementation Guide
Audit Risk Alert -- AICPA Issues Audit Risk Alert on
Current Economic Crisis
International Financial
Reporting -- IASB Issues
Agenda for January 19-23, 2009 Meeting
Auditing and Internal
Controls Headlines
Auditor's Risk Assessment -- PCAOB Proposed Auditing Standards
Discussed
Audit Risk Alert -- AICPA Issues Audit Risk Alert on
Current Economic Crisis
Government Headlines
Reporting Deficiencies -- Common Financial Reporting Deficiencies
in State and Local Government Annual Reports Discussed
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ACCOUNTING AND SEC HEADLINES:
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Impairments -- FASB Issues
Impairment Guidance Applicable to 2008 Year-End Reporting
For detail, please contact info@zy-cpa.com
The FASB has issued FASB
Staff Position (FSP) EITF 99-20-1, Amendments to the Impairment Guidance of
EITF Issue No. 99-20. This FSP amends the impairment guidance in EITF Issue
No. 99-20, “Recognition of Interest Income and Impairment on Purchased
Beneficial Interests and Beneficial Interests That Continue to Be Held by a
Transferor in Securitized Financial Assets.” The FASB believes this guidance
will achieve a more consistent determination of whether an
other-than-temporary impairment has occurred. The FSP also retains and
emphasizes the objective of an other-than-temporary
impairment assessment and the related disclosure requirements in FASB Statement
No. 115, Accounting for Certain Investments in Debt and Equity Securities,
and other related guidance.
The FSP is effective for
interim and annual reporting periods ending after December 15, 2008, and shall
be applied prospectively. Retrospective application to a prior interim or
annual reporting period is not permitted.
Pensions -- Defined
Benefit Plans and Other Postretirement Benefit Obligations Discussed
For detail, please contact info@zy-cpa.com
We have published a Hot
Topic, “Defined Benefit Pension and Other Postretirement Benefit Obligations -
Current Trends.” In this year-end publication, we have traditionally discussed
the appropriate discount rates companies should use when measuring their
defined benefit pension and other postretirement benefit obligations as well as
certain other measurement considerations and disclosure requirements. However,
due to the impact of rapidly changing financial market conditions, this year we
expanded our discussion of discount rates, rates of return, and market-related
value of plan assets. We have included a discussion of other current issues
related to employer funding of and accounting for defined benefit and other
postretirement benefit plans, such as the Pension Protection Act of 2006.
See our Hot Topic for
complete details.
EITF Meeting Results --
EITF Discusses Statement 160 Implementation Questions
For detail, please contact info@zy-cpa.com
We have published a meeting
summary to document the discussions at the January 15, 2009 EITF meeting on
EITF Issue No. 08-10, "Selected Statement 160 Implementation
Questions." The EITF did not reach a final consensus on Issue 08-10. It
was generally agreed that the issues that were being discussed may have broader
implications beyond the stated scope in Issue 08-10. As a result, the EITF
decided it should revisit these issues at its next meeting, currently scheduled
for March 18-19, 2009. Issue 08-10 was the only issue publicly discussed at
this meeting.
See our meeting summary for
details.
Leases -- FASB Discusses
Lease Accounting and Other Matters
For detail, please contact info@zy-cpa.com
As discussed in its "Summary of Board
Decisions" publication, the FASB met on January 14, 2009, and discussed: (a)
leases; and (b) conceptual framework. The FASB decided that the scope of
its project on leases should include arrangements that are leases in form but
in substance are an acquisition of the leased asset.
The FASB decided that successful development of a "right-of-use"
accounting model by lessees requires that it also develop a right-of-use model
that would apply to all lessors (including sublessors). As a result, the FASB rejected suggestions to
limit the project’s initial scope to reporting by sublessors.
In regards to its conceptual
framework project, the FASB discussed which possible measurement methods should
be included in the conceptual framework and tentatively decided to include the
following categories:
-Actual or estimated current
prices (which will become past prices in future periods if an item is not remeasured);
-Actual past entry prices
adjusted for interest accruals, depreciation, amortization, impairments, and
similar things; and
-Other prescribed
computations based on discounted or undiscounted estimates of future cash flows
(which would include value in use and fair-value-based measurements, among
other things).
The next FASB meeting is
scheduled for January 21, 2009.
Securities -- SEC
Publishes Final Rule on Insurance Contracts
For detail, please contact info@zy-cpa.com
The SEC has published a final
rule, Indexed Annuities and Certain Other Insurance Contracts. This rule
defines the terms “annuity contract” and “optional annuity contract” under the
Securities Act of 1933 (Securities Act). The rule is intended to clarify the
status under the federal securities laws of indexed annuities, under which
payments to the purchaser are dependent on the performance of a securities
index. This rule also includes provisions that exempt insurance companies from
filing reports under the Securities Exchange Act of 1934 with respect to
indexed annuities and other securities that are registered under the Securities
Act, provided that certain conditions are satisfied.
The provisions associated
with annuity contracts and optional annuity contracts within this new rule are
effective January 12, 2011. The provisions associated with exempting insurance
companies from filing reports are effective May 1, 2009.
Securities Registration --
SEC Amends Rules for Mutual Funds Registering Securities
For detail, please contact info@zy-cpa.com
The SEC has published a final
rule, Enhanced Disclosure and New Prospectus Delivery Option for Registered
Open-End Management Investment Companies. This new rule amends the form
used by mutual funds to register under the Investment Company Act of 1940 and to
offer their securities under the Securities Act in order to enhance the
disclosures that are provided to mutual fund investors. The amendments require
key information to appear in plain English in a standardized order at the front
of the mutual fund statutory prospectus. The rule also includes amendments that
permit an entity to satisfy its mutual fund prospectus delivery obligations
under Section 5(b)(2) of the Securities Act 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 new rule is effective
March 31, 2009.
Derivatives and Hedging
Activities -- FASB Publishes Proposed Revisions to Statement 133 Implementation
Guide
For detail, please contact info@zy-cpa.com
The FASB has issued for
public comment revisions to its, Proposed Staff Implementation Guidance on
Statement 133. Specifically, the FASB has proposed FASB Statement 133, Accounting
for Derivative Instruments and Hedging Activities, Implementation
Issue (DIG) No. C22, “Exception Related to Embedded Credit Derivatives."
This proposed DIG Issue would amend the accounting and reporting requirements
of paragraph 14B of Statement 133 to provide clarifying language regarding when
embedded credit derivative features, including those in collateralized debt
obligations (CDOs) and synthetic CDOs,
are not considered embedded derivatives subject to potential bifurcation and
separate accounting. According to the FASB, the objective of this proposed DIG
Issue is to improve financial reporting by resolving some potential ambiguity
about the breadth of the embedded credit derivative scope exception in
paragraph 14B.
Comments on this proposed DIG
Issue are due February 13, 2009.
Audit Risk Alert -- AICPA
Issues Audit Risk Alert on Current Economic Crisis
For detail, please contact info@zy-cpa.com
The AICPA has issued an Audit
Risk Alert, Current Economic Crisis: Accounting and Auditing Considerations
- 2009. This Audit Risk Alert 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 current economic environment. Preparers and other users of financial statements my find the
discussion useful in this Risk Alert. Topics covered in this Alert
include:
-Current state of the
economy;
-Events leading to the
current economic crisis;
-Regulatory interventions;
-Other government
interventions;
-Resources for economic
information;
-Fair value;
-Other-than-temporary
impairment;
-Audit and attestation issues
and developments; and
-Managing risk.
International Financial
Reporting -- IASB Issues Agenda for January 19-23, 2009 Meeting
For detail, please contact info@zy-cpa.com
The IASB is scheduled to
discuss the following agenda items at its January 19-23, 2009 meeting:
-Annual Improvements project;
-Phases A, C and D of the
Conceptual Framework project;
-Derecognition;
-Fair value measurement;
-Financial instruments;
-Financial instruments with
characteristics of equity;
-IFRIC interpretation on
transfers of assets from customers;
-IFRS for private entities;
-Leases;
-Post-employment benefits;
and
-IASB technical plan.
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:
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Auditor's Risk Assessment
-- PCAOB Proposed Auditing Standards Discussed
For detail, please contact info@zy-cpa.com
We have added a GAAS Update
Service that provides discussion and analysis of the PCAOB's
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. The proposed
standards would supersede the PCAOB’s interim
auditing standards related to audit planning and supervision, audit risk and
materiality, consideration of internal control in an audit of financial
statements, audit evidence, and performing tests of accounts and disclosures
before year end. Among other matters, the proposed standards are intended to:
-Enhance the integration of
the audit of the financial statements with the audit of internal control over
financial reporting;
-Integrate the auditor’s
current responsibilities for considering fraud during the audit; and
-Reduce unnecessary
differences with the standards of the International Auditing and Assurance
Standards Board, while making changes that are necessary in the PCAOB’s view for audits of issuers.
Comments on the PCAOB's 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.
Audit Risk Alert -- AICPA
Issues Audit Risk Alert on Current Economic Crisis
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, Current
Economic Crisis: Accounting and Auditing Considerations - 2009. This Audit
Risk Alert 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 current economic environment. Preparers and other users
of financial statements my find the discussion useful in this Risk Alert.
Topics covered in this Alert include:
-Current state of the
economy;
-Events leading to the
current economic crisis;
-Regulatory interventions;
-Other government
interventions;
-Resources for economic
information;
-Fair value;
-Other-than-temporary
impairment;
-Audit and attestation issues
and developments; and
-Managing risk.
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:
======================
Reporting Deficiencies --
Common Financial Reporting Deficiencies in State and Local Government Annual
Reports Discussed
For detail, please contact info@zy-cpa.com
We have added a Governmental
GAAP Update Service that discusses some of the most common financial reporting
deficiencies found in the annual reports of state and local governments.
Specifically, this Update focuses on many of the common deficiencies found in
the letter of transmittal or management’s discussion and analysis (MD&A),
which have not significantly changed from the common deficiencies reported in
the prior year. In addition, this Update includes practice points that present
selected questions and answers found in the GASB's Comprehensive
Implementation Guide, on guidance covering specific MD&A deficiencies.
Specific MD&A deficiencies discussed in this Update are:
-Letter of transmittal was
dated prior to the date of the independent auditor’s report;
-Failure to reference the
MD&A in the letter of transmittal;
-Amounts reported in the
MD&A do not agree to the basic financial statements;
-Failure to address
significant changes in major funds other than the general fund;
-Failure to limit the
discussion to currently known facts, decisions, or conditions; and
-Failure for the MD&A to
provide analysis.
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