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Accounting Research
Manager(TM)
Weekly Summary of
Developments
June 8-12, 2009
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Accounting Research
Manager subscriber,
The Accounting Research
Manager database now contains this week's weekly summary of developments. Click
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of this week's Weekly Summary.
Accounting and SEC
Headlines
Investment Companies -- FASB Issues Proposed Guidance on
Estimating Fair Value of Investments in Investment Companies
Revenue Recognition -- FASB Discusses Revenue Recognition and
Other Matters
Proxy Rules -- SEC Issues Proposal on Facilitating
Shareholder Director Nominations
SEC Reporting -- SEC Staff Issues Accounting Bulletin
EITF Materials -- FASB Issues Additional Materials for
June 18, 2009 EITF Meeting
International Financial
Reporting -- IASB Issues
Agenda for June 15-19 2009 Meeting
Auditing and Internal
Controls Headlines
Quality Control -- AICPA Issues Proposed Guidance on
Quality Control for Audits and Audit Firms
Interim Financial
Information -- Discussion
and Analysis of SAS 116
Government Headlines
Derivative Instruments -- GASB Staff Implementation Guidance on
Derivative Instruments Discussed
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ACCOUNTING AND SEC HEADLINES:
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Investment Companies --
FASB Issues Proposed Guidance on Estimating Fair Value of Investments in
Investment Companies
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The FASB has issued for
public comment proposed FASB Staff Position (FSP) No. FAS 157-g, “Estimating
the Fair Value of Investments in Investment Companies That Have Calculated Net
Asset Value per Share in Accordance with the AICPA Audit and Accounting Guide,
Investment Companies.” This proposed FSP would amend FASB Statement No. 157, Fair
Value Measurements, to provide application guidance for estimating the fair
value of investments in investment companies that have calculated net asset
value per share in accordance with the AICPA Audit and Accounting Guide, Investment
Companies.
As proposed, this FSP would
be effective upon issuance, including prior periods for which financial
statements have not been issued, and applied prospectively.
Comments on this proposed FSP
are due July 8, 2009.
Revenue Recognition --
FASB Discusses Revenue Recognition and Other Matters
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As discussed in its
"Summary of Board Decisions" publication, the FASB met on June 10,
2009, and discussed the following topics:
-Revenue recognition;
-Financial instruments with
characteristics of equity; and
-Conceptual framework - measurement.
Regarding its revenue
recognition project, the FASB discussed: (a) gross vs. net presentation
of revenues; (b) the combination, segmentation, and modification of
contracts; and (c) nonmonetary exchanges. The
FASB made a number of decisions on these issues, including the following:
-The amount an entity
recognizes as revenue depends on the identification of performance obligations
and an entity must determine whether its performance obligation is to provide
goods and services itself or to arrange for another party to provide those
goods and services;
-An entity should disclose
separately revenue in the same line of business from: (a) providing
goods and services itself; and (b) arranging for the provision of goods
and services;
-An entity should disclose
the basis for its assessment and any significant judgment in identifying
performance obligations when other parties are involved in providing goods and
services to the entity’s customer;
-The FASB tentatively decided
that: (a) two or more contracts with the same customer should be
accounted for as a single net contract position if the prices of those
contracts are interdependent; and (b) an entity should account for a
single contract with a customer as multiple contracts only if each contract segment
is priced independently;
-An entity should recognize
revenue for a nonmonetary exchange transaction only
if the transaction has commercial substance;
-An entity should not
recognize revenue from a nonmonetary exchange
transaction if the purpose was to facilitate a sale to another party; and
-An entity should measure the
nonmonetary consideration received at its fair value
or, if it cannot be estimated reliably, by reference to the selling price of
the promised goods and services;
The FASB also discussed
financial instruments with characteristics of equity, including measurement
requirements for freestanding equity, liability, and asset instruments and
equity hybrids instruments (instruments that are separated into an equity
component and a liability or asset component ), and decided the following:
-An entity would expense as
incurred all transaction costs or fees arising from the issuance of a financial
instrument;
-An entity would initially
measure a freestanding equity instrument at its transaction price;
-In initially measuring a
separated equity hybrid instrument, the liability or asset component would be
measured at fair value as if it were a freestanding liability or asset and the
remainder of the transaction price for the hybrid instrument as a whole would
be allocated to the equity component;
-An entity would not remeasure a freestanding equity instrument or equity
component of a hybrid instrument that it cannot be required to redeem;
-At each reporting date, an
entity would remeasure at current redemption value an
equity instrument or a separated equity component of a hybrid instrument that
has a redemption requirement;
-An entity would remeasure the liability or asset component of a separated
hybrid instrument on the basis of the requirements of U.S. generally accepted
accounting principles (GAAP) that would apply if it were a freestanding
instrument;
-An entity would present a
physically settled forward repurchase contract on a net basis in the statement
of financial position and remeasure that instrument
at fair value as of the subsequent reporting date;
-An entity would report
convertible debt as a liability in its entirety and subsequently measure that
liability at fair value at each reporting date; and
-All other freestanding
liability and asset instruments would be remeasured
as required by existing U.S. GAAP.
The FASB also discussed a
draft measurement chapter for the conceptual framework that is based on
measurement factors the FASB has discussed in earlier meetings.
Proxy Rules -- SEC Issues
Proposal on Facilitating Shareholder Director Nominations
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The SEC has issued for public
comment a proposed rule, Facilitating Shareholder Director Nominations.
This proposal would amend federal proxy rules to allow greater exercise of
shareholders’ rights to nominate and elect directors to company boards of
directors. This proposal would require, under certain circumstances, a company
to include in the company’s proxy materials a shareholder’s, or group of
shareholders’, nominees for director. The proposal includes certain
requirements, key among which are a requirement that use of the new procedures
be in accordance with state law, and provisions regarding the disclosures
required to be made concerning nominating shareholders or groups and their
nominees. In addition, this proposal would require companies to include in
their proxy materials, under certain circumstances, shareholder proposals that
would amend, or that request an amendment to, a company’s governing documents
regarding nomination procedures or disclosures related to shareholder
nominations, provided the proposal does not conflict with the SEC’s disclosure
rules. This proposal also makes related changes to certain other SEC rules and
regulations, including the existing exemptions from proxy rules and the
beneficial ownership reporting requirements.
Comments on this proposal are
due 60 days from publication in the Federal Register.
SEC Reporting -- SEC Staff
Issues Accounting Bulletin
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The SEC's Office of the Chief
Accountant published Staff Accounting Bulletin (SAB) No. 112. SAB 112 amends or
rescinds portions of the interpretive guidance included in the Staff
Accounting Bulletin Series to make the relevant interpretive guidance
consistent with current authoritative accounting and auditing guidance and SEC
rules and regulations. Specifically, SAB 112 aims to bring existing guidance
into conformity with recent pronouncements by the FASB, including FASB Statement
No. 141 (Revised December 2007), Business Combinations, and FASB
Statement No. 160, Noncontrolling Interests
in Consolidated Financial Statements.
SAB 112 is effective June 10,
2009.
EITF Materials -- FASB
Issues Additional Materials for June 18, 2009 EITF Meeting
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The FASB has issued the
following additional materials for the June 18, 2009 EITF Meeting:
-Proposed SEC Staff
Announcement, Topic No. D-110, Escrowed Share Arrangements and the
Presumption of Compensation;
-EITF Issue No. 08-1,
"Revenue Arrangements with Multiple Deliverables" (Issue Summary No.
2, Supplement No. 2, and Disclosure Group Report); and
-EITF Issue No. 09-3,
"Applicability of SOP 97-2 to Certain Arrangements That Include Software
Elements" (Issue Summary No. 1 and Supplement No. 1).
International Financial
Reporting -- IASB Issues Agenda for June 15-19 2009 Meeting
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The IASB is scheduled to
discuss the following agenda items at its June 15-19, 2009 meeting:
-Education sessions on
expected risk adjusted amortized cost and dynamic provisioning in Spain;
-Financial instruments;
-Liabilities - Amendments to
IAS 37, Provisions, Contingent Liabilities and Contingent Assets;
-Conceptual Framework project
(phase C);
-Revenue recognition;
-Joint ventures;
-Financial instruments with
characteristics of equity;
-Insurance contracts;
-Leases;
-Rate-regulated activities;
and
-Annual Improvements project.
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AUDITING AND INTERNAL
CONTROLS HEADLINES:
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Quality Control -- AICPA
Issues Proposed Guidance on Quality Control for Audits and Audit Firms
The AICPA has issued for
public comment the following two proposals:
-Proposed Statement on
Auditing Standards (SAS), Quality Control for an Audit of Financial
Statements; and
For detail, please contact info@zy-cpa.com
-Proposed Statement on
Quality Control Standards (SQCS), A Firm's System of Quality Control.
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The proposed SAS would
supersede SAS No. 25, The Relationship of Generally Accepted Auditing
Standards to Quality Control Standards, and represents a redrafting to
apply the Auditing Standards Board’s (ASB) clarity drafting conventions and to
converge with International Standards on Auditing (ISAs).
According to the AICPA, the proposed SAS should not result in a change to
existing practice and contains requirements and application material that
address specific responsibilities of the auditor regarding quality control
procedures for an audit of financial statements. Quality control systems,
policies, and procedures are the responsibility of the audit firm which is
covered by the proposed SQCS. The proposed SAS specifies quality control
procedures at the engagement level that assist the auditor in achieving the
objectives of the quality control standards.
The proposed SQCS would
supersede SQCS No. 7, A Firm’s System of Quality Control, and also
represents a redrafting to apply the ASB clarity drafting conventions and to
converge with international requirements. According to the AICPA, the proposed
SQCS does not change or expand existing quality control standards in any
significant respect. To reflect a more principles-based approach to standard
setting, certain requirements that are duplicative of broader requirements in
existing quality control standards have been moved to application and other
explanatory material. The proposed SQCS also contains a requirement that
procedures established for dealing with differences of opinion should enable a
member of the engagement team to document that member’s disagreement with the
conclusions reached after appropriate consultation.
As proposed, both the SAS and
SQCS would be effective for audits of financial statements for periods
beginning on or after December 15, 2010.
Comments on both of these
proposals are due August 31, 2009.
Interim Financial
Information -- Discussion and Analysis of SAS 116
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We have added a GAAS Update
Service that provides discussion and analysis of AICPA Statement on Auditing
Standards (SAS) No. 116, Interim Financial Information, which supersedes
AU Section 722 of the same name. Specifically, SAS 116 revises the guidance on
the independent accountant’s professional responsibilities to accommodate
reviews of interim financial information of nonissuers,
including companies offering securities pursuant to SEC Rule 144A, Private Resales of Securities to Institutions, or participating
in private equity exchanges. SAS 116 also removes the guidance for reviews of
the interim financial information of issuers since such guidance appropriately
resides in the auditing standards of the PCAOB.
SAS 116 is effective for
reviews of interim financial information for interim periods beginning after
December 15, 2009. Early application 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:
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Derivative Instruments --
GASB Staff Implementation Guidance on Derivative Instruments Discussed
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We have published a
Governmental GAAP Update Service that discusses the Guide to Implementation
of GASB Statement 53 on Accounting and Financial Reporting for Derivative
Instruments. The staff of the GASB prepared this Guide to assist financial
statement preparers and attestors in adapting to the
new requirements of GASB Statement No. 53, Accounting and Financial
Reporting for Derivative Instruments. This Update includes discussion of
questions and answers provided in the Guide on the following topics:
-Definition of derivative
instruments;
-Financial instruments not
included in the scope of GASB 53;
-Recognition and measurement
of derivative instruments;
-Hedging derivative
instruments;
-Methods of evaluating effectiveness;
-Hybrid instruments;
-Notes to financial
statements;
-Effective date and
transition; and
-Guide appendixes.
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