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Accounting Research
Manager(TM)
Weekly Summary of
Developments
August 17-21, 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:
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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
FASB Codification -- SEC Publishes Interpretation Regarding
the FASB Accounting Standards Codification
Loan Losses -- SEC Staff Publishes Sample Letter on
MD&A Disclosure Regarding Provisions and Allowances for Loan Losses
SEC Reporting -- SEC Staff Publishes New and Updated
Interpretations
PCAOB Rules -- SEC Approves PCAOB Rule Changes
Subsequent Events -- Interpretations of Topic 855 Published
Financial Instruments -- FASB Discusses Financial Instruments
and Other Matters
EITF Materials -- FASB Issues Additional Materials for
September 9-10, 2009 EITF Meeting
Employee Benefits -- IASB Publishes Proposal on the
Discount Rate for Measuring Employee Benefits
Auditing and Internal
Controls Headlines
PCAOB Rules -- SEC Approves PCAOB Rule Changes
Real Estate -- New Edition of Knowledge-Based Audits
of Real Estate Published
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ACCOUNTING AND SEC HEADLINES:
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FASB Codification -- SEC
Publishes Interpretation Regarding the FASB Accounting Standards Codification
For detail, please contact info@zy-cpa.com
The SEC has published an
interpretive release, Commission Guidance Regarding the Financial Accounting
Standards Board’s Accounting Standards Codification. This release provides
guidance regarding the release by the FASB of its FASB Accounting Standards CodificationTM (Codification). On July 1, 2009,
the Codification became effective for transactions that occur
beginning on or after July 1, 2009, for a calendar year end public company.
Many parts of existing SEC rules and staff guidance refer to pre-Codification
accounting standards, which may be confusing. Under this release, concurrent
with the effective date of the Codification, references in the SEC’s rules and
staff guidance to specific standards under U.S. GAAP should be understood to
mean the corresponding reference in the Codification.
The release indicates that
the SEC and its staff also intend to embark on a longer term rulemaking and
updating initiative to revise comprehensively specific references to specific
standards under U.S. GAAP in the SEC’s rules and staff guidance. The release
also reiterates that the Codification does not supersede SEC rules and
regulations, and is therefore not an authoritative source for such content.
This interpretive release is effective upon publication in the Federal
Register.
Loan Losses -- SEC Staff
Publishes Sample Letter on MD&A Disclosure Regarding Provisions and
Allowances for Loan Losses
For detail, please contact info@zy-cpa.com
The staff in the Division of
Corporation Finance (Corp Fin) of the SEC has published an illustrative letter,
Sample Letter Sent to Public Companies on MD&A Disclosure Regarding
Provisions and Allowances for Loan Losses. This letter was sent to certain
public companies identifying a number of disclosure issues they may wish to
consider in preparing Management's Discussion and Analysis of Financial
Condition and Results of Operations (MD&A). Topics covered in this letter
include the following:
-Higher-risk loans;
-Changes in practices
followed to determine allowance for loan losses;
-Declines in collateral
value; and
-Other possible MD&A
disclosures if relevant and material.
SEC Reporting -- SEC Staff
Publishes New and Updated Interpretations
For detail, please contact info@zy-cpa.com
The staff in Corp Fin has
issued a new Compliance and Disclosure Interpretation (C&DI), Regulation
FD. This C&DI provides interpretations by Corp Fin, in a question and
answer format, of the SEC’s Regulation FD, which addresses the selective disclosure
of material nonpublic information. Topics covered in this C&DI include
general rules regarding selective disclosure and various definitions under
Regulation FD.
Corp Fin has also issued
updates to the following C&DIs:
-Securities Act Sections;
-Securities Act Rules;
-Securities Act Forms;
-Regulation S-K;
-Exchange Act Sections;
and
-Exchange Act Section 16
and Related Rules and Forms.
These documents provide
interpretations by Corp Fin in a question and answer format. Topics updated in
these C&DIs include:
-Registering securities when
selling convertible securities and warrants;
-Private placement exemption;
-Treatment of “claw-backs” of
previously awarded executive compensation in current year executive
compensation disclosures; and
-Section 16 reporting
requirements for stock splits that include cash payments for fractional shares.
PCAOB Rules -- SEC
Approves PCAOB Rule Changes
The SEC has published the
following two releases approving PCAOB rule changes:
-Public Company Accounting
Oversight Board; Order Approving Proposed Rules on Annual and Special Reporting
by Registered Public Accounting Firms (Release 1); and
For detail, please contact info@zy-cpa.com
-Public Company Accounting
Oversight Board; Order Approving Proposed Rules on Succeeding to the Status of
a Predecessor Firm (Release 2).
For detail, please contact info@zy-cpa.com
Release 1 relates to the PCAOB’s adoption of eight new rules (PCAOB Rules 2200-2207)
concerning annual and special reporting by registered public accounting firms,
instructions to two forms to be used for such reporting (Form 2 and Form 3),
and related amendments to existing rules.
Release 2 relates to the PCAOB’s adoption of new rules and a form relating to
succeeding to the registration status of a predecessor firm. Specifically,
PCAOB Rules 2108, Succeeding to the Registration Status of a Predecessor,
and 2109, Procedure for Succeeding to the Registration Status of a
Predecessor, will now require reporting (Form 4) when a firm succeeds to
the registration status of a predecessor.
Subsequent Events --
Interpretations of Topic 855 Published
For detail, please contact info@zy-cpa.com
We have published, Subsequent
Events - Interpretations of Topic 855, which provides interpretive guidance
on Codification Topic 855, Subsequent Events. Topic 855 provides
guidance on the accounting for and disclosures of subsequent eventsb - that is, events that occur after the balance
sheet date but before financial statements are issued or are available to be
issued.
Our interpretation includes
guidance in a question and answer (Q&A) format on the accounting and
disclosure requirements of Topic 855. Among other things, our interpretation
includes:
-An overview of the key
provisions and requirements of Topic 855;
-Guidance on the recognition
of subsequent events, including the concept of financial statements “available
to be issued”;
-Examples of recognized and nonrecognized subsequent events; and
-Examples of subsequent
events footnote disclosures from actual filings with the SEC.
See our Literature Update for
complete details.
Financial Instruments --
FASB Discusses Financial Instruments and Other Matters
For detail, please contact info@zy-cpa.com
As reported in its
"Summary of Board Decisions" publication, the FASB met on August 19,
2009, and discussed the following topics:
-Accounting for financial
instruments;
-Disclosure of certain loss
contingencies;
-Revenue recognition; and
-Technical corrections to
FASB statements and other U.S. GAAP literature.
The FASB discussed which
financial instruments would be affected by the proposed changes to the
accounting for financial instruments and decided the project would include all
financial instruments as defined in the "Master Glossary" of the
Codification, except for the following:
-Employers’ and plans’
obligations for pension benefits;
-Other postretirement
benefits, including health care and life insurance benefits, postemployment benefits, and employee stock option and
stock purchase plans;
-Other forms of deferred
compensation arrangements (as defined);
-Contracts within the scope
of Codification Topic 944, Financial Services - Insurance;
-Noncontrolling
interests in consolidated subsidiaries;
-Equity investments in
consolidated subsidiaries;
-Equity instruments issued by
an entity and classified in "stockholders’ equity," in their
entirety, in the statement of financial position;
-An interest in a variable
interest entity that the entity is required to consolidate; and
-Lease assets and liabilities
that are accounted for under Codification Topic 840, Leases.
The FASB began redeliberations of disclosure requirements for certain loss
contingencies and decided to initially focus on loss contingencies associated
with litigation and to consider other types of loss contingencies at a future
meeting. The FASB made a number of decisions, a few of which included the
following:
-To establish an overall
disclosure objective that an entity shall disclose qualitative and quantitative
information about the loss contingency to enable a financial statement user to
understand the nature of the contingency and its potential timing and
magnitude.
-To establish broad
principles that loss contingency disclosures: (a) about litigation
contingencies should focus on the contentions of the parties, rather than
predictions about the future outcome; (b) about a contingency should be
more robust as the likelihood and magnitude of loss increase and as the
contingency progresses toward resolution; and (c) should provide a
summary of information that is publicly available about a case and indicate
where users can obtain more information.
-To maintain the existing
requirement to disclose asserted claims and assessments whose likelihood of
loss is at least reasonably possible and to clarify that at least reasonably
possible and more than remote have the same meaning.
-That entities should not
consider the possibility of recoveries from insurance or indemnification
arrangements when assessing whether a contingency should be disclosed.
-To not to require entities
to disclose information about settlement negotiations.
-To require disclosure about
possible recoveries from insurance and other sources if and to the extent that
the information has been provided to the plaintiff in discovery.
The FASB discussed, but did not
reach any decisions, on the presentation of contracts with customers related to
its revenue recognition project, including the following topics:
-When, if ever, an entity
should present contractual rights and obligations as assets and liabilities,
respectively;
-Whether an entity should
present net contract assets separately from net contract liabilities;
-Whether and how an entity
should present short-term contracts separately from long-term contracts; and
-The relationship between an
entity’s contract position and accounts receivable.
The FASB also discussed
comments received on its exposure draft, Rescission of FASB Technical
Bulletin No. 01-1, Nullification of EITF Topics No. D-33 and
No. D-67, Amendments, and Technical Corrections, and decided to proceed
to issue final guidance with a few modifications, which are discussed further
in the "Summary of Board Decisions" publication.
EITF Materials -- FASB
Issues Additional Materials for September 9-10, 2009 EITF Meeting
For detail, please contact info@zy-cpa.com
The FASB has issued the
following additional materials for the September 9-10, 2009 EITF Meeting:
-EITF Issue No. 08-1, "Revenue
Arrangements with Multiple Deliverables" (comment letters); and
-EITF Issue No. 09-3,
"Applicability of SOP 97-2 to Certain Arrangements That Include Software
Elements" (comment letters).
Employee Benefits -- IASB
Publishes Proposal on the Discount Rate for Measuring Employee Benefits
For detail, please contact info@zy-cpa.com
The IASB has issued for
public comment an exposure draft, Discount Rate for Employee Benefits.
This proposal would amend IAS 19, Employee Benefits, which requires an
entity to determine the rate used to discount employee benefit obligations with
reference to market yields on high quality corporate bonds at the end of the
reporting period. However, when there is no deep market in corporate bonds, an
entity is required to use market yields on government bonds instead. The recent
global financial crisis has led to a widening of the spread between yields on
corporate bonds and yields on government bonds. This proposal would eliminate
the requirement to use yields on government bonds. Instead, entities would
estimate the yield on high quality corporate bonds. If adopted, the IASB
believes the amendments would ensure that the comparability of financial
statements is maintained across jurisdictions, regardless of whether there is a
deep market for high quality corporate bonds.
Comments on this proposal are
due September 30, 2009.
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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PCAOB Rules -- SEC
Approves PCAOB Rule Changes
As discussed above in our
Accounting and SEC Summaries, the SEC has published the following two releases
approving PCAOB rule changes:
-Public Company Accounting
Oversight Board; Order Approving Proposed Rules on Annual and Special Reporting
by Registered Public Accounting Firms (Release 1); and
For detail, please contact info@zy-cpa.com
-Public Company Accounting
Oversight Board; Order Approving Proposed Rules on Succeeding to the Status of
a Predecessor Firm (Release 2).
For detail, please contact info@zy-cpa.com
Release 1 relates to the PCAOB’s adoption of eight new rules (PCAOB Rules 2200-2207)
concerning annual and special reporting by registered public accounting firms,
instructions to two forms to be used for such reporting (Form 2 and Form 3),
and related amendments to existing rules.
Release 2 relates to the PCAOB’s adoption of new rules and a form relating to
succeeding to the registration status of a predecessor firm. Specifically,
PCAOB Rules 2108, Succeeding to the Registration Status of a Predecessor,
and 2109, Procedure for Succeeding to the Registration Status of a
Predecessor, will now require reporting (Form 4) when a firm succeeds to
the registration status of a predecessor.
Real Estate -- New Edition
of Knowledge-Based Audits of Real Estate Published
For detail, please contact info@zy-cpa.com
We have published the 2009
edition of Knowledge-Based Audits of Real Estate. This publication is
designed to help the auditor efficiently and effectively perform financial
statement audits of real estate in accordance with auditing standards generally
accepted in the United States of America (GAAS). In addition, the
Knowledge-Based Audit documents, audit programs, practice aids, correspondence,
and example reports, which incorporate the requirements of the Risk
Assessment Standards, have been included and are referenced throughout the
materials.
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