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Accounting Research
Manager(TM)
Weekly Summary of
Developments
October 5-9, 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
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of this week's Weekly Summary.
Accounting and SEC
Headlines
Disclosure Checklists -- Checklists Updated through September
30, 2009
Section 404 -- SEC Announces New SOX 404 Compliance
Date for Small Public Companies
FASB Codification -- FASB Publishes Amendments to
Codification
Credit Ratings -- SEC Issues Proposals and Concept
Release
FASB Meeting -- FASB Discusses Financial Statement
Presentation and Other Matters
Oil and Gas Activities -- AICPA Issues Working Draft of Audit
and Accounting Guide
Rights Issues -- IASB Publishes Amendments to IAS 32
IASB Update -- IASB Discusses Financial Instruments
Auditing and Internal
Controls Headlines
Special Considerations -- AICPA Issues Proposal on Audits of
Financial Statements Based on Special Purpose Frameworks
Foreign Country Frameworks -- AICPA Issues Proposal on Reporting on
Financial Statements Based on a Framework Accepted in Another Country
Summary Financial
Statements -- AICPA
Issues Proposal on Engagements to Report on Summary Financial Statements
Contractual Agreements -- AICPA Issues Proposal on Reporting
Compliance with Contractual Agreements or Regulatory Requirements
Audit Opinions -- AICPA Issues Proposals on Forming
Opinions, Modifying Opinions, and Emphasis of Matter Paragraphs
Engagement Quality Review -- PCAOB AS 7 Discussed
Oil and Gas Activities -- AICPA Issues Working Draft of Audit
and Accounting Guide
Government Headlines
GASB Pronouncements -- Implementation Dates Discussed
Pension Standards -- GASB Discusses Public Hearings on
Reexamining Pension Standards and Other Matters
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ACCOUNTING AND SEC HEADLINES:
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Disclosure Checklists --
Checklists Updated through September 30, 2009\
For detail, please contact info@zy-cpa.com
As discussed in our
Literature Update, we have updated the General U.S. GAAP Financial Statement
Disclosures Checklist through September 30, 2009. This checklist includes
the changes to the FASB Accounting Standards CodificationTM (Codification) resulting
from the EITF meeting held on September 9-10, 2009, released as an Accounting
Standards Update (ASU) on October 7, 2009. This checklist includes the
disclosure requirements from:
-ASU No. 2009-06, Income
Taxes (Topic 740) - Implementation Guidance on Accounting for Uncertainty in
Income Taxes and Disclosure Amendments for Nonpublic Entities;
-ASU No. 2009-12, Fair
Value Measurements and Disclosures (Topic 820) - Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent);
-ASU No. 2009-13, Revenue
Recognition (Topic 605) - Multiple-Deliverable Revenue Arrangements;
-FASB Statement No. 166, Accounting
for Transfers of Financial Assets; and
-FASB Statement No. 167, Amendments
to FASB Interpretation No. 46(R).
Statements 166 and 167, which
have not yet been incorporated by the FASB into the Codification, have been
included in the checklists for informational purposes only. It should be noted
that the guidance in these two standards is not yet effective and entities are
precluded from early adopting.
We have also updated the General
U.S. GAAP Interim Financial Statement Disclosures Checklist through
September 30, 2009, to reflect the interim disclosure requirements as of that
date.
See our Literature Update for
complete details.
Section 404 -- SEC
Announces New SOX 404 Compliance Date for Small Public Companies
For detail, please contact info@zy-cpa.com
We have published a Hot Topic
discussing the SEC's announcement that the smallest publicly reporting
companies will begin complying with the final portion of Section 404 of the
Sarbanes-Oxley Act of 2002 in nine months, beginning with their annual reports
for fiscal years ending on or after June 15, 2010, instead of for fiscal years
ending on or after December 15, 2009. During 2008, the SEC granted an extension
to smaller public companies with a “public float” below $75 million for
compliance with Section 404(b) for smaller public companies until fiscal years
ending on or after December 15, 2009. Section 404(b) requires a registrant to
provide an attestation report on management’s assessment of internal controls
over financial reporting by the registrant’s external auditor. Under the SEC’s
latest announcement, the extension of time for compliance with Section 404(b)
for smaller public companies will expire, beginning with the annual reports of
companies with fiscal years ending on or after June 15, 2010.
See our Hot Topic for
complete details.
FASB Codification -- FASB
Publishes Amendments to Codification
The FASB has published the following
amendments to the Codification:
-FASB Accounting Standards
Update 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue
Arrangements; and
For detail, please contact info@zy-cpa.com
-FASB Accounting Standards
Update 2009-14, Software (Topic 985)—Certain Revenue Arrangements That
Include Software Elements.
For detail, please contact info@zy-cpa.com
FASB Accounting Standards
Update 2009-13 addresses the accounting for multiple-deliverable arrangements
to enable vendors to account for products or services (deliverables) separately
rather than as a combined unit. Specifically, this guidance amends the criteria
in Subtopic 605-25, Revenue Recognition - Multiple-Element Arrangements,
for separating consideration in multiple-deliverable arrangements. This
guidance establishes a selling price hierarchy for determining the selling
price of a deliverable, which is based on: (a) vendor-specific objective
evidence; (b) third-party evidence; or (c) estimates. This
guidance also eliminates the residual method of allocation and requires that
arrangement consideration be allocated at the inception of the arrangement to
all deliverables using the relative selling price method. In addition, this
guidance significantly expands required disclosures related to a vendor's
multiple-deliverable revenue arrangements.
FASB Accounting Standards
Update 2009-14 changes the accounting model for revenue arrangements that
include both tangible products and software elements. Under this guidance,
tangible products containing software components and nonsoftware
components that function together to deliver the tangible product's essential
functionality are excluded from the software revenue guidance in Subtopic
985-605, Software - Revenue Recognition. In addition, hardware
components of a tangible product containing software components are always
excluded from the software revenue guidance.
FASB Accounting Standards
Updates 2009-13 and 2009-14 are effective prospectively for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010. Early adoption is permitted under both.
These FASB Accounting
Standards Updates represent consensuses reached in Issue 08-1 (2009-13) and
Issue 09-3 (2009-14) by the EITF at its September 9-10, 2009 meeting.
Credit Ratings -- SEC
Issues Proposals and Concept Release
The SEC has issued the following documents
for public comment regarding credit ratings:
-Proposed Rule, Credit
Ratings Disclosure; and
For detail, please contact info@zy-cpa.com
-Concept Release on
Possible Rescission of Rule 436(g) under the Securities Act of 1933.
For detail, please contact info@zy-cpa.com
The Proposed Rule includes
amendments to SEC rules to require disclosure of information regarding credit
ratings used by registrants, including closed-end management investment
companies, in connection with a registered offering of securities so that
investors will better understand the credit rating and its limitations. The
Proposed Rule also would require additional disclosure that is intended to
inform investors about potential conflicts of interest that could affect the
credit rating. In addition, the Proposed Rule would require disclosure of
preliminary credit ratings in certain circumstances so that investors have
enhanced information about the credit ratings process that may indicate the
quality or reliability of the rating. The Proposed Rule would be applicable to
registration statements filed under the Securities Act of 1933 (Securities
Act), the Securities Exchange Act of 1934 and the Investment Company Act of
1940, and Forms 8-K and 20-F.
In connection with the
Proposed Rule, the SEC is seeking comments on the Concept Release as to whether
Rule 436(g) under the Securities Act should be rescinded and whether there
continues to be a sufficient basis to exempt nationally recognized statistical
rating organizations from Section 7 and 11 of the Securities Act. Rule 436(g)
provides an exemption for credit ratings provided by nationally recognized statistical
rating organizations from being considered a part of the registration
statement.
Comments on the Concept
Release and Proposed Rule are due December 14, 2009.
FASB Meeting -- FASB
Discusses Financial Statement Presentation and Other Matters
For detail, please contact info@zy-cpa.com
As reported in its
"Summary of Board Decisions" publication, the FASB met on October 7,
2009, and discussed: (a) financial statement presentation; and (b)
an embedded credit derivatives scope exception. In conjunction with its
financial statement presentation project, the FASB held an informational
meeting with a member of the academic community and a member of the user
community and discussed the benefits of the direct method statement of cash
flows.
The FASB decided to shorten
the comment period from 45 days to 30 days on its forthcoming Proposed
Accounting Standards Update, Derivatives and Hedging (Topic 815): Scope
Exception Related to Embedded Credit Derivatives. The FASB expects to issue
a proposed Accounting Standards Update in mid-October 2009.
Oil and Gas Activities --
AICPA Issues Working Draft of Audit and Accounting Guide
For detail, please contact info@zy-cpa.com
The AICPA has issued for
public comment a working draft of an AICPA Audit and Accounting Guide (AAG), Entities
with Oil and Gas Producing Activities. This draft AAG is intended to assist
preparers of financial statements for entities with oil and gas producing
activities in preparing financial statements and to assist auditors in auditing
and reporting on such financial statements. Topics covered in this draft AAG
include:
-Overview and primary
business activities of the industry;
-Accounting for common oil
and gas ownership arrangements;
-Successful efforts method
and general accounting for oil and gas activities;
-Full cost method of
accounting for oil and gas activities;
-Accounting for international
oil and gas activities; and
-Tax considerations.
Comments on this draft AAG
are due December 11, 2009.
Rights Issues -- IASB Publishes
Amendments to IAS 32
For detail, please contact info@zy-cpa.com
The IASB has published, Classification
of Rights Issues: Amendment to IAS 32. This guidance amends IAS 32, Financial
Instruments: Presentation, and addresses the accounting for rights issues
(rights, options or warrants) that are denominated in a currency other than the
functional currency of the issuer. Under previous guidance, such rights issues
were accounted for as derivative liabilities. This amendment requires that,
provided certain conditions are met, such rights issues are classified as
equity regardless of the currency in which the exercise price is denominated.
This amendment to IAS 32 is
effective for annual periods beginning on or after February 1, 2010. Early
adoption is permitted.
IASB Update -- IASB
Discusses Financial Instruments
For detail, please contact info@zy-cpa.com
As reported in its "IASB
Update" publication, the IASB met on October 6, 2009, and discussed its
project on financial instruments to replace IAS 39, Financial Instruments:
Recognition and Measurement. Specifically, the IASB discussed issues
associated with: (a) classification and measurement; (b)
impairment; and (c) hedge accounting. The IASB discussed responses
received to its Exposure Draft, Financial Instruments: Classification and
Measurement, and made a number of decisions (detailed in the IASB Update),
including the following:
-Any final guidance should
address the business model condition first;
-Not to require fair value
information on the face of the statement of financial position;
-To require a number of new
disclosures on the face of the statement of comprehensive income;
-Confirmed that particular
instruments would be measured at amortized cost in particular circumstances;
and
-To include application guidance
on expected cash flow that requires using 'catch-up' adjustments to ensure that
the carrying amount of variable rate financial assets unwinds to the remaining
expected cash flows.
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:
=======================================
Special Considerations --
AICPA Issues Proposal on Audits of Financial Statements Based on Special
Purpose Frameworks
For detail, please contact info@zy-cpa.com
The AICPA has issued for
public comment an exposure draft of two proposed Statements on Auditing
Standards (SASs), Special Considerations - Audits
of Financial Statements Prepared in Accordance with Special Purpose Frameworks,
and Special Considerations - Audits of Single Financial Statements and
Specific Elements, Accounts, or Items of a Financial Statement. This
proposal addresses special considerations in the application of auditing
standards to an audit of financial statements prepared in accordance with a
special purpose framework, which is a cash, tax, regulatory, or contractual
basis of accounting. This proposal also includes a number of requirements for
the auditor, including a requirement to obtain an understanding of: (a)
the purpose for which the financial statements are prepared; (b) the
intended users; and (c) the steps taken by management to determine that
the special purpose framework is acceptable in the circumstances.
As proposed, this guidance
would be effective for audits of financial statements for periods beginning on or
after December 15, 2010.
Comments on this proposal are
due December 31, 2009.
Foreign Country Frameworks
-- AICPA Issues Proposal on Reporting on Financial Statements Based on a
Framework Accepted in Another Country
For detail, please contact info@zy-cpa.com
The AICPA has issued for
public comment an exposure draft of a proposed SAS, Reporting on Financial
Statements Prepared in Accordance With a Financial Reporting Framework
Generally Accepted in Another Country. This proposal would supersede SAS
No. 51, Reporting on Financial Statements Prepared for Use in Other
Countries. The proposed SAS would require the auditor to obtain an understanding
of a relevant financial reporting framework generally accepted in another
country and of relevant auditing standards other than
As proposed, this guidance
would be effective for audits of financial statements for periods beginning on
or after December 15, 2010.
Comments on this proposal are
due December 31, 2009.
Summary Financial
Statements -- AICPA Issues Proposal on Engagements to Report on Summary
Financial Statements
For detail, please contact info@zy-cpa.com
The AICPA has issued for
public comment an exposure draft of a proposed SAS, Engagements to Report on
Summary Financial Statements. This proposal would supersede SAS No. 42, Reporting
on Condensed Financial Statements and Selected Financial Data. Among other
things, this proposal: (a) addresses auditor responsibilities when
reporting on summary financial statements derived from financial statements
audited by that same auditor; (b) eliminates reporting on selected
financial data; (c) requires the auditor to determine whether the
criteria applied by management in the preparation of the summary financial
statements are acceptable; and (d) requires the auditor to obtain
management’s agreement that it acknowledges and understands its responsibilities
for the summary financial statements.
As proposed, this guidance
would be effective for audits of financial statements for periods beginning on
or after December 15, 2010.
Comments on this proposal are
due December 31, 2009.
Contractual Agreements --
AICPA Issues Proposal on Reporting Compliance with Contractual Agreements or
Regulatory Requirements
For detail, please contact info@zy-cpa.com
The AICPA has issued for
public comment an exposure draft of a proposed SAS, Reporting on Compliance
with Aspects of Contractual Agreements or Regulatory Requirements in Connection
With Audited Financial Statements (Redrafted). The proposed SAS would
supersede paragraphs 19-21 of SAS No. 62, Special Reports. The proposal
is designed to reflect a more principles-based approach to standard setting;
therefore, certain requirements that are duplicative of broader requirements in
paragraphs 19–21 of SAS 62 have been moved to application and other explanatory
material. The AICPA does not intend for this proposal to change or expand
existing auditing standards contained in paragraphs 19-21.
As proposed, this guidance
would be effective for audits of financial statements for periods beginning on
or after December 15, 2010.
Comments on this proposal are
due December 31, 2009.
Audit Opinions -- AICPA
Issues Proposals on Forming Opinions, Modifying Opinions, and Emphasis of
Matter Paragraphs
For detail, please contact info@zy-cpa.com
The AICPA has issued for
public comment an exposure draft of the following three SASs:
-Forming an Opinion and
Reporting on Financial Statements (Proposal 1);
-Modifications to the
Opinion in the Independent Auditor’s Report (Proposal 2);
-Emphasis of Matter
Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report
(Proposal 3).
Proposal 1 addresses the
auditor’s responsibility to form an opinion on the financial statements as a
whole and provides guidance on the form and content of the auditor’s report
issued as a result of an audit of financial statements. This proposal covers situations
when the auditor would be expressing an unmodified opinion on the financial
statements and establishes the basic form of the auditor’s report. This
proposed SAS also includes requirements and application material related to
auditing and reporting on comparative financial statements.
Proposal 2 addresses the
auditor’s responsibility to issue an appropriate report in circumstances when,
in forming an opinion in accordance with Proposal 1, the auditor concludes that
a modification to the auditor’s opinion on the financial statements is
necessary. This proposal defines a modified report to include a qualified or
adverse opinion or a disclaimer of opinion and addresses the issuance of a
qualified, adverse, or disclaimer of opinion using the auditor’s judgment about
the materiality of the matters giving rise to the modification and the
pervasiveness of their effects or possible effects on the financial statements.
Proposal 3 addresses
circumstances when the auditor considers it necessary or is required to include
additional communications in the auditor’s report that are not modifications to
the auditor’s opinion. This proposal defines and uses the terms "emphasis
of matter" and "other matter" paragraphs in the auditor's
report. The number and nature of paragraphs included in the auditor’s report
that address matters appropriately presented or disclosed in the financial
statements (emphasis of matters) and matters other than those presented or
disclosed in the financial statements (other matters) is not expected to change
from current practice.
As proposed, the guidance in these SASs would be effective for
audits of financial statements for periods beginning on or after December 15,
2010.
Comments on these proposed SASs are due
December 31, 2009.
Engagement Quality Review
-- PCAOB AS 7 Discussed
For detail, please contact info@zy-cpa.com
We have added a GAAS Update
Service that provides discussion and analysis of PCAOB Auditing Standard No. 7,
Engagement Quality Review. AS 7 requires an engagement quality review
for audits and interim reviews and supersedes the PCAOB’s
interim quality control standard on concurring partner review requirements.
Among other matters, AS 7 requires the engagement quality reviewer to:
-Evaluate the significant
judgments made by the engagement team about engagement planning and about the
materiality and disposition of corrected and uncorrected identified misstatements;
-Evaluate whether the
engagement documentation that he or she reviewed supports the conclusions
reached by the engagement team with respect to the matters reviewed; and
-Provide concurring approval
of issuance only if, after performing the review with due professional care, he
or she is not aware of a “significant engagement deficiency,” as defined.
Oil and Gas Activities --
AICPA Issues Working Draft of Audit and Accounting Guide
For detail, please contact info@zy-cpa.com
As discussed above in our
Accounting and SEC Summaries, the AICPA has issued for public comment a working
draft of an AICPA Audit and Accounting Guide (AAG), Entities with Oil and
Gas Producing Activities. This draft AAG is intended to assist preparers of
financial statements for entities with oil and gas producing activities in
preparing financial statements and to assist auditors in auditing and reporting
on such financial statements. Topics covered in this draft AAG include:
-Overview and primary
business activities of the industry;
-Accounting for common oil
and gas ownership arrangements;
-Successful efforts method
and general accounting for oil and gas activities;
-Full cost method of
accounting for oil and gas activities;
-Accounting for international
oil and gas activities; and
-Tax considerations.
Comments on this draft AAG
are due December 11, 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
======================
GOVERNMENT HEADLINES:
======================
GASB Pronouncements --
Implementation Dates Discussed
For detail, please contact info@zy-cpa.com
We have added a
"Governmental GAAP Update Service" that provides a reminder of
current and upcoming implementation dates related to new GASB pronouncements or
certain provisions within existing GASB pronouncements. Because of the phase-in
approach often used by the GASB for the implementation of certain of its
pronouncements, this Update may be useful because it prompts state and local
government financial statement preparers and auditors about the accounting and
financial reporting issues that may need to be addressed when preparing for the
current and upcoming fiscal years.
Pension Standards -- GASB
Discusses Public Hearings on Reexamining Pension Standards and Other Matters
For detail, please contact info@zy-cpa.com
The September 2009 edition of
the "GASB Report" has been issued and includes the following
discussion items:
-GASB calendar;
-GASB holds public hearings
on reexamination of pension standards;
-Summary of GASB board
meeting held on August 27, 2009;
-GASB website resources; and
-GASB posts video on service
efforts and accomplishments reporting proposed suggested guidelines posted to
website.
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