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Accounting Research Manager(TM)
Weekly Summary of Developments
November 16-20, 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

EITF Meeting Results -- Decisions Reached
Transfers of Financial Assets -- Hot Topic Published
Emissions Trading Schemes -- FASB Discusses Emissions Trading Schemes and Other Matters
Financial Instruments -- FASB Discusses Accounting for Financial Instruments
SEC Staff Interpretations -- Updated Compliance and Disclosure Interpretations Published
PCAOB Registration -- SEC Seeks Comments on Effective Date Change for PCAOB Registered Firm Reporting Rules
PCAOB Inspections -- SEC Seeks Comments on PCAOB Amendments to the Inspection Frequency Requirements for Non-U.S. Firms
Financial Instruments -- IASB Issues IFRS 9
IFRIC Update -- Extinguishing Financial Liabilities and Other Matters Discussed

Auditing and Internal Controls Headlines

Auditing Standards -- 2010 Edition of GAAS Practice Manual Published
PCAOB Registration -- SEC Seeks Comments on Effective Date Change for PCAOB Registered Firm Reporting Rules
PCAOB Inspections -- SEC Seeks Comments on PCAOB Amendments to the Inspection Frequency Requirements for Non-U.S. Firms

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ACCOUNTING AND SEC HEADLINES:
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EITF Meeting Results -- Decisions Reached
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As described in detail in our "EITF Flash Report," the Emerging Issues Task Force (EITF) discussed the following issues at its November 19, 2009 meeting:

-EITF Issue No. 09-2, "Research and Development Assets Acquired and Contingent Consideration Issued In an Asset Acquisition";
-EITF Issue No. 09-E, "Accounting for Stock Dividends, Including Distributions to Shareholders with Components of Stock and Cash";
-EITF Issue No. 09-F, "Casino Base Jackpot Liabilities";
-EITF Issue No. 09-G, "Clarification of the Definition of Deferred Acquisition Costs of Insurance Entities";
-EITF Issue No. 09-I, "Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset"; and
-EITF Issue No. 09-J, "Impact of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in which the Underlying Equity Security Primarily Trades."

The EITF reached a final consensus on Issue 09-E which was significantly modified by the EITF from the related consensus-for-exposure. The EITF also reached consensuses-for-exposure on Issues 09-F, 09-G, 09-I, and 09-J. Of particular interest to insurance companies, the EITF in Issue 09-G clarified the definition of "acquisition costs." The FASB must still ratify these decisions which is scheduled for December 2, 2009. The EITF did not reaffirm its consensus-for-exposure in Issue 09-2; rather it decided to have the FASB clarify the scope in this issue.

Prior to the EITF meeting this week, the FASB distributed additional meeting materials relating to Issue 09-2 and Issue 09-G:
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See our EITF Flash Report for complete details.

Transfers of Financial Assets -- Hot Topic Published
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We have published a Hot Topic, A Reminder - Accounting for Transfers of Financial Assets Is Changing. This Hot Topic provides a reminder that the accounting for transfers of financial assets is changing per the guidance in both FASB Statement No. 166, Accounting for Transfers of Financial Assets, and FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). Topics covered include:

-Effective dates of Statement 166 and Statement 167;
-Elimination of the qualifying special-purpose entity concept;
-Modifications to the financial-components approach;
-Conditions for reporting a transfer of a portion of a financial asset as a sale;
-Clarifications made to conditions required for sale accounting treatment; and
-Elimination of the exception for guaranteed mortgage securitizations.

The guidance in Statements 166 and 167 is effective for reporting periods beginning after November 15, 2009, and cannot be applied early. As of November 20, 2009, the FASB has not codified the requirements in these statements into the FASB Accounting Standards Codification^TM.

See our Hot Topic for complete details.

Emissions Trading Schemes -- FASB Discusses Emissions Trading Schemes and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB and IASB (the Boards) held a joint meeting on November 18, 2009, and discussed the following topics:

-Emissions trading schemes;
-Insurance contracts;
-Leases; and
-Revenue recognition.

The Boards discussed the accounting for emissions cap and trade schemes and focused on schemes with voluntary participation, which involve contracts between knowledgeable and willing parties. Specifically, the Boards discussed the application of the definitions of an asset and a liability, as provided by applicable standards issued by the Boards. The Boards are expected to discuss accounting models for emissions trading schemes (both voluntary and statutory) in the first quarter of 2010.

The Boards discussed participating features in insurance contracts and reviewed the following two views on how to deal with such contracts:

-The cash flows that arise from a participating feature are integral to measurement of the liability like any other contractual cash flow and should be included in the measurement of the liability on an expected present value basis (the IASB tentatively decided to explore this view).
-A participating feature should be considered for recognition, classification and measurement separately (the FASB tentatively decided to explore this view).

Financial Instruments -- FASB Discusses Accounting for Financial Instruments
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As reported in its "Summary of Board Decisions" publication, the FASB met on November 17, 2009, and discussed the accounting for financial instruments. Specifically, the FASB discussed the definition of "amortized cost" for use in its project on accounting for financial instruments and decided that amortized cost would not be reduced by allowances for credit impairments but would be reduced for direct write-offs of principal amounts. The FASB is expected to finalize the exact wording of the definition after making decisions on how interest income would be recognized.

SEC Staff Interpretations -- Updated Compliance and Disclosure Interpretations Published

The staff in the Division of Corporation Finance (Corp Fin) of the SEC has issued updates to the following Compliance and Disclosure Interpretations (C&DIs):

-Securities Act Sections (new questions 139.29 and 139.30); and
For detail, please contact info@zy-cpa.com

-Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting (new question 103.10 and withdrawn question 103.05).
For detail, please contact info@zy-cpa.com

These C&DIs provide interpretations by Corp Fin, in a question and answer (Q&A) format, of sections of the Securities Act of 1933, and the Securities Exchange Act of 1934 (Exchange Act), including Sections 13(d) and 13(g) covering the beneficial ownership reporting requirements. Included in this update is guidance on the following new questions:

-May an issuer contemplating a registered debt exchange offer execute a lock-up agreement (or agreement to tender) with a note holder before the filing of the registration statement?

-In a negotiated third-party exchange offer, may an acquiring company execute a lock-up agreement (or agreement to tender) before the filing of the registration statement to obtain a commitment from management and principal security holders of a target company to tender their shares in the exchange offer?

-Rule 13d-1(a) states that a Schedule 13D must be filed within 10 days after the acquisition of more than 5% of a class of equity securities registered under Section 12 of the Exchange Act. Is the Schedule 13D due 10 days after the trade date or the settlement date of a securities transaction that creates the reporting obligation?

In addition, Corp Fin has withdrawn a Q&A providing guidance on whether Rule 13d-1(a) requires a Schedule 13D to be filed 10 days after the trade date or the settlement date of a securities transaction that creates the reporting obligation.

PCAOB Registration -- SEC Seeks Comments on Effective Date Change for PCAOB Registered Firm Reporting Rules
For detail, please contact info@zy-cpa.com

The SEC has issued for public comment, Notice of Filing and Immediate Effectiveness of Proposed Rule Change Postponing the Effective Date of Rules and Forms Related to Annual and Special Reporting by Registered Firms and Succession to the Registration Status of a Predecessor Firm. This proposal changes the effective date of new PCAOB rules and forms (Forms 3 and 4) to December 31, 2009. Under the new rules, Form 3 is used by registered firms to report, within 30 days, the occurrence of certain reportable events. The new rules also govern the filing of an optional Form 4, which, in certain circumstances, allows a firm to succeed to the registration status of a predecessor firm without a break in that registration status and without the need to file a new registration application on Form 1.

These rules, rule amendments, and forms were previously approved by the SEC on August 13, 2009, and were scheduled to take effect on October 12, 2009. However, the PCAOB is postponing the effective date in order to resolve technical issues related to deploying the PCAOB’s new Web-based system for processing and publishing filings on the new forms. The postponement will not affect the timing of the first annual reports (Form 2) required from registered firms, which will still be due on June 30, 2010, for the 12-month period ending March 31, 2010.

Comments on this proposal are due December 10, 2009.

PCAOB Inspections -- SEC Seeks Comments on PCAOB Amendments to the Inspection Frequency Requirements for Non-U.S. Firms
For detail, please contact info@zy-cpa.com

The SEC has issued for public comment, Public Company Accounting Oversight Board; Notice of Filing of Proposed Amendment to Board Rules Relating to Inspections. This proposal seeks comments on PCAOB adopted amendments to the inspection frequency requirements of PCAOB Rule 4003, Frequency of Inspections. Specifically, this proposal will give the PCAOB the ability to postpone, for up to three years, the first inspection of any foreign registered public accounting firms that the PCAOB is otherwise required to conduct before the end of 2009 and that is in a jurisdiction where the PCAOB has not conducted an inspection before 2009.

Comments on this proposal are due 21 days after it is published in the Federal Register.

Financial Instruments -- IASB Issues IFRS 9
For detail, please contact info@zy-cpa.com

The IASB has issued IFRS 9, Financial Instruments, which provides guidance on the classification and measurement of financial assets. The IASB divided its project to replace IAS 39, Financial Instruments: Recognition and Measurement, into three main phases, and publication of IFRS 9 represents the completion of the first part of that three-part project. The IASB intends IFRS 9 to ultimately replace IAS 39 in its entirety by the end of 2010. As the IASB completes each phase, as well as its separate project on the derecognition of financial instruments, it will delete the relevant portions of IAS 39 and create chapters in IFRS 9 that replace the requirements in IAS 39. The second part of the project addresses the impairment methodology for financial assets. The decisions by the IASB on this portion of the project are reflected in an Exposure Draft, Financial Instruments: Amortised Cost and Impairment, that was published for public comment on November 5, 2009. Proposals for the third part, on hedge accounting, continue to be developed.

The IASB issued the chapters of IFRS 9 relating to the classification and measurement of financial assets first because they form the foundation of its new standard on financial instruments. In addition, many of the concerns expressed during the financial crisis arose from the classification and measurement requirements for financial assets in IAS 39. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the many different impairment methods in IAS 39. IFRS 9 is intended to improve comparability and make financial statements easier to understand for investors and other users.

The effective date for mandatory adoption of IFRS 9 is for annual periods beginning on or after January 1, 2013. Consistent with requests by the G20 leaders and others, early adoption is permitted for 2009 year-end financial statements.

IFRIC Update -- Extinguishing Financial Liabilities and Other Matters Discussed
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As reported in the IASB's "IFRIC Report" publication, the International Financial Reporting Interpretations Committee (IFRIC) met on November 5-6, 2009, and discussed the following topics:

-Accounting for production stripping costs;
-Extinguishing financial liabilities with equity instruments;
-IFRIC agenda and tentative agenda decisions; and
-IFRIC work in progress.

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:
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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Auditing Standards -- 2010 Edition of GAAS Practice Manual Published
For detail, please contact info@zy-cpa.com

We have published the 2010 edition of the GAAS Practice Manual (the Manual). The primary objective of the Manual is to provide the practitioner with a comprehensive and quick reference source for currently effective AICPA pronouncements of Statements on Auditing Standards (SAS), Statements on Standards for Attestation Engagements (SSAE), Statements on Standards for Accounting and Review Services (SSARS), and interpretations of these standards. This edition of the Manual has been updated, among other things, to reflect:

-SAS No. 115, Communicating Internal Control Related Matters Identified in an Audit;
-SAS No. 116, Interim Financial Information;
-SSAE No. 15, An Examination of an Entity's Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements; and
-SSARS No. 18, Applicability of Statements on Standards for Accounting and Review Services.

See our Literature Update for complete details.

PCAOB Registration -- SEC Seeks Comments on Effective Date Change for PCAOB Registered Firm Reporting Rules
For detail, please contact info@zy-cpa.com

As discussed above in our Accounting and SEC Summaries, the SEC has issued for public comment, Notice of Filing and Immediate Effectiveness of Proposed Rule Change Postponing the Effective Date of Rules and Forms Related to Annual and Special Reporting by Registered Firms and Succession to the Registration Status of a Predecessor Firm. This proposal changes the effective date of new PCAOB rules and forms (Forms 3 and 4) to December 31, 2009. Under the new rules, Form 3 is used by registered firms to report, within 30 days, the occurrence of certain reportable events. The new rules also govern the filing of an optional Form 4, which, in certain circumstances, allows a firm to succeed to the registration status of a predecessor firm without a break in that registration status and without the need to file a new registration application on Form 1.

These rules, rule amendments, and forms were previously approved by the SEC on August 13, 2009, and were scheduled to take effect on October 12, 2009. However, the PCAOB is postponing the effective date in order to resolve technical issues related to deploying the PCAOB’s new Web-based system for processing and publishing filings on the new forms. The postponement will not affect the timing of the first annual reports (Form 2) required from registered firms, which will still be due on June 30, 2010, for the 12-month period ending March 31, 2010.

Comments on this proposal are due December 10, 2009.

PCAOB Inspections -- SEC Seeks Comments on PCAOB Amendments to the Inspection Frequency Requirements for Non-U.S. Firms
For detail, please contact info@zy-cpa.com

As discussed above in our Accounting and SEC Summaries, the SEC has issued for public comment, Public Company Accounting Oversight Board; Notice of Filing of Proposed Amendment to Board Rules Relating to Inspections. This proposal seeks comments on PCAOB adopted amendments to the inspection frequency requirements of PCAOB Rule 4003, Frequency of Inspections. Specifically, this proposal will give the PCAOB the ability to postpone, for up to three years, the first inspection of any foreign registered public accounting firms that the PCAOB is otherwise required to conduct before the end of 2009 and that is in a jurisdiction where the PCAOB has not conducted an inspection before 2009.

Comments on this proposal are due 21 days after it is published in the Federal Register.

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