===================================================
Accounting Research
Manager(TM)
Weekly Summary of
Developments
December 14-18, 2009
===================================================
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
Proxy Rules -- SEC Issues Final Rule on Proxy
Disclosure Enhancements Effective for the Upcoming Proxy Season
Proxy Rules -- SEC Re-Opens Comment Period for
Shareholder Director Nomination Proposal
Risk Assessment -- PCAOB Reproposes
Auditing Standards on Auditor Risk Assessment
Stock Compensation -- FASB Issues Proposal on Classification
of Employee Share-Based Payment Awards
Receivables -- FASB Issues Proposal on Effects of
Loan Modifications
Insurance Contracts -- FASB Issues Proposal on Costs Relating
to the Acquisition of Insurance Contracts
Casinos -- FASB Issues Proposal on Casino Base
Jackpot Liabilities
Revenue Recognition -- FASB Discusses Revenue Recognition and
Other Matters
Asset-Backed Securities -- SEC Permits Filing Accommodation for
Static Pool Information
Auditing and Internal
Controls Headlines
Risk Assessment -- PCAOB Reproposes
Auditing Standards on Auditor Risk Assessment
Employee Benefit Plans -- New Edition of Knowledge-Based Audits
Published
Analytical Procedures -- AICPA Issues Proposal
Financial Reporting
Framework -- AICPA Issues
Proposal on Financial Reporting Framework Application Reports
Government Headlines
Governmental GAAP -- New Edition of Governmental GAAP Guide
Published
==================================================
NEW on ARM: AutoCheck U.S. GAAP Disclosures Checklist
The new AutoCheck
U.S. GAAP Disclosures Checklist on Accounting Research Manager® now
allows you to customize and tailor the popular ARM checklist and simplify the
complex process of preparing financial statements. Contact us today to discover
how to enhance your productivity and ensure accuracy in compliance.
For detail, please contact info@zy-cpa.com
=============================
ACCOUNTING AND SEC HEADLINES:
=============================
Proxy Rules -- SEC Issues Final Rule on Proxy
Disclosure Enhancements Effective for the Upcoming Proxy Season
For detail, please contact info@zy-cpa.com
The SEC has issued a final
rule, Proxy Disclosure Enhancements, which amends existing SEC rules and
is intended to enhance information provided in connection with proxy
solicitations and in other reports filed with the SEC. This final rule is
applicable to proxy and information statements, annual reports and registration
statements under the Securities Exchange Act of 1934, and registration
statements under the Securities Act of 1933 as well as the Investment Company
Act of 1940. The amendments included in this final rule require registrants to
make new or revised disclosures about:
-Compensation policies and
practices that present material risks to the company;
-Stock and option awards of
executives and directors;
-Director and nominee
qualifications and legal proceedings;
-Corporate board of directors
leadership structure;
-Board of director roles in
risk oversight; and
-Potential conflicts of
interest of compensation consultants that advise companies and their boards of
directors.
The amendments in this final
rule also transfer the requirement to disclose shareholder voting results from
Forms 10-Q and 10-K to Form 8-K.
This final rule is effective
February 28, 2010.
Proxy Rules -- SEC Re-Opens Comment Period for
Shareholder Director Nomination Proposal
For detail, please contact info@zy-cpa.com
The SEC has announced that it
is re-opening the public comment period for its proposed shareholder director
nomination rule, Facilitating Shareholder Director Nominations. In
general, this proposal includes a comprehensive series of rule amendments to
facilitate the rights of shareholders to nominate directors on corporate
boards. The SEC is re-opening the public comment period on this proposal to
seek views on additional data and related analyses received by the SEC at or
after the close of the original public comment period. Information on how to
access the additional data and related analysis from the SEC's website is
contained in the text of this proposal.
Comments on this proposal are
due January 19, 2010.
Risk Assessment -- PCAOB Reproposes
Auditing Standards on Auditor Risk Assessment
For detail, please contact info@zy-cpa.com
The PCAOB has reproposed for public comment a proposed rule, Proposed
Auditing Standards Related to the Auditor's Assessment of and Response to Risk
and Related Amendments to PCAOB Standards. This proposal includes seven
auditing standards and related amendments that collectively would revise the
requirements for assessing risk in an audit. The PCAOB initially proposed these
standards on October 21, 2008. This proposal includes changes made in response
to comments received on the original proposal and other refinements and would
establish requirements for audit procedures performed throughout the audit,
from the initial planning stages through the evaluation of the audit results in
forming the opinion in the auditor's report. This proposal is intended to
improve audits of issuers by enhancing the effectiveness of an auditor’s
assessment of and response to risk. In integrated audits, improvements in the
requirements related to risk assessment should enhance the integration of the
audit of financial statements with the audit of internal control over financial
reporting. In addition, this proposal emphasizes the auditor's responsibility
to consider the risk of fraud throughout the audit and contains new
requirements intended to improve an auditor’s evaluation of disclosures in
financial statements.
Comments on this proposal are
due March 2, 2010.
Stock Compensation -- FASB Issues Proposal on
Classification of Employee Share-Based Payment Awards
For detail, please contact info@zy-cpa.com
The FASB has issued for
public comment a proposed Accounting Standards Update (ASU), Compensation -
Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a
Share-Based Payment Award in the Currency of the Market in Which the Underlying
Equity Security Trades (A consensus of the FASB Emerging Issues Task Force).
This proposed ASU addresses the classification of an employee share-based
payment award with an exercise price denominated in the currency of a market in
which the underlying equity security trades. This proposed ASU would provide
amendments to FASB Accounting Standards CodificationTM (Codification) Topic 718
to clarify that an employee share-based payment award with an exercise price
denominated in the currency of a market in which a substantial portion of the
entity's equity securities trade should be considered to contain a condition
that is not a market, performance, or service condition. Therefore, an entity
would not classify such an award as a liability if it otherwise qualifies as
equity.
As proposed, this guidance
would be effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2010. Earlier application would be
permitted.
Comments on this proposal are
due February 12, 2010.
Receivables -- FASB Issues Proposal on Effects of
Loan Modifications
For detail, please contact info@zy-cpa.com
The FASB has issued for
public comment a proposed ASU, Receivables (Topic 310): Effect of a Loan
Modification When the Loan Is Part of a Pool That Is Accounted for as a Single
Asset (A consensus of the FASB Emerging Issues Task Force). This proposed
ASU addresses the diversity in practice that has developed about whether a loan
that is part of a pool of loans accounted for as a single asset should be
removed from that pool upon a modification that would constitute a troubled
debt restructuring. Under this proposed ASU, modifications of loans that are
accounted for within a pool under Codification Subtopic 310-30 would not result
in the removal of those loans from the pool even if the modification of those
loans would otherwise be considered a troubled debt restructuring. Entities
would continue to be required to consider whether the pool of assets in which
the loan is included is impaired if expected cash flows for the pool change.This proposed ASU would not affect the accounting
for loans under the scope of Codification Subtopic 310-30 that are not
accounted for within pools. In addition, this proposed ASU includes additional
disclosure requirements.
As proposed, this guidance
would be effective on a prospective basis for modifications of loans accounted
for within pools under Codification Subtopic 310-30 beginning in the first
interim or annual period after the amendments to the Codification take effect.
Early application would be permitted.
Comments on this proposal are
due February 12, 2010.
Insurance Contracts -- FASB Issues Proposal on Costs Relating to the Acquisition of Insurance Contracts
For detail, please contact info@zy-cpa.com
The FASB has issued for
public comment a proposed ASU, Financial Services - Insurance (Topic 944):
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
(A consensus of the FASB Emerging Issues Task Force). This proposed ASU
addresses diversity in practice regarding the interpretation of which costs
relating to the acquisition of new or renewal insurance contracts qualify as
deferred acquisition costs and specifies that the following costs would be capitalizable:
-Incremental direct costs of
contract acquisition; and
-Certain costs directly
related to the following acquisition activities performed by the insurer for
the contract: (a) underwriting; (b) policy issuance and
processing; (c) medical and inspection; and (d) contract selling.
All other acquisition-related
costs would be charged to expense as incurred. Under this proposed ASU,
administrative costs, rent, depreciation, occupancy, equipment, and all other
general overhead costs would be considered indirect costs and would be charged
to expense as incurred.
As proposed, this guidance
would be effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2010. Early application would be permitted.
Comments on this proposal are
due February 12, 2010.
Casinos -- FASB Issues Proposal on Casino Base
Jackpot Liabilities
For detail, please contact info@zy-cpa.com
The FASB has issued for
public comment a proposed ASU, Entertainment - Casinos (Topic 924): Casino
Base Jackpot Liabilities (A consensus of the FASB Emerging Issues Task Force).
This proposed ASU clarifies that an entity should accrue casino base jackpot
liabilities only if the entity is obligated to award the base jackpot amount.
Diversity in practice has developed about whether an entity accrues liabilities
for a base jackpot before it is won if the entity is not required to award the
base jackpot. Some entities do not accrue liabilities for a base jackpot before
it is won because they could avoid the payment. Other entities accrue
liabilities for a base jackpot ratably over the period of play expected to
precede payout.
As proposed, this guidance
would be effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2010.
Comments on this proposal are
due February 12, 2010.
Revenue Recognition -- FASB Discusses Revenue Recognition
and Other Matters
For detail, please contact info@zy-cpa.com
As reported in its
"Summary of Board Decisions" publication, the FASB and IASB (the
Boards) held a joint meeting on December 16-17, 2009, and discussed the
following topics:
-Revenue recognition;
-Leases;
-Financial instruments with
characteristics of equity;
-Conceptual framework:
measurement;
-Fair value measurement;
-Financial instruments: hedge
accounting;
-Insurance contracts;
-Financial statement
presentation;
-Reporting discontinued
operations; and
-Consolidation.
The Boards discussed the
following specific topics on revenue recognition: (a) warranties and
product liability; (b) rights of return; and (c) estimates of
uncertain consideration. Tentative decisions reached by the Boards related to
these issues include:
-If the objective of a
warranty is to provide a customer with cover for latent defects, that warranty
does not give rise to a separate performance obligation. On the basis of all
the available evidence, the entity would determine at the end of the reporting
period the likelihood and extent of defects in the assets it has sold to
customers and, hence, the amount of unsatisfied performance obligations with
respect to those assets.
-If the objective of a
warranty is to provide a customer with cover for faults that arise after the
product is transferred to the customer, that warranty gives rise to a separate
performance obligation.
-If the law requires an
entity to pay compensation if its products cause harm or damage, that
requirement does not give rise to a performance obligation.
-An entity should not
recognize revenue for the goods that are expected to be returned, but instead should
recognize a refund liability for the expected (probability-weighted) amount of
refunds to customers.
-An entity should update
refund liabilities for changes in expectations about the amount of refunds and
make a corresponding adjustment to the amount allocated to the performance
obligations.
-An entity should recognize
an asset (and corresponding adjustment to cost of sales) for its right to
recover goods from customers on settling the refund liability, initially
measured at the original cost of the goods (i.e., the former carrying amount in
inventory).
-An entity should include an
estimated amount of uncertain consideration in the transaction price only if it
can identify the possible outcomes of a contract (i.e., consideration amounts)
and reasonably estimate the probabilities of those outcomes.
-In the context of revenue
recognition, an entity can identify the possible outcomes of a contract and
reasonably estimate the related probabilities only if it: (a) has
experience with identical or similar types of contracts; and (b) does
not expect circumstances surrounding those types of contracts to change
significantly.
Asset-Backed Securities -- SEC Permits Filing Accommodation
for Static Pool Information
For detail, please contact info@zy-cpa.com
The SEC has issued a final
rule, Extension of Filing Accommodation for Static Pool Information in
Filings with Respect to Asset-Backed Securities. This guidance amends Rule
312 of Regulation S-T to extend its application for one year. Rule 312 provides
a temporary filing accommodation for filings with respect to asset-backed
securities that allows static pool information required to be disclosed in a
prospectus to be provided on an Internet website under certain conditions.
Under Rule 312, such information is deemed to be included in the prospectus
included in the registration statement for the asset-backed securities. As a
result of this new guidance, Rule 312 will now apply to filings with respect to
asset-backed securities filed on or before December 31, 2010.
The guidance in the final
rule is effective December 31, 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:
=======================================
Risk Assessment -- PCAOB Reproposes
Auditing Standards on Auditor Risk Assessment
For detail, please contact info@zy-cpa.com
As discussed above in our
Accounting and SEC Summaries, the PCAOB has reproposed
for public comment a proposed rule, Proposed Auditing Standards Related to
the Auditor's Assessment of and Response to Risk and Related Amendments to
PCAOB Standards. This proposal includes seven auditing standards and
related amendments that collectively would revise the requirements for
assessing risk in an audit. The PCAOB initially proposed these standards on
October 21, 2008. This proposal includes changes made in response to comments
received on the original proposal and other refinements and would establish
requirements for audit procedures performed throughout the audit, from the
initial planning stages through the evaluation of the audit results in forming
the opinion in the auditor's report. This proposal is intended to improve
audits of issuers by enhancing the effectiveness of an auditor’s assessment of
and response to risk. In integrated audits, improvements in the requirements
related to risk assessment should enhance the integration of the audit of
financial statements with the audit of internal control over financial
reporting. In addition, this proposal emphasizes the auditor's responsibility
to consider the risk of fraud throughout the audit and contains new
requirements intended to improve an auditor’s evaluation of disclosures in
financial statements.
Comments on this proposal are
due March 2, 2010.
Employee Benefit Plans -- New Edition of Knowledge-Based
Audits Published
For detail, please contact info@zy-cpa.com
We have published the 2010
edition of Knowledge-Based Audits of Employee Benefit Plans. This
publication is designed to help the auditor efficiently and effectively perform
financial statement audits of employee benefit plans in accordance with
auditing standards generally accepted in the
See our Literature Update for
complete details.
Analytical Procedures -- AICPA Issues Proposal
For detail, please contact info@zy-cpa.com
The AICPA has issued an
exposure draft of a proposed SAS, Analytical Procedures (Redrafted).
This proposed SAS would supersede SAS No. 56, Analytical Procedures, to
apply the Auditing Standards Board (ASB) clarity drafting conventions and to
converge with International Standards on Auditing. This proposed SAS addresses
the auditor’s use of analytical procedures as substantive and the
responsibility to perform analytical procedures near the end of the audit to
assist the auditor when forming an overall conclusion on the 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 proposed SAS
are due May 3, 2010.
Financial Reporting
Framework -- AICPA
Issues Proposal on Financial Reporting Framework Application Reports
For detail, please contact info@zy-cpa.com
The AICPA has issued an
exposure draft of a proposed SAS, Reports on Application of Requirements of
an Applicable Financial Reporting Framework. This proposed SAS would
supersede SAS No. 50, Reports on the Application of Accounting Principles,
to apply the ASB’s clarity drafting conventions. The
proposed SAS does not change or expand SAS 50 in any significant respect. To
reflect a more principles-based approach to standard setting, certain
requirements that are duplicative of broader requirements in SAS 50 have been
moved to application and other explanatory material.
As proposed, this guidance
would be effective for engagements that begin on or after December 15, 2010.
Comments on this proposed SAS
are due May 17, 2010.
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