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Accounting Research Manager(TM)
Weekly Summary of Developments
December 21-23, 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

Variable Interest Entities -- Statement 167 Interpretation Added
EITF Matters -- November 19, 2009 Meeting Minutes Published
Derivatives -- FASB Discusses Embedded Credit Derivatives and Other Matters
Proxy Disclosure Enhancements -- SEC Staff Publishes Compliance and Disclosure Interpretations
Smaller Issuers -- SEC Staff Publishes Presentation on Review of Common Financial Reporting Issues Facing Smaller Issuers
Financial Crisis -- IASB Discusses Financial Crisis and Other Matters

Auditing and Internal Controls Headlines

Related Parties -- Proposed AICPA Auditing Standard Discussed

Government Headlines

Special Revenue Funds -- GASB 54 Changes Discussed

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SEASONS GREETINGS FROM THE STAFF OF ACCOUNTING RESEARCH MANAGER!

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ACCOUNTING AND SEC HEADLINES:
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Variable Interest Entities -- Statement 167 Interpretation Added
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We have published an interpretation, Accounting for Variable Interest Entities , which provides interpretive guidance on FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). Statement 167 amends FASB Interpretation (FIN) No. 46 (Revised December 2003), Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51. Statement 167 retains the fundamental concepts of a variable interest entity (VIE), a variable interest, and a primary beneficiary that must consolidate the VIE. However, it makes several significant changes to FIN 46R.

The guidance in Statement 167 is effective for annual reporting periods that begin after November 15, 2009, and for interim periods within that first annual reporting period. Accordingly, for entities with a calendar year-end, Statement 167 is effective January 1, 2010. Earlier application is prohibited. It should be noted that the FASB has not incorporated the changes made by Statement 167 into the FASB Accounting Standards Codification^TM (Codification).

See our Literature Update for complete details.

EITF Matters -- November 19, 2009 Meeting Minutes Published
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The final meeting minutes of the November 19, 2009 EITF meeting have been issued. The minutes document the results previously described in our meeting summary published in November 2009. As discussed in the minutes, the EITF reached a final consensus on EITF Issue No. 09-E, "Accounting for Stock Dividends, Including Distributions to Shareholders with Components of Stock and Cash," which was significantly modified by the EITF from the related consensus-for-exposure. The EITF also reached consensuses-for-exposure on:

-EITF Issue No. 09-F, "Casino Base Jackpot Liabilities" (see proposed Accounting Standards Update (ASU), Entertainment-Casinos (Topic 924): Casino Base Jackpot Liabilities (A consensus of the FASB Emerging Issues Task Force));
-EITF Issue No. 09-G, "Clarification of the Definition of Deferred Acquisition Costs of Insurance Entities" (see 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));
-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" (see 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)); 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" (see proposed 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)).

Of particular interest to insurance companies, the EITF in Issue 09-G clarified the definition of "acquisition costs." The EITF did not reaffirm its consensus-for-exposure in EITF Issue No. 09-2, "Research and Development Assets Acquired and Contingent Consideration Issued In an Asset Acquisition"; rather it decided to have the FASB clarify the scope in this issue.

Derivatives -- FASB Discusses Embedded Credit Derivatives and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB met on December 22, 2009, and discussed the following topics: (a) embedded credit derivatives scope exception; and (b) reconsideration of the scope of FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The FASB decided to revise its proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives, by removing guidance from the examples that is not related to the original purpose of the project. Specifically, the FASB decided to remove:

-The bifurcation guidance from the examples on synthetic collateralized debt obligations;
-The supplemental commentary on the application of the clearly-and-closely-related notion;
-The reminder of the application of other relevant accounting guidance; and
-The reminder of the disclosure requirements for credit derivatives.

The final Accounting Standards Update is expected to reflect these changes. The FASB also decided to make it easier to transition to the new requirements by providing a fair value option. By electing that option an entity would not need to evaluate whether an embedded credit derivative feature exists that would require bifurcation. An entity would be required to elect the fair value option at the beginning of the reporting period of adoption.

The FASB also reconsidered the scope of Statement 160. Specifically, the FASB discussed whether a conveyance of an oil and gas business should be accounted for in accordance with the guidance on: (a) decreases in ownership of a subsidiary in Codification Topic 810, Consolidation; or (b) mineral right conveyances and related transactions in Codification Topic 932, Extractive Activities-Oil and Gas. The FASB decided that an entity would account for conveyance transactions using the mineral rights conveyance guidance and instructed its staff to draft a proposed Accounting Standards Update that reflects this.

Proxy Disclosure Enhancements -- SEC Staff Publishes Compliance and Disclosure Interpretations
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The staff in the Division of Corporation Finance (Corp Fin) of the SEC has issued Compliance and Disclosure Interpretations (C&DI), Proxy Disclosure Enhancements Transition. This C&DI provides interpretations by Corp Fin, in a question and answer (Q&A) format, of how the effective date (February 28, 2010) of the SEC's recently issued final rule, Proxy Disclosure Enhancements, applies to the filing of proxy statements, Form 10-Ks, Form 8-Ks, and registration statements at or around the time of the effective date. Specific topics discussed in this C&DI include:

-How the effective date applies to an issuer's Form 10-K for fiscal year 2009 and its proxy statement containing Form 10-K Part III information for 2009;
-Voluntary and discretionary compliance with the new proxy disclosure enhancement rules if an issuer is not required to comply with the requirements for its 2009 Form 10-K;
-Impact of the effective date on Regulation S-K registration statement amendments filed by a reporting issuer with a 2009 fiscal year that ends before December 20, 2009;
-Impact of the effective date on Regulation S-K registration statement amendments filed by a new registrant, such as for an initial public offering or a first registration on Form 10; and
-Form 8-K requirements under new Item 5.07 if and issuer's annual meeting of shareholders takes place on or after February 28, 2010, but the proxy statement for the meeting was mailed to shareholders before that date.

Smaller Issuers -- SEC Staff Publishes Presentation on Review of Common Financial Reporting Issues Facing Smaller Issuers
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The staff in Corp Fin of the SEC has published a presentation, SEC Staff Review of Common Financial Reporting Issues Facing Smaller Issuers. This presentation provides a sampling of issues that the Corp Fin staff frequently encounter when reviewing filings for smaller public companies as well as an overview of developments within Corp Fin. Topics covered in the presentation are:

-Overview of Corp Fin;
-The comment letter process;
-Recent developments within Corp Fin;
-Financial reporting issues frequently raised in comment letters; and
-Resources available to issuers regarding Corp Fin and the comment letter process.

Financial reporting issues frequently raised in comment letters discussed in the presentation include the following broad topic areas:

-Impact of the financial crisis on financial statements;
-Management’s Discussion & Analysis;
-Reverse mergers and “back door” registrations;
-Business combinations;
-Equity transactions;
-Embedded conversion options and freestanding warrants; and
-Smaller reporting company status.

Financial Crisis -- IASB Discusses Financial Crisis and Other Matters
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As reported in its "IASB Update" publication, the IASB met on December 14-18, 2009, and discussed the following topics:

-Financial crisis;
-Consolidation (education session);
-Financial instruments: classification and measurement, hedge accounting;
-Financial instruments with characteristics of equity;
-Fair value measurement;
-Conceptual framework: phase C;
-Discontinued operations;
-Effective dates of new standards;
-Emissions trading schemes;
-Financial statement presentation;
-IAS 37, Provisions, Contingent Liabilities and Contingent Assets - limited re-exposure comment deadline;
-Insurance contracts;
-Joint ventures;
-Leases;
-Post-employment benefits; and
-Revenue Recognition.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Related Parties -- Proposed AICPA Auditing Standard Discussed
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We have added a GAAS Update Service that discusses the AICPA's Proposed Statement on Auditing Standards (SAS), Related Parties (Redrafted), which would supersede the “Related Parties” section of SAS 45 (AU Section 334), Omnibus Statement on Auditing Standards─1983. To facilitate convergence with the international standards, the proposed standard has been drafted using International Standard on Auditing No. 550, Related Parties (ISA 550), as a base. The differences between the proposed SAS and ISA 550 that have no compelling reason have been eliminated.

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GOVERNMENT HEADLINES:
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Special Revenue Funds -- GASB 54 Changes Discussed
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We have added a Governmental GAAP Update Service that discusses an important change in the definition of “special revenue funds” resulting from the issuance of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB 54 was issued to: (a) improve the consistency in reporting fund balance components; (b) enhance fund balance presentation; (c) improve the usefulness of fund balance information; and (d) clarify the definitions of the governmental fund types. Topics covered in this update are:

-Definition of special revenue funds;
-Restricted and (or) committed revenue sources;
-Rainy day or stabilization funds; and
-GASB 54 effective date and order information.

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