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Accounting Research Manager(TM)
Weekly Summary of Developments
March 8-12, 2010
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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

Conceptual Framework -- FASB and IASB Publish Reporting Entity Proposal
Credit Derivatives -- FASB Issues Guidance on Embedded Credit Derivatives
New Accounting Standards -- Checklist Updated
Revenue Recognition -- Revenue Recognition Guide Amended
Hedge Accounting -- FASB Discusses Hedge Accounting and Other Matters
PCAOB Inspections -- SEC Approves PCAOB Rules Relating to Inspections
Financial Instruments -- IASB Financial Instruments and Other Matters

Auditing and Internal Controls Headlines

Compliance Auditing -- Discussion and Analysis of SAS 117
PCAOB Inspections -- SEC Approves PCAOB Rules Relating to Inspections

Government Headlines

GASB Standards -- GASB Proposal on the Codification of FASB and AICPA Pronouncements Discussed

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ACCOUNTING AND SEC HEADLINES:
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Conceptual Framework -- FASB and IASB Publish Reporting Entity Proposal
The FASB and IASB (the Boards) have issued a proposal that defines what constitutes a "reporting entity." The proposal is available in both the FASB and IASB formats as follows:

-Proposed Statement of Financial Accounting Concepts, Conceptual Framework for Financial Reporting: The Reporting Entity (FASB); and
For detail, please contact info@zy-cpa.com

-Exposure Draft, Conceptual Framework for Financial Reporting: The Reporting Entity (IASB).
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This proposal is part of a joint project between the Boards to develop a common and improved conceptual framework that provides a foundation for developing future accounting standards. This proposal discusses what constitutes a reporting entity, which in different situations could be a group of entities, a single entity, or only a portion of an entity. This proposal also provides that:

-An entity controls another entity when it has the power to direct the activities of that other entity to generate benefits for (or limit losses to) itself. If an entity that controls one or more entities prepares financial reports, it should present consolidated financial statements.
-A portion of an entity could qualify as a reporting entity if the economic activities of that portion can be distinguished objectively from the rest of the entity and financial information about that portion of the entity has the potential to be useful in making decisions about providing resources to that portion of the entity.

Comments on this proposal are due July 16, 2010.

Credit Derivatives -- FASB Issues Guidance on Embedded Credit Derivatives
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The FASB issued Accounting Standards Update (ASU) No. 2010-11, Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives. The FASB believes this ASU clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, only one form of embedded credit derivative qualifies for the exemption - one that is related only to the subordination of one financial instrument to another. As a result, entities that have contracts containing an embedded credit derivative feature in a form other than such subordination may need to separately account for the embedded credit derivative feature.

The amendments in the ASU are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after March 5, 2010.

New Accounting Standards -- Checklist Updated
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We have updated our publication "Summary Checklist of Recent Authoritative U.S. Accounting Standards." This checklist is intended to serve as a reference tool to help users ensure that they have considered authoritative standards recently issued or approved by the FASB. The standards are listed by source and a summary of the transition guidance is provided with a reference to the relevant Codification paragraph(s). Effective dates and application (adoption) requirements are also presented.

We have updated our checklist to reflect the issuance of ASU No. 2010-11, Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.

See our Literature Update for complete details.

Revenue Recognition -- Revenue Recognition Guide Amended
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We have updated our publication, Revenue Recognition Guide. This publication is a comprehensive reference manual covering key concepts and issues that arise in determining when and how to recognize revenue. This edition includes amendments made primarily to reflect recent literature approved by the FASB as a result of the EITF meeting held on September 9-10, 2009, as follows:

-EITF Issue No. 08-1, "Revenue Arrangements with Multiple Deliverables," and codified by the FASB in ASU 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force. The guidance from this EITF decision affects multi-element revenue recognition-guidance previously reflected in EITF Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables,” as codified into Topic 605, Revenue Recognition.
-EITF Issue No. 09-3, "Certain Revenue Arrangements That Include Software Elements," and codified by the FASB in ASU 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements - a consensus of the FASB Emerging Issues Task Force. The guidance in this issue revises some of the concepts when applying the guidance for recognizing revenue when software elements are present. That guidance resulted primarily from Statement of Position 97-2, Software Revenue Recognition, as codified into Topic 985, Software.

See our Literature Update for complete details.

Hedge Accounting -- FASB Discusses Hedge Accounting and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB met on March 10, 2010, and discussed the following topics: (a) accounting for financial instruments: hedge accounting; and (b) financial statement presentation. The FASB decided that the hedge accounting model would incorporate all changes to current hedge accounting proposed in its June 6, 2008 Exposure Draft, Accounting for Hedging Activities, except that the proposed ASU would retain hedging of risk components (bifurcation-by-risk), which the Exposure Draft proposed to eliminate. Entities that qualify for the delayed effective date for certain aspects of the classification and measurement guidance would also apply the hedge accounting model in the proposed ASU.

The financial statement presentation project is a joint project of the FASB and the IASB. In 2007, the IASB finalized certain changes to its presentation standard, IAS 1, Presentation of Financial Statements. Those changes include requiring:

-That a complete set of financial statements comprise the following: (a) a statement of financial position as of the end of the period; (b) a statement of comprehensive income for the period; (c) a statement of changes in equity for the period; (d) a statement of cash flows for the period; (e) notes, comprising a summary of significant accounting policies and other explanatory information; and (f) a statement of financial position as of the beginning of the earliest comparative period when a reporting entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.
-An entity present with equal prominence all of the financial statements in a complete set of financial statements.
-An entity present comparative information in respect of the previous period for all amounts reported in the current period’s financial statements.

The FASB affirmed the inclusion of the above requirements in its Exposure Draft on financial statement presentation planned for issuance in April 2010. Those requirements would not override the SEC’s requirements for presenting comparative information as set forth in Regulation S-X.

The FASB affirmed its prior tentative decision that an entity should not present the effects of extraordinary, unusual, and infrequently occurring events and transactions as a functional category in the statement of comprehensive income as currently required under FASB Accounting Standards Codification™ Topic 225, Income Statement, Subtopic 225-20.

The FASB chairman announced the addition of the following projects to the FASB’s agenda:

-Investments properties, in which the FASB is expected to consider whether entities should be given the option (or be required) to measure an investment property at fair value through earnings; and
-Balance sheet - offsetting, in which the FASB is expected to reconsider the current criteria that determine when an entity may offset assets and liabilities and report them as a net amount in the statement of financial position.

The FASB chairman also announced the addition of a project to the EITF's agenda to reconsider whether it is appropriate to use different exchange rates in an economy with multiple exchange rates (such as a parallel rate and an official rate) for: (a) remeasurement of a foreign-currency-denominated transaction; and (b) translation of a foreign subsidiary’s financial statements.

PCAOB Inspections -- SEC Approves PCAOB Rules Relating to Inspections
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The SEC has issued, Public Company Accounting Oversight Board; Order Approving Proposed Amendment to Board Rules Relating to Inspections. This order approves the PCAOB revision to its Rule 4003, Frequency of Inspections. The amendment adds a provision to PCAOB Rule 4003 granting the PCAOB the ability to postpone, for up to three years, the current 2009 deadline for the first inspection of 49 non-U.S. firms that are located in 24 jurisdictions in which the PCAOB has not conducted an inspection prior to 2009.

Financial Instruments -- IASB Financial Instruments and Other Matters
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As reported in its "IASB Update" publication, the IASB met on March 3, 2010, and discussed financial instruments: hedge accounting. In addition, the FASB and IASB held a joint meeting on March 3, 2010, and discussed the following items:

-Financial statement presentation; and
-Fair value measurement.

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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Compliance Auditing -- Discussion and Analysis of SAS 117
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We have added a GAAS Update Service that provides discussion and analysis of AICPA Statement on Auditing Standards (SAS) No. 117, Compliance Auditing, which supersedes SAS 74 (AU Section 801), Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance. SAS 117 establishes standards and provides guidance on performing and reporting on an audit of an entity’s compliance with applicable governmental audit compliance requirements. This GAAS Update Service covers the following topics:

-Summary of significant changes to existing standards and practice;
-Applicability of SAS 117;
-Primary objectives of SAS 117;
-Terms and definitions;
-Management’s responsibilities;
-Adapting and applying the AU Sections to a compliance audit;
-Establishing materiality levels; and
-Identifying government programs and applicable compliance requirements.

SAS 117 is effective for compliance audits for fiscal periods ending on or after June 15, 2010, with earlier application permitted.

PCAOB Inspections -- SEC Approves PCAOB Rules Relating to Inspections
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As discussed above in our Accounting and SEC Summaries, the SEC has issued, Public Company Accounting Oversight Board; Order Approving Proposed Amendment to Board Rules Relating to Inspections. This order approves the PCAOB revision to its Rule 4003, Frequency of Inspections. The amendment adds a provision to PCAOB Rule 4003 granting the PCAOB the ability to postpone, for up to three years, the current 2009 deadline for the first inspection of 49 non-U.S. firms that are located in 24 jurisdictions in which the PCAOB has not conducted an inspection prior to 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

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GOVERNMENT HEADLINES:
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GASB Standards -- GASB Proposal on the Codification of FASB and AICPA Pronouncements Discussed
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We have added a Governmental GAAP Update Service that discusses the GASB's Exposure Draft, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. If adopted, this proposal would incorporate into the GASB’s authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which do not conflict with or contradict GASB pronouncements:

-FASB Statements and Interpretations;
-APB Opinions; and
-AICPA Accounting Research Bulletins.

If adopted, the requirements in the GASB's proposal would become effective for financial statements for periods beginning after December 15, 2011, with earlier application encouraged.

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