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Accounting Research
Manager(TM)
Weekly Summary of
Developments
October 11-15, 2010
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Accounting Research
Manager subscriber,
The Accounting Research
Manager database now contains this week's weekly summary of developments. Click
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If you do not have immediate
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of this week's Weekly Summary.
Accounting and SEC
Headlines
Insurance Contracts -- FASB Issues Guidance on Deferred
Acquisition Costs
New Accounting Standards -- Checklist Updated
Troubled Debt
Restructurings -- FASB
Issues Proposal on Accounting for Troubled Debt Restructurings By Creditors
Consolidation -- FASB Discusses Definition of an
Investment Company
Proxy Rules -- SEC Suspends Proxy Rule Changes for
Shareholder Director Nominations
Securities -- SEC Issues Rule Related to Indexed
Annuities
Asset-Backed Securities -- SEC Proposes Asset-Backed Securities Offering
Rules
International Financial
Reporting -- CAQ
International Practices Task Force Meeting Minutes Published
Financial Instruments -- IASB Issues Enhanced Derecognition Disclosure Requirements
International Accounting -- IASB Publishes Agenda for October
19-22, 2010 Meeting
Auditing and Internal
Controls Headlines
Fraud -- CAQ Issues Report on Deterring and
Detecting Financial Reporting Fraud
Government Headlines
GASB Report Issued -- Input on Emerging Issues and Other
Matters Discussed
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ACCOUNTING AND SEC HEADLINES:
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Insurance Contracts --
FASB Issues Guidance on Deferred Acquisition Costs
For detail, please contact info@zy-cpa.com
The FASB has issued
Accounting Standards Update (ASU) No. 2010-26, Financial Services -
Insurance (Topic 944): Accounting for Costs Associated with Acquiring or
Renewing Insurance Contracts. The ASU amends FASB Accounting Standards
Codification™ (Codification) Topic 944, Financial Services - Insurance,
to address diversity in practice regarding the interpretation of which costs
relating to the acquisition of new or renewal insurance contracts qualify for
deferral. The amendments to the Codification specify which costs incurred in
the acquisition of new and renewal contracts should be capitalized.
ASU 2010-26 reflects the
consensus reached in EITF Issue No. 09-G, "Accounting for Costs Associated
with Acquiring or Renewing Insurance Contracts," and is effective for
fiscal years beginning after December 15, 2011. While the guidance in this ASU
is required to be applied prospectively upon adoption, retrospective
application is also permitted (to all prior periods presented). Early adoption
is also permitted, but only at the beginning of an entity’s annual reporting
period.
New Accounting Standards
-- Checklist Updated
For detail, please contact info@zy-cpa.com
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 checklist is updated shortly after the FASB
adds content to the Codification. 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 2010-26, discussed above.
See our Literature Update for
complete details.
Troubled Debt
Restructurings -- FASB Issues Proposal on Accounting for Troubled Debt
Restructurings By Creditors
For detail, please contact info@zy-cpa.com
The FASB has issued for
public comment a proposed ASU, Receivables (Topic 310): Clarifications to
Accounting for Troubled Debt Restructurings by Creditors. The proposed ASU
provides guidance to assist creditors in determining whether a modification of
the terms of a receivable meets the criteria to be considered a troubled debt
restructuring, both for purposes of recording an impairment
and for disclosure of troubled debt restructurings. The clarifying guidance in
this proposed ASU is intended to result in a more consistent application of
GAAP for debt restructurings.
The amendments in this
proposed ASU would apply to all creditors, both public and nonpublic, that
restructure receivables falling within the scope of Codification Subtopic
310-40, Receivables - Troubled Debt Restructurings by Creditors. Among
other clarifications to the Codification in this proposal, a creditor would be
precluded from using the borrower’s effective rate test as described in
paragraph 470-60-55-10 of Subtopic 470-60, Debt - Troubled Debt
Restructurings by Debtors, in its evaluation of whether a restructuring
constitutes a troubled debt restructuring.
For purposes of measuring
impairment of a receivable restructured in a troubled debt restructuring, the
proposed ASU would be effective on a prospective basis for interim and annual
periods ending after June 15, 2011, with retrospective application permitted.
For purposes of identifying and disclosing troubled debt restructurings, the
proposed ASU would be effective for interim and annual periods ending after
June 15, 2011, and would be applied retrospectively to restructurings occurring
on or after the beginning of the earliest period presented.
Comments on this proposed ASU
are due December 13, 2010.
Consolidation -- FASB
Discusses Definition of an Investment Company
For detail, please contact info@zy-cpa.com
As reported in its
"Summary of Board Decisions" publication, the FASB met on October 13,
2010, and discussed a number of issues raised by constituents related to the
definition of an investment company. The FASB decided to change its previous
tentative decision that a noninvestment company
parent should not retain the specialized accounting treatment for an investment
company that it consolidates. The FASB is expected to discuss its decision to
retain the specialized accounting treatment with the IASB at a future meeting.
The FASB also discussed the
transition requirements for the proposed investment company guidance and
reached a number of decisions, including:
-For entities that a
reporting entity is required to consolidate because the reporting entity does
not meet the revised definition of an investment company, the reporting entity
should apply the revised investment company definition retrospectively, if
practicable, for all periods presented;
-If full retrospective
application is not practicable, a reporting entity should apply prospectively
the revised investment company definition, using the business combination
guidance in Codification Topic 805, Business Combinations, to measure
the assets, liabilities, and noncontrolling interests
of the subsidiary as of the date of adoption of the proposed guidance; and
-For entities that the
reporting entity is required to account for under the equity method because the
entities do not meet the revised definition, the reporting entity should apply
the revised investment company definition retrospectively, if practicable, for
all periods presented by applying the equity method guidance in Codification
Topic 323, Investments - Equity Method and Joint Ventures.
Proxy Rules -- SEC
Suspends Proxy Rule Changes for Shareholder Director Nominations
For detail, please contact info@zy-cpa.com
The SEC has issued a final
rule, Facilitating Shareholder Director Nominations. This final rule
provides notice of the SEC's granting of a stay of effectiveness for its previously
issued final rule, Facilitating Shareholder Director Nominations,
pending resolution of ongoing litigation. This rule includes changes to the
federal proxy rules to facilitate shareholder access to a company's proxy
materials to include nominees to the corporate board of directors. As a result
of the stay of effectiveness, Rule 14a-11 and related rule amendments contained
in the SEC's previously issued final rule on shareholder director nominations
are not effective until further notice from the SEC.
Securities -- SEC Issues
Rule Related to Indexed Annuities
For detail, please contact info@zy-cpa.com
The SEC has issued final
rule, Indexed Annuities. This final rule withdraws Rule 151A under the
Securities Act of 1933, which defines the terms “annuity contract” and
“optional annuity contract.” Rule 151A was included in the SEC's final rule, Indexed
Annuities and Certain Other Insurance Contracts, issued in January 2009. On
July 12, 2010, the United States Court of Appeals for the District of Columbia
Circuit issued an order vacating the rule.
This final rule is effective
upon publication in the Federal Register.
Asset-Backed Securities --
SEC Proposes Asset-Backed Securities Offering Rules
For detail, please contact info@zy-cpa.com
The SEC has issued for public
comment a proposed rule, Issuer Review of Assets in Offerings of
Asset-Backed Securities. This proposal implements Section 945 and a portion
of Section 932 of the “Dodd-Frank Wall Street Reform and Consumer Protection
Act” (the Act). Specifically, this proposal includes a new rule under the
Securities Act of 1933 to require any issuer registering the offer and sale of
an asset-backed security (ABS) to perform a review of the assets underlying the
ABS. The proposal also includes amendments to Item 1111 of Regulation AB that
would require an ABS issuer to disclose the nature of its review of the assets
and the findings and conclusions of the issuer’s review of the assets. If the
issuer has engaged a third party for purposes of reviewing the assets, the
proposal requires that the issuer disclose the third party’s findings and
conclusions. In addition, under this proposal, an issuer or underwriter of an
ABS offering would be required to file a new form to include certain disclosure
relating to third-party due diligence providers to implement Section
15E(s)(4)(A) of the Securities Exchange Act of 1934, a new provision added by
Section 932 of the Act.
Comments on this proposal are
due November 15, 2010.
International Financial
Reporting -- CAQ International Practices Task Force Meeting Minutes Published
For detail, please contact info@zy-cpa.com
The Center for Audit
Quality's (CAQ’s) International Practices Task Force
(IPTF) has published highlights from its meeting held with the staff of the SEC
on May 25, 2010. Topics discussed at this meeting included:
-Monitoring inflation in
certain countries;
-Availability of the two year
accommodation in Form 20-F for first time adopters of IFRS for Foreign Private
Issuers (FPIs) electing to file on Form 10-K;
-Application of Codification
Topic 855, Subsequent Events, to financial statements of certain FPIs and certain financial statements filed pursuant to
Rules 3-05 and 3-09 of Regulation S-X;
-Acceptance of IFRS for SMEs as an acceptable basis of accounting for financial
statements of foreign businesses filed pursuant to Rules 3-05 and Rule 3-09 of
Regulation S-X; and
-SEC staff observations
regarding compliance with the requirements for filing financial statements
without reconciliation to U.S. GAAP.
The IPTF is a task force of
the CAQ SEC Regulations Committee which meets periodically with the staff of
the SEC that focuses on international emerging technical accounting and
reporting issues relating to SEC rules and regulations.
Financial Instruments --
IASB Issues Enhanced Derecognition Disclosure
Requirements
For detail, please contact info@zy-cpa.com
The IASB has issued
amendments to IFRS 7, Financial Instruments: Disclosures, as part of its
review of off-balance sheet activities. The new disclosure requirements are
contained in Disclosures - Transfers of Financial Assets (Amendments to IFRS
7).
The amendments allow users of
financial statements to improve their understanding of transfer transactions of
financial assets (e.g., securitizations), including understanding the possible
effects of any risks that may remain with the entity that transferred the
assets. The amendments also require additional disclosures if a
disproportionate amount of transfer transactions are undertaken around the end
of a reporting period. The IASB believes that these amendments broadly align
the relevant disclosure requirements of IFRS and U.S. GAAP.
The IASB previously published
for public comment proposals to replace the existing derecognition
model in IAS 39, Financial Instruments: Recognition and Measurement, and
the associated disclosure requirements in IFRS 7. However, in response to the
feedback received, the IASB decided to retain existing derecognition
requirements (to be incorporated into IFRS 9, Financial Instruments) and
to finalize improved disclosure requirements.
International Accounting
-- IASB Publishes Agenda for October 19-22, 2010 Meeting
For detail, please contact info@zy-cpa.com
The IASB has issued an agenda
for its October 19-22, 2010 meeting. Topics expected to be discussed at this
meeting include the following:
-Annual improvements;
-Other comprehensive income:
comment letter summary;
-Hedge accounting;
-Post-employment benefits;
-Impairment;
-Leases;
-Fair value measurement;
-IFRS Interpretations
Committee: update from last meeting;
-Financial statement
presentation; and
-Financial instruments: hedge
accounting.
Portions of these sessions
are expected to be held with the FASB.
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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Fraud -- CAQ Issues Report
on Deterring and Detecting Financial Reporting Fraud
For detail, please contact info@zy-cpa.com
The CAQ has issued a report Deterring
and Detecting Financial Reporting Fraud - A Platform for Action. This
report is the result of CAQ-sponsored roundtable discussions and interviews on
the issue of financial reporting fraud at public companies. The report contains
numerous ideas for mitigating the risk of financial reporting fraud, as well as
points to consider. Topics discussed in the report include:
-What financial reporting
fraud is;
-Understanding the landscape;
-Tone at the top;
-Skepticism and communication
as a tools for detecting or deterring fraud; and
-Increasing the effectiveness
across the financial reporting supply chain.
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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======================
GOVERNMENT HEADLINES:
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GASB Report Issued --
Input on Emerging Issues and Other Matters Discussed
For detail, please contact info@zy-cpa.com
The September 2010 edition of
the "GASB Report" has been issued and includes the following
discussion items:
-GASB calendar;
-GASB requests input on
emerging issues;
-Summary of recent GASB
meetings; and
-GASB technical plan for the
final four months of 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