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Accounting Research
Manager(TM)
Weekly Summary of
Developments
November 1-5, 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:
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
Repurchase Agreements -- FASB Reconsiders Effective Control for
Repurchase Agreements
Leases -- Accounting for Leases Interpretation
Updated
Mortgage and
Foreclosure-Related Disclosures -- SEC Staff Publishes Illustrative Letter on Mortgage and
Foreclosure-Related Disclosures
International Accounting -- SEC Staff Publishes Progress Report on
Work Plan for Global Accounting Standards
XBRL -- SEC Staff Issues Observations From
Review of Interactive Data Financial Statements
Whistleblower Program -- SEC Proposes New Whistleblower Program
Under Dodd-Frank Act
Security-Based Swaps -- SEC Proposes New Rule to Address Fraud
in Connection with Security-Based Swaps
Financial Instruments -- IASB Issues Additions to IFRS 9
Annual Improvements -- IASB Discusses Annual Improvements and
Other Matters
Hedge Accounting -- IASB Discusses Hedge Accounting
IFRS for SMEs
-- Publication of Guide and Other Matters Discussed
Auditing and Internal
Controls Headlines
Auditing Standards -- AICPA Approves Additional Clarity
Standards
Not-for-Profit
Organizations -- New
Edition of Knowledge-Based Audits of Not-for-Profit Organizations with Single
Audits
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ACCOUNTING AND SEC HEADLINES:
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Repurchase Agreements --
FASB Reconsiders Effective Control for Repurchase Agreements
For detail, please contact info@zy-cpa.com
The FASB has issued a
proposed Accounting Standards Update (ASU), Transfers and Servicing (Topic
860): Reconsideration of Effective Control for Repurchase Agreements. The
purpose of the proposal is to solicit input from stakeholders on a proposal to
improve the accounting for repurchase agreements (repos)
and other agreements that both entitle and obligate a transferor to repurchase
or redeem financial assets before their maturity.
In a typical repo transaction, an entity transfers financial assets to a counterparty in exchange for cash with an agreement for
the counterparty to return the same or equivalent financial assets for a fixed
price in the future. FASB Accounting Standards CodificationTM (Codification) Topic 860, Transfers
and Servicing, prescribes when an entity may or may not recognize a sale
upon the transfer of financial assets subject to repo
agreements. That determination is based, in part, on whether the entity has
maintained effective control over the transferred financial assets. The
amendments in this proposal are intended to simplify the accounting for these
transactions by removing from the assessment of effective control the criterion
requiring the transferor to have the ability to repurchase or redeem the
financial assets.
The amendments would be
effective for new transfers and existing transactions that are modified as of
the beginning of the first interim or annual period after the ASU is finalized.
The final ASU is expected to be issued during the first quarter of 2011. An
entity would apply the amendments prospectively to both transfers that occur
after the effective date and existing transactions that are modified after the
effective date.
Comments on this proposed ASU
are due January 15, 2011.
Leases -- Accounting for
Leases Interpretation Updated
For detail, please contact info@zy-cpa.com
We have updated our
publication, Accounting for Leases - Interpretations of U.S. GAAP,
including adding an interpretation that clarifies the accounting for a residual
value guaranteed at lease inception. We have also updated certain
interpretations to remove guidance relating to qualifying-special purpose
entities. The concept of such entities was eliminated by the FASB from GAAP.
See our Literature Update for
complete details.
Mortgage and Foreclosure-Related
Disclosures -- SEC Staff Publishes Illustrative Letter on Mortgage and
Foreclosure-Related Disclosures
For detail, please contact info@zy-cpa.com
The staff in the Division of
Corporation Finance (Corp Fin) of the SEC has published an illustrative letter,
“Sample Letter Sent to Public Companies on Accounting and Disclosure Issues
Related to Potential Risks and Costs Associated with Mortgage and
Foreclosure-Related Activities or Exposures.” This letter was sent to certain
public companies as a reminder of disclosure obligations for their
consideration in upcoming Form 10-Qs and subsequent filings, in light of
continued concerns about potential risks and costs associated with mortgage and
foreclosure-related activities or exposures. Topics covered in this letter
include the following:
-The effect of various
representations and warranties regarding mortgages made to purchasers of the
mortgages;
-Implications of any reviews
undertaken of loan documentation and foreclosure practices; and
-Loss contingencies.
International Accounting
-- SEC Staff Publishes Progress Report on Work Plan for Global Accounting
Standards
For detail, please contact info@zy-cpa.com
The SEC’s Office of the Chief
Accountant and Corp Fin published their first progress report on the Work Plan
related to global accounting standards. In February 2010, the SEC issued Commission
Statement in Support of Convergence and Global Accounting Standards, which
directed the SEC staff to execute a “Work Plan” to provide the information needed
to evaluate the implications of incorporating IFRS into the financial reporting
system for
The progress report addresses
six key areas:
-Sufficient development and
application of IFRS for the U.S. domestic reporting system;
-The independence of standard
setting for the benefit of investors;
-Investor understanding and
education regarding IFRS;
-Examination of the U.S.
regulatory environment that would be affected by a change in accounting
standards;
-The effect on issuers both
large and small, including changes to accounting systems, changes to
contractual arrangements, corporate governance considerations, and litigation
contingencies; and
-Human capital readiness.
XBRL -- SEC Staff Issues
Observations From Review of Interactive Data Financial
Statements
For detail, please contact info@zy-cpa.com
The staff in the SEC’s
Division of Risk, Strategy and Financial Innovation has completed a review of
the Interactive Data Financial Statement submissions. These submissions were
made under SEC rules relating to interactive data for financial reporting,
including final rule, Interactive Data to Improve Financial Reporting.
This rule requires companies to provide their financial statements submitted to
the SEC in interactive data format using eXtensible
Business Reporting Language (XBRL). The SEC staff performed the reviews on the
population of filings submitted from June through August 2010. These filings
include the first group of mandated detailed tagged submissions and the initial
filings from the companies in the second phase-in group.
According to the SEC staff,
the filings indicate that filers devoted significant effort to consider their
responsibilities under this program, comply with the new XBRL requirements, and
provide high-quality submissions. The SEC staff identified certain areas where
there were common issues with the filings, including the following:
-Negative values;
-Extending an element where
an existing U.S. GAAP Taxonomy element is appropriate;
-Observations on axis and
member use; and
-Tagging and parenthetical
amounts.
Whistleblower Program --
SEC Proposes New Whistleblower Program Under Dodd-Frank Act
For detail, please contact info@zy-cpa.com
The SEC has issued for public
comment, Proposed Rules for Implementing the Whistleblower Provisions of
Section 21F of the Securities Exchange Act of 1934. This proposal would
establish a whistleblower program to reward individuals who provide the SEC
with high-quality tips that lead to successful enforcement actions. To be
considered for an award, a whistleblower must voluntarily provide the SEC with
original information about a violation of the federal securities laws that
leads to the successful enforcement by the SEC of a federal court or
administrative action in which the SEC obtains monetary sanctions totaling more
than $1 million. This proposal would implement the whistleblower program
required by Section 922 Dodd-Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank Act).
Comments on this proposal are
due December 17, 2010.
Security-Based Swaps -- SEC
Proposes New Rule to Address Fraud in Connection with Security-Based Swaps
For detail, please contact info@zy-cpa.com
The SEC has issued for public
comment a proposed rule, Prohibition Against Fraud,
Manipulation, and Deception in Connection with Security-Based Swaps. This
proposal is intended to help address fraud, manipulation, and deception in
connection with security-based swaps. The rule is proposed under Title VII of
the Dodd-Frank Act, which generally authorizes the SEC to regulate
security-based swaps.
Comments on this proposal are
due 45 days after it is published in the Federal Register.
Financial Instruments --
IASB Issues Additions to IFRS 9
For detail, please contact info@zy-cpa.com
The IASB has issued IFRS 9, Financial
Instruments - Includes Additions for Financial Liabilities (October 2010).
The requirements included in this document are being added to IFRS 9, Financial
Instruments, and complete the classification and measurement phase of the IASB’s project to replace IAS 39, Financial Instruments:
Recognition and Measurement. The addition of these requirements follows the
IASB’s November 2009 issuance of IFRS 9, which
prescribed the classification and measurement of financial assets.
The new requirements address
the problem of volatility in profit or loss arising from an issuer choosing to
measure its own debt at fair value (i.e., the “own credit” problem). In
response to feedback received during its consultation process, the IASB decided
to maintain the existing amortized cost measurement for most liabilities,
limiting change to that required to address the own credit problem. With the
new requirements, an entity choosing to measure a liability at fair value will
present the portion of the change in its fair value due to change in the
entity’s own credit risk in the other comprehensive income section of the
income statement.
IFRS 9 applies to financial
statements for annual periods beginning on or after January 1, 2013. Entities
are permitted to apply the new requirements in earlier periods. However, if
they do, they must also apply the requirements in IFRS 9 that relate to
financial assets.
The remaining second and
third phases of the IFRS 9 issuance project deal with accounting for the
impairment of financial assets and hedge accounting. The IASB anticipates
completion of those phases by June 30, 2011. With the addition of the
impairment and hedge accounting requirements to IFRS 9, that standard will
replace IAS 39 in its entirety.
Annual Improvements --
IASB Discusses Annual Improvements and Other Matters
For detail, please contact info@zy-cpa.com
As reported in its "IASB
Update" publication, the IASB met on October 19-22, 2010, and discussed
the following topics:
-Annual improvements;
-Conceptual framework;
-Effective dates;
-Emissions trading schemes;
-Extractive activities;
-Fair value measurement;
-Financial instruments:
amortized cost and impairment;
-Financial instruments: hedge
accounting;
-Financial statement
presentation;
-Financial instruments with
characteristics of equity;
-Offsetting;
-Other comprehensive income;
-Leases; and
-Post-employment benefits.
Portions of these sessions
were held with the FASB.
Hedge Accounting -- IASB
Discusses Hedge Accounting
For detail, please contact info@zy-cpa.com
As reported in its "IASB
Update" publication, the IASB met on October 27, 2010, and discussed the
following issues:
-Hedging using intragroup monetary items;
-Risk components that are not
contractually specified;
-Accounting for the time
value of options;
-Eligibility of
non-derivative financial instruments as hedging instruments; and
-Proposed transition
requirements and effective date.
IFRS for SMEs -- Publication of Guide and Other Matters Discussed
For detail, please contact info@zy-cpa.com
The IASB staff has issued
"IFRS for SMEs Update" publication which is
a staff summary of news relating to the International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs). This
update includes discussion of the following topics:
-Guide to the IFRS for SMEs published;
-Michelle Fisher appointed as
IFRS for SMEs Practice Fellow;
-IFRS for SMEs
at the World Congress of Accountants;
-Reorganization of IFRS for SMEs web pages;
-Upcoming train the trainers
workshops in Kazakhstan and Singapore;
-Train the trainers workshop
in Panama City;
-Status of translations of the
IFRS for SMEs;
-News about adoptions of the
IFRS for SMEs; and
-Where to obtain IFRS for SMEs materials.
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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AUDITING AND INTERNAL
CONTROLS HEADLINES:
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Auditing Standards --
AICPA Approves Additional Clarity Standards
For detail, please contact info@zy-cpa.com
The Auditing Standards Board
of the AICPA has finalized six additional standards as part of its Clarity
Project. This brings to 23 the number of clarified standards (including a new
preface) issued by the AICPA. These standards are effective for audits of
financial statements for periods ending on or after December 15, 2012.
The AICPA’s
Clarity Project is intended to make existing U.S. generally accepted auditing
standards (GAAS) easier to understand, apply, and move toward converging U.S.
GAAS with International Standards on Auditing issued by the International
Auditing and Assurance Standards Board. For further information on the AICPA's Clarity Project, see our previously published discussion
and analysis in our publication "A Closer Look."
Not-for-Profit
Organizations -- New Edition of Knowledge-Based Audits of Not-for-Profit
Organizations with Single Audits
For detail, please contact info@zy-cpa.com
We have published the
2010-2011 edition of Knowledge-Based Audits of
Not-for-Profit Organizations with Single Audits. This publication combines
everything an auditor needs to perform financial statement audits in accordance
with Government Auditing Standards (also known as the "Yellow Book
"), and single audits in accordance with OMB Circular A-133. This edition
reflects comprehensive coverage of current authoritative literature including
extensive revisions and updated discussions to reflect auditing pronouncements
through AICPA Statement on Auditing Standards No. 120, Required
Supplementary Information, and accounting pronouncements through ASUs issued through December 2009.
See our Literature Update for
complete details.
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