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Accounting Research Manager(TM)
Weekly Summary of Developments
December 6-10, 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

SEC and PCAOB Activities -- 2010 AICPA Year-End SEC and PCAOB Conference
Receivables -- FASB Proposes to Defer Effective Date of Disclosures about Troubled Debt Restructurings
Hedge Accounting -- IASB Issues Proposal to Improve Hedge Accounting
Management Commentary -- IASB Issues IFRS Practice Statement on Management Commentary
Financial Reporting Manual -- SEC Staff Updates Its Financial Reporting Manual
Health Care Entities -- FASB Discusses EITF Decision on Presenting Net Patient Service Revenues and Other Matters
Financial Instruments -- IASB Discusses Impairment Model for Financial Instruments

Auditing and Internal Controls Headlines

SOX 404 -- Updated Interpretation for Small, Publicly Held Companies Published
Understanding the Entity -- Clarified Statement Auditing Standards Discussed

Government Headlines

Fiscal Sustainability -- Publication Examines Fiscal Sustainability

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ACCOUNTING AND SEC HEADLINES:
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SEC and PCAOB Activities -- 2010 AICPA Year-End SEC and PCAOB Conference
For detail, please contact info@zy-cpa.com

We have prepared an "Overview" of the 2010 AICPA National Conference on SEC and PCAOB Developments held on December 6-8, 2010, in Washington, D.C. Principal themes of the conference included:

-Looming changes to accounting standards, including significant FASB/IASB convergence projects (revenue recognition, leases and financial instruments) and the potential adoption of IFRS in the U.S.;
-Continued emphasis on the transparency and integrity of financial reporting;
-SEC rulemaking mandated by the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (Dodd-Frank Act); and
-Emphasis on the consequences of the continued economic crisis on financial reporting and internal controls over financial reporting.

See our Literature Update for compete details.

Receivables -- FASB Proposes to Defer Effective Date of Disclosures About Troubled Debt Restructurings
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The FASB has issued for public comment a proposed Accounting Standards Update (ASU), Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. For public companies, this proposal would delay indefinitely the effective date of the disclosures about troubled debt restructurings in ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The delay is intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring would then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011.

As proposed, the deferral in this ASU would be effective upon issuance of the final ASU which is expected to be issued in January 2011.

Comments on this proposed ASU are due December 24, 2010.

Hedge Accounting -- IASB Issues Proposal to Improve Hedge Accounting
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The IASB has issued for public comment an Exposure Draft, Hedge Accounting. This proposal includes requirements that are intended to enable companies to reflect their risk management activities better in their financial statements, and, in turn, help investors to understand the effect of those activities on future cash flows. This proposal includes requirements in the following areas:

-What financial instruments qualify for designation as hedging instruments;
-What items (existing or expected) qualify for designation as hedged items;
-An objective-based hedge effectiveness assessment;
-How an entity should account for a hedging relationship; and
-Hedge accounting presentation and disclosures.

As proposed, the guidance in this exposure draft would be applied prospectively.

Comments on this proposal are due March 9, 2011.

Management Commentary -- IASB Issues IFRS Practice Statement on Management Commentary
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The IASB has issued an IFRS Practice Statement, Management Commentary - A Framework for Presentation. This statement provides a broad, non-binding framework for the presentation of narrative reporting to accompany financial statements prepared in accordance with IFRS. Management commentary provides users of financial statements with a historical and prospective commentary on the entity’s financial position, financial performance, and cash flows (similar in concept to "MD&A" used in SEC filings). This statement permits entities to adapt the information provided to particular circumstances of their business, including the legal and economic circumstances of individual jurisdictions. This flexible approach is intended to generate more meaningful disclosure about the most important resources, risks and relationships that can affect an entity’s value, and how they are managed.

Financial Reporting Manual -- SEC Staff Updates Its Financial Reporting Manual
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The staff in the SEC’s Division of Corporation Finance (Corp Fin) has released its updated Financial Reporting Manual, as of September 30, 2010. This manual represents informal guidance prepared for use by the Corp Fin staff. Corp Fin has made this manual public because readers may find the guidance useful in preparing filings with the SEC. Updates in this edition of the manual include the following areas (identified below in parentheses by section number in the manual):

-Proxy Statements (section 1140);
-Selected Financial Data (section 1600);
-Measuring Significance - Basics [S-X 3-05(b)(2)] (section 2015);
-Equity Method Investments, Including Fair Value Option [S-X 3-09, S-X 4-08(g), S-X 8-03, S-X 10-01(b)(1), and SAB Topic 6K.4.b] (section 2400);
-Management’s Annual Report on Internal Control Over Financial Reporting [S-K 308] (section 4310);
-Results of Operations [S-K 303(a)(3)] (section 9220); and
-Tabular Disclosure of Contractual Arrangements [S-K 303(a)(5)] (section 9240).

Health Care Entities -- FASB Discusses EITF Decision on Presenting Net Patient Service Revenues and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB met on December 8, 2010, and discussed the following topics: (a) EITF Consensus on Issue 09-H, "Health Care Entities: Presentation and Disclosure of Net Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts"; and (b) private company outreach.

The FASB decided to reexpose the consensus reached by the EITF at its November 19, 2010 meeting regarding Issue 09-H because of concerns raised by some constituents about the potential effects and implementation issues that may arise as a result of that consensus. The comment period for the forthcoming exposure draft is expected to be 60 days.

The FASB and IASB (the Boards) held a joint meeting on December 8, 2010, and discussed alternative methods to account for credit impairment in accounting for financial instruments. The Boards tentatively indicated support for a method that provides a floor for the "good book" (performing loans) allowance based on a calculation of a 12-month expected loss estimate.

Financial Instruments -- IASB Discusses Impairment Model for Financial Instruments
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As reported in its "IASB Update" publication, the IASB met on December 1, 2010, and discussed the scope and characteristics of an impairment model that could be used as a potential basis for the forthcoming proposal on impairment of financial instruments. The purpose of this meeting was to give staff direction on how they should develop the impairment model further and decisions about the content of the forthcoming proposal are expected to be made at a later meeting. Decisions about the content of the proposal are expected to be made at a later IASB meeting.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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SOX 404 -- Updated Interpretation for Small, Publicly Held Companies Published
For detail, please contact info@zy-cpa.com

We have published the 2011 edition of SOX 404 for Small, Publicly Held Companies, which provides information that management needs to assess the effectiveness of a company’s internal control over financial reporting and its disclosure controls. Written for small companies, this publication focuses on the SEC’s rules for assessing internal control and the PCAOB’s requirements for independent auditors. This edition of the publication has been updated to include:

-A summary of the relevant provisions of the Dodd-Frank Act that, among other things, permanently exempts certain small companies from Section 404(b) of the Sarbanes-Oxley Act of 2002; and
-Coverage of the newly issued COSO guidance on monitoring internal control systems and the recently issued guidance from the Information Systems Audit and Control Association on monitoring internal control systems and information technology.

See our Literature Update for complete details.

Understanding the Entity -- Clarified Statement Auditing Standards Discussed
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We have added a GAAS Update Service that provides discussion and analysis of a clarified Statement on Auditing Standards (SAS), Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Redrafted), which was issued as part of the AICPA's Clarity Project. The clarified SAS will supersede SAS-109 (AU Section 314) of the same name, and addresses the auditor’s responsibility to identify and assess the risks of material misstatement in the financial statements through understanding the entity and its environment, including its internal controls. This update is the second in our two-part coverage of this SAS, and specifically discusses the following topics: (a) identifying and assessing risks of material misstatement; and (b) documentation requirements.

The clarified SAS is 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."

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GOVERNMENT HEADLINES:
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Fiscal Sustainability -- Publication Examines Fiscal Sustainability
For detail, please contact info@zy-cpa.com

We have added a Governmental GAAP Update Service that discusses the increased focus on fiscal sustainability and the 2010 midterm elections. This update discusses the GASB's project on studying how best to disclose fiscal sustainability problems facing state and local governments. Topics discussed in this update include:

-Research and objective of the GASB's project;
-Current GAAP reporting: backward, forward, or both;
-Current status of the GASB's project; and
-Where is the GASB going with its project.

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