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Accounting Research Manager(TM)
Weekly Summary of Developments
February 7-11, 2011
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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

Hedge Accounting -- FASB Seeks Input on Issues about Hedge Accounting
Insurance Contracts -- FASB Discusses Insurance Contracts and Other Matters
Security Ratings -- SEC Proposes Rules on Security Ratings
Leases -- FASB and IASB Discuss Leases and Other Matters
IFRS for SMEs -- Countries Approve Use of IFRS for SMEs and Other Matters Discussed
International Financial Reporting -- CAQ International Practices Task Force Meeting Minutes Published

Auditing and Internal Controls Headlines

Interim Financial Information -- SAS 121 Issued
Accounting and Review Services -- SSARS 20 Issued
AICPA Professional Standards -- Checklist Updated
Omitted Procedures -- Clarified Statement Discussed

Government Headlines

Accounting Standards -- GASB 62 Discussed

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ACCOUNTING AND SEC HEADLINES:
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Hedge Accounting -- FASB Seeks Input on Issues about Hedge Accounting
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The FASB has issued a Discussion Paper, Selected Issues about Hedge Accounting, to solicit input on how to improve, simplify, and converge the financial reporting requirements for hedging activities. In May 2010, the FASB proposed revisions to improve and simplify standards for the financial reporting of financial instruments, including hedge accounting guidance, in the proposed Accounting Standards Update, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities-Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815). In December 2010, as part of a project to improve the accounting for financial instruments, the IASB issued an Exposure Draft, Hedge Accounting, which the IASB believes will help align hedge accounting more closely with risk management while addressing inconsistencies and weaknesses in the existing hedge accounting model.

Differences exist between IFRS and U.S. GAAP relating to hedge accounting. The revisions proposed by the IASB would result in more differences compared with the FASB’s current and proposed hedge accounting guidance. The FASB Discussion Paper asks stakeholders whether the IASB’s proposals are a better starting point for any changes to U.S. GAAP as it relates to derivatives and hedging activities.

Comments on the FASB's Discussion Paper are due by April 25, 2011. In addition to soliciting written comments on the FASB’s Discussion Paper, the FASB plans to participate in the IASB’s discussion of comments received on its proposal and input received on the FASB proposal in the second quarter of 2011.

Insurance Contracts -- FASB Discusses Insurance Contracts and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB met on February 9, 2011, and discussed the following topics:

-Insurance contracts;
-Investment properties; and
-Goodwill impairment assessments.

The FASB discussed how to proceed with its project on insurance contracts in light of feedback from constituents and decided to continue this project. The FASB affirmed the objective of developing standards of accounting for insurance contracts that would improve existing U.S. GAAP and converge with IFRS.

The FASB also reaffirmed its previous decision that the investment properties guidance expected to be issued would only apply to entities that meet the five criteria the FASB has previously developed. The FASB decided that the business activities and business purpose criteria should describe the qualifying entities as those that invest in real estate for total return. The FASB decided to allow an entity with investments in both property and other types of real estate investments (e.g., mortgage receivables or mortgage-back securities) to qualify under the investment properties guidance.

The FASB continued to evaluate alternative ways of identifying potential goodwill impairments that might be more cost-effective than the existing fair value approach (step one of the current two-step impairment assessment process). The FASB directed its staff to further assess through outreach, whether the cost-effectiveness of an approach that would identify potential impairments through an analysis of qualitative factors will address the cost concerns expressed by preparers of nonpublic entity financial statements. The FASB also decided to include public entities within the scope of this project.

Security Ratings -- SEC Proposes Rules on Security Ratings
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The SEC has issued for public comment a proposed rule, Security Ratings. This proposal is one of several releases that the SEC is expected to issue relating to the use of security ratings by credit rating agencies. This proposal would remove security ratings as one of the conditions for companies seeking to use short-form registration (e.g., Forms S-3 and F-3) when registering securities for public sale. This proposal includes provisions pursuant to Section 939A of the “Dodd-Frank Wall Street Reform and Consumer Protection Act.”

Comments on this proposal are due March 28, 2011.

Leases -- FASB and IASB Discuss Leases and Other Matters
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As reported in the "IASB Update" publication, the FASB and IASB met on February 1-2, 2011, and discussed the following topics:

-Leases;
-Insurance contracts; and
-Revenue recognition.

In addition, the IASB met separately to discuss post-employment benefits.

IFRS for SMEs -- Countries Approve Use of IFRS for SMEs and Other Matters Discussed
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The IASB staff has issued its periodic "IFRS for SMEs Update" publication which is a 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:

-News about countries permitting use of IFRS for SMEs;
-New presentations about IFRS for SMEs posted;
-Recent "train the trainers" workshops in Kazakhstan and Singapore;
-Upcoming train the trainers workshop in the Caribbean;
-Russian language train the trainers presentations now available; and
-Where to obtain IFRS for SMEs materials.

International Financial Reporting -- CAQ International Practices Task Force Meeting Minutes Published
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The Center for Audit Quality (CAQ) has published meeting highlights of the International Practices Task Force (IPFT) of November 23, 2010. Topics discussed at this meeting included:

-Application of FASB Accounting Standards CodificationTM Topic 855, Subsequent Events, to financial statements of certain Foreign Private Issuers (FPIs) and certain financial statements filed pursuant to Rules 3-05 and 3-09 of Regulation S-X;
eXtensible Business Reporting Language (XBRL) and FPIs;
-Colombia price-level adjusting; and
-Monitoring inflation in certain countries.

The IPTF is a task force of the CAQ SEC Regulations Committee that meets periodically with the staff of the SEC that focuses on international emerging technical accounting and reporting issues relating to SEC rules and regulations.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Interim Financial Information -- SAS 121 Issued
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The AICPA has issued Statement on Auditing Standards (SAS) No. 121, Revised Applicability of Statement on Auditing Standards No. 100, Interim Financial Information. SAS 121 revises paragraph .05 of SAS No. 100, Interim Financial Information, as amended (AU sec. 722 ), such that the SAS would be applicable when the accountant audited the entity's latest annual financial statements, and the appointment of another accountant to audit the current year financial statements is not effective prior to the beginning of the period covered by the review.

SAS 121 is effective for interim reviews of interim financial information for periods beginning after December 15, 2011. Early application is permitted.

Accounting and Review Services -- SSARS 20 Issued
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The AICPA has issued Statement on Standards for Accounting and Review Services (SSARS) No. 20, Revised Applicability of Statements on Standards for Accounting and Review Services. SSARS 20 revises paragraph .01 of AR section 90, so that SSARS do not apply when the provisions of SAS 100, as amended (AU sec. 722) apply.

SSARS 20 is effective for reviews of financial statements for periods beginning after December 15, 2011. Early application is permitted.

AICPA Professional Standards -- Checklist Updated
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We have updated our publication "Summary Checklist of Recent Authoritative AICPA Professional Standards." This checklist is intended to serve as a reference tool that can be used to review engagement and other related authoritative standards recently issued by the AICPA.

This checklist has been updated to reflect the issuance of SAS 121 and SSARS 20, discussed above.

See our Literature Update for complete details.

Omitted Procedures -- Clarified Statement Discussed
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We have added a GAAS Update Service that provides discussion and analysis of a clarified SAS, Consideration of Omitted Procedures After the Report Release Date, which was issued as part of the AICPA's Clarity Project. The clarified SAS will supersede SAS No. 46 (AU Section 390), Consideration of Omitted Procedures After the Report Date, and addresses the responsibilities of the auditor when, subsequent to the report release date, the auditor becomes aware that certain auditing procedures considered necessary at the time of the audit were omitted.

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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Accounting Standards -- GASB 62 Discussed
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We have added a Governmental GAAP Update Service that provides an overview of GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. GASB 62 is intended to enhance the usefulness of the Codification of Governmental Accounting and Financial Reporting Standards by incorporating guidance that previously could only be found in certain FASB and AICPA pronouncements. This update discusses the following topics:

-Changes may also affect governmental activities;
-Capitalization of interest and contingencies; and
-Effective date and transition.

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