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Accounting Research Manager(TM)
Weekly Summary of Developments
March 21-25, 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

Revenue Recognition -- FASB and IASB Discuss Revenue Recognition and Other Matters
New Accounting Standards -- Checklist Updated
Fair Value Measurement -- FASB and IASB Discuss Fair Value Measurement and Other Matters

Auditing and Internal Controls Headlines

Related Parties -- Clarified SAS Discussed

Government Headlines

Interim Financial Reporting -- Benefits of Interim Financial Reporting for Governments Discussed

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ACCOUNTING AND SEC HEADLINES:
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Revenue Recognition -- FASB and IASB Discuss Revenue Recognition and Other Matters
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As reported in its "Summary of Board Decisions" publication, the FASB and IASB (the Boards) met on March 21-23, 2011, and discussed the following topics:

-Revenue recognition;
-Disclosure-cross-cutting issues;
-Leases;
-Insurance contracts;
-Transfers and servicing-repurchase agreements; and
-Accounting for financial instruments-impairments.

Regarding their project on revenue recognition, the Boards discussed when and how an entity should adjust the promised amount of consideration in a contract to reflect the effects of the time value of money. The Boards tentatively decided that an entity should adjust the promised amount of consideration to reflect the time value of money if the contract includes a financing component that is significant to that contract. In assessing whether a contract has a significant financing component, an entity should consider various factors, including the following:

-Whether the amount of customer consideration would be substantially different if the customer paid in cash at the time of transfer of the goods or service;
-Whether there is a significant timing difference between when the entity transfers the promised goods or services to the customer and when the customer pays for those goods or services; and
-Whether the interest rate that is explicit or implicit within the contract is significant.

The Boards also tentatively decided that, as a practical expedient, an entity should not be required to assess whether a contract has a significant financing component if the period between payment by the customer and the transfer of the promised goods or services to the customer is one year or less. This decision was supported by 4 members of the FASB and 11 members of the IASB.

The Boards also discussed "cross-cutting issues" on the proposed disclosures in the revenue recognition, leases, and insurance contracts due process documents. The discussion focused on several observations and recommendations for the project teams as they finalize the disclosure requirements in each project. The Boards agreed to align the wording of the disclosure objectives of each project and that all roll-forward disclosures prescribed in these projects be presented in tabular format.

Regarding their project on leases, the Boards discussed the accounting for elements of a lease contract at the date of inception versus the date of commencement from both the lessee’s and lessor’s perspective. The Boards reached a number of tentative decisions including to:

-Require a lessee and a lessor to recognize and initially measure lease assets and lease liabilities (and derecognize any corresponding assets and liabilities) at the date of commencement of the lease;
-Require a lessee and a lessor to use a discount rate calculated at the date of commencement when initially measuring lease assets and lease liabilities; and
-Include application guidance on the accounting for costs incurred by the lessee before the date of commencement of a lease.

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 checklist is updated shortly after the FASB adds or revises content in the FASB Accounting Standards Codification^TM (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 Codification Maintenance Update 2011-03. This update effectively represents a “roll-off” of transition guidance related to FASB Accounting Standards Update (ASU) No. 2010-18, Receivables (Topic 310): Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset, and ASU No. 2010-11, Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.

See our Literature Update for complete details.

Fair Value Measurement -- FASB and IASB Discuss Fair Value Measurement and Other Matters
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As reported in the "IASB Update" publication, the Boards met on March 14-18, 2011, and discussed the following topics:

-Fair value measurement-effective dates;
-Financial instruments-hedge accounting;
-Insurance contracts; and
-Leases.

The IASB met separately and discussed the following topics:

-Impairment (education session);
-Effective dates: post-employment benefits and other comprehensive income; and
-Expected issuance of IFRS 12, Disclosure of Interests in Other Entities.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Related Parties -- Clarified SAS Discussed
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We have added a GAAS Update Service that provides discussion and analysis of a clarified SAS, Related Parties (Redrafted), which was finalized as part of the AICPA's Clarity Project. The clarified SAS will supersede AU Section 334, “Related Parties,” of SAS 45, Omnibus Statement on Auditing Standards - 1983, and addresses the auditor’s responsibilities concerning related party relationships and transactions, and focuses on the special risks that they pose and their implications for the conduct of the audit.

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":
For detail, please contact info@hkcmcpa.us

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GOVERNMENT HEADLINES:
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Interim Financial Reporting -- Benefits of Interim Financial Reporting for Governments Discussed
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We have added a Governmental GAAP Update Service that discusses interim financial reporting as an important tool for governments. Specifically, this update discusses certain benefits for governments that prepare interim financial statements, including the opportunity to streamline the year-end financial reporting process. Topics discussed in this update include:

-Purpose of interim reports;
-Accounting and financial reporting for interim reports;
-Auditing concerns for interim reports; and
-Potential requirement for interim reporting by debt issuers.

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@hkcmcpa.us