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Accounting Research Manager®
Weekly Summary of Developments
June 6-10, 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:

For detail, please contact info@hkcmcpa.us


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

Business Combinations -- Interpretation Updated
Revenue Recognition -- FASB Discusses Revenue Recognition and Other Matters
Audit and Accounting Guides -- AICPA Publishes Guides
Insurance Contracts -- IASB and FASB Discuss Insurance Contracts and Other Matters

Auditing and Internal Controls Headlines

Not-for-Profit Entities -- New Edition of Knowledge-Based Audits Published
Audit and Accounting Guides -- AICPA Publishes Guides
Written Representations -- Clarified Statement on Auditing Standards Discussed

Government Headlines

External Auditors -- Tools and Techniques When Searching for New External Auditors

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ACCOUNTING AND SEC HEADLINES:
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Business Combinations -- Interpretation Updated
For detail, please contact info@hkcmcpa.us


We have updated our publication, Accounting for Business Combinations, Goodwill, and Other Intangible Assets - Interpretations of U.S. and International Accounting Standards, to reflect the following accounting standards:

-FASB Accounting Standards Update (ASU) No. 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations; and
-ASU No. 2010-28, Intangibles – Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.

See our Literature Update for complete details.

Revenue Recognition -- FASB Discusses Revenue Recognition and Other Matters
For detail, please contact info@hkcmcpa.us


As reported in its "Summary of Board Decisions" publication, the FASB met on June 8, 2011, and discussed the following topics:

-Revenue recognition;
-Accounting for financial instruments: classification and measurement; and
-Investment companies.

Regarding its project on revenue recognition, the FASB discussed whether certain rate-regulated activities should be within the scope of the forthcoming revenue recognition standard. The FASB decided to retain the existing guidance in Topic 980, Regulated Operations, for the recognition of regulatory assets and liabilities from alternative revenue programs and to require that an entity present revenue arising from those assets and liabilities separately from revenues arising from contracts with customers on the face of the statement of comprehensive income.

The FASB also discussed whether nonpublic entities should be exempt from some of the proposed disclosure requirements in the proposed revenue recognition standard. The FASB agreed that certain disclosures should not be required of nonpublic entities; however, the FASB believes that a nonpublic entity should disclose:

-Disaggregate revenue between: (a) goods or services transferred to customers at a point in time; and (b) goods or services transferred to customers over time; and
-Qualitative information about how economic factors affect the amount, timing, and uncertainty of revenue and cash flows.

Regarding its project on the accounting for financial instruments, the FASB decided that the initial measurement principle should depend upon the subsequent classification and measurement of a financial instrument. The FASB decided that financial instruments subsequently classified as fair value with all changes in fair value recognized in net income would be initially measured at fair value. Financial instruments subsequently classified as fair value with fair value changes in other comprehensive income or amortized cost would be initially measured at transaction price.

Audit and Accounting Guides -- AICPA Publishes Guides

The AICPA has published the following:

-Audit and Accounting Guide (AAG), Gaming; and
For detail, please contact info@hkcmcpa.us


-AAG, Service Organizations: Applying SSAE No. 16, Reporting on Controls at a Service Organization (SOC 1).
For detail, please contact info@hkcmcpa.us


The AAG on gaming:

-Identifies certain requirements applicable to the gaming industry provided in the FASB Accounting Standards Codification™ (Codification) and by the GASB;
-Provides understanding of prevalent or sole industry practice concerning certain issues;
-Identifies certain other, but not necessarily all, industry practices concerning certain accounting issues; and
-Provides guidance that has been supported by the AICPA on the accounting, reporting, or disclosure treatment of transactions or events that are not set forth in the Codification.

The AAG on service organizations provides guidance to practitioners engaged to examine and report on a service organization’s controls over the services it provides to user entities when those controls are likely to be relevant to user entities’ internal control over financial reporting.

Insurance Contracts -- IASB and FASB Discuss Insurance Contracts and Other Matters
For detail, please contact info@hkcmcpa.us


As reported in its "IASB Update" publication, the IASB and FASB (the Boards) met on June 2, 2011, and discussed the following topics:

-Insurance contracts;
-Asset and liability offsetting (education session);
-Leases; and
-Revenue recognition.

The IASB held a separate meeting on June 2, 2011, and discussed the following topics related to IFRS 9, Financial Instruments:

-Accounting for time value of options;
-Designating combinations of options as the hedging instrument;
-Rebalancing;
-Voluntary discontinuation; and
-Macro hedging (education session).

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


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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Not-for-Profit Entities -- New Edition of Knowledge-Based Audits Published
For detail, please contact info@hkcmcpa.us


We have published the 2011 edition of Knowledge-Based Audits of Not-for-Profit Entities. This publication is designed to help the auditor efficiently and effectively perform financial statement audits of not-for-profit entities, in accordance with auditing standards generally accepted in the United States, and when applicable, Generally Accepted Government Auditing Standards (also know as the "Yellow Book "), issued by the U.S. Government Accountability Office.

This edition of the publication includes revisions and updates to reflect current accounting authoritative literature and, among other things, auditing pronouncements through:

-AICPA Statement on Auditing Standards (SAS) No. 118, Other Information in Documents Containing Audited Financial Statements;
-SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole; and
-SAS No. 120, Required Supplementary Information.

See our Literature Update for complete details.

Audit and Accounting Guides -- AICPA Publishes Guides

As discussed above in our Accounting and SEC Summaries, the AICPA has published the following:

-Audit and Accounting Guide (AAG), Gaming; and
For detail, please contact info@hkcmcpa.us


-AAG, Service Organizations: Applying SSAE No. 16, Reporting on Controls at a Service Organization (SOC 1).
For detail, please contact info@hkcmcpa.us


The AAG on gaming:

-Identifies certain requirements applicable to the gaming industry provided in the FASB Accounting Standards Codification™ (Codification) and by the GASB;
-Provides understanding of prevalent or sole industry practice concerning certain issues;
-Identifies certain other, but not necessarily all, industry practices concerning certain accounting issues; and
-Provides guidance that has been supported by the AICPA on the accounting, reporting, or disclosure treatment of transactions or events that are not set forth in the Codification.

The AAG on service organizations provides guidance to practitioners engaged to examine and report on a service organization’s controls over the services it provides to user entities when those controls are likely to be relevant to user entities’ internal control over financial reporting.

Written Representations -- Clarified Statement on Auditing Standards Discussed
For detail, please contact info@hkcmcpa.us


We have added a GAAS Update Service that provides discussion and analysis of a clarified Statement on Auditing Standards (SAS), Written Representations, which was finalized as part of the AICPA's Clarity Project. The clarified SAS supersedes SAS 85 (AU Section 333), Management Representations, and addresses the auditor’s responsibility in an audit of financial statements to obtain written representations from management and, when appropriate, those charged with governance.

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.Database 'Research Mgr - MOM Authoring', View '2. Contents\b. Auditing', Document 'Auditing'"

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


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GOVERNMENT HEADLINES:
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External Auditors -- Tools and Techniques When Searching for New External Auditors
For detail, please contact info@hkcmcpa.us


We have added a Governmental GAAP Update Service that discusses tips and techniques for procuring new external auditors. Considerations discussed in this update include:

-Making sure the scope of services is extremely concise;
-Auditor independence and alignment to Government Auditing Standards are not always a given;
-The term of any agreement should be sufficient so that work is beneficial to the audit firm and to the government; and
-The budget for the audit should be transparent.

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