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Accounting Research Manager®
Weekly Summary of Developments
June 13-17, 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
Comprehensive Income -- FASB Issues Guidance on the
Presentation of Comprehensive Income
New Accounting Standards -- Checklist Updated
Financial Reporting -- SEC Chief Accountant Discusses
Accounting and Auditing Issues
Broker-Dealers -- PCAOB Adopts Interim Inspection
Program for Broker-Dealer Audits And Broker and Dealer Funding Rules
Leases -- FASB and IASB Discuss Leases and
Other Matters
EITF Materials -- FASB Issues Additional Materials
for June 23, 2011 EITF Meeting
Auditing and Internal
Controls Headlines
Risk Management -- New Edition of Auditor's Risk
Management Guide Published
Auditing Standards -- OMB Circular A-133 Compliance
Supplement Published
Broker-Dealers -- PCAOB Adopts Interim Inspection
Program for Broker-Dealer Audits And Broker and Dealer Funding Rules
Government Headlines
Auditing Standards -- OMB Circular A-133 Compliance
Supplement Published
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ACCOUNTING AND SEC HEADLINES:
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Comprehensive Income --
FASB Issues Guidance on the Presentation of Comprehensive Income
For detail, please contact info@hkcmcpa.us
The FASB has issued Accounting
Standards Update (ASU) No. 2011-05, Comprehensive Income (Topic 220):
Presentation of Comprehensive Income. This ASU amends the FASB
Accounting Standards CodificationTM (Codification) to allow an
entity the option to present the total of comprehensive income, the components
of net income, and the components of other comprehensive income either in a
single continuous statement of comprehensive income or in two separate but
consecutive statements. In both choices, an entity is required to present each
component of net income along with total net income, each component of other
comprehensive income along with a total for other comprehensive income, and a
total amount for comprehensive income. ASU 2011-05 eliminates the option to
present the components of other comprehensive income as part of the statement
of changes in stockholders' equity. The amendments to the Codification in the
ASU do not change the items that must be reported in other comprehensive income
or when an item of other comprehensive income must be reclassified to net
income.
ASU 2011-05 should be applied
retrospectively. For public entities, the amendments are effective for fiscal
years, and interim periods within those years, beginning after December 15,
2011. For nonpublic entities, the amendments are effective for fiscal years
ending after December 15, 2012, and interim and annual periods thereafter.
Early adoption is permitted.
New Accounting Standards --
Checklist Updated
For detail, please contact info@hkcmcpa.us
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 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 ASU 2011-05, discussed above.
See our Literature Update for
complete details.
Financial Reporting -- SEC
Chief Accountant Discusses Accounting and Auditing Issues
For detail, please contact info@hkcmcpa.us
James L. Kroeker,
Chief Accountant of the SEC’s Office of the Chief
Accountant, gave a speech at the
-The launch of “Financial
Reporting Series Forums,” which focus on emerging issues in financial
reporting;
-Convergence of international
accounting standards;
-Standard setting for private
companies;
-The release by the SEC staff
of the Study Required by Section 989G(b) of the Dodd-Frank Act Regarding
Compliance with Section 404(b) of the Sarbanes-Oxley Act;
-The role of the auditor in
mitigating financial reporting risk; and
-Issues related to U.S. listed
foreign companies.
Broker-Dealers -- PCAOB
Adopts Interim Inspection Program for Broker-Dealer Audits And Broker and
Dealer Funding Rules
The PCAOB has issued the
following releases:
-PCAOB Release No. 2011-001, Temporary
Rule for an Interim Program of Inspection Related to Audits of Brokers and
Dealers; and
For detail, please contact info@hkcmcpa.us
-PCAOB Release No. 2011-002, Board
Funding Final Rules for Allocation of the Board's Accounting Support Fee among
Issuers, Brokers, and Dealers, and Other Amendments to the Board's Funding
Rules.
For detail, please contact info@hkcmcpa.us
These releases include certain
rules to implement provisions of the Dodd-Frank Wall Street Reform and Consumer
Protection Act related to audits of securities brokers and dealers.
Specifically, Release 2011-001 adopts a temporary rule to establish an interim
inspection program for registered public accounting firms’ audits of brokers
and dealers. If approved by the SEC, the temporary rule will allow the PCAOB to
begin basic inspection work on selected audits of brokers and dealers. The
temporary rule provides for an interim inspection program while the PCAOB
considers the scope and other elements of a permanent inspection program. Under
the temporary rule, the PCAOB will begin to inspect auditors of brokers and
dealers and identify and address with the registered firms any significant
issues in those audits. The PCAOB also expects that insights gained through the
interim program will aid in the eventual determination of the scope and
elements of a permanent program. The PCAOB expects to publish a proposal for a
permanent program in 2013, which will be subject to approval by the SEC.
Release 2011-002 includes
rules for assessing and collecting a portion of the PCAOB accounting support
fee from brokers and dealers to fund oversight of audits of brokers-dealers,
and includes certain amendments to existing funding rules for issuers. The
funding rules, which are subject to approval by the SEC, would result in
brokers and dealers with more than $5 million in tentative net capital being
allocated an appropriate portion of the accounting support fee. The PCAOB
anticipates that the rules will be in effect for its 2011 funding cycle for
broker and dealers, which begins in the fall.
Leases -- FASB and IASB
Discuss Leases and Other Matters
For detail, please contact info@hkcmcpa.us
As reported in its
"Summary of Board Decisions" publication, the FASB and IASB (the
Boards) met on June 13-15, 2011, and discussed the following topics:
-Leases;
-Insurance contracts;
-Investment properties;
-Accounting for financial
instruments-classification and measurement;
-Accounting for financial
instruments-impairment;
-Balance sheet offsetting; and
-Revenue recognition.
The Boards continued to
discuss their project on lease accounting and reached several tentative
decisions, including the following:
-A head lease and a sublease
should be accounted for as separate transactions;
-An intermediate lessor, as a lessee in a head lease arrangement, should
account for its assets and liabilities arising from the head lease in
accordance with the decisions-to-date for all lessees;
-An intermediate lessor, as a lessor in a sublease
arrangement, should account for its assets and liabilities arising from the
sublease in accordance with the decisions-to-date for all lessors;
-For short-term leases, a
lessee is not required to recognize lease assets or lease liabilities and
should recognize lease payments in profit or loss on a straight-line basis over
the lease term, unless another systematic and rational basis is more
representative of the time pattern in which use is derived from the underlying
asset; and
-A lessee may elect to apply
the recognition and measurement requirements in the leases guidance to
short-term leases.
Regarding their project on
balance sheet offsetting, the Boards discussed the following alternative
approaches for requiring offsetting of financial assets and financial
liabilities on the face of the balance sheet:
-Alternative 1 - This approach
requires a right of setoff that is exercisable both in the normal course of
business and in bankruptcy, insolvency, or default and intention to settle a
financial asset and financial liability net or simultaneously.
-Alternative 2 - This approach
requires a right of setoff that is legally enforceable in the normal course of
business and intention to settle a financial asset and financial liability net
or simultaneously.
-Alternative 3 - For
derivative instruments, this approach provides an exception from the general
offsetting criteria, which would allow offsetting of fair value amounts
recognized for derivatives and fair value amounts recognized for the right to
reclaim cash collateral or the obligation to return cash collateral arising
from derivative instrument(s) recognized at fair value with the same
counterparty under a master netting agreement. This approach requires a right
of setoff that is only enforceable in bankruptcy, insolvency, or default of one
of the counterparties.
The IASB supported Alternative
1, while a majority of the FASB members supported Alternative 3.
In connection with the revenue
project, the Boards announced that they intend to re-expose their revised
revenue recognition proposal in the third quarter of 2011. The revised proposal
would have a 120 day comment period.
EITF Materials -- FASB
Issues Additional Materials for June 23, 2011 EITF Meeting
For detail, please contact info@hkcmcpa.us
The FASB has issued the
following additional materials for the June 23, 2011 EITF meeting:
-EITF Issue No. 9-H,
"Health Care Entities - Presentation and Disclosure of Net Revenue,
Provision for Bad Debts, and the Allowance for Doubtful Accounts" (issue
summary supplement);
-EITF Issue No. 10-E,
"Accounting for Deconsolidation of a Subsidiary That Is In-Substance Real
Estate" (issue summary supplement); and
-EITF Issue No. 10-H,
"Fees Paid to the Federal Government by Health Insurers" (issue
summary).
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
=======================================
AUDITING AND INTERNAL CONTROLS
HEADLINES:
=======================================
Risk Management -- New
Edition of Auditor's Risk Management Guide Published
For detail, please contact info@hkcmcpa.us
We have published the 2011
edition of Auditor's Risk Management Guide: Integrating Auditing and ERM.
This edition provides comprehensive, how-to guidance on performing a risk
management-based audit and assessing risk in a Sarbanes-Oxley world. Among
other changes, this updated publication contains the following:
-Discussion of the new global
risk management standard, “ISO 31000: Risk Management - Principles and
Guidelines;”
-Expanded discussion on risk
appetite and risk tolerance;
-Concepts from the PCAOB’s recently issued risk assessment standards; and
-A new case study on cash
management.
See our Literature Update for
complete details.
Auditing Standards -- OMB
Circular A-133 Compliance Supplement Published
For detail, please contact info@hkcmcpa.us
We have published the March
2011 Office of Management and Budget (OMB) Compliance Supplement to OMB
Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. This Supplement serves to identify existing important
compliance requirements that the federal government expects to be considered as
part of an audit conducted under the provisions of OMB Circular A-133. This
Supplement also provides guidance to assist auditors in determining compliance
requirements relevant to the audit, audit objectives, and suggested audit
procedures for programs not included in the Supplement. For single audits, this
Supplement replaces agency audit guides and other audit requirement documents
for individual federal programs.
This Supplement is effective
for audits of fiscal years beginning after June 30, 2010, and supersedes the
OMB Circular A-133 Compliance Supplement dated June 2010.
Broker-Dealers -- PCAOB
Adopts Interim Inspection Program for Broker-Dealer Audits And Broker and
Dealer Funding Rules
As discussed above in our
Accounting and SEC Summaries, the PCAOB has issued the following releases:
-PCAOB Release No. 2011-001, Temporary
Rule for an Interim Program of Inspection Related to Audits of Brokers and
Dealers; and
For detail, please contact info@hkcmcpa.us
-PCAOB Release No. 2011-002, Board
Funding Final Rules for Allocation of the Board's Accounting Support Fee among
Issuers, Brokers, and Dealers, and Other Amendments to the Board's Funding
Rules.
For detail, please contact info@hkcmcpa.us
These releases include certain
rules to implement provisions of the Dodd-Frank Wall Street Reform and Consumer
Protection Act related to audits of securities brokers and dealers. Specifically,
Release 2011-001 adopts a temporary rule to establish an interim inspection
program for registered public accounting firms’ audits of brokers and dealers.
If approved by the SEC, the temporary rule will allow the PCAOB to begin basic
inspection work on selected audits of brokers and dealers. The temporary rule
provides for an interim inspection program while the PCAOB considers the scope
and other elements of a permanent inspection program. Under the temporary rule,
the PCAOB will begin to inspect auditors of brokers and dealers and identify
and address with the registered firms any significant issues in those audits.
The PCAOB also expects that insights gained through the interim program will
aid in the eventual determination of the scope and elements of a permanent
program. The PCAOB expects to publish a proposal for a permanent program in
2013, which will be subject to approval by the SEC.
Release 2011-002 includes
rules for assessing and collecting a portion of its accounting support fee from
brokers and dealers to fund PCAOB oversight of audits of brokers-dealers, and
includes certain amendments to existing funding rules for issuers. The funding
rules, which are subject to approval by the SEC, would result in brokers and
dealers with more than $5 million in tentative net capital being allocated an
appropriate portion of the accounting support fee. The PCAOB anticipates that
the rules will be in effect for its 2011 funding cycle for broker and dealers,
which begins in the fall.
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
======================
GOVERNMENT HEADLINES:
======================
Auditing Standards -- OMB
Circular A-133 Compliance Supplement Published
For detail, please contact info@hkcmcpa.us
As discussed above in our
Auditing and Internal Controls Summaries, we have published the March 2011
Office of Management and Budget (OMB) Compliance Supplement to OMB Circular
A-133, Audits of States, Local Governments, and Non-Profit Organizations.
This Supplement serves to identify existing important compliance requirements
that the federal government expects to be considered as part of an audit
conducted under the provisions of OMB Circular A-133. This Supplement also
provides guidance to assist auditors in determining compliance requirements
relevant to the audit, audit objectives, and suggested audit procedures for
programs not included in the Supplement. For single audits, this Supplement
replaces agency audit guides and other audit requirement documents for
individual federal programs.
This Supplement is effective
for audits of fiscal years beginning after June 30, 2010, and supersedes the
OMB Circular A-133 Compliance Supplement dated June 2010.
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