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Accounting Research Manager®
Weekly Summary of Developments
June 20-24, 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
EITF Meeting Results -- Decisions Reached
Fraud -- New Issue of "A Closer
Look" Published
Auditor's Reporting Model -- PCAOB Issues Concept Release on
Auditor's Reporting Model
Audit Firms -- PCAOB Publishes Staff Guidance
on Firm Annual Reports
Financial Instruments -- FASB Discusses Financial
Instrument Risk Disclosures and Other Matters
Employee Benefits -- IASB Amends IAS 19
Other Comprehensive Income -- IASB Amends IAS 1
Annual Improvements Project -- IASB Publishes Proposed
Improvements to IFRS
IFRS for SMEs -- IASB Issues Guidance on the Use of the IFRS for SMEs
in Parent’s Separate Financial Statements
State and Local Governments -- AICPA Issues Audit Risk Alert on
State and Local Governmental Developments
Auditing and Internal
Controls Headlines
Fraud -- New Issue of "A Closer
Look" Published
Auditor's Reporting Model -- PCAOB Issues Concept Release on
Auditor's Reporting Model
Audit Firms -- PCAOB Publishes Staff Guidance
on Firm Annual Reports
External Confirmations -- Clarified Statement on Auditing
Standards Discussed
State and Local Governments -- AICPA Issues Audit Risk Alert on
State and Local Governmental Developments
Government Headlines
Deferred Inflows and
Outflows --
Deferred Inflows and Outflows of Resources Project Gains Momentum
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ACCOUNTING AND SEC HEADLINES:
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EITF Meeting Results --
Decisions Reached
For detail, please contact info@hkcmcpa.us
As described in detail in our
"EITF Flash Report," the Emerging Issues Task Force (EITF) discussed
the following issues at its June 23, 2011 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";
-EITF Issue No. 10-E,
"Accounting for Deconsolidation of a Subsidiary That Is In-Substance Real
Estate"; and
-EITF Issue No. 10-H,
"Fees Paid to the Federal Government by Health Insurers."
The EITF reached a final
consensus on Issues 09-H and 10-H. The EITF also reached a
consensus-for-exposure on Issue 10-E. The FASB must still ratify these
decisions.
Prior to the EITF meeting this
week, the FASB distributed additional meeting materials including (a) a
revised proposed agenda; (b) EITF Summary of Issues; and (c)
proposed revision to Issue 9-H:
For detail, please contact info@hkcmcpa.us
See our EITF Flash Report for
complete details.
Fraud -- New Issue of
"A Closer Look" Published
For detail, please contact info@hkcmcpa.us
We have prepared and published
another edition of “A Closer Look.” In this edition, we provide an analysis of
the role of deception in fraud. The analysis is intended to provide an
understanding of the general nature of deception along with the auditor’s role
in detecting material misstatement caused by fraud. In addition to exploring
fraud and the deception related to it, this edition of “A Closer Look” also
examines the auditor’s defenses against fraud, such as the concepts of strategic
reasoning, professional skepticism, focused training, and carefully considered
audit procedures.
See our Literature Update for
complete details.
Auditor's Reporting Model -- PCAOB Issues Concept Release on Auditor's
Reporting Model
For detail, please contact info@hkcmcpa.us
The PCAOB has issued a concept
release to discuss alternatives for changing the auditor's reporting model. The
PCAOB also announced that it will convene a public roundtable to discuss the
concept release in the third quarter of 2011. The concept release presents
several alternatives for changing the auditor's reporting model and is seeking
specific comment on these or other alternatives that could provide investors
with more transparency in the audit process and more insight into the company's
financial statements or other information outside the financial statements. These
alternatives include:
-An auditor's discussion and
analysis;
-Required and expanded use of
emphasis paragraphs;
-Auditor assurance on other
information outside the financial statements; and
-Clarification of language in
the standard auditor's report.
The concept release seeks
public comment on alternatives for amendments to, or the development of new,
auditing standards that would supersede the PCAOB's
current standards on the auditor's report. Comments on the concept release are
due September 30, 2011.
Audit Firms -- PCAOB
Publishes Staff Guidance on Firm Annual Reports
For detail, please contact info@hkcmcpa.us
The PCAOB staff has updated
its Staff Questions and Answers, “Annual Reporting on Form 2,” concerning a
registered firm’s obligation to file its annual report on Form 2. The questions
and answers were prepared to supplement PCAOB Release No. 2008-004, Rules on
Periodic Reporting by Registered Public Accounting Firms (June 10, 2008)
and the instructions to Form 2.
Staff questions and answers do
not constitute PCAOB rules, nor have they been approved by its members.
Financial Instruments --
FASB Discusses Financial Instrument Risk Disclosures and Other Matters
For detail, please contact info@hkcmcpa.us
As reported in its
"Summary of Board Decisions" publication, the FASB met on June 22,
2011, and discussed the following topics: (a) financial instruments:
disclosures; and (b) financial instruments: classification and
measurement. The FASB staff briefly summarized what it has learned about
financial instruments risk disclosures through research and outreach with
users, preparers, and others. The FASB decided that its project on disclosures
regarding financial instruments would focus on improving disclosures about the
liquidity and interest rate risks of financial instruments. The FASB directed
its staff to undertake additional outreach with users to learn their views
about the types of entities that should be required to provide expanded
disclosures about those risks, for discussion at a future meeting.
The FASB also discussed how an
entity should classify and measure loan commitments, revolving lines of credit,
and standby letters of credit. The FASB decided that an entity would measure
loan commitments, revolving lines of credit, and standby letters of credit at
fair value if its business strategy for the underlying loans is to hold them
for sale with changes in fair value recognized in net income. For all other
loan commitments, revolving lines of credit, and standby letters of credit, an
entity would recognize any fees received in accordance with the existing
guidance in FASB Accounting Standards CodificationTM Subtopic 310-20. Under
that guidance, if the likelihood is that exercise of the commitment is remote,
any commitment fees received would be recognized as fee income over the
commitment period. If the likelihood that exercise is
not remote, any commitment fees received would be deferred and recognized over
the life of the funded loan as an adjustment of yield.
Employee Benefits -- IASB
Amends IAS 19
For detail, please contact info@hkcmcpa.us
The IASB has issued an amended
version of IAS 19, Employee Benefits, which according to the IASB is
intended to improve financial reporting by:
-Eliminating an option to
defer the recognition of gains and losses, known as the “corridor method”;
-Streamlining the presentation
of changes in assets and liabilities arising from defined benefit plans,
including requiring remeasurements to be presented in
other comprehensive income; and
-Enhancing the disclosure
requirements for defined benefit plans.
The amendments to IAS 19 are
effective for financial years beginning on or after January 1, 2013. Earlier
application is permitted.
Other Comprehensive Income
-- IASB Amends IAS 1
For detail, please contact info@hkcmcpa.us
The IASB has issued amendments
to IAS 1, Presentation of Financial Statements, to require companies
preparing financial statements in accordance with IFRS to group together items
within other comprehensive income (OCI) that may be reclassified to the profit
or loss section of the income statement. The amendments also reaffirm existing
requirements that items in OCI and profit or loss should be presented as either
a single statement or two consecutive statements.
The IASB’s
amendments to IAS 1 are set out in Presentation of Items of Other
Comprehensive Income and are effective for financial years beginning on or
after July 1, 2012.
Annual Improvements Project
-- IASB Publishes Proposed Improvements to IFRS
For detail, please contact info@hkcmcpa.us
The IASB has issued for public
comment an Exposure Draft, Improvements to IFRSs,
which includes proposed amendments to the following IFRSs
under the IASB's annual improvements project:
-IFRS 1, First-time
Adoption of International Financial Reporting Standards;
-IAS 1, Presentation of
Financial Statements;
-IAS 16, Property, Plant
and Equipment;
-IAS 32, Financial
Instruments: Presentation; and
-IAS 34, Interim Financial
Reporting.
The purpose of the project is
to provide a streamlined process for dealing efficiently with a collection of
narrow scope amendments and clarifications to IFRSs.
The proposed amendments
reflect issues discussed by the IASB in the project cycle that began in 2009.
The proposed effective date for the amendments is for annual periods beginning
on or after January 1, 2013, although entities would be permitted to adopt them
earlier.
Comments on this proposal are
due October 21, 2011.
IFRS for SMEs -- IASB Issues Guidance on the Use of the IFRS for SMEs in Parent’s Separate Financial Statements
For detail, please contact info@hkcmcpa.us
The IASB staff has issued a
Question and Answer (Q&A) document, IFRS for SMEs
- Use of the IFRS for SMEs in Parent’s Separate
Financial Statements (Section 1, Issue 1). This document includes guidance,
in a Q&A format, from the IASB's SME
Implementation Group that is responsible for assisting the IASB on matters
related to the implementation of IFRS for Small and Medium-sized Entities (SMEs). This guidance addresses whether a parent entity that
itself does not have public accountability may present its separate financial
statements in accordance with IFRS for SMEs if it is
part of a group that is required (or elects) to present consolidated financial
statements in accordance with full IFRS.
State and Local Governments
-- AICPA Issues Audit Risk Alert on State and Local Governmental Developments
For detail, please contact info@hkcmcpa.us
The AICPA has issued an Audit
Risk Alert, State and Local Governmental Developments. The Alert is
intended to provide auditors of financial statements of state and local
governments with an overview of recent economic, industry, technical,
regulatory, and professional developments that may affect the audits and other
engagements they perform. The Alert also includes discussion of recently issued
specific accounting and audit guidance that may have an impact on audits of
state and local governments. This Alert may also be useful to financial
statement preparers.
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:
=======================================
Fraud -- New Issue of
"A Closer Look" Published
For detail, please contact info@hkcmcpa.us
As discussed above in our
Accounting and SEC Summaries, we have prepared and published another edition of
“A Closer Look.” In this edition, we provide an analysis of the role of
deception in fraud. The analysis is intended to provide an understanding of the
general nature of deception along with the auditor’s role in detecting material
misstatement caused by fraud. In addition to exploring fraud and the deception
related to it, this edition of “A Closer Look” also examines the auditor’s
defenses against fraud, such as the concepts of strategic reasoning,
professional skepticism, focused training, and carefully considered audit
procedures.
See our Literature Update for
complete details.
Auditor's Reporting Model -- PCAOB Issues Concept Release on Auditor's
Reporting Model
For detail, please contact info@hkcmcpa.us
As discussed above in our
Accounting and SEC Summaries, the PCAOB has issued a concept release to discuss
alternatives for changing the auditor's reporting model. The PCAOB also
announced that it will convene a public roundtable to discuss the concept
release in the third quarter of 2011. The concept release presents several
alternatives for changing the auditor's reporting model and is seeking specific
comment on these or other alternatives that could provide investors with more
transparency in the audit process and more insight into the company's financial
statements or other information outside the financial statements. These
alternatives include:
-An auditor's discussion and
analysis;
-Required and expanded use of
emphasis paragraphs;
-Auditor assurance on other
information outside the financial statements; and
-Clarification of language in
the standard auditor's report.
The concept release seeks
public comment on alternatives for amendments to, or the development of new,
auditing standards that would supersede the PCAOB's
current standards on the auditor's report. Comments on the concept release are
due September 30, 2011.
Audit Firms -- PCAOB
Publishes Staff Guidance on Firm Annual Reports
For detail, please contact info@hkcmcpa.us
As discussed above in our
Accounting and SEC Summaries, the PCAOB staff has updated its Staff Questions
and Answers, “Annual Reporting on Form 2,” concerning a registered firm’s
obligation to file its annual report on Form 2. The questions and answers were
prepared to supplement PCAOB Release No. 2008-004, Rules on Periodic
Reporting by Registered Public Accounting Firms (June 10, 2008) and the
instructions to Form 2.
Staff questions and answers do
not constitute PCAOB rules, nor have they been approved by its members.
External Confirmations --
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), External Confirmations, which was finalized as
part of the AICPA's Clarity Project. The clarified
SAS supersedes SAS 67 (AU Section 330), The Confirmation Process, and
addresses the auditor’s use of external confirmation procedures to obtain
relevant and reliable audit evidence.
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
State and Local Governments
-- AICPA Issues Audit Risk Alert on State and Local Governmental Developments
For detail, please contact info@hkcmcpa.us
As discussed above in our
Accounting and SEC Summaries, the AICPA has issued an Audit Risk Alert, State
and Local Governmental Developments. The Alert is intended to provide
auditors of financial statements of state and local governments with an
overview of recent economic, industry, technical, regulatory, and professional
developments that may affect the audits and other engagements they perform. The
Alert also includes discussion of recently issued specific accounting and audit
guidance that may have an impact on audits of state and local governments. This
Alert may also be useful to financial statement preparers.
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:
======================
Deferred Inflows and
Outflows -- Deferred Inflows and Outflows of Resources Project Gains Momentum
For detail, please contact info@hkcmcpa.us
We have added a Governmental
GAAP Update Service that discusses the forthcoming GASB standard, Financial
Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and
Net Position. This update also discusses the GASB's
tentative decisions reached regarding deferred inflows and outflows of
resources. Specifically, this update discusses the following topics:
-Overview of deferred inflows
and outflows of resources;
-Decisions made in the ongoing
project on deferred inflows and outflows; and
-Other items identified by the
GASB that will be impacted by any new guidance.
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