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Accounting Research Manager®
Weekly Summary of Developments
September 5-9, 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
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Accounting and SEC
Headlines
Financial Instruments -- FASB Discusses Financial
Instruments and Other Matters
SEC Regulations -- SEC Seeks Public Comment on
Developing a Process to Review Existing Regulations
Financial Reporting Manual -- SEC Staff Updates Financial
Reporting Manual
Auditing and Internal
Controls Headlines
Commercial Entities -- 2012 Edition of
Knowledge-Based Audits Published
Summary Financial
Statements --
Clarified SAS Discussed
Government Headlines
Government Sponsored
Entities --
Implicit and Explicit Guarantees of Federal Securities Discussed
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ACCOUNTING AND SEC HEADLINES:
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Financial Instruments --
FASB Discusses Financial Instruments and Other Matters
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As reported in its
"Summary of Board Decisions" publication, the FASB met on September
7, 2011, and discussed the following topics:
-Accounting for financial
instruments-disclosures;
-Accounting for financial
instruments-classification and measurement; and
-Insurance contracts.
Regarding its project on
disclosures regarding financial instruments, the FASB discussed the results of
staff outreach, project scope, and staff recommended disclosures for liquidity
and interest rate risk. The FASB reached a number of tentative decisions,
including the following:
-The scope for the proposed
disclosures about liquidity risk would include all entities, but only financial
institutions would provide disclosures about interest rate risk;
-Financial institutions would
include banks, savings and loan associations, savings banks, credit unions,
finance companies, and insurance entities;
-The disclosures required of
financial institutions would be applicable to reportable segments of entities,
such as those reportable segments that engage in transactions that involve
lending to or financing the activities of others; and
-The proposed disclosures
would be required for interim and annual reporting periods, except for
nonpublic, nonfinancial entities, which would be required to provide the
liquidity risk disclosures only for annual reporting periods.
Regarding its project on the
classification and measurement of financial instruments, the FASB discussed: (a)
conditional fair value option for groups of financial assets and financial
liabilities; and (b) hybrid financial assets. The FASB reached the
following decisions regarding these topics:
-At initial recognition, an
entity would be permitted to measure a group of financial assets and financial
liabilities at fair value with changes in fair value recognized in net income
if the entity manages the net exposure relating to those financial assets and
financial liabilities (which may be derivative instruments) and provides
information on that basis to the reporting entity’s management.
-For hybrid financial assets,
an entity would be permitted, at initial recognition, to apply a conditional
fair value option to avoid bifurcation and separate accounting of an embedded
derivative feature. An entity would be permitted to measure a hybrid financial
asset at fair value in its entirety after the entity has determined that an
embedded derivative feature exists that otherwise would require bifurcation and
separate accounting.
Separately, Leslie F. Seidman, FASB chairman, announced the addition of a
short-term, narrow-scope project to the FASB's agenda to simplify the manner in
which an entity tests other indefinite-lived intangible assets for impairment.
SEC Regulations -- SEC
Seeks Public Comment on Developing a Process to Review Existing Regulations
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The SEC has issued for public
comment a request for information, Retrospective Review of Existing
Regulations. This document seeks comments from interested parties to assist
the SEC as it considers developing a plan for the retrospective review of its
regulations. Specifically, the SEC is seeking public comment on the process it
should use to conduct retrospective reviews, such as how often rules should be
reviewed, the factors that should be considered, and ways to improve public
participation in the rulemaking process.
Comments on this request are due
October 6, 2011.
Financial Reporting Manual
-- SEC Staff Updates Financial Reporting Manual
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The staff in the Division of
Corporation Finance (Corp Fin) of the SEC has released the updated Financial
Reporting Manual. This manual represents informal guidance prepared for use
by the staff in Corp Fin when reviewing or addressing financial reporting
matters in registrant filings. Corp Fin has made this manual public because
readers may find the guidance useful in preparing filings with the SEC.
This update to the manual
includes style revisions made to the Table of Contents and Topic 1: Registrant’s
Financial Statements. Corresponding reference changes have also been made in
the body of the manual and Index. According to the Corp Fin staff, these
revisions have been made to improve the formatting of Topic 1, and do not
change the substantive content of the manual.
See our Literature Update for
complete details.
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AUDITING AND INTERNAL CONTROLS
HEADLINES:
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Commercial Entities -- 2012
Edition of Knowledge-Based Audits Published
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We have published the 2012
edition of Knowledge-Based Audits of Commercial Entities (formerly, Knowledge-Based
Audit Procedures). The primary objective of this publication is to show
practitioners the most effective approach for conducting high-quality audits of
nonpublic commercial entities. This edition of the publication includes
revisions and updates to reflect current authoritative literature and, among
other things, auditing pronouncements through AICPA Statement on Auditing
Standards (SAS) No. 121, Revised Applicability of Statement on Auditing
Standards No. 100 – Interim Financial Information.
See our Literature Update for
complete details.
Summary Financial
Statements -- Clarified SAS Discussed
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We have added a GAAS Update
Service that provides discussion and analysis of a clarified SAS, Engagements
to Report on Summary Financial Statements, which was finalized as part of
the AICPA's Clarity Project. The clarified SAS will
supersede SAS 42 (AU Section 552), Reporting on Condensed Financial
Statements and Selected Financial Data. The clarified SAS addresses the
auditor’s responsibilities when reporting on summary financial statements
derived from financial statements audited by that same auditor. Therefore, an
auditor cannot report on summary financial statements unless the auditor has
audited the financial statements from which the summary financial statements
are derived.
The clarified SAS will be
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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listed above may not be accessible under your current subscription. For
information about upgrading your subscription to include additional content,
click here:
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GOVERNMENT HEADLINES:
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Government Sponsored
Entities -- Implicit and Explicit Guarantees of Federal Securities Discussed
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We have added a Governmental
GAAP Update Service that discusses government sponsored entities (GSEs). Specifically, this update discusses the impact in
the change of status of many GSEs as a result of the
financial crisis and what disclosures related to implicit or explicit
guarantees of federal securities may be necessary. Topics discussed in this
update are:
-Overview and description of GSEs;
-Status of debts of GSEs; and
-Disclosure issues of implicit
GSEs.
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