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Accounting
Research Manager®
Weekly
Summary of Developments
October
24-28, 2011
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Accounting
Research Manager subscriber,
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developments. Click the link below to access and print the fully-formatted
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ACCOUNTING
AND SEC HEADLINES:
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Investment
Companies -- FASB Issues Proposal to Clarify Criteria for Investment Company
Accounting
For detail, please contact info@hkcmcpa.us
The FASB has
issued a proposed Accounting Standards Update (ASU), Financial Services -
Investment Companies (Topic 946): Amendments to the Scope, Measurement, and
Disclosure Requirements, intended to improve and converge financial
reporting by setting forth consistent criteria for determining whether an
entity is an investment company. This proposed ASU is a result of the efforts
of the FASB and the IASB (the Boards) to develop consistent criteria for
determining whether an entity is an investment company. Under U.S. GAAP,
investment companies carry all of their investments at fair value, even if they
hold a controlling interest in another company. The primary changes being
proposed by the FASB relate to which entities would be considered investment
companies as well as certain disclosure and presentation requirements. These
changes are also being proposed under IFRS for the first time. The FASB
believes the proposed ASU would improve the comparability between entities that
meet the criteria to be investment companies under U.S. GAAP and those that
meet the criteria to be investment entities under the proposed amendments to
IFRS. The IASB issued its proposal, Investment Entities, on August 25,
2011.
In addition
to the changes to the criteria for determining whether an entity is an investment
company, the FASB also proposes that an investment company consolidate another
investment company if it holds a controlling financial interest in the entity.
Comments on
the proposed ASU and the IASB's proposal are due
January 5, 2012.
Real
Estate -- FASB Issues Proposal on Accounting for Investment Property Entities
For detail, please contact info@hkcmcpa.us
The FASB has
issued a proposed ASU, Real Estate - Investment Property Entities (Topic
973), intended to develop accounting guidance for investment property
entities. This proposed ASU would require an entity that meets certain criteria
(e.g., substantially all of the entity’s business activities are investing in
real estate property or properties) to measure its investment properties at
fair value with any changes in fair value recognized in net income. The
proposed ASU would also introduce additional presentation and disclosure
requirements for an investment property entity. This proposed ASU is a result
of the FASB’s efforts to align the scope of entities
that would apply the proposed lessor accounting model
under U.S. GAAP and IFRS and to address the diversity in practice about the
accounting by real estate entities.
As part of
the Boards joint project on accounting for leases, the IASB decided that a lessor of an investment property would not be required to
apply the proposed lessor accounting requirements in
the IASB’s August 2010 Exposure Draft, Leases,
if the lessor measures its investment properties at
fair value by electing the fair value model under IAS 40, Investment
Property. Unlike IFRS, U.S. GAAP does not contain specific accounting
requirements for investment properties. As a result, an entity that invests in
real estate properties but is not an investment company is required to measure
its real estate properties at cost under Codification Topic 360, Property,
Plant, and Equipment, and account for the leases separately. In response to
consistent investor input, the FASB decided to prescribe the circumstances when
fair value would be required, rather than introduce an optional accounting
practice into U.S. GAAP.
Comments on
the proposed ASU are due January 5, 2012.
Comprehensive
Income -- FASB Defers Certain Other Comprehensive Income Presentation
Requirements
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As reported
in its “Summary of Board Decisions” publication, the FASB met on October 21,
2011, and discussed the operational concerns of stakeholders about the
presentation requirements for reclassification adjustments in ASU No. 2011-05, Comprehensive
Income (Topic 220): Presentation of Comprehensive Income. This ASU was
issued by the FASB on June 16, 2011. The FASB decided that the specific
requirement to present items that are reclassified from other comprehensive
income to net income alongside their respective components of net income and
other comprehensive income will be deferred. Therefore, those requirements will
not be effective for public entities for fiscal years and interim periods
within those years beginning after December 15, 2011. Key provisions for those
requirements pertain primarily to Codification paragraphs 220-10-45-17,
220-10-55-7 through 55-9, and 220-10-55-18. The FASB decided that the comment
period on the forthcoming exposure draft will be no shorter than 15 days.
Risk Disclosures
-- FASB Discusses Disclosures About Risks and
Uncertainties
For detail, please contact info@hkcmcpa.us
As reported
in its "Summary of Board Decisions" publication, the FASB met on
October 26, 2011, and discussed the scope and overall objectives of its project
on disclosures about risks and uncertainties and the liquidation basis of
accounting. The FASB decided that improving disclosures that would serve as an
early warning of an entity’s potential inability to continue as a going concern
would not be an objective of this project, since the FASB tentatively decided
to add incremental disclosures about liquidity risk in the separate project on
accounting for financial instruments. The FASB postponed making a decision
about whether to incorporate into GAAP the existing auditing guidance for
making a going-concern assessment. Instead, the FASB instructed its staff to
perform additional work to determine whether the term "substantial
doubt" can be defined in a way that would be operable and not conflict
with auditing guidance to be developed by the PCAOB and the Auditing Standards
Board of the AICPA.
Uncertainty
in Financial Reporting -- SEC Staff to Hold Roundtable on Measuring Uncertainty
in Financial Reporting
The SEC’s
Office of the Chief Accountant (OCA) will hold a public roundtable “Uncertainty
in Financial Reporting: How Much to Recognize and How Best to Communicate it.”
In connection with this roundtable, OCA issued the following documents:
-Request for
Comment, Inaugural Roundtable of the Financial Reporting Series Entitled
“Uncertainty in Financial Statements - How Much to Recognize and How Best to
Communicate It” and;
For detail, please contact info@hkcmcpa.us
-Briefing
Paper, Measurement Uncertainty in Financial Reporting - How Much to
Recognize and How Best to Communicate It.
For detail, please contact info@hkcmcpa.us
This
roundtable will examine financial statement measurements and associated
disclosures where the outcome depends on future events that by definition are
presently unknown. Specifically, the roundtable discussion is expected to focus
on:
-Measurement
and recognition: whether measurements that involve uncertainty provide
investors with useful information.
-Disclosure:
the information that investors find important to understand and assess
measurement uncertainties and the challenges or impediments that preparers face
in providing that information.
-Auditability: the auditor's role and responsibility for
reporting on financial statements with measurement uncertainties.
This
roundtable is the first in OCA’s Financial Reporting
Series (FRS). As part of its oversight role for accounting and auditing
standard setting and financial reporting, OCA will hold an ongoing series of
roundtable sessions to facilitate a balanced discussion of implementation
issues or emerging issues within the financial reporting system. This first
roundtable is scheduled for November 8, 2011, at the SEC’s headquarters in
EITF
Materials -- FASB Issues Additional Materials for November 3, 2011 EITF Meeting
For detail, please contact info@hkcmcpa.us
The FASB has
issued the following additional materials for the November 3, 2011 EITF
meeting:
-Proposed
agenda;
-EITF
meeting dates for 2012 to be confirmed;
-EITF Issue
No. 10-E, "Derecognition of In Substance Real
Estate" (issue summary, supplement, and comment letters); and
-EITF Issue
No. 11-A, "Parent's Accounting for the Cumulative Translation Adjustment
(CTA) upon the Sale or Transfer of a Group of Assets within a Consolidated
Foreign Entity That Meets the Definition of a Business" (issue summary).
Some of
the documents listed above may not be accessible under your current subscription.
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content, click here:
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AUDITING AND
INTERNAL CONTROLS HEADLINES:
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Health
Care Entities -- New Edition of Knowledge-Based Audits of Health Care Entities
Published
For detail, please contact info@hkcmcpa.us
We have
published the 2011 edition of Knowledge-Based Audits of Health Care
Entities. This publication will help readers comply with the AICPA's risk assessment standards and provides
practitioners with an effective approach for conducting audits of for-profit
(investor-owned) and not-for-profit health care entities. This edition of the
publication reflects comprehensive coverage of current accounting authoritative
literature and, among other things, auditing pronouncements through 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.
Analytical
Procedures -- Clarified SAS Discussed
For detail, please contact info@hkcmcpa.us
We have
added a GAAS Update Service that provides discussion and analysis of a
clarified SAS, Analytical Procedures, which was finalized as part of the
AICPA's Clarity Project and subsequently designated
as AU-C Section 520, Analytical Procedures, by SAS 122, Statements on
Auditing Standards: Clarification and Recodification.
AU-C Section 520 will supersede SAS 56 (AU Section 329), Analytical
Procedures, and addresses the auditor’s responsibility in connection with:
(a) using analytical procedures as substantive procedures either alone
or in combination with tests of details; and (b) performing analytical
procedures near the end of the audit that assist the auditor when forming an
overall conclusion on the financial statements.
AU-C Section
520 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."
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:
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======================
GOVERNMENT
HEADLINES:
======================
GASB
Activities -- GASB Approval of Technical Plan Discussed
For detail, please contact info@hkcmcpa.us
We have
added a Governmental GAAP Update Service that discusses the GASB's
approval of its updated technical plan. The GASB’s
technical plan includes projects on:
-Conceptual
framework: recognition and measurement attributes;
-Economic
condition reporting;
-Government
combinations; and
-Postemployment benefit accounting and financial reporting.
As discussed
in this update, the GASB has also added a major project that addresses fair
value measurement and a narrow scope practice issue that is related to
technical corrections of existing standards.
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