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Accounting
Research Manager®
Weekly
Summary of Developments
December 5 -
December 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 link below to access and print the fully-formatted
Weekly Summary:
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below is the text of this week's Weekly Summary.
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ACCOUNTING
AND SEC HEADLINES:
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SEC and
PCAOB Activities -- 2011 AICPA Year-End SEC and PCAOB Conference
For detail, please contact info@hkcmcpa.us
We have
prepared an "Overview" of the 2011 AICPA National Conference on
Current SEC and PCAOB Developments held on December 5-7, 2011, in Washington,
D.C. Principal themes of the conference included:
-Global
accounting and auditing standards initiatives, including the potential adoption
of IFRS in the U.S. and the significant remaining FASB/IASB convergence
projects;
-Continued
emphasis on the transparency and integrity of financial reporting;
-Ideas for
updating the role of auditors, including the PCAOB’s
releases on independence (including mandatory audit firm rotation) and possible
changes to the auditor’s report; and
-Emphasis on
the consequences of the continued economic crisis (most recently in Europe) on
financial reporting and internal controls over financial reporting.
See our
Literature Update for compete details.
Consolidation -- FASB Proposes
Guidance on Cumulative Translation Adjustment
For detail, please contact info@hkcmcpa.us
The FASB has
issued for public comment a proposed Accounting Standards Update (ASU), Consolidation
(Topic 810): Parent’s Accounting for the Cumulative Translation Adjustment upon
the Sale or Transfer of a Group of Assets That Is a Nonprofit Activity or a
Business within a Consolidated Foreign Entity. This proposed ASU would
require that when a reporting entity ceases to have a controlling financial
interest in a group of assets that is a nonprofit activity or a business (other
than a sale of in substance real estate or conveyance of oil and gas mineral
rights) within a consolidated foreign entity, the reporting entity would be
required to apply the guidance in Subtopic 810-10 to release any related
cumulative translation adjustment into earnings. In addition, this proposal
would require that upon such sale or transfer, if a parent has hedged part (or
all) of its net investment in the foreign entity in which the group of assets
had resided, the parent would be required to release into earnings the related
amount of accumulated gain or loss on the net investment hedge attributable to
the nonprofit activity or business.
The guidance
being proposed in this ASU results from the consensus reached by the EITF in
Issue No. 11-A, “Parent’s Accounting for the
Cumulative Translation Adjustment upon the
As proposed,
this ASU would be applied prospectively to derecognition
events occurring after the effective date and prior periods would not be
adjusted. Early adoption would be permitted.
Comments on
this proposed ASU are due February 6, 2012.
FASB
Proposals
-- FASB Extends Comment Period on Proposals
For detail, please contact info@hkcmcpa.us
As reported
in its "Summary of Board Decisions" publication, the FASB met on
December 8, 2011, and decided to extend the comment period deadline to February
15, 2012, for the following previously issued proposed ASUs:
-Financial
Services-Investment Companies (Topic 946): Amendments to the Scope,
Measurement, and Disclosure Requirements;
-Real
Estate-Investment Property Entities (Topic 973); and
-Consolidation
(Topic 810): Principal versus Agent Analysis.
Derivatives
and Hedging -- Interpretation Updated
For detail, please contact info@hkcmcpa.us
We have
revised our publication, Derivatives and Hedging - Interpretations of U.S.
GAAP, to reflect amendments of the FASB Accounting Standards CodificationTM
through ASU No. 2011-09, Compensation - Retirement Benefits - Multiemployer
Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a
Multiemployer Plan, and FASB Editorial and Maintenance Update 2011-16.
Among the interpretations added to this publication are those addressing the
following:
-Required
ongoing assessment to determine whether a contract is a derivative instrument;
-Meaning of
"inception of the contract";
-Insurance
contract features involving certain currencies; and
-Immateriality
does not obviate assessment of hybrid financial instrument.
See our
Literature Update for complete details.
Risk
Alerts -- AICPA Issues Audit Risk Alerts
The AICPA
has issued the following alerts:
-Audit Risk
Alert, Insurance Industry Developments - 2011/12
For detail, please contact info@hkcmcpa.us
-Audit Risk
Alert,
For detail, please contact info@hkcmcpa.us
-Audit Risk
Alert, Health Care Industry Developments - 2011/12
For detail, please contact info@hkcmcpa.us
AICPA Alerts
provide users with a detailed overview of recent industry, technical,
regulatory, or professional developments. Audit Risk Alerts can also be used by
an entity’s internal management to address areas of audit concern.
Risk -- PCAOB Staff
Publishes Guidance on Assessing and Responding to Risk in the Current Economic
Environment
For detail, please contact info@hkcmcpa.us
The PCAOB
has published Staff Audit Practice Alert No. 9, Assessing and Responding to
Risk in the Current Economic Environment, to assist auditors in identifying
matters related to the current economic environment that might affect the risk
of material misstatements in financial statements and, therefore, require
additional audit attention. Practice Alert 9 updates PCAOB Staff Audit Practice
Alert No. 3, Audit Considerations in the Current Economic Environment,
which was issued in December 2008, in light of current global economic
conditions and recent enhancements to PCAOB standards.
Many of the
matters discussed in Practice Alert 3 (i.e., fair value measurements,
accounting estimates, going concern, and financial statement disclosures)
continue to be critical in audits of 2011 financial statements. However,
certain of the PCAOB standards referenced in Practice Alert 3 regarding
assessment of and response to risk were superseded in 2010 with the PCAOB's adoption of eight new risk assessment standards.
Staff Audit
Practice Alert 9 is organized into the following four sections: (1) considering
the impact of economic conditions on the audit; (2) auditing fair value
measurements and estimates; (3) the auditor's consideration of a company's
ability to continue as a going concern; and (4) auditing financial statement
disclosures.
The PCAOB
publishes Staff Audit Practice Alerts to highlight new, emerging, or otherwise
noteworthy circumstances that may affect how auditors conduct audits under the
existing requirements of PCAOB standards and relevant laws.
Comprehensive
Income
-- FASB Discusses Presentation of Comprehensive Income
For detail, please contact info@hkcmcpa.us
As reported
in its "Summary of Board Decisions" publication, the FASB met on
December 7, 2011, and discussed the feedback received from stakeholders on its
November 2011 FASB Exposure Draft, Comprehensive Income (Topic 220):
Deferral of the Effective Date for Amendments to the Presentation of
Reclassifications of Items Out of Accumulated Other Comprehensive Income in
Accounting Standards Update No. 2011-05.The FASB affirmed its decision to
defer the effective date of certain aspects of ASU 2011-05, Comprehensive
Income (Topic 220) - Presentation of Comprehensive Income, as proposed in
the Exposure Draft. That decision defers only those changes in ASU 2011-05 that
related to the presentation of reclassification adjustments. The amendments in
the forthcoming proposed guidance would supersede only those paragraphs that
pertain to how and where reclassification adjustments are presented. While the
FASB indicated that it is considering the operational concerns about the
presentation requirements for classification adjustments, entities would
continue to report reclassifications out of accumulated comprehensive income
consistent with the presentation requirements in effect before ASU 2011-05. The
portion of ASU 2011-05 pertaining to the requirement to report comprehensive
income either in a single continuous statement or in two separate but
consecutive financial statements is unaffected by this FASB decision.
IFRS for SMEs -- SME Implementation Group Issues Q&As
The SME
Implementation Group has published two question and answer documents (Q&As) on IFRS for SMEs:
-IFRS for
SMEs - Interpretation of ‘Traded in a Public Market’
(Section 1, Issue 3)
For detail, please contact info@hkcmcpa.us
-IFRS for
SMEs - Entities that Typically Have Public
Accountability (Section 1, Issue 2)
For detail, please contact info@hkcmcpa.us
These two Q&As contain guidance to help
entities assess whether they have public accountability and, therefore, whether
they meet the scope requirements in Section 1 of the IFRS for SMEs. Q&As
published by the SME Implementation Group are non-mandatory guidance that will
help those who use the IFRS for SMEs to think about
specific accounting questions. They are not intended to modify in any way the
application of full IFRS.
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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Risk
Alerts -- AICPA Issues Audit Risk Alerts
As discussed
above in our Accounting and SEC Summaries, the AICPA has issued the following
alerts:
-Audit Risk
Alert, Insurance Industry Developments - 2011/12
For detail, please contact info@hkcmcpa.us
-Audit Risk
Alert,
For detail, please contact info@hkcmcpa.us
-Audit Risk
Alert, Health Care Industry Developments - 2011/12
For detail, please contact info@hkcmcpa.us
AICPA Alerts
provide users with a detailed overview of recent industry, technical,
regulatory, or professional developments. Audit Risk Alerts can also be used by
an entity’s internal management to address areas of audit concern.
Risk -- PCAOB Staff
Publishes Guidance on Assessing and Responding to Risk in the Current Economic
Environment
For detail, please contact info@hkcmcpa.us
As discussed
above in our Accounting and SEC Summaries, the PCAOB has published Staff Audit
Practice Alert No. 9, Assessing and Responding to Risk in the Current
Economic Environment, to assist auditors in identifying matters related to
the current economic environment that might affect the risk of material
misstatements in financial statements and, therefore, require additional audit
attention. Practice Alert 9 updates PCAOB Staff Audit Practice Alert No. 3, Audit
Considerations in the Current Economic Environment, which was issued in
December 2008, in light of current global economic conditions and recent
enhancements to PCAOB standards.
Many of the
matters discussed in Practice Alert 3 (i.e., fair value measurements,
accounting estimates, going concern, and financial statement disclosures)
continue to be critical in audits of 2011 financial statements. However,
certain of the PCAOB standards referenced in Practice Alert 3 regarding
assessment of and response to risk were superseded in 2010 with the PCAOB's adoption of eight new risk assessment standards.
Staff Audit
Practice Alert 9 is organized into the following four sections: (1) considering
the impact of economic conditions on the audit; (2) auditing fair value
measurements and estimates; (3) the auditor's consideration of a company's
ability to continue as a going concern; and (4) auditing financial statement
disclosures.
The PCAOB
publishes Staff Audit Practice Alerts to highlight new, emerging, or otherwise
noteworthy circumstances that may affect how auditors conduct audits under the
existing requirements of PCAOB standards and relevant laws.
Audit
Opinions -- AICPA Standards on Forming an Opinion on Financial Statements
Discussed
For detail, please contact info@hkcmcpa.us
We have
added a GAAS Update Service that provides discussion and analysis of a
clarified AICPA Statement on Auditing Standards (SAS), Forming an Opinion
and Reporting on Financial Statements, which was finalized as part of the AICPA's Clarity Project and subsequently designated as AU-C
Section 700, Forming an Opinion and Reporting on Financial Statements,
by SAS 122, Statements on Auditing Standards: Clarification and Recodification. AU-C Section 700 will supersede:
-SAS 1
section 410 (AU Section 410), Adherence to Generally Accepted Accounting
Principles;
-SAS 1
section 530 (AU Section 530), Dating of the Independent Auditor’s Report,
paragraphs 1 and 2; and
-Along with
AU-C Section 705, Modifications to the Opinion in the Independent Auditor’s
Report, and AU-C Section 706, Emphasis-of-Matter Paragraphs and
Other-Matter Paragraphs in the Independent Auditor’s Report, supersede
various paragraphs of SAS 58 (AU Section 508), Reports on Audited Financial
Statements.
AU-C Section
700 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:
For detail, please contact info@hkcmcpa.us
=======================================
GOVERNMENT
HEADLINES:
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Financial
Projections -- GASB Proposes Financial Projections for Assessing Economic
Condition
For detail, please contact info@hkcmcpa.us
The GASB has
issued for public comment a Preliminary Views document, Economic Condition
Reporting: Financial Projections. This document proposes that state and
local governments present certain five-year projections that would accompany
their financial statements as required supplementary information. The objective
of these proposed projections is to better enable taxpayers, bond holders, and
other interested parties to assess a government’s financial health. Based on
its research and input from financial statement users, preparers, and auditors,
the GASB believes that projections of the following information are necessary
to assist users in assessing a government’s economic condition:
-Cash
inflows and cash outflows, with explanations of the known causes of
fluctuations;
-Financial
obligations, including bonds, pensions, other postemployment
benefits, and long-term contracts, with explanations of the known causes of
fluctuations; and
-Annual debt
service payments, including principal and interest.
Comments on
this document are due March 16, 2012.
Governmental
Combinations -- GASB Closer to Issuing a Combinations Proposal
For detail, please contact info@hkcmcpa.us
We have
published a Governmental GAAP Update Service that discusses the GASB activities
in regards to governmental combinations. Topics discussed in this update
include:
-Overview of
combinations in government;
-Combining
governments without consideration;
-Adjustments
involved in carryovers;
-Intra-entity
payables and receivables;
-Consideration
and purchasing assets and liabilities; and
-Measurement
of assets and liabilities involved in combinations.
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