===================================================
Accounting
Research Manager®
Weekly
Summary of Developments
February 27
- March 2, 2012
===================================================
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
=============================
ACCOUNTING
AND SEC HEADLINES:
=============================
Leases --
FASB Discusses Lease Accounting 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 February 27-29, 2012, and discussed the following topics:
-Leases;
-Accounting
for financial instruments: classification and measurement;
-Insurance
contracts; and
-Accounting
for financial instruments: impairment.
The Boards
discussed lessee accounting and, in particular, different methods of amortizing
the right-of-use asset. The Boards also discussed any consequences that a
change to the lessee accounting model would have on the tentative decisions for
lessor accounting. While the Boards did not reach any
formal decisions regarding leases at these meetings, the Boards discussed the
following two approaches to amortizing the right-of-use asset:
-An asset
approach in which the lessee would amortize the right-of-use asset based on the
estimated consumption of the underlying leased asset over the lease term; and
-An
interest-based amortization approach in which the lessee would amortize the
right-of-use asset on a systematic basis that reflects the pattern of
consumption of expected future economic benefits for those leases for which
substantially all of the risks and rewards of the underlying leased asset have
been transferred to the lessee.
Regarding
their project on the accounting for financial instruments, the Boards discussed
the cash flow characteristics assessment and held an informational session on
the business model assessment in their respective classification and
measurement models for financial instruments. The Boards reached a number of
tentative decisions, including the following:
-A financial
asset could be eligible for a measurement category other than fair value
through profit or loss if the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding;
-A
contractual term that changes the timing or amount of payments of principal and
interest would not preclude the financial asset from a measurement category
other than fair value through profit or loss as long as any variability only
reflects changes in the time value of money and the credit risk of the
instrument; and
-A
prepayment or extension option, including those that are contingent, does not
preclude a financial asset from a measurement category other than fair value
through profit and loss as long as these features are consistent with the
notions of solely payments of principal and interest on the principal amount
outstanding.
The Boards
continued their discussions on their insurance contracts project by considering
the following topics: (a) eligibility criteria and mechanics for the
premium allocation approach; (b) measurement of liabilities for
infrequent, high-severity events; (c) onerous contracts; (d)
unbundling goods and services components; and (e) financial instruments
with discretionary participation features. The Boards reached a number of
tentative decisions, including the following:
-Discounting
and interest accretion to reflect the time value of money should be required in
measuring the liability for remaining coverage for contracts that have a
significant financing component, as defined according to the characteristics of
a significant financing component under the revenue recognition proposals;
-Insurers
should measure both an insurance contract liability by applying the building-block
approach and an onerous contract liability by applying the premium allocation
approach, taking into account estimates of expected cash flows at the balance
sheet date; and
-The
measurement of the liability for onerous contracts should be updated at the end
of each reporting period.
EITF
Materials -- FASB Issues Additional Materials for March 15, 2012 EITF Meeting
For detail, please contact info@hkcmcpa.us
The FASB has
issued the following additional materials for the March 15, 2012 EITF meeting:
-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" (comment letters);
-EITF Issue
No. 12-A, "Not-for-Profit Entities - Classification of Gifts of Securities
in the Statement of Cash Flows" (issue summary);
-EITF Issue
No. 12-D, "Accounting for Joint and Several Liability for which the Total
Amount of the Obligation at the Reporting Date Is Fixed" (issue summary);
and
-EITF Issue
No. 12-E, "Accounting for Fair Value Information That Arises Subsequent to
the Measurement Date and Its Inclusion in the Impairment Analysis of
Unamortized Film Costs" (issue summary).
Related
Parties -- PCAOB Proposes Guidance on Related Parties
For detail, please contact info@hkcmcpa.us
The PCAOB
has issued for public comment a proposed auditing standard, Related Parties.
The PCAOB believes the proposed standard would improve the auditor's evaluation
of a public company's identification of, accounting for, and disclosure about
its relationships and transactions with related parties.
The PCAOB
also is proposing amendments to enhance the auditor's identification and
evaluation of a company's significant unusual transactions, which are significant
transactions that are outside the normal course of business or that otherwise
appear to be unusual due to their timing, size, or nature. In addition, the
PCAOB is proposing amendments that, among other things, would improve the
auditor's understanding of a company's financial relationships with its
executive officers.
The proposed
standard would supersede the PCAOB's interim auditing
standard AU sec. 334, Related Parties. The proposed amendments would
amend other auditing standards, including AU sec. 316, Consideration of
Fraud in a Financial Statement Audit, and Auditing Standard No. 12, Identifying
and Assessing Risks of Material Misstatement.
Comments on
the proposed standard and related amendments are due by May 15, 2012.
Brokers
and Dealers -- PCAOB Proposes to Amend Rules and Forms Related to Auditors of
Brokers and Dealers
For detail, please contact info@hkcmcpa.us
The PCAOB
has proposed amendments to its rules and forms to apply them to auditors of
brokers and dealers registered with the SEC, as authorized by the Dodd-Frank
Act. The proposed amendments would include references to audits and auditors of
brokers and dealers in relevant PCAOB rules. The proposal would also make the PCAOB's auditing standards, including most of the PCAOB's ethics and independence requirements, applicable to
broker dealer audits, once the SEC provides direction that auditors of brokers
and dealers are to comply with PCAOB standards.
In addition,
the amendments would change PCAOB registration, withdrawal, and reporting forms
to, among other things, require that auditors of brokers and dealers identify
annually each audit report issued for a broker or dealer. PCAOB rules require
similar reporting by auditors of public companies. The proposed amendments also
include separate technical changes to PCAOB rules and forms unrelated to the
Dodd-Frank Act.
Comments on
this proposal are due April 30, 2012.
Accredited
Investor -- SEC Staff Publishes Small Entity Compliance Guide on Accredited
Investor Standards
For detail, please contact info@hkcmcpa.us
The staff of
the SEC has published a Small Entity Compliance Guide, "Accredited
Investor" Net Worth Standard. This guide summarizes and explains
amendments adopted by the SEC to the accredited investor standards under the
Securities Act of 1933 to implement the requirements of Section 413(a) of the
Dodd-Frank Act. Section 413(a) requires that the value of a person’s primary
residence be excluded when determining whether the person qualifies as an
“accredited investor” on the basis of having a net worth in excess of $1
million. This guide discusses the following topics:
-Accredited
investor standards;
-Requirements
for an individual to qualify as an accredited investor based on net worth; and
-Primary
residence can be included in the net worth calculation for certain follow-on
investments.
This guide
also includes examples of accredited investor net worth calculations.
In addition
to the release of this guide, the SEC staff has removed Questions 179.01 and
255.47 from its Compliance and Disclosure Interpretation, Securities Act
Rules. These questions relate to the definition of an accredited investor.
IFRS for SMEs -- IASB Issues IFRS for SMEs
Update
For detail, please contact info@hkcmcpa.us
The IASB
staff has issued its periodic "IFRS for SMEs
Update" publication which is a summary of news relating to the International
Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). This update includes discussion of the following
topics:
-Progress on
Q&As about the IFRS for SMEs;
-Status
report on Q&As about the IFRS for SMEs;
-Status
report on IFRS for SMEs translations;
-Additional
Arabic-language training module available;
-Upcoming
IFRS for SMEs “train the trainers” workshops; and
-Where to
obtain IFRS for SMEs materials.
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:
=======================================
Nontraditional
Engagements -- Updated Edition of Knowledge-Based Nontraditional Engagements
Published
For detail, please contact info@hkcmcpa.us
We have
published a new edition of Knowledge-Based Nontraditional Engagements.
This publication is designed to help the auditor efficiently and effectively
perform nontraditional engagements in accordance with applicable standards
issued by the AICPA. This edition of the publication includes revisions and
updates to reflect current authoritative literature and, among other things,
pronouncements through:
-AICPA
Statement on Quality Control Standards No. 8, A Firm’s System of Quality
Control (Redrafted); and
-AICPA
Statement on Standards for Attestation Engagements No. 17, Reporting on
Compiled Prospective Financial Statements When the Practitioner’s Independence
Is Impaired.
See our
Literature Update for complete details.
Related
Parties -- PCAOB Proposes Guidance on Related Parties
For detail, please contact info@hkcmcpa.us
As discussed
above in our Accounting and SEC Summaries, the PCAOB has issued for public comment
a proposed auditing standard, Related Parties. The PCAOB believes the
proposed standard would improve the auditor's evaluation of a public company's
identification of, accounting for, and disclosure about its relationships and
transactions with related parties.
The PCAOB
also is proposing amendments to enhance the auditor's identification and
evaluation of a company's significant unusual transactions, which are
significant transactions that are outside the normal course of business or that
otherwise appear to be unusual due to their timing, size, or nature. In
addition, the PCAOB is proposing amendments that, among other things, would
improve the auditor's understanding of a company's financial relationships with
its executive officers.
The proposed
standard would supersede the PCAOB's interim auditing
standard AU sec. 334, Related Parties. The proposed amendments would
amend other auditing standards, including AU sec. 316, Consideration of
Fraud in a Financial Statement Audit, and Auditing Standard No. 12, Identifying
and Assessing Risks of Material Misstatement.
Comments on
the proposed standard and related amendments are due by May 15, 2012.
Brokers
and Dealers -- PCAOB Proposes to Amend Rules and Forms Related to Auditors of
Brokers and Dealers
For detail, please contact info@hkcmcpa.us
As discussed
above in our Accounting and SEC Summaries, the PCAOB has proposed amendments to
its rules and forms to apply them to auditors of brokers and dealers registered
with the SEC, as authorized by the Dodd-Frank Act. The proposed amendments
would include references to audits and auditors of brokers and dealers in
relevant PCAOB rules. The proposal would also make the PCAOB's
auditing standards, including most of the PCAOB's
ethics and independence requirements, applicable to broker dealer audits, once
the SEC provides direction that auditors of brokers and dealers are to comply
with PCAOB standards.
In addition,
the amendments would change PCAOB registration, withdrawal, and reporting forms
to, among other things, require that auditors of brokers and dealers identify
annually each audit report issued for a broker or dealer. PCAOB rules require
similar reporting by auditors of public companies. The proposed amendments also
include separate technical changes to PCAOB rules and forms unrelated to the
Dodd-Frank Act.
Comments on
this proposal are due April 30, 2012.
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