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Accounting Research Manager(TM)
Weekly Summary of Developments
April 7-11, 2008
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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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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

FASB Statement 140 Changes -- FASB Decides to Curtail QSPEs and Discusses Other Matters
Securities Registration -- SEC Issues Final Rule for Real Estate Entities Using Form S-11
International Financial Reporting -- IASB Issues Agenda for April 15-18, 2008 Meeting

Auditing and Internal Controls Headlines

Internal Controls -- Sarbanes-Oxley Section 404 Guide for Management Published
Fair Value Measurements -- PCAOB Interpretive Guidance on Auditing Fair Value Measurements and the Use of Specialists Discussed

Government Headlines

Service Efforts and Accomplishments -- GASB Issues Proposed Statement to Amend GASB Concepts Statement No. 2
Fund Balance Accounting -- GASB Exposure Draft on Fund Balance Reporting and Governmental Funds Definitions Discussed
GASB Report Issued -- FAF, FASB, and GASB Organizational Changes Discussed

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ACCOUNTING AND SEC HEADLINES:
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FASB Statement 140 Changes -- FASB Decides to Curtail QSPEs and Discusses Other Matters
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As reported in its "Action Alert" publication, the FASB discussed the following items at its April 2, 2008 meeting: (a) amending the derecognition model for financial assets in FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities; and (b) credit derivative disclosures. The FASB decided the following regarding Statement 140:

-To remove the concept of a "qualifying special-purpose entity" (QSPE) from both Statement 140 and FASB Interpretation (FIN) No. 46 (Revised December 2003), Consolidation of Variable Interest Entities.
-To amend the derecognition criteria in Statement 140 to improve financial reporting in the short term and to consider working on a joint derecognition research project with the IASB. Specifically: (a) paragraph 9(a) is expected to be clarified to require that the transferred financial assets must be beyond the reach of the transferor or any of its consolidated affiliates; and (b) paragraph 9(c) is expected to be amended to include an additional criterion that states that if the transferor constrains the transferee, the transferor maintains effective control over the transferred assets. This change incorporates similar requirements from current paragraph 9(b) relating to QSPEs, which is scheduled to be eliminated.
-Only an entire financial asset or a participating interest of an individual financial asset will be eligible for derecognition. The participating interest may not be an interest in an equity instrument, a derivative financial instrument, or a hybrid financial instrument with an embedded derivative not clearly and closely related to the original financial asset.

In addition, the FASB chairman announced that a new project was added to the FASB agenda that will consider improvements to disclosures about credit derivatives accounted for under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.

As also reported in its Action Alert publication, the FASB is scheduled to meet on April 16, 2008 to discuss issues raised by respondents to proposed FASB Staff Position (FSP) SOP 90-7-a, An Amendment of AICPA Statement of Position 90-7, and whether to issue that FSP as final.

Securities Registration -- SEC Issues Final Rule for Real Estate Entities Using Form S-11
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The SEC has issued a final rule, Revisions to Form S-11 to Permit Historical Incorporation by Reference. The final rule includes amendments to Form S-11, which is a registration statement used by real estate entities registering securities under the Securities Act of 1933. The final rule revises Form S-11 to permit an entity that has filed an annual report for its most recently completed fiscal year and that is current in its reporting obligations under the Securities Exchange Act of 1934 (Exchange Act) to incorporate by reference into Form S-11 information from its previously filed Exchange Act reports and documents.

The final rule is effective upon publication in the Federal Register.

International Financial Reporting -- IASB Issues Agenda for April 15-18, 2008 Meeting
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The IASB is scheduled to discuss the following agenda items at its April 15-18, 2008 meeting:

-Amendments to IAS 39, Financial Instruments: Recognition and Measurement, Exposures Qualifying for Hedge Accounting;
-Amendments to IFRS 5, Non-current Assets Held for Sale and Discontinued Operations;
-Annual improvements process;
-Consolidation;
-Cost of and investment in a subsidiary, jointly controlled entity or associate (amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, and IAS 27, Consolidated and Separate Financial Statements);
-Fair value measurement (education session);
-IFRS for small and medium-sized entities;
-Joint ventures;
-Liabilities: amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets; and
-Revenue recognition.

Of note, the IASB is scheduled to discuss the issues raised during "field tests" of the Exposure Draft (ED), IFRS for Small and Medium-sized Entities. The field testing included having 116 small and medium-sized firms in 20 different countries restate their most recent annual financial statements following the proposals in the ED. The IASB will learn of any problems encountered in this process. Finalization of this ED is scheduled for the fourth quarter of 2008.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Internal Controls -- Sarbanes-Oxley Section 404 Guide for Management Published
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We have added the Second Edition of the guide published by the Institute of Internal Auditors (IIA), Sarbanes-Oxley Section 404: A Guide for Management by Internal Controls Practitioners. The Guide provides guidance to management regarding its obligations under Section 404 of the Sarbanes-Oxley Act of 2002 (SOX). Significant changes included in this update include:

-Updated references to both PCAOB Auditing Standard No. 5, An Audit of Internal Control over Financial Reporting That is Integrated with an Audit of Financial Statements, and related SEC guidance for management on Section 404 of SOX. The first edition was based on the top-down and risk-based approach adopted in both documents, and the second edition updates the discussion and extends the guidance provided by the regulators.
-An expanded and updated discussion of information technology (IT) general controls scoping based on IIA's "Guide to the Assessment IT General Controls Scope Based on Risk" (GAIT) products.
-An extended discussion of the role of entity-level controls. The benefit of additional years of experience with management's assessment of internal control over financial reporting.

Fair Value Measurements -- PCAOB Interpretive Guidance on Auditing Fair Value Measurements and the Use of Specialists Discussed
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We have added a GAAS Update Service that discusses PCAOB Staff Audit Practice Alert No. 2, Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists. The Practice Alert was issued in light of FASB Statement No. 157, Fair Value Measurements, as well as the significantly increased audit risk and challenges related to valuation of financial instruments brought about by the liquidity crisis in the capital markets, which began in early 2007. The Practice Alert discusses the following key topics:

-Auditing fair value measurements, including the classification of fair value measurements within the fair value hierarchy established by Statement 157;
-The use of specialists in fair value measurements; and
-The use of pricing services in fair value measurements.

This issue of the GAAS Update Service is the second in our two-part coverage of the Practice Alert, and specifically discusses the use of pricing services in fair value measurements. The first part of this Practice Alert addressed auditing fair value measurements and the use of specialists in fair value measurements.

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:
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Service Efforts and Accomplishments -- GASB Issues Proposed Statement to Amend GASB Concepts Statement No. 2
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The GASB has issued for public comment a proposed statement, Service Efforts and Accomplishments Reporting - An Amendment of GASB Concepts Statement No. 2. The proposal would amend GASB Concepts Statement (CON) No. 2, Service Efforts and Accomplishments Reporting, to reflect advancements made in reporting service efforts and accomplishments (SEA) by state and local governments. Specifically, the proposal would clarify the:

-Objectives and characteristics of SEA reporting;
-Elements of SEA performance measures;
-Approaches to reporting SEA performance information;
-Limitations of SEA performance information and how to enhance its usefulness; and
-Role of the GASB in the reporting of SEA performance information and the limitations of that role.

In addition, the proposal would incorporate state-of-the-art terminology into the discussion of the elements of SEA performance management within CON 2.

Comments on the proposal are due by July 3, 2008.

Fund Balance Accounting -- GASB Exposure Draft on Fund Balance Reporting and Governmental Funds Definitions Discussed
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We have added a Governmental GAAP Update Service that is the second of a two part series on the GASB proposed Exposure Draft (ED), Fund Balance Reporting and Governmental Fund Type Definitions. The ED seeks to enhance the usefulness of fund balance information by: (a) providing clearer fund balance classifications that can be more consistently applied; and (b) clarifying the existing governmental fund type definitions. This second part of the two part series focuses on the proposed changes to governmental fund type definitions included in the ED (e.g., general fund, special revenue funds, capital projects and debt service funds).

The first part of this two part series was published March 30, 2008 and focused on the classification of fund balances (e.g., nonspendable fund balance, spendable fund balance, restricted fund balance) and the illustrated classification of fund balances included in the ED.

As proposed, the ED would be effective for financial statements for periods beginning after June 15, 2010.

Comments on the ED are due by June 30, 2008.

GASB Report Issued -- FAF, FASB, and GASB Organizational Changes Discussed
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The March 2008 edition of the "GASB Report" has been issued and includes the following discussion items:

-GASB Calendar;
-Financial Accounting Foundation (FAF) Trustees Approve Changes Designed to Boost Effectiveness of FAF, FASB, and GASB in a Changing Environment;
-GASB March 4-6, 2008 Board Meeting Summary;
-GASB Performance Measures: Technical Inquiry Activities;
-Governmental Accounting Standards Advisory Council (GASAC) March 6-7, 2008 Meeting Summary; and
-Who's Who at the GASB.

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