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Accounting Research Manager(TM)
Weekly Summary of Developments
March 2-6, 2009
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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

Financial Assets -- FASB Discusses Amending Statement 140 and Other Issues
Engagement Quality -- PCAOB Reproposes Auditing Standard on Engagement Quality Review
Securities Act Forms -- SEC Staff Issues Compliance and Disclosure Interpretations
Smaller Reporting Companies -- SEC Staff Publishes Observations in the Review of Smaller Reporting Company IPOs
Financial Instruments -- IASB Issues Amendments to IFRS 7 to Improve Disclosures about Financial Instruments
EITF Materials -- FASB Issues Materials for March 19, 2009 EITF Meeting
IASB Update -- IASB Discusses Global Financial Crisis and Other Matters

Auditing and Internal Controls Headlines

Engagement Quality -- PCAOB Reproposes Auditing Standard on Engagement Quality Review
Audit Sampling -- AICPA Issues Proposed Auditing Standard on Audit Sampling

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ACCOUNTING AND SEC HEADLINES:
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Financial Assets -- FASB Discusses Amending Statement 140 and Other Issues
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As reported in its "Summary of Board Decisions" publication, the FASB met on March 4, 2009, and discussed the following topics:

-Proposed amendment to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities; and
-Scope exception from FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, for embedded credit derivatives.

The FASB redeliberated significant issues related to the proposed amendment to Statement 140 and decided:

-A transferor should not account for the transfer of a financial asset as a sale if the transferor retains effective control over all or a portion of the transferred financial asset or group of financial assets being evaluated for derecognition as a single unit;

-To require that the application of paragraphs 9(b) and 9(c) consider the transferor’s relationship with the transferred financial asset and any involvements with beneficial interest holders in securitized financial assets;

-A transferor must record a portion of a transferred financial asset as a purchase in certain cases when a subsequent change to the portion causes the transferred portion to no longer meet the criteria of a participating interest (as described in paragraph 55 of Statement 140);

-When a transfer of a financial asset in its entirety meets the criteria for sale accounting, a transferor should include as sale proceeds its beneficial interest in the transferred financial assets (if any) at fair value as of the transfer date; and

-When accounting for a transfer of financial assets that does not qualify for sale accounting, a transferor should not reclassify or remeasure the interests (including security interests) it receives in the transferred financial assets.

The FASB redeliberated significant issues raised in comments received on proposed Statement 133 Implementation Issue (DIG) No. C22, “Exception Related to Embedded Credit Derivatives.” This proposal addresses the scope exception in paragraph 14B of Statement 133 which indicates that the concentration of credit risk that is only in the form of subordination of one financial instrument to another shall not be considered an embedded derivative feature that is subject to the application of paragraphs 12 and 14A of Statement 133. The FASB agreed to proceed with the issuance of final Implementation issue, subject to a few modifications.

Engagement Quality -- PCAOB Reproposes Auditing Standard on Engagement Quality Review
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The PCAOB has reproposed for public comment, Proposed Auditing Standard, Engagement Quality Review. The PCAOB first proposed a new standard on engagement quality review on February 26, 2008. Since then, the PCAOB has made extensive changes to the original proposal and will now be seeking comment on the revised proposal reflecting these changes. The proposal would supersede the PCAOB’s quality control standard, SECPS Requirements of Membership, Section 1000.08(f). This proposal provides a framework for an engagement quality reviewer to objectively evaluate the significant judgments made by the engagement team and the conclusions reached in forming an overall conclusion on the engagement. This proposal would apply to all audit engagements and engagements to review interim financial information conducted pursuant to the standards of the PCAOB. As proposed, the revised rules would be effective for audits of fiscal years ending on or after December 15, 2009. The rules for interim periods would not be effective until fiscal years beginning after December 15, 2009.

Comments on the proposal are due April 20, 2009.

Securities Act Forms -- SEC Staff Issues Compliance and Disclosure Interpretations
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The staff of the SEC's Division of Corporation Finance (Corp Fin) has published Compliance and Disclosure Interpretations (C&DIs), Securities Act Forms. These C&DIs provide Corp Fin’s interpretations, in a question and answer (Q&A) format, of forms issued under the Securities Act of 1933. Some of these Q&As were previously published in other Corp Fin publications. Q&As included in these C&DIs cover a broad range of topics, including:

-Graphic presentations in prospectuses;
-F-Series registration statements;
-Post-effective amendments;
-Incorporation by reference;
-Registration form general instructions; and
-Information required in prospectuses.

Smaller Reporting Companies -- SEC Staff Publishes Observations in the Review of Smaller Reporting Company IPOs
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The staff of Corp Fin has published, Staff Observations in the Review of Smaller Reporting Company IPOs. This document is intended to provide smaller reporting companies with information to aid them in preparing their registration statements. This document contains a summary of common comments cited by Corp Fin staff in first comment letters sent to smaller reporting companies in connection with the reviews of initial registration statements under the Securities Act of 1933. Smaller reporting companies may want to consider these comments when preparing their registration statement disclosures. Topics discussed in this document are:

-Prospectus cover page;
-Prospectus summary;
-Risk factors;
-Use of proceeds;
-Description of business;
-Management's Discussion and Analysis;
-Directors, officers, promoters and control persons;
-Transactions with related parties, promoters and certain control persons;
-Plan of distribution;
-Selling security holders;
-Financial statements;
-Undertakings;
-Recent sales of unregistered securities;
-Signatures; and
-Other general comments on registration statements and prospectuses.

Financial Instruments -- IASB Issues Amendments to IFRS 7 to Improve Disclosures about Financial Instruments
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The IASB has issued, Improving Disclosures about Financial Instruments: Amendments to IFRS 7, "Financial Instruments-Disclosures." These amendments to IFRS 7, Financial Instruments: Disclosures, are intended to improve the disclosure requirements about fair value measurements and reinforce existing principles for disclosures about the liquidity risk associated with financial instruments. These amendments introduce a three-level hierarchy for fair value measurement disclosures and require entities to provide additional disclosures about the relative reliability of fair value measurements. In addition, the amendments clarify and enhance the existing requirements for the disclosure of liquidity risk.

These amendments apply for annual periods beginning on or after January 1, 2009. However, an entity will not be required to provide comparative disclosures in the first year of application.

EITF Materials -- FASB Issues Materials for March 19, 2009 EITF Meeting
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The FASB issued the following materials for the March 19, 2009 EITF meeting:

-EITF agenda committee report;
-Issue No. 08-1, "Revenue Arrangements with Multiple Deliverables" (Comment Letters); and
-Issue No. 07-5, "Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock" (Comment Letters).

IASB Update -- IASB Discusses Global Financial Crisis and Other Matters
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As reported in its "IASB Update" publication, the IASB met on February 17-20, 2009, and discussed the following items:

-Global financial crisis;
-IFRS for non-publicly accountable entities;
-Interim financial reporting;
-Insurance contracts;
-Post-employment benefits;
-Rate-regulated activities; and
-Annual improvements.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Engagement Quality -- PCAOB Reproposes Auditing Standard on Engagement Quality Review
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As discussed above in our Accounting and SEC Summaries, the PCAOB has reproposed for public comment, Proposed Auditing Standard, Engagement Quality Review. The PCAOB first proposed a new standard on engagement quality review on February 26, 2008. Since then, the PCAOB has made extensive changes to the original proposal and will now be seeking comment on the revised proposal reflecting these changes. The proposal would supersede the PCAOB’s quality control standard, SECPS Requirements of Membership, Section 1000.08(f). This proposal provides a framework for an engagement quality reviewer to objectively evaluate the significant judgments made by the engagement team and the conclusions reached in forming an overall conclusion on the engagement. This proposal would apply to all audit engagements and engagements to review interim financial information conducted pursuant to the standards of the PCAOB. As proposed, the revised rules would be effective for audits of fiscal years ending on or after December 15, 2009. The rules for interim periods would not be effective until fiscal years beginning after December 15, 2009.

Comments on the proposal are due April 20, 2009.

Audit Sampling -- AICPA Issues Proposed Auditing Standard on Audit Sampling
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The AICPA has issued for public comment, Proposed Statement on Auditing Standards (SAS), Audit Sampling (Redrafted). This proposed SAS would supersede SAS No. 39, Audit Sampling. This proposed SAS represents the redrafting of SAS No. 39 to apply the Auditing Standards Board’s (ASB’s) clarity drafting conventions and to converge with International Standard on Auditing (ISA) No. 530 (Redrafted), Audit Sampling. The proposed SAS states that it does not change or expand SAS 39 in any significant respect. To reflect a more principles-based approach to standard setting, certain requirements that are duplicative of broader requirements in SAS 39 have been moved to application and other explanatory material, consistent with ISA 530.

As proposed, this SAS would be effective for audits of financial statements for periods beginning on or after December 15, 2010.

Comments on this proposed SAS are due May 29, 2009.

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@zy-cpa.com