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Accounting Research
Manager(TM)
Weekly Summary of
Developments
June 15-19, 2009
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Accounting Research
Manager subscriber,
The Accounting Research
Manager database now contains this week's weekly summary of developments. Click
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If you do not have immediate
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of this week's Weekly Summary.
Accounting and SEC
Headlines
Securitizations -- FASB Issues Guidance on Asset
Securitizations and Special-Purpose Entities
EITF Meeting Results -- EITF Decisions Reached
Leases -- FASB Discusses Lease Accounting Issues
PCAOB Rules -- SEC Seeks Comments on Proposed PCAOB
Rules on Successor Auditors and Audit Firm Reporting
Share-Based Payments -- IASB Issues Guidance on Accounting for
Group Cash Settled Share-Based Payment Transactions
Liabilities -- IASB Issues Discussion Paper on Credit
Risk in Liability Measurement
International Financial
Reporting -- IASB Issues
Agenda for June 22-23, 2009 Standards Advisory Council Meeting
Auditing and Internal Controls
Headlines
PCAOB Rules -- SEC Seeks Comments on Proposed PCAOB
Rules on Successor Auditors and Audit Firm Reporting
TARP -- GAO Publishes Status Report
Government Headlines
GASB Report Issued -- GASB Agendas and Other Matters
Discussed
TARP -- GAO Publishes Status Report
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ACCOUNTING AND SEC HEADLINES:
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Securitizations -- FASB
Issues Guidance on Asset Securitizations and Special-Purpose Entities
The FASB has issued the
following two standards which change the way entities account for
securitizations and special-purpose entities:
-FASB Statement No. 166, Accounting
for Transfers of Financial Assets;
For detail, please contact info@zy-cpa.com
-FASB Statement No. 167, Amendments
to FASB Interpretation No. 46(R).
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Statement 166 is a revision
to FASB Statement No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, and will require more
information about transfers of financial assets, including securitization
transactions, and where entities have continuing exposure to the risks related
to transferred financial assets. It eliminates the
concept of a “qualifying special-purpose entity,” changes the requirements for
derecognizing financial assets, and requires additional disclosures.
Statement 167 is a revision
to FASB Interpretation No. 46 (Revised December 2003), Consolidation of
Variable Interest Entities, and changes how a reporting entity determines
when an entity that is insufficiently capitalized or is not controlled through
voting (or similar rights) should be consolidated. The determination of whether
a reporting entity is required to consolidate another entity is based on, among
other things, the other entity’s purpose and design and the reporting entity’s
ability to direct the activities of the other entity that most significantly
impact the other entity’s economic performance.
The new standards will
require a number of new disclosures. Statement 167 will require a reporting
entity to provide additional disclosures about its involvement with variable
interest entities and any significant changes in risk exposure due to that
involvement. A reporting entity will be required to disclose how its
involvement with a variable interest entity affects the reporting entity’s
financial statements. Statement 166 enhances information reported to users of
financial statements by providing greater transparency about transfers of
financial assets and an entity’s continuing involvement in transferred
financial assets.
Statements 166 and 167 will
be effective at the start of a reporting entity’s first fiscal year beginning
after November 15, 2009, or January 1, 2010, for a calendar year-end entity.
Early application is not permitted.
EITF Meeting Results --
EITF Decisions Reached
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As described in our
"EITF Flash Report," the EITF discussed the following issues at its
June 18, 2009 meeting:
-EITF Issue No. 08-1,
"Revenue Arrangements with Multiple Deliverables";
-EITF Issue No. 08-9,
"Milestone Method of Revenue Recognition";
-EITF Issue No. 09-1,
"Accounting for Own-Share Lending Arrangements in Contemplation of
Convertible Debt Issuance";
-EITF Issue No. 09-2,
"Research and Development Assets Acquired In an Asset Acquisition";
-EITF Issue No. 09-3,
"Applicability of SOP 97-2 to Certain Arrangements That Include Software
Elements";
-EITF Issue No. 09-4,
"Seller Accounting for Contingent Consideration"; and
-Proposed SEC Staff
Announcement, Topic No. D-110, Escrowed Share Arrangements
and the Presumption of Compensation.
The EITF reached a
consensus-for-exposure on Issues 08-1 and 09-3. It also reached a final
consensus on Issue 09-1. The FASB must still ratify these
decisions which is scheduled for July 1, 2009. An SEC staff member
announced that the staff was issuing Topic D-110 and that the current guidance
in the Financial Reporting Manual published by the SEC's Division of
Corporation Finance would be deleted as a result of finalization of Topic
D-110.
See our EITF Flash Report for
complete details.
Prior to its meeting, the
EITF issued additional meeting materials which are available on Accounting
Research Manager:
For detail, please contact info@zy-cpa.com
Leases -- FASB Discusses
Lease Accounting Issues
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As reported in its
"Summary of Board Decisions" publication, the FASB met on June 17,
2009, and discussed several lessee accounting issues that were not addressed in
the FASB's Discussion Paper, Leases: Preliminary
Views. The FASB reached the following tentative decisions:
-In a sale and leaseback
transaction, a seller/lessee would consider whether the entire leased asset
qualifies for derecognition. If the entity
determines, after applying the applicable guidance for the underlying asset,
that the transaction qualifies as a sale, it would derecognize the leased item
and recognize a right-of-use asset and an obligation to make rental payments
for the leaseback. The FASB is expected to consider whether additional criteria
are needed to help entities determine whether a sale and leaseback transaction
represents a sale and how to account for a sale and leaseback transaction when
the sales prices or rental payments are not at market rates.
-A lessee preparing financial
statements in accordance with international financial reporting standards would
follow the guidance in IAS 36, Impairment of Assets, to determine
whether its right-of-use asset is impaired and a loss should be recognized. A
lessee applying
-A lessee would subsequently
report a right-of-use asset at cost adjusted for any amortization and
impairment losses and would not be permitted to subsequently remeasure its right-of-use asset to fair value unless
required to do so to recognize an impairment loss.
-A lessee would expense any
initial direct costs as incurred.
-A lessee would apply the new
lease standard by recognizing an obligation to pay rentals and a right-of-use
asset for all outstanding leases at the transition date. The obligation and the
asset would be measured at the present value of the lease payments, discounted
using the lessee’s incremental borrowing rate on the transition date.
PCAOB Rules -- SEC Seeks
Comments on Proposed PCAOB Rules on Successor Auditors and Audit Firm Reporting
The SEC has issued the
following two documents seeking comments on proposed rules from the PCAOB:
-Notice of Filing of
Proposed Rules on Succeeding to the Registration Status of a Predecessor Firm
(Proposal 1); and
For detail, please contact info@zy-cpa.com
-Notice of Filing of
Proposed Rules on Annual and Special Reporting by Registered Public Accounting
Firms (Proposal 2).
For detail, please contact info@zy-cpa.com
Proposal 1 relates to the PCAOB’s adoption of new rules and a form relating to
succeeding to the registration status of a predecessor firm. Specifically,
PCAOB Rules 2108, Succeeding to the Registration Status of a Predecessor,
and 2109, Procedure for Succeeding to the Registration Status of a
Predecessor, will now require reporting (Form 4) when a firm succeeds to
the registration status of a predecessor.
Proposal 2 relates to the PCAOB’s adoption of eight new rules (PCAOB Rules 2200-2207)
concerning annual and special reporting by registered public accounting firms,
instructions to two forms to be used for such reporting (Form 2 and Form 3),
and related amendments to existing rules.
Comments on these two
proposals are due 30 days from publication in the Federal Register.
Share-Based Payments --
IASB Issues Guidance on Accounting for Group Cash Settled Share-Based Payment
Transactions
For detail, please contact info@zy-cpa.com
The IASB has issued Amendments
to IFRS 2,"Share-based Payment" - Group Cash-Settled Share-Based
Payment Transactions. This guidance amends IFRS 2, Share-based Payment,
to clarify the accounting for group cash-settled share-based payment
transactions. Specifically, these amendments:
-Clarify the scope of IFRS 2
to provide that an entity that receives goods or services in a share-based
payment arrangement must account for those goods or services no matter which
entity in the group settles the transaction, and no matter whether the
transaction is settled in shares or cash;
-Clarify that in IFRS 2 a
‘group’ has the same meaning as in IAS 27, Consolidated and Separate
Financial Statements, that is, it includes only a parent and its
subsidiaries; and
-Incorporate guidance
previously included in IFRIC 8, Scope of IFRS 2 and IFRIC 11 IFRS 2—Group
and Treasury Share Transactions.
Entities shall apply these
amendments to all share-based payments within the scope of IFRS 2 for annual
periods beginning on or after January 1, 2010. Earlier application is permitted.
Liabilities -- IASB Issues
Discussion Paper on Credit Risk in Liability Measurement
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The IASB and its staff have
issued for public comment the following two documents:
-IASB Discussion Paper (DP), Credit
Risk in Liability Measurement; and
-IASB Staff Paper, Credit
Risk in Liability Measurement.
The DP examines questions
about the role of credit risk in liability measurement, including whether
current measurement of liabilities (including fair value) incorporates the
chance that an entity will fail to perform as required. This DP outlines the
three most often-cited arguments in favor of and against including credit risk
in the measurement of liabilities. Specifically, this DP seeks input from
constituents on the following questions:
-When a liability is first
recognized, should its measurement: (a) always; (b) sometimes; or
(c) never incorporate the price of credit risk inherent in the
liability?
-Should current measurements
following initial recognition: (a) always; (b) sometimes; or (c)
never incorporate the price of credit risk inherent in the liability?
-How should the amount of a
change in market interest rates attributable to the price of the credit risk
inherent in the liability be determined?
-Among the three approaches
to liability measurement and credit standing discussed in this DP, which do you
prefer and are their other alternative approaches?
The IASB staff paper also
discusses arguments in favor and against including credit risk in the
measurement of liabilities. This paper also includes illustrative examples of
using credit risk in the measurement of liabilities.
Comments on the DP and IASB
staff paper are due September 1, 2009.
International Financial
Reporting -- IASB Issues Agenda for June 22-23, 2009 Standards Advisory Council
Meeting
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The IASB's
Standards Advisory Council (SAC) is expected to discuss the following agenda
items at its June 22-23, 2009 meeting:
-Consistency of application
of IFRSs;
-Overview of recent IASB and
SAC member activities;
-Financial instruments;
-Views on how the IASB should
respond to urgent issues;
-Financial statement
presentation and other comprehensive income; and
-Constitutional review.
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
=======================================
AUDITING AND INTERNAL
CONTROLS HEADLINES:
=======================================
PCAOB Rules -- SEC Seeks
Comments on Proposed PCAOB Rules on Successor Auditors and Audit Firm Reporting
As discussed above in our
Accounting and SEC Summaries, the SEC has issued the following two documents
seeking comments on proposed rules from the PCAOB:
-Notice of Filing of
Proposed Rules on Succeeding to the Registration Status of a Predecessor Firm
(Proposal 1); and
For detail, please contact info@zy-cpa.com
-Notice of Filing of
Proposed Rules on Annual and Special Reporting by Registered Public Accounting
Firms (Proposal 2).
For detail, please contact info@zy-cpa.com
Proposal 1 relates to the PCAOB’s adoption of new rules and a form relating to
succeeding to the registration status of a predecessor firm. Specifically,
PCAOB Rules 2108, Succeeding to the Registration Status of a Predecessor,
and 2109, Procedure for Succeeding to the Registration Status of a
Predecessor, will now require reporting (Form 4) when a firm succeeds to
the registration status of a predecessor.
Proposal 2 relates to the PCAOB’s adoption of eight new rules (PCAOB Rules 2200-2207)
concerning annual and special reporting by registered public accounting firms,
instructions to two forms to be used for such reporting (Form 2 and Form 3),
and related amendments to existing rules.
Comments on these two
proposals are due 30 days from publication in the Federal Register.
TARP -- GAO Publishes
Status Report
For detail, please contact info@zy-cpa.com
On October 3, 2008, the
Emergency Economic Stabilization Act of 2008 was signed into law. The act
established the Office of Financial Stability (OFS) within the Department of
the Treasury and authorized the Troubled Asset Relief Program (TARP). Every 60
days, the U.S. Comptroller General is required to report on a variety of areas
associated with the oversight of TARP. On June 17, 2009, the Government
Accountability Office (GAO) issued a report, Troubled Asset Relief Program:
June 2009 Status of Efforts to Address Transparency and Accountability Issue.
This report follows up on GAO recommendations made in previous TARP reports and
reviews:
-Activities that had been
initiated or completed under TARP as of June 12, 2009;
-OFS hiring efforts and use
of contractors; and
-TARP performance indicators.
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 Report Issued -- GASB
Agendas and Other Matters Discussed
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The May 2009 edition of the
"GASB Report" has been issued and includes the following discussion
items:
-GASB calendar;
-Items added to the GASB's current and research agendas; and
-A summary of GASB's meeting held on April 21-23, 2009.
TARP -- GAO Publishes
Status Report
For detail, please contact info@zy-cpa.com
As discussed above in our
Auditing and Internal Controls Summaries, on October 3, 2008, the Emergency
Economic Stabilization Act of 2008 was signed into law. The act established the
Office of Financial Stability (OFS) within the Department of the Treasury and
authorized the Troubled Asset Relief Program (TARP). Every 60 days, the U.S.
Comptroller General is required to report on a variety of areas associated with
the oversight of TARP. On June 17, 2009, the Government Accountability Office
(GAO) issued a report, Troubled Asset Relief Program: June 2009 Status of
Efforts to Address Transparency and Accountability Issue. This report
follows up on GAO recommendations made in previous TARP reports and reviews:
-Activities that had been
initiated or completed under TARP as of June 12, 2009;
-OFS hiring efforts and use
of contractors; and
-TARP performance indicators.
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