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Accounting Research Manager(TM)
Weekly Summary of Developments
April 11-15, 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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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

Audit and Accounting Guides -- AICPA Issues Working Draft of Guides on Health Care Entities and Employee Benefit Plans
Compensation -- AICPA Issues Working Draft of Valuation of Privately Held Company Equity Securities Issued as Compensation
Self-Regulatory Organizations -- SEC Issues Proposal on Rule Changes by Self-Regulatory Organizations
Inflation Rates -- Interpretation Issued, Inflation Rates for Judging Whether an Economy Is Highly Inflationary - March 2011
Leases -- FASB and IASB Discuss Leases and Other Issues
IFRS for SMEs -- IASB Publishes Proposed Implementation Guidance

Auditing and Internal Controls Headlines

Audit and Accounting Guides -- AICPA Issues Working Draft of Guides on Health Care Entities and Employee Benefit Plans
Compensation -- AICPA Issues Working Draft of Valuation of Privately Held Company Equity Securities Issued as Compensation

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ACCOUNTING AND SEC HEADLINES:
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Audit and Accounting Guides -- AICPA Issues Working Draft of Guides on Health Care Entities and Employee Benefit Plans

The AICPA has issued for public comment working drafts of the following:

-Audit and Accounting Guide (AAG), Health Care Entities; and
For detail, please contact info@hkcmcpa.us

-AAG, Employee Benefit Plans.
For detail, please contact info@hkcmcpa.us

The draft AAG on health care entities is the first comprehensive revision of the Guide since 1996 and includes expanded discussions on the following health care industry specific topics:

-Medical malpractice claims;
-Patient receivables and revenue recognition;
-The reporting entity and related entities; and
-Financial reporting and accounting for managed care services and continuing care retirement communities.

The draft AAG on employee benefit plans includes certain topics not previously included in the 1991 Guide. Topics covered in this AAG include:

-Defined contribution retirement plans;
-Defined benefit pension plans;
-Health and welfare benefit plans; and
-Investments.

The AICPA is seeking comments from interested parties including preparers of financial statements, financial statement users, and auditors. Comments on the health care entities working draft are due June 6, 2011, whereas comments on the employee benefit plans working draft are due June 10, 2011.

Compensation -- AICPA Issues Working Draft of Valuation of Privately Held Company Equity Securities Issued as Compensation
For detail, please contact info@hkcmcpa.us

The AICPA has issued for public comment a working draft of an AICPA Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation. This practice aid provides guidance and illustrations for valuation specialists, preparers of financial statements, and independent auditors regarding the valuation of and disclosures related to the issuance of privately held company equity securities as compensation. This practice aid is not intended to focus on determining the value of an enterprise as a whole but rather the fair value of individual common shares or other equity securities that constitute a minority of the outstanding securities.

Comments on this draft practice aid are due May 31, 2011.

Self-Regulatory Organizations -- SEC Issues Proposal on Rule Changes by Self-Regulatory Organizations
For detail, please contact info@hkcmcpa.us

The SEC has issued a final rule, Technical Amendment to Rule 19b-4: Filings with Respect to Proposed Rule Changes by Self-Regulatory Organizations. This final rule amends Rule 19b-4(a) under the Securities Exchange Act of 1934 (Exchange Act) to clarify that references to “business day” in Section 19(b) of the Exchange Act and related Rule 19b-4 refer to a day other than a:

-Saturday or Sunday;
-Federal holiday;
-Day that the U.S. Office of Personnel Management has announced that federal agencies in the Washington, D.C. area are closed to the public;
-Day on which the SEC is subject to a federal government shutdown in the event of a lapse in appropriations; or
-Day on which the SEC’s Washington, D.C. office is otherwise not open for regular business.

In general, Section 19(b)(1) of the Exchange Act requires self-regulatory organizations (SRO), including national securities exchanges, to file with the SEC any proposed rule change. Section 19(b) of the Exchange Act provides time frames within which the SEC must act in connection with reviewing and processing SRO proposed rule changes based on the day submitted to the SEC.

This final rule is effective April 7, 2011.

Inflation Rates -- Interpretation Issued, Inflation Rates for Judging Whether an Economy Is Highly Inflationary - March 2011
For detail, please contact info@hkcmcpa.us

Our Interpretation, Inflation Rates for Judging Whether an Economy Is Highly Inflationary - March 2011, has been issued and reflects the latest available inflation rate information. We did not make any changes since our December 2010 update.

Users of this Interpretation should also refer to all of the actions of the International Practices Task Force of the Center for Audit Quality (CAQ) for further guidance in classifying countries as hyperinflationary, particularly for countries not reporting data to the International Monetary Fund and published in the International Financial Statistics, the source for this Interpretation.

See our Literature Update for complete details.

Leases -- FASB and IASB Discuss Leases and Other Issues
For detail, please contact info@hkcmcpa.us

As reported in its "Summary of Board Decisions" publication, the FASB and IASB (the Boards) met on April 12-14, 2011, and discussed the following topics:

-Leases;
-Revenue recognition;
-Insurance contracts; and
-Accounting for financial instruments-impairment.

Previously, the Boards tentatively decided in their lease project that the lessee’s liability and the lessor’s receivable should include the following three components: (1) lease payments that meet a high threshold; (2) lease payments for which the variability lacks economic substance; and (3) lease payments that depend on an index or a rate. At the current meeting, the Boards continued their discussion to clarify the definition of these items.

Regarding their project on revenue recognition, the Boards discussed the following topics: (a) determining the transaction price; (b) allocating the transaction price; (c) licenses and rights to use; (d) fulfillment costs; and (e) sale and repurchase agreements. The Boards reached a number of tentative decisions regarding these topics, including:

-An entity’s objective when determining the transaction price is to estimate the total amount of consideration to which the entity will be entitled under the contract;
-If the standalone selling price of a good or service underlying a separate performance obligation is highly variable, the most appropriate technique to estimate a standalone selling price may be a residual technique;
-For contracts in which an entity grants a license or other rights to a customer, the promised rights give rise to a performance obligation that the entity satisfies at the point in time when the customer obtains control; and
-The costs that relate directly to a contract include costs that are incurred before the contract is obtained if those costs relate specifically to an anticipated contract.

The Boards made a number of tentative decisions on their insurance contracts project and decided that an insurer could use either a "top-down approach" or a "bottom-up approach" to determine discount rates that reflect the characteristics of the insurance contract liability. Application of the "top-down approach" includes the following:

-An insurer should determine an appropriate yield curve based on current market information;
-If there are no observable market prices for some points on that yield curve, the insurer should use an estimate that is consistent with the Boards' guidance on fair value measurement, in particular for Level 3 fair value measurement;
-The cash flows of the instruments should be adjusted so that they reflect the characteristics of the cash flows of the insurance contract liability; and
-An insurer using a top-down approach need not make adjustments for remaining differences between the liquidity inherent in the liability cash flows and the liquidity inherent in the asset cash flows.

IFRS for SMEs -- IASB Publishes Proposed Implementation Guidance
For detail, please contact info@hkcmcpa.us

The IASB has published for public comment the following draft implementation guidance:

-Draft Implementation Guidance - IFRS for SMEs: Section 1, Issue 2 - Captive Insurance Subsidiaries;
-Draft Implementation Guidance - IFRS for SMEs: Section 1, Issue 3 - Interpretation of ‘Traded in a Public Market’; and
-Draft Implementation Guidance - IFRS for SMEs: Section 1, Issue 4 - Investment Funds with Only a few Participants.

These documents propose guidance, in a question and answer format, from the IASB's SME Implementation Group that is responsible for assisting the IASB on matters related to the implementation of IFRS for Small and Medium-sized Entities (SMEs). Specifically, this draft implementation guidance addresses certain questions regarding the definition and scope of the term "public accountability" for purposes of applying IFRS for SMEs.

Comments on this draft guidance are due June 15, 2011.

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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Audit and Accounting Guides -- AICPA Issues Working Draft of Guides on Health Care Entities and Employee Benefit Plans

As discussed above in our Accounting and SEC Summaries, the AICPA has issued for public comment working drafts of the following:

-Audit and Accounting Guide (AAG), Health Care Entities; and
For detail, please contact info@hkcmcpa.us

-AAG, Employee Benefit Plans.
For detail, please contact info@hkcmcpa.us

As discussed above in our Accounting and SEC Summaries, the AICPA has issued for public comment a working draft of an AICPA Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation. This practice aid provides guidance and illustrations for valuation specialists, preparers of financial statements, and independent auditors regarding the valuation of and disclosures related to the issuance of privately held company equity securities as compensation. This practice aid is not intended to focus on determining the value of an enterprise as a whole but rather the fair value of individual common shares or other equity securities that constitute a minority of the outstanding securities.

Comments on this draft practice aid are due May 31, 2011.

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