Journal of Accountancy

news digest

Financial Services

december 2008

The Office of Thrift Supervision released a brochure to promote the benefits for businesses in the financial services industry of joining a regional coalition to prepare for recovery after a disaster.

The brochure, Regional Coalitions: Public-Private Partnerships for the Financial Services Sector, was developed and issued by the Financial and Banking Information Infrastructure Committee and the Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security. The regional coalitions were formed to help the financial services sector recover after a natural disaster or man-made attack. Membership is open to any business in the financial services sector and provides the ability to network with strategic partners in other critical sectors.

The brochure contains information about existing regional coalitions and how to join one or obtain information that could be useful in establishing a new coalition. The brochure is available at http://files.ots.treas.gov/481131.pdf.

news digest

Small Business

december 2008

President Bush and Small Business Administration Acting Administrator Sandy Baruah met with women small business owners in Oklahoma City in September as part of a campaign to promote the benefits of health savings accounts (HSAs). The meeting highlighted the benefits of HSAs and included testimony from women business owners who have benefited from them or are considering them.

The roundtable discussion was part of the joint effort by the SBA, the National Economic Council and the Treasury Department to promote the benefits of HSAs. Those agencies have also created a fact sheet that highlights the benefits of the accounts. More resources for small businesses and individuals are available at www.hsa.gov.

The SBA submitted a final rule on women-owned small business (WOSB) contracting procedures and a new proposed rule on the industries eligible for WOSB contracting assistance. The proposed rule would increase from four to 31 the number of industries under which a set aside could be established. The final rule sets procedures for implementing set asides in the eligible industries.

The final rule, which went into effect Oct. 31, is available at the Federal Register online at www.gpoaccess.gov/fr.

news digest

International

december 2008

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board of the International Federation of Accountants (IFAC), has issued for comment the first in a series of consultation papers focused on developing an international public-sector conceptual framework. The consultation paper, Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities, identifies the IPSASB’s preliminary views on the objectives and scope of financial reporting, the qualitative characteristics of information included in general purpose financial reports, and the characteristics of public-sector reporting entities.

Comments are due by March 31. The document is available at www.ifac.org/Guidance/EXD-Details.php?EDID=0119.

The International Auditing and Assurance Standards Board (IAASB), a standard- setting board under the auspices of IFAC, released seven International Standards on Auditing. The ISAs are in a new style following the conventions to improve clarity. The clarified ISAs include ISA 200 (Revised and Redrafted), Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing, which contains an overview of an audit to aid in understanding its purpose and scope. The ISA also defines the respective authority of the requirements and guidance in ISAs and contains the most fundamental requirements for auditors. It emphasizes the importance of sound and consistent professional judgment by the auditor, and the necessity for sufficient audit evidence to support the auditor’s opinion.

The IAASB also released:

ISA 320 (Revised and Redrafted), Materiality in Planning and Performing an Audit
ISA 450 (Revised and Redrafted), Evaluation of Misstatements Identified during the Audit
ISA 530 (Redrafted), Audit Sampling
ISA 610 (Redrafted), Using the Work of Internal Auditors
ISA 705 (Revised and Redrafted), Modifications to the Opinion in the Independent Auditor’s Report
ISA 706 (Revised and Redrafted), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report

The revisions in particular upgrade the standards in important areas of materiality, misstatements and reporting by the auditor, IAASB Chairman John Kellas said in a press release. The ISAs are part of the IAASB’s program to redraft existing standards following clarity drafting conventions. As of Oct. 2, the IAASB had released 22 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year. All clarified ISAs will be effective for audits of financial statements for periods beginning on or after Dec. 15, 2009.

The ISAs are available for free at www.ifac.org/store.

The AICPA filed a comment letter on the review of the IASC Foundation’s (IASCF) Constitution. While expressing strong support for the objectives of the IASCF and the IASB, the Institute:

Urged the IASCF to continue its efforts to secure permanent funding for the IASB’s activities. The Institute said the SEC should use part of the current levy on U.S. public companies for accounting standard-setting activities as a permanent funding source for the IASB.
Supported the creation of a monitoring group, as envisioned by the IASCF, to formalize the link to public authorities. The Institute expressed support for the SEC having a seat on the monitoring group and recommends that the IASCF add a bank regulator to the group. If in the future many countries adopt the IASB’s standard for private entities, the AICPA believes the IASCF should increase private entity constituency representation on the monitoring group.
Agreed with the IASCF’s recommendation that a memorandum of understanding between the monitoring group and IASCF should be exposed for public comment.
Supported the establishment of operating protocols in a manner that fully maintains the IASB’s independence, while providing sufficient oversight so that individual countries don’t have a basis for “carve-out” exceptions to what the IASB promulgates.
Supported the proposed IASB geographic composition and the increased board size as reasonable changes.
Supported having a maximum of three part-time members of the IASB.
Called for the Trustees Appointments Advisory Group (TAAG) to continue to have an important role to fill even with the creation of the monitoring group. Primarily, the TAAG will help ensure that the IASCF has a formalized mechanism to reach out to additional constituencies to gather “fresh” perspectives when identifying candidates to serve as IASCF Trustees.

The comment letter is available at www.ifrs.com/pdf/IASB_Comment_Letter.pdf.

NEWS DIGEST

Banking

DECEMBER 2008

Actions by national banks and thrifts to prevent home mortgage foreclosures increased faster than new foreclosures in the second quarter of 2008, according to the OCC and OTS Mortgage Metrics Report. The report, issued jointly by the Office of the Comptroller of the Currency and the Office of Thrift Supervision, replaces the separate reports previously issued by the federal banking regulators.

The report contains data on 34.7 million first-lien mortgages, worth more than $6.1 trillion, held or serviced by national banks and thrifts. The data is collected from nine national banks and five savings associations, which hold approximately 60% of all first-lien mortgages in the United States.

The report shows that new loan modifications increased by more than 80% from January to June of 2008. Loss mitigation actions relative to new foreclosures averaged more than 87% during the second quarter, an increase of 12 percentage points from the first quarter.

More than nine out of 10 mortgages remained current although credit declined in all risk categories. Early stage delinquencies (30 to 59 days past due) and seriously delinquent mortgages (60 or more days past due, or 30 or more days past due in the case of bankrupt borrowers) also increased.

The complete report is available at www.occ.treas.gov and www.ots.treas.gov.

news digest

FYI

december 2008

The Financial Accounting Foundation appointed Marc A. Siegel to the FASB board. His term was effective Oct. 20 and extends until June 30, 2013. Prior to his appointment, Siegel led the accounting research and analysis team at RiskMetrics Group in Rockville, Md. He succeeds George J. Batavick.

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