The SEC proposed new rules that would
require securities issuers to provide an XBRL
version of their financial statements.
Under the proposal, all U.S. public
companies and foreign private issuers listed with the
SEC would be required to provide financial information
using XBRL within three years. The SEC staff
recommended the following implementation schedule
beginning with fiscal periods ending on or after Dec.
15, 2008 (contingent upon the rules being adopted by
Year 1. The proposed rules
would apply only to domestic and foreign large
accelerated filers that use U.S. GAAP and have a
worldwide public float above $5 billion (approximately
the 500 largest companies).
Year 2. All other large
accelerated filers, domestic and foreign, using U.S.
GAAP would be subject to interactive data reporting.
Year 3. All remaining filers
using U.S. GAAP and all foreign private issuers that
prepare their financial statements in accordance with
IFRS as issued by the IASB would be subject to the
Companies filing in U.S.
GAAP under the proposed rules will use data tags
issued April 28, 2008, by XBRL US Inc. The SEC said it
expects its EDGAR system to begin accepting test
filings using a Feb. 11, 2008, version of these tags
in late May, with the final April 28 version of the
tags becoming available in June. Until the EDGAR
system is fully functional, companies will be able to
use an interim system to provide XBRL submissions to
the SEC using the April 28 version of the tags.
Comments on the SEC’s proposed rules are due 60
days after publication in the Federal Register
. For more information, visit www.sec.gov/spotlight/xbrl.shtml
FASB issued Statement no. 162, The
Hierarchy of Generally Accepted Accounting
Principles. The standard is
intended to improve financial reporting by identifying
a consistent framework for selecting accounting
principles to be used in preparing financial
statements that conform to U.S. GAAP for
Before the standard
was issued, the GAAP hierarchy was defined in
Statement on Auditing Standards (SAS) no. 69, The
Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. In 2003, the
SEC recommended that FASB redefine the GAAP hierarchy.
FASB began work to move the GAAP hierarchy into the
accounting literature. Statement no. 162 establishes
that the GAAP hierarchy should be directed to
entities, because it is the entity, not its auditor,
that is responsible for selecting accounting
principles for financial statements.
no. 162 is effective 60 days after the SEC’s approval
of the PCAOB auditing amendments to AU Section 41,
The Meaning of Present Fairly in Conformity
With Generally Accepted Accounting Principles. The
GAAP hierarchy will remain in SAS no. 69 for state and
local governmental entities and federal governmental
Statement no. 162 is available at www.fasb.org.
Proposed changes to the Uniform CPA
Examination include, for the first time,
incorporating International Financial Reporting
Standards IFRS), according to an
exposure draft published by the AICPA Board of
Examiners. The ED proposes that the IFRS conceptual
framework be tested and that additional testing of
international standards occur if IFRS becomes
generally accepted in the United States. Comments will
be considered by the Board of Examiners as the
proposed content and skill specifications are
finalized. The new specifications will be scheduled
for implementation after they have been approved and
will be available to students, educators and other
interested parties well before the effective date.
Comments are due by July 31. The ED and comment form
are available at www.cpa-exam.org/cpa/exposure_draft.html.
FASB issued FASB Staff Position FAS 142-3,
Determination of the Useful Life of
Intangible Assets. The FSP’s goal is to
provide guidance on the determination of the
useful life of intangible assets in accordance
with FASB Statement no. 142, Goodwill and
Other Intangible Assets.
In particular, the goal is to
improve the consistency between the useful life of a
recognized intangible asset under Statement no. 142
and the period of expected cash flows used to measure
the fair value of the asset under FASB Statement no.
141(R), Business Combinations , and other
applicable accounting literature.
The FSP is
effective for financial statements issued for fiscal
years beginning after Dec. 15, 2008, and interim
periods within those fiscal years. Early adoption is
prohibited. The guidance for determining the useful
life of a recognized intangible asset should be
applied prospectively to intangible assets acquired
after the effective date. The disclosure requirements
should be applied prospectively to all intangible
assets recognized as of, and subsequent to, the
The FSP is available at www.fasb.org/pdf/fsp_fas142-3.pdf.
SEC Chairman Christopher Cox called for new
regulation of investment banks in
a recent speech at a security traders’ conference in
Washington. “The notion embedded in the
Gramm-Leach-Bliley Act that investment banks should be
able to operate outside of a statutory consolidated
supervision regime is no longer tenable in the wake of
Bear Stearns,” Cox said. He also commented that “the
SEC has focused on the need to change the standards
for measuring the adequacy of liquidity in light of
the ‘run on the bank’ that Bear [Stearns]
experienced.” For a complete copy of Cox’s remarks,
Reports of suspected money laundering in the
residential real estate industry rose sharply
between 2002 and 2005 then flattened in 2006 as
overall market activity slowed, according to the
Financial Crimes Enforcement Network.
The report, Suspected Money
Laundering in the Residential Real Estate
Industry, describes the types of transactions and
associated illicit activities that individuals or
groups may use to launder money via residential
The analysis found that
more than 75% of reported suspects had no relationship
with the residential real estate industry, and
reported collusion with real estate or construction
professionals was rare. In some cases, money was
laundered through residential real estate to support
tax evasion, fraud and identity theft. The schemes
often included the use of straw buyers to obtain
dozens of mortgages, which were then used to launder
illicit funds as loan payments were made.
FinCEN said a major difficulty in identifying
mortgage loan fraud connected with money laundering is
that the launderer projects an “image of normalcy” by
making regular and timely payments to integrate the
illicit funds. On the other hand, an attempted
fraud-for-profit scheme could result in a loss to the
financial institution and is more likely to prompt the
filing of a suspicious activity report (SAR).
The analysis is available at www.fincen.gov/MLR_Real_Estate_Industry_SAR_web.pdf.
The FDIC reported a 370% increase in the
Deposit Insurance Fund’s contingent liability for
anticipated failures in the first quarter of 2008.
The banking regulator is also
increasing the frequency of special examinations in
response to what it calls “changing economic
The first quarter Letter to
Stakeholders said the amount set aside in the
DIF’s Provisions for Insurance Losses increased from
$124 million to $583 million at quarter’s end. Assets
in liquidation for institutions in receivership
increased 148% since the end of the first quarter of
2007 from $331 million to $821 million.
agency said it is continuing to expand its staff of
field examiners to accommodate a greater workload. The
FDIC is pursuing targeted reviews of selected issues
between regularly scheduled examinations and other
activities in cooperation with other federal banking
The FDIC’s Letter to
Stakeholders is available at www.fdic.gov.
The AICPA’s Peer Review Board issued new
standards for performing and reporting on peer
reviews to promote quality in CPA firms’
accounting and auditing practices.
The standards, effective for peer
reviews beginning on or after Jan. 1, 2009, are
intended to produce simpler, more readable reports
that will provide greater transparency to state boards
of accountancy, federal agencies such as the
Government Accountability Office, and the private
“We have rewritten the standards to be
more principles-based,” said Susan Coffey, AICPA
senior vice president–member quality and state
regulation. “It results in less of a checklist-based
process that is intended to be more robust. It focuses
the report on the most important issues.”
Letters of comment have been eliminated as well as
the old three-tier system of “unmodified,” “modified”
and “adverse” grades given to firms by reviewers. The
new standards require a simple “pass,” “pass with
deficiencies,” or “fail” grade.
standards are available on the AICPA Peer Review
Program and CPCAF Peer Review Program Web sites at www.aicpa.org/members/div/practmon/index.htm