The U.S. Court of Appeals for the District of Columbia upheld a lower court decision on the constitutionality of the PCAOB and Sarbanes-Oxley Act, which spawned the regulator.

The plaintiffs in Free Enterprise Fund v. PCAOB argued that SOX and the PCAOB violate the appointments clause, separation of powers and nondelegation principles of the Constitution because PCAOB board members hold significant regulatory power yet are appointed by the SEC, not by the president with the advice and consent of the Senate.

The appeals court held 2-1 that the manner in which PCAOB board members are appointed and overseen under Sarbanes-Oxley is constitutional. SEC commissioners, who are appointed by presidential nomination with Senate consent, "exercise comprehensive control over Board procedures and decisions and Board members. For instance, the Commission approves all Board rules," Justice Judith W. Rogers wrote for the majority in the appellate court ruling.

The AICPA's Auditing Standards Board issued an exposure draft of a proposed Statement on Auditing Standards (SAS), Interim Financial Information. The proposed statement would amend AU section 722, Interim Financial Information, to accommodate reviews of interim financial information of nonissuers, including companies offering securities pursuant to SEC Rule 144A or participating in private equity exchanges. For example, a nonissuer may, on a quarterly basis, prepare interim financial statements that conform to the requirements of Article 10 of SEC Regulation S-X.

The statement would apply when the interim financial information is intended to provide a periodic update to year-end reporting and the accountant has either audited the entity's latest annual financial statements or is auditing the current-year financial statements and the entity's latest annual financial statements were audited by another auditor.

The statement clarifies that if these conditions are not met, reviews of interim financial information of nonissuers should be performed in accordance with Statements on Standards for Accounting and Review Services. The proposed SAS also removes the guidance for reviews of the interim financial information of issuers because such guidance appropriately resides in the PCAOB's auditing standards.

The proposed statement would be effective for interim periods of fiscal years beginning after Dec. 15, 2008. Early application would be permitted. Comments are due Nov. 3. The document is available at http://tinyurl.com/5vx6ta.

The Office of Thrift Supervision is hosting a conference to examine potential solutions to the nation's housing crisis. The OTS's Third Annual National Housing Forum is scheduled for Dec. 8 at the National Press Club in Washington.

The conference will feature experts in housing and mortgage finance issues. Several speakers and panels will focus on residential mortgage lending, federal financial regulation, mortgage banking and the securities market.

More information is available at www.ots.treas.gov.

Profits at insured banks and savings institutions tumbled 87% from year-earlier levels in the second quarter of 2008, the FDIC reported in its Quarterly Banking Profile. Industry income was $5 billion, compared with $36.8 billion in the second quarter of 2007. Behind the earnings drop were ballooning loan-loss provisions and a continuing rise in noncurrent loans.

Loan-loss provisions totaled $50.2 billion, more than quadruple the $11.4 billion the industry logged in the prioryear period. Institutions with more than $1 billion in assets saw a drop in return on assets to 0.10% from 1.23% a year earlier; smaller institutions' ROA dropped to 0.57% from 1.10%.

The rate of all loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) rose for a ninth consecutive quarter to more than 2%, the highest level since the third quarter of 1993.

To read the Quarterly Banking Profile, go to www.fdic.gov.

The nation's thrifts posted $5.4 billion in losses in the second quarter of 2008, the second-worst quarter on record after $8.8 billion in losses in the fourth quarter of 2007, the OTS said. Institutions set aside $14 billion in loan-loss provisions, the highest total on record, bringing total reserves set aside in the past four quarters to $30 billion. The number of problem thrifts increased to 17, from 12 in the previous quarter.

More details on thrifts' finances are available at www.ots.treas.gov.

The AICPA's Accounting Standards Executive Committee issued an exposure draft of a proposed Audit and Accounting Guide, Gaming. The proposed guide addresses new accounting issues that have emerged over the years. It also includes guidance dedicated specifically to governmental gaming entities.

Comments are due Dec. 9. The ED is available at http://tinyurl.com/5oguoe.

FASB added the topic "business combinations" to the FASB Accounting Standards Codification. The addition integrates various standards, including FASB Statement no. 141(R), Business Combinations; FASB Statement no. 109, Accounting for Income Taxes; FASB Interpretation no. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109; and various EITF issues and SEC staff accounting bulletins. FASB included only the post-141(R) standards in the business combinations topic.

The codification is expected to become the single source of authoritative literature in April 2009. During the verification period, which ends Jan. 15, 2009, users are encouraged to provide input on whether the business combinations topic and all other content accurately reflect U.S. GAAP.

Users who register at http://asc.fasb.org/ can access and review the codification, including the newly added business combinations information, for free. The codification content is not yet approved as authoritative.

The SEC unveiled the successor to the agency's 1980s-era EDGAR database, which will give investors far faster and easier access to key financial information about public companies and mutual funds, according to an SEC news release.

The new system is called IDEA, short for Interactive Data Electronic Applications. Based on an architecture that incorporates XBRL technology, it will at first supplement and then eventually replace the EDGAR system.

EDGAR will be available to users for the indefinite future. During the transition, investors can take advantage of interactive, IDEA-like features that will be grafted onto EDGAR in the short run. This will allow investors to tap IDEA's advanced search capabilities, and to use the information from EDGAR within spreadsheets and analytical software something that was never possible with EDGAR. The EDGAR database also will be available as an archive of company filings for past years.

The article "A New Day for Business Combinations" (June 08, page 34) misstated the treatment under FASB Statement no. 141(R) of contingent consideration involving shares. The article should have stated that contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

The article "Long-Term Care Insurance and Tax Planning" (Aug. 08, page 44) incorrectly characterized tax law concerning eligibility of long-term care (LTC) expenses for coverage under flexible spending arrangements (FSAs). The article should have said that FSAs (and health reimbursement arrangements that are FSAs) cannot be used to pay for either LTC insurance premiums or LTC expenses.