The codification includes a Web-based search tool. Advanced features include the ability to select multiple sections from different topics and subtopics and join them into a single document. A cross-reference feature allows users to see where current standards are located in the codification topical structure. Use of the Web-based tool is currently free.

The FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the Emerging Issues Task Force, and the AICPA) to organize them under roughly 90 topics and include all accounting standards issued by a standard setter within levels A–D of the current U.S. GAAP hierarchy. The ASC also includes relevant portions of authoritative content issued by the SEC, as well as selected SEC staff interpretations and administrative guidance issued by the SEC. FASB received about 1,500 comments submitted by approximately 400 constituents during the initial verification period that ended in January. At its Feb. 25 board meeting, FASB noted that approximately 100 changes to the FASB ASC were in process as a result of the feedback received. FASB decided to include in the codification, thereby elevating in authoritative status, the AICPA Technical Inquiry Service (TIS) Section 5100, Revenue Recognition, paragraphs 38–76, which may result in an accounting change for private entities that had not previously applied the guidance.

The FASB ASC Web site is asc.fasb.org. AICPA resources related to the codification project are available at tinyurl.com/dlswb8.

Many lease contracts don’t appear on a balance sheet because IFRS and U.S. GAAP split leases into two categories—finance leases (capital leases under U.S. GAAP) and operating leases—and only assets and liabilities arising from finance leases are recognized in the statement of financial position. For an operating lease, the lessee simply recognizes lease payments as an expense over the lease term.

The different accounting treatment of finance and operating leases has resulted in various problems, the standard setters say. The discussion paper, available at www.fasb.org/draft/DP_Leases.pdf, is open for comment until July 17.

Bank failures continued to put pressure on the DIF at the start of 2009. In the fourth quarter, the FDIC was named receiver of 12 institutions with combined assets of $25 billion and combined estimated losses of $4 billion. The FDIC took over 21 failed institutions in the first quarter of 2009 at an estimated cost to the DIF of $2.35 billion.

The fourth quarter drop in the DIF balance was primarily due to the $17.55 billion increase in the provision for insurance losses mainly related to anticipated failures, the report said. The increase in provisions was partially offset by increased assessment revenue, interest earned on securities and both realized and unrealized gains on securities.

The sharp drop in the DIF balance coincided with almost 11% growth in insured deposits from $4.29 trillion at the end of 2007 to $4.76 trillion at the end of 2008. The divergence of the DIF balance and total deposits resulted in a drop in the DIF reserve ratio from 1.22% at the end of 2007 to 0.40% at the end of 2008.

The FDIC has taken steps to restore the reserve ratio. At the end of February, the regulator released an interim final rule that imposes an emergency special assessment on insured institutions of 20 cents per $100 of deposits as of June 30, 2009. The rule permits another 10-basis-point assessment after June 30 if necessary to maintain confidence in federal deposit insurance. The special assessments are part of the FDIC’s plan to restore the reserve ratio to 1.15% over seven years.

The CFO Report to the Board is available at www.fdic.gov.

  AICPA staff issued guidance to help preparers and auditors consider financial reporting issues resulting from actions taken by the National Credit Union Administration (NCUA) to stabilize the corporate credit union system.

The NCUA is injecting $1 billion in cash from the National Credit Union Share Insurance Fund (NCUSIF) into the U.S. Central Federal Credit Union (USC) in the form of capital. The USC and many of its member corporate credit unions made investments in asset-backed securities that became impaired.

The NCUA also is offering a voluntary temporary NCUSIF guarantee of member shares in corporate credit unions through Dec. 31, 2010.

The guidance, available at tinyurl.com/dc2uae, was developed by AICPA staff and industry experts. It explains how to evaluate capital investments in corporate credit unions for other-than-temporary impairment. Issued as two Technical Practice Aid question-and-answer documents, the guidance explores whether the NCUA’s actions constitute a type 1 or type 2 subsequent event with regard to the valuation of a federally insured credit union’s NCUSIF deposit at Dec. 31, 2008, and when and how the obligation for the insurance premium should be recognized for financial reporting purposes.

  Credit quality continued to deteriorate at the end of 2008 as the performance rate for all mortgages dropped to just under 90%, down from 93% at the end of the third quarter of 2008, according to the OCC and OTS Mortgage Metrics Report for the fourth quarter of 2008.

The biggest percentage jump in serious delinquencies occurred in prime mortgages. At the end of the fourth quarter, 2.4% of all prime mortgages were seriously delinquent compared with 1.1% at the end of the first quarter of 2008.

Loan modifications and payment plans increased 11% in the quarter, but re-default rates remained high. Serious delinquency rates (60 or more days past due) after eight months were 41% for loans modified in the first quarter and 46% for loans modified in the second quarter. So far, 31% of loans modified in the third quarter have become seriously delinquent after only three months.

The report also noted that modifications that resulted in lower payments increased to more than 50% of all loan modifications in the fourth quarter. A modification’s effect on monthly payments has been a big factor in re-default rates. When modifications decreased monthly payments by more than 10%, the serious delinquency rate was only about 23% after six months compared with a 51% serious delinquency rate after six months for modifications that resulted in no change in payment.

The Mortgage Metrics Report is available at www.ots.treas.gov and www.occ.treas.gov.

FASB on April 1 issued amendments and clarifications to the business combinations standard in the form of FASB Staff Position (FSP) 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. The FSP, available at tinyurl.com/d6fdld, is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after Dec. 15, 2008.

FraudNet is an e-mail, phone and fax hotline that processes allegations about federal agencies and federally funded programs. Tips may be provided anonymously, and the GAO keeps all inquiries confidential. The GAO may refer allegations for follow-up to its own investigative units, appropriate inspector general offices, or to the Justice Department.

“The Recovery Act has set aside billions of dollars to create jobs, invest in infrastructure, and fund other measures to counter the current economic downturn. Experience tells us that the risk of fraud and abuse grows when large sums are spent quickly, eligibility requirements are being established or changed, and new programs created,” Gene L. Dodaro, acting comptroller general of the United States and head of the GAO, said in a press release.

Tipsters may call FraudNet at 800-424-5454 (an automated answering system); send an e-mail to fraudnet@gao.gov; send a fax to 202-512-3086; or write to: GAO FraudNet, 441 G St., NW, Mail Stop 4T21, Washington, DC 20548. FraudNet is on the Web at www.gao.gov/fraudnet/fraudnet.htm.

The study, Mortgage Loan Fraud Connections with Other Financial Crimes, examines the activities of people reported in depository institution SARs for mortgage loan fraud between July 2003 and June 2008, by evaluating SARs filed by money services businesses (SAR-MSB), securities brokers and dealers of insurance companies (SAR-SF) and casinos and card clubs (SAR-C).

The report said:

• Securities fraud was indentified in 23% of SAR-SFs reporting MLF subjects, compared with 16% of all SARSFs in the same five-year period.
• Approximately 70% of the examined SAR-MSBs described suspicious wire transfers by MLF subjects; 34% of those reports described transfers to foreign countries by MLF subjects. Nigeria was the most frequent reported destination of those funds, accounting for 10% of MLF subject activity reported in SAR-MSBs. In contrast, wire transfers to Nigeria reported in all SARMSBs represented only 3% of activity.
• In SAR-SFs, FinCEN found an unusually high number of reports of suspicious documents, fraudulent identifications, and forgery among MLF subjects.
• Check fraud by MLF subjects was reported in the SAR-Cs at an unusually high level—17%—compared with only 3% of all SAR-Cs during the same five-year period.

FinCEN also released Advisory FIN-2009-A001 to highlight red flags that are potential indicators of loan modification/ foreclosure rescue scams. The advisory notes the red flags only show possible indications of fraud. Some of the red flags include: a homeowner making payments to a third party other than the mortgage holder or servicer; the so-called “foreclosure specialist” charging an upfront fee; the homeowner being pressured to sign paperwork he or she did not have an opportunity to read and did not thoroughly understand; the foreclosure specialist giving a guarantee the home would be saved “no matter what”; and the foreclosure specialist falsely claiming to be affiliated with the government.

The complete Mortgage Loan Fraud report and Advisory FIN-2009-A001 are available at www.fincen.gov. If financial institutions have questions, they can call FinCEN’s Regulatory Helpline at 800-949-2732.

Prior to Statement no. 55, the GAAP hierarchy was contained in Statement on Auditing Standards (SAS) no. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, rather than in GASB’s authoritative literature. Statement no. 55 incorporates relevant portions of SAS no. 69 into the GASB literature without substantive change. Statement no. 55 is effective immediately.

To order a copy of the statement, go to www.gasb.org.

  GASB also issued an Invitation to Comment (ITC) on Pension Accounting and Financial Reporting to obtain feedback for a re-examination of pension accounting and financial reporting standards. The ITC addresses key issues related to pension accounting and financial reporting including the process on which pension accounting and financial reporting should focus; recognition of liabilities and expenses; measurement of unfunded pension obligations; the use of actuarial methods; and reporting by government employers in cost-sharing multiple-employer pension plans and reporting by pension plans themselves.

Comments are requested by July 31. A public hearing on the ITC is scheduled for GASB’s regular meeting on Aug. 26 at 8:30 a.m. The ITC is available at www.gasb.org.

The primary communiqué released at the end of a summit held in London on April 2 said the G-20 would “call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards.”

The group also issued a declaration that expands the Financial Stability Forum to become the Financial Stability Board, which will have broad authority to review and advise financial regulators and standard-setting bodies. The declaration details several recommendations for accounting standard setters including several actions that it says should be taken by the end of 2009.

A March 14 status report on the G-20’s action plan shows that FASB and the International Accounting Standards Board (IASB) have been active since the action plan was first unveiled in November. Just before the summit in London, the IASB further detailed its progress on the G-20 recommendations in an overview of measures undertaken by the International Accounting Standards Committee Foundation with the IASB responding to the conclusions reached by the G-20 at its summit in Washington.

The G-20’s members are the finance ministers and central bank governors of 19 of the world’s most significant industrial and emerging economies, and the European Union, which is represented by the rotating Council presidency and the European Central Bank.

For more information, visit www.g20.org.

  The IASB published an exposure draft of proposals to improve the derecognition requirements for financial instruments.

The IASB is also proposing to enhance disclosure requirements, especially in situations where an entity continues to have an ongoing involvement in a financial asset that would be derecognized under the proposals. The additional disclosures would allow users to make a better assessment of the risks associated with such an asset.

The proposals are part of the IASB’s comprehensive review of off-balancesheet activities and follow the publication of proposals in December 2008 to strengthen and improve the requirements for identifying which entities a company controls, known as consolidation.

The IASB says its comprehensive review of off-balance-sheet risk is in response to concerns raised by the G-20 leaders at their meeting in Washington in November. The IASB and FASB have announced their intention for these proposals to become joint projects.

Comments are due by July 31. The ED is available under “Open for Comment” at www.iasb.org.

  The IASB also released an exposure draft for a proposed new standard on accounting for income tax. If adopted, the standard would replace the existing requirements in International Accounting Standard no. 12 (IAS 12), Income Taxes.

The proposed standard retains the basic approach to accounting for income tax, known as the temporary difference approach. The objective of that approach is to recognize now the future tax consequences of past events and transactions, rather than waiting until the tax is payable. Although the proposed standard retains the same principle, it removes most of the exceptions in IAS 12 to simplify the accounting and strengthen the principle in the standard. In addition, the ED proposes a new structure for the standard intended to make it easier to use.

Comments are due on the ED by July 31. It is available under “Open for Comment” at www.iasb.org.

The SBA’s Surety Bond Guarantee Program guarantees bid, payment and performance bonds. The bonds protect project owners against financial loss if contractors default or fail to perform. The program is a partnership with the surety industry to aid small businesses that would otherwise be unable to obtain surety bonds in the traditional commercial market. The SBA guarantees between 70% and 90% of the bond amount issued by the participating surety companies.

The SBA said another pending change authorized by the Recovery Act allows the agency to guarantee sureties of up to $10 million on a federal contract following certification by the contracting officer that the bond guarantee is required. For more information on small business provisions in the Recovery Act and how the SBA is implementing those provisions, go to www.sba.gov/recovery.

  Karen Gordon Mills became the SBA administrator after the Senate unanimously approved her appointment on April 1. Mills, of Brunswick, Maine, was president of MMP Group Inc. She has 25 years of experience investing in and growing small businesses. In 2007, Maine Gov. John Baldacci appointed her chair of the state’s Council on Competitiveness and the Economy, where she concentrated on attracting investment in rural and regional development initiatives.

She is a member of the Council on Foreign Relations and is a former vice chairman of Harvard Overseers. She has an economics degree from Harvard University and an MBA from Harvard Business School, where she was a Baker Scholar.