¤ Legislation introduced in California would limit the
liability for errors that occur because of computer failures
and errors on January 1, 2000 (Y2K). California State Assembly
bill 1710 would allow damages for costs resulting from bodily
injury and costs to replace or repair failed computer systems
or programs. It would prohibit punitive damage awards or
awards based on emotional distress. California becomes the
second state to introduce Y2K liability legislation. In
Virginia, a bill introduced in January would protect the state
and its officials from any liability for losses caused by
computer date failures in state-run computer systems.
IFAC on the Go
¤ The IFAC moved its offices and changed its telephone
and fax numbers. The new address is 535 Fifth Avenue, 26th
Floor, New York, NY 10017. The new telephone number is
212-286-9344 and the new fax number is 212-286-9570.
Time for a Donate Break
¤ Companies can order a how-to kit on deducting donated
merchandise. The kit, published by the National Association
for the Exchange of Industrial Resources (NAEIR), includes
tips on identifying donatable merchandise, instructions on the
donation process and a formula for calculating potential tax
savings. The kit is free and can be ordered by calling the
NAEIR at 800-562-0955.
One More Time!
¤ The FAF has reappointed Anthony T. Cope and John M.
(Neel) Foster to their second and final five-year terms as
members of the FASB. Cope, a chartered financial analyst, was
a senior vice-president and partner of Wellington Management
Co. before his original appointment. Foster, before his FASB
tenure, was a vice-president and treasurer at Compaq Computer
¤ FASB Vice-Chairman James J. Leisenring heads a new
FASB task force to provide guidance on its upcoming
derivatives standard and identify implementation issues. Other
members include Philip D. Ameen, General Electric Co.; Robert
H. Herz, Coopers & Lybrand; Michael Joseph, Ernst &
Young; Jack LaGue, National Life of Vermont; Carlos Mello,
People's Bank of Connecticut; Deidre Shiela, Price Waterhouse;
David H. Sidwell, J. P. Morgan & Co.; John T. Smith,
Deloitte & Touche; John E. Stewart, Arthur Andersen; Steve
Swad, KPMG Peat Marwick; and Richard G. Ueltschy, Crowe,
Chizek and Co. Jane Adams, from the SEC, and Robert Storch,
from the FDIC, will participate as observers.
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In for the Duration
¤ Robert J. Freeman was reappointed to the GASB for a
two-year term. Freeman, distinguished professor of accounting
at Texas Tech University, has been a member of the GASB since
1990. The reappointment will bring his service on the GASB to
10 years, the maximum allowed under the FAF bylaws.
Y2K Interpretation from Institute
¤ The ASB auditing issues task force approved an
auditing interpretation to SAS no. 70, Reports on the
Processing of Transactions by Service Organizations .
It clarifies the responsibilities service organizations and
their auditors have regarding the year 2000 issue in an
organization's description of controls.
FASB 125 Explained for Auditors
¤ The ASB audit issues task force approved an auditing
interpretation related to FASB Statement no. 125,
Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities . The
interpretation's full title is The Use of Legal
Interpretations As Evidential Matter to Support Management's
Assertion That a Transfer of Financial Assets Has Met the
Isolation Criterion in Paragraph 9(a) of Statement of
Financial Accounting Standards No. 125 . The board
expects it to be widely applicable because of the increasing
use of asset securitizations and similar transactions.
EPS Headache Cured
¤ FASB Statement no. 128, Earnings per Share ,
contained conflicting guidance on year-to-date diluted EPS.
However, the FASB staff has resolved the problem in Topic 62
of the EITF Abstracts : The calculation of diluted
EPS for the year-to-date period should include dilutive
potential common shares for all quarters on a quarterly
weighted-average basis. This differs from guidance in
paragraph 46 of the statement.
Death Tax a Killer
¤ "The death tax continues to kill family-owned
small businesses and the jobs they provide," said Jack
Faris, president of the National Federation of Independent
Business (NFIB). "It's ludicrous that surviving family
members must pay a tax on a business when the owner
dies," said Faris. The NFIB is urging Congress to repeal
the estate and gift tax.