News, Notes and Items of Interest


F Y I

Short takes, notes and items of interest

Y2K Liability
¤ 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 Corp.

Derivative Reinforcements
¤ 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.

 

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.



 

©1998 AICPA

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