January 2003 > News Digest
AcSEC, the AICPA accounting standards executive committee, in agreement with FASB and the SEC, rescinds SOP 92-3, Accounting for Foreclosed Assets. FASB statement no. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, effectively superseded the SOP, the scope of which did not include non-long-lived assets such as inventories and marketable equity securities.
The ASB issues Statement on Auditing Standards no. 100, Interim Financial Information, replacing SAS no. 71, with the same title. The new standard provides additional guidance on performing reviews of interim financial information and incorporates the SECs requirement for timely filing of interim data. It also includes recommendations from the Public Oversight Boards Panel on Audit Effectiveness and from the AICPA professional issues task forces Practice Alert 2000-4, Quarterly Review Procedures for Public Companies. Copies of the SAS (product no. 060702) can be ordered from the AICPA at 888-777-7077.
The accounting and review services committee issues Statement on Standards for Accounting and Review Services no. 9, Omnibus2002, which includes revisions to previously issued statements. The new release amends SSARS no. 1, Compilation and Review of Financial Statements, in several respects; provides guidance related to SSARS no. 4, Communications Between Predecessor and Successor Accountants; and clarifies the relationship between the effectiveness of quality control systems and the performance of an engagement according to applicable professional standards. Copies of the statement can be ordered from the AICPA at 888-777-7077.
The GAO releases a report, Trends, Market Impacts, Regulatory Responses, and Remaining Challenges ( www.gao.gov/new.items/d03138.pdf ), which found the number of times public companies restated their financial results due to accounting irregularities rose 145% from January of 1997 through June of 2002. The agency analyzed 919 restatements made by 845 public companies. About 10% of publicly traded companies made at least one such adjustment during this period, according to the study. Improper recognition of revenue was the most frequently cited reason for the restatements.
The International Accounting Standards Board (IASB) issues an exposure draft, Share-based Payment ( www.iasb.org.uk ), which proposes companies, on their financial statements, report as expenses any shares or options they grant to employees as compensation. The IASB concluded that such transactions are not different from those in which an entity receives resourcessuch as the services of employees or other goods or servicesas consideration for its equity instruments. Comments are due March 7.
A new Federal Trade Commission publication, Financial Institutions and Customer Data: Complying with the Safeguard Rule ( www.ftc.gov/bcp/conline/pubs/buspubs/safeguards.htm ), explains important aspects of the regulation ( www.ftc.gov/privacy/glbact ), which applies to businesses significantly engaged in providing financial products or services to consumers. The report includes a section called How to Comply and lists the specific requirements financial institutions must follow in developing their written information security plan. The Safeguard Rule also affects credit reporting agencies, ATM operators and any company that receives information from financial institutions.
The IRS releases 2003 cost-of-living adjustments related to benefit and contribution limits for qualified retirement plans ( www.irs.gov/pub/irs-news/ir02-111.pdf ). Many such savings caps are not changing this year because the increase in the cost-of-living index fell below the statutory thresholds that otherwise would trigger their adjustment. However, several will increase this year. The limitation under section 402(g)(1) on the exclusion for elective deferrals rises to $12,000 from $11,000, affecting contributions to 401(k) plans and the federal governments thrift savings plans.
Four practitioners replace departing members of the ASB. The appointees are Kenneth Macias, William F. Messier Jr., Steven L. Schenbeck and Michael T. Umscheid.