Highlights


  

 

Japan and the International Accounting Standards Board (IASB) agreed to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRS). The two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRS, with the remaining differences being removed on or before June 30, 2011. To view the full announcement and agreement, visit www.asb.or.jp/html_e/asbj/pressrelease/pressrelease_20070808_e.pdf . The announcement follows a similar agreement between the IASB and India (see News Digest, page 22).

The AICPA has joined the National Association of Black Accountants (NABA) in requesting that the U.S. Small Business Administration increase the revenue threshold for CPA firms seeking small business designations for purposes of contracting with the federal government to provide accounting services. In a letter to SBA Administrator Steven C. Preston, Jim Metzler, the AICPA’s vice president–small firm interests, requested that the upper limit be lifted from $7.5 million in annual revenue to $25 million. NABA also has advocated for the $25 million threshold.

“Raising the size standard to $25 million would properly recognize Federal government technological accounting acquisition needs and the fact that today’s savvy small business accounting firm is required to function in the accounting systems technology arena,” Metzler wrote. “These areas include accounting systems software, budget and accounting security, and the establishment of total accounting systems.”

Metzler said federal programs for small, disadvantaged, minority and emerging accounting firms would ensure startup and very small accounting firms still had opportunities to compete for government business.

The Government Accountability Office issued in July a revision of Government Auditing Standards (also known as the “Yellow Book”). This revision updates the previous revision from January (and supersedes the 2003 version of the standards) by providing final changes to the sections of Chapter 3 on quality control and assurance and peer review. The July standards represent the complete version of the Yellow Book until notice of further updates and revisions. To access the revised standards, information on the effective date, and a summary of technical changes, go to www.gao.gov/govaud/ybk01.htm.

Victims of Hurricanes Katrina, Rita and Wilma now have an additional year to sell vacant land that they owned and used as part of their principal residence that was destroyed as a result of the hurricanes. Federal tax rules state that individuals have two years to sell vacant land to take advantage of the exclusion on gain from the sale of a principal residence, but the IRS extended the deadline. Victims of the 2005 hurricanes now have three years after the destruction of their principal residence as a result of the hurricanes to sell. For specific information on this provision and other tax relief information for hurricane victims, go to www.irs.gov.

FASB removed from its project agenda Staff Position no. FAS 154-a , Considering the Effect of Prior-Year Misstatements When Quantifying Misstatements in Current-Year Financial Statements. The project was aimed at addressing the process of quantifying misstatements in current-year financial statements arising from the carryover or reversal of prior-period errors for the purpose of evaluating materiality. As proposed in a March exposure draft, it would have been effective for financial statements issued for fiscal years ending after June 15, 2007.

Ninety-nine percent of financial executives polled during a recent AICPA conference said they are concerned about rising employee health care costs. Eighty-one percent of the respondents said their employee health care costs have risen in the past year, from as little as 5% to more than 20%. While most of the executives said their organizations do not plan to reduce benefits, nearly a quarter indicated that employees would have to shoulder increased costs. Other cost-control strategies included offering high-deductible consumer-driven plans and changing health care providers. The AICPA conducted the poll at its 2007 Summer Controllers Workshop in Las Vegas. Approximately 460 financial executives—primarily CPAs representing private, public and not-for-profit organizations—attended the conference. More than half responded to the poll.

The Financial Crimes Enforcement Network (FinCEN) issued a rule to clarify procedures U.S. financial institutions should use to assess the risks of some foreign banking relationships. The rule, issued pursuant to section 312 of the USA PATRIOT Act, applies to a relatively small category of foreign banks, including those with an offshore banking license and certain high-risk banks subject to certain international or U.S. Treasury Department determinations.

The rule requires U.S. financial institutions to identify the owners of these foreign banks if their shares are not publicly traded and to determine whether these foreign banks provide correspondent accounts to other foreign banks, therefore providing them with access to the U.S. financial system. Financial institutions’ risk assessments should consider the nature of the foreign banks’ business, reasonably available information on the foreign banks’ anti-money laundering record, and information on the nature of the foreign supervisory regulations under which the banks are operating.

The final regulation is available at www.fincen.gov/31_CFR_Part_103_312_
EDD_Rule.pdf
.

The National Credit Union Administration has released an advance notice of proposed rulemaking to solicit comment on whether the regulator should expand the ability of federal credit unions to make investments in foreign currencies. The board would limit investments in foreign currency to deposits and instruments issued by federally insured banks, corporates and government-sponsored enterprises domiciled in the U.S. or its territories.

The NCUA has authority under the Federal Credit Union Act to permit credit unions to make investments denominated in foreign currencies, but the board’s regulations currently bar the practice.

The NCUA is specifically asking for comments on how credit unions would:

Measure, monitor and control foreign exchange risk of each currency in which it invests and accepts deposits.

Establish processes for controlling credit risk, interest rate risk, liquidity risk, transaction risk, compliance risk, strategic risk and reputation risk associated with investments denominated in foreign currency.

Develop an exit strategy to facilitate divestiture of all investments in a particular currency and identify triggering events or scenarios that would alert credit unions as to when divestiture may be appropriate or necessary.

The NCUA also wants comments on whether the board should regulate the qualifications of credit union employees involved in foreign currency investment activities to ensure they have the knowledge and experience necessary to manage such a portfolio.

Comments are due Oct. 30. The advance notice of proposed rulemaking can be viewed at www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/P-703-704.pdf.

The IRS has released the 2007–2008 Priority Guidance Plan containing 303 projects to be completed through June 2008. The plan focuses on items that are considered most important to taxpayers and tax administration. It incorporates suggestions solicited from all interested parties, including taxpayers, tax practitioners and industry groups. The IRS said it will periodically update the guide to include the latest developments such as the enactment of any tax legislation or to consider comments from taxpayers and tax practitioners relating to additional projects. Comments and suggestions are encouraged throughout the year.

Copies of the 2007–2008 Priority Guidance Plan can be downloaded at www.irs.gov/pub/irs-utl/2007-2008pgp.pdf or by calling Treasury’s Office of Public Affairs at 202-622- 2960. To view the AICPA’s May 31 comments on the guidance plan, see http://tax.aicpa.org/NR/rdonlyres/F4828DE0-8A98-426A-B921-909798E0FF2F/0/AICPA_Comments_on_IRS_Guidance_Priority_List_20072008.doc . 

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