Accounting
AcSEC issues an exposure draft (ED) of a proposed statement of position (SOP), Allowance for Credit Losses, that addresses creditors’ recognition and measurement of the allowance for credit losses related to all loans, as defined—with certain exceptions—in FASB Statement no. 114, Accounting by Creditors for Impairment of a Loan. The ED amends existing guidance in the AICPA Audit and Accounting Guide, Certain Financial Institutions and Entities That Lend to or Finance the Activities of Others, and it applies to all creditors other than state, local and federal government entities. If approved, the proposed SOP would be effective for financial statements for fiscal years beginning after December 15, 2003, with earlier application encouraged. Comments on the ED, which is available at www.aicpa.org/members/div/acctstd/edo/2003_06_credit_losses.asp , are due September 19.
AcSEC publishes Statement of Position (SOP) 03-1, A ccounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. Among the topics the SOP covers are the presentation of—and interest in—separate accounts, gains and losses on the transfer of assets from the general account to a separate account and liability valuation. It is effective for financial statements covering fiscal years beginning after December 15, 2003. Earlier adoption is encouraged, but retroactive application to prior years’ financial statements is prohibited. Entities should apply the SOP for the first time as of the beginning of their fiscal year. Copies of the statement (product code 014936JA) are available from the AICPA at 888-777-7077.
The Institute’s accounting standards staff releases a technical practice aid (TPA) ( www.aicpa.org/download/acctstd/tpa_6400_35.pdf ) to clarify a reference in paragraph 4.07 of the AICPA Audit and Accounting Guide, Health Care Organizations, t o “other-than-temporary impairment” losses. The TPA explains how the term applies to not-for-profit health care organizations’ investment losses related to debt securities and equity securities with readily determinable fair values.
