The IRS clarified certain instructions for form 1040, schedule D, which the AICPA had said imposed significant burdens on individual taxpayers reporting capital gains and losses ( www.irs.gov/formspubs/article/0,,id=109875,00.html; www.irs.gov/businesses/small/article/0,,id=153349,00.html). Taxpayers can continue using a substitute statement to provide this information in a format similar to lines 1 and 8 of schedules D and D-1. They are not required to report the details of each transaction in the official versions of those schedules but must, nevertheless, provide such details with the tax return—for example, as an attachment.
The IRS posted on its Web site final Roth 401(k) regulations issued in December 2005 and answers to frequently asked questions on Roth 401(k) contributions ( http://a257.g.akamaitech.net/7/257/2422/01jan20061800/; www.irs.gov/retirement/article/0%2C%2Cid=152956%2C00.html) (see News Digest, JofA, Feb.06, page 19). The IRS also issued temporary and proposed regulations that significantly simplify tax-filing requirements for small employers (www.irs.gov/irs/article/0,,id=152458,00.html). Comments are due April 3, 2006.
The SEC proposed rules amending disclosure requirements for executive and director compensation, related-party transactions, director independence and other corporate governance matters and security ownership by officers and directors ( www.sec.gov/news/press/2006-10.htm). The proposals require disclosure in plain English (www.sec.gov/news/extra/handbook.htm) and modify the compensation arrangement reporting requirements in Form 8-K. Comments are due April 10, 2006, and can be submitted electronically at www.sec.gov/rules/proposed.shtml.
FASB issued an exposure draft (ED), The Fair Value Option for Financial Assets and Financial Liabilities, that would permit companies to report at fair value any financial assets and liabilities they irrevocably select on a contract-by-contract basis ( www.fasb.org/draft/ed_fair_value_option.pdf). Any valuation changes would be included in corporate earnings, which the board aims to make less volatile by enabling companies to account for fair-value fluctuations more consistently than is possible under current rules. Comments are due April 10, 2006. (A subsequent proposal will address nonfinancial assets and liabilities.)
The International Federation of Accountants issued Guidance for the Development of a Code of Corporate Conduct, an ED designed to help accountants imbue their organizations with pervasive and enduring ethical values and standards ( www.ifac.org/guidance/exd-download.php?EDFID=00163). Comments are due April 15, 2006.
The AICPA Tax Executive Committee issued proposed Statement on Standards for Tax Services no. 9, Quality Control, which defines the “adequate system of quality control” that members providing public or private tax services must establish and maintain in order to provide reasonable assurance their personnel comply with applicable professional standards ( www.aicpa.org/tax/ssts9exposuredraft). Comments are due August 31, 2006.
The boards of directors of the AICPA and the National Association of State Boards of Accountancy approved the Uniform Accountancy Act, Fourth Edition ( www.aicpa.org/download/states/uaa_2005_fourth_edition.doc). Among other changes, it contains revised provisions governing peer review, substantial equivalency and confidentiality of state board records.
The AICPA’s Auditing Standards Board issued a proposed Statement on Standards for Attestation Engagements (SSAE), Reporting on an Entity’s Internal Control Over Financial Reporting ( www.aicpa.org/members/div/auditstd/internal_control_financial_reporting.htm). A revision to an ED issued in March 2003, it reflects guidance from Public Company Accounting Oversight Board Auditing Standard no. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements, that is appropriate for examining the internal controls of nonissuers; it is useful to financial institutions, insurers and government entities. An accompanying document, “A Framework for Evaluating Control Exceptions and Deficiencies,” presents techniques helpful in applying the SSAE. Comments are due May 19, 2006.
The International Accounting Standards Board ( www.iasb.org) published proposed international financial reporting standard, ED 8, Operating Segments, to give financial statement users greater insight into an entity’s management of its operations. The ED would replace International Accounting Standard 14, Segment Reporting, and align IASB guidance with FASB Statement no. 131, Disclosures about Segments of an Enterprise and Related Information (www.fasb.org/st/summary/stsum131.shtml).
The IRS issued Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita and Wilma, which lists regions designated as disaster areas or eligible for administrative relief or tax breaks under recent legislation ( www.irs.gov/pub/irs-pdf/p4492.pdf). The GAO released a similar document, Government Auditing Standards: Temporary Exceptions and Guidance in Response to Hurricanes Katrina and Rita (www.gao.gov/govaud/hurricanedocument.pdf).