FASB issued a standard that
gives companies the option to report selected
financial assets and liabilities at fair value.
Statement of Financial Accounting
Standards no. 159, The Fair Value Option for
Financial Assets and Financial Liabilities,
is designed to reduce complexity in
accounting for financial instruments and
volatility in earnings caused by measuring related
assets and liabilities differently, according to
FASB. The standard also creates presentation and
disclosure requirements designed to aid
comparisons between companies that use different
measurement attributes for similar types of assets
and liabilities. Statement no. 159 does not
eliminate disclosures required by FASB statements
no. 157, Fair Value Measurements, and no.
107, Disclosures About Fair Value of Financial
Instruments. Statement no. 159 is effective
for fiscal years beginning after Nov. 15, 2007.
Companies may adopt the standard at the beginning
of the previous fiscal year provided they choose
to do so in the first 120 days of that fiscal year
and also apply the provisions of Statement no.
157. To view the standard, visit www.fasb.org/pdf/fas159.pdf.
The AICPA provided comments
on a Department of Labor (DOL) request
for information concerning a provision of
the Pension Protection Act of 2006 (PPA) that
allows 401(k) plan sponsors and administrators to
provide investment advice using objective computer
models that meet certain requirements. AICPA
comments focused on requirements in the PPA for
the computer models to be certified by an eligible
investment expert and for annual compliance
audits. Among other recommendations, the AICPA:
Said CPAs are qualified to perform
the compliance audits of these computer models.
Recommended that the DOL develop or
reference suitable performance and reporting
Encouraged the DOL to recognize AICPA
professional attestation standards as being
suitable for performing the compliance audits.
The AICPA comment letter is available on the
Employee Benefit Plan Audit Quality Center Web
site at www.aicpa.org/EBPAQC.
Rank-and-file employees who
unknowingly exercised backdated stock
options in 2006 can obtain relief from a 20% tax
obligation if their employers elected to
participate in an IRS program and pay the tax
The service established the
Compliance Resolution Program in February.
Companies that elected to participate were
required to notify affected employees by March 15.
The program allows companies to pay the
additional 20% tax and any interest tax employees
owe, which will be treated as income to the
affected employees. Under a 2004 law, employees
who were issued stock options at below-market
price were required to pay the additional tax and
interest on options exercised in 2006. Options
earned and vested before 2005 were not affected.
The program acknowledges that some employees
unwittingly benefited from backdating or other
option underpricing schemes, the IRS said in a
release. The same break doesn’t extend to
corporate executives or other insiders.
The AICPA and Canadian
Institute of Chartered Accountants
expanded their jointly published
framework of Generally Accepted Privacy Principles
to address international privacy concerns.
Generally Accepted Privacy Principles—A
Global Privacy Framework amplifies the
organizations’ 2003 GAPP framework to address
privacy implications of globalization in such
areas as international outsourcing of services. It
references privacy laws and regulations, both
domestic and international, incorporating them
into a single privacy objective supported by 10
privacy principles as an aid to businesses with
international transactions and CPAs in private
practice providing them with consulting and
attestation services. The framework is available
in versions for businesses and CPA
The IASB released an exposure
draft of the International Financial Reporting
Standard for Small and Medium-sized Entities
(IFRS for SMEs). The proposal would
simplify accounting principles that are
appropriate for smaller, non-listed companies. The
draft is based on full International Financial
Reporting Standards (IFRS), which were developed
primarily for listed companies.
Tweedie, the IASB chairman, said the proposal’s
goal is to “produce a standard for use by smaller
and unlisted companies that offers the
comparability of full IFRS while reducing the
burden on the preparing company.”
requires listed companies to comply with IFRS, but
it is not requiring the adoption of IFRS for
SMEs, leaving the decision to each member
The English text of the ED is
available at www.iasb.org.
Spanish, French and German translations are
expected this month. Comments are due by Oct.