News Highlights for January 2011
FASB issued a discussion paper to gather input from stakeholders about the time and effort that will be involved in adapting to several anticipated new accounting and reporting standards and when those standards, which are part of the FASB and International Accounting Standards Board (IASB) convergence projects, should be effective. The board said it will use the input it receives to develop an implementation plan that helps companies and other stakeholders manage both the pace and cost of change.
“We issued this discussion paper to gather the information we need to create a realistic, cost-effective plan for transitioning to the new standards,” Acting FASB Chairman Leslie F. Seidman said in a press release.
The board wants stakeholder input on the amount of time and effort that will be involved in learning about and transitioning to the new requirements, whether the standards should be adopted at the same time or sequentially over a number of years, and whether different effective dates would be appropriate for different classes of entities.
The discussion paper, Effective Dates and Transition Methods, is available at tinyurl.com/29ze5qf and refers to the following convergence projects:
- Accounting for financial instruments and revisions to the accounting for derivative instruments and hedging activities, including netting of financial instruments (exposure draft issued May 2010);
- Revenue recognition: revenue from contracts with customers (ED issued June 2010);
- Leases (ED issued August 2010);
- Financial statement presentation (including discontinued operations) (ED has not yet been issued);
- Insurance contracts (discussion paper issued September 2010); and
- Comprehensive income (ED issued May 2010).
To review the status of these projects, go to fasb.org and click on the “Projects” tab.
The discussion paper says FASB plans to make several targeted improvements to U.S. GAAP over the next year (for example, fair value measurements and disclosure). Those new requirements will include transition provisions and effective dates based on FASB’s assessment of them on a stand-alone basis. FASB may reconsider and amend those decisions in light of the feedback it receives on this discussion paper.
Comments are due Jan. 31, 2011. FASB said that the IASB plans to issue a Request for Views soliciting input on the same issues.
The Accounting and Review Services Committee issued SSARS no. 19 in December 2009, making the most significant changes to the compilation and review literature since the issuance of SSARS no. 1, Compilation and Review of Financial Statements, in December 1978. SSARS no. 19 is effective for compilations and reviews of financial statements for periods ending on or after Dec. 15, 2010, with early implementation of a new compilation reporting option permitted.
Questions have been raised about how the requirements and guidance apply to compilations and reviews of personal financial statements. AR section 80, Compilation of Financial Statements, and AR section 90, Review of Financial Statements (AICPA, Professional Standards, vol. 2), are applicable to compilations and reviews of personal financial statements in the same manner as to compilations and reviews of financial statements of commercial entities. The exhibit, available at tinyurl.com/2ey8hm5, discusses internal control for personal financial statements and includes examples of standard engagement letters for a compilation and a review of personal financial statements.
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