For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. “We were motivated to develop and issue this alert by the auditing challenges presented by the subprime credit situation and its effects
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TOPICS / ACCOUNTING & REPORTING
FASB financial accounting & reporting
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The letter is co-signed by CAQ Governing Board Chairman James S. Turley, chairman and CEO of Ernst & Young LLP, and
Highlights
FASB tentatively approved a one-year delay in the effective date for FIN 48, Accounting for Uncertainty in Income Taxes, for private enterprises, including not-for-profit organizations. Acting on a request from the Private Company Financial Reporting Committee for a deferral, the FASB board is seeking public comment on a
Financial Reporting
The Private Company Financial Reporting Committee recommended that FASB delay the effective date of FIN 48, Accounting for Uncertainty in Income Taxes , for private companies. The PCFRC voted unanimously at its September meeting to recommend postponing the effective date until guidance is issued on FIN 48’s implications for pass-through
Refining Fair Value Measurement
EXECUTIVE SUMMARY FASB Statement no. 157 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The standard does not require fair values to be
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,
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The majority of investors (56%) said SOX was a good idea; 5% said it was a bad idea; and 30% said SOX
Accounting for Uncertainty
EXECUTIVE SUMMARY FASB Interpretation no. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, sets the threshold for recognizing the benefits of tax return positions in financial statements as “more likely than not” (greater than 50%) to be sustained by a taxing authority. The effect is most
Banking
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The statement describes prudent safety, soundness and consumer protection standards that lending institutions should follow to ensure borrowers obtain loans they can
A Bid for Fair Value
EXECUTIVE SUMMARY Zions Bancorporation developed Employee Stock Option Appreciation Rights Securities (ESOARS) as a market-based pricing technique for expensing stock options under FASB Statement no. 123(R). ESOARS auctions may be able to achieve a lower expense for Statement no. 123(R) purposes than other option-pricing models such
Getting a Handle on Loan Fees
EXECUTIVE SUMMARY Due to increased regulatory scrutiny and improved controls following Sarbanes-Oxley, financial companies are paying closer attention to the recognition of fees from loan origination. Recognition of fees from loan origination is subject to FASB Statement no. 91, which requires that these fees be netted
Financial Reporting
“The next steps that the Commission is announcing today will keep us on course with the Roadmap announced in 2005,” SEC Chairman Christopher Cox said in a press release. Pending public comments on the proposal, “we remain on track to eliminate reconciliation by 2009.” In a staff position document, FASB
Highlights
FASB issued an exposure draft that calls for expanded disclosure about financial guarantee insurance contracts. The ED, Accounting for Financial Guarantee Insurance Contracts—an Interpretation of FASB Statement No. 60, would, among other things, reduce diversity in the way financial guarantee insurance contracts are accounted for by insurers. That diversity has
Avoiding FASB 123(R) Pitfalls
EXECUTIVE SUMMARY FASB Statement no. 123(R), Share-Based Payment, poses a potential dilemma for companies with net operating losses (NOLs) that award nonqualified stock options (NQSOs) as compensation. If a company’s allowable tax deduction for stock option compensation exceeds the related book expense, it can realize an
Employee Benefits
In a staff position document, FASB amended several statements to conform with pension-reporting requirements of Statement no. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. FASB Staff Position FAS 158-1 also revised implementation guidance for Statement no. 158 and made technical revisions to the statement itself. Statement
Financial Reporting
A second, related FASB exposure draft is Not-for-Profit Organizations: Goodwill and Other Intangible Assets Acquired in a Merger or Acquisition. Both are part of a FASB project on business combinations. The AICPA issued Interpretation no. 29, Reporting on an Uncertainty, Including an Uncertainty About an Entity’s Ability to Continue as
Extraordinary Items Share Exclusive Company
EXECUTIVE SUMMARY Material gains and losses are classified as “extraordinary” on the income statement when they are both “unusual” and “infrequent.” Extraordinary items are reported at the bottom of the income statement, net of their tax effects. FASB Statement no. 145 significantly shortened the list of
Highlights
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
A Road Map for Share-Based Compensation
EXECUTIVE SUMMARY Since FASB Statement no. 123(R) began requiring companies to recognize an expense equal to the grant-date fair value of options awarded as compensation, there has been a significant change in share-based payments to employees. Companies are taking a fresh look at the alternatives available to
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