O n a quiet Friday in New York—less than a month after that chaotic Friday when Bear Stearns’ stock went into a free fall—a panel of financial reporting experts met with about 200 corporate directors and other stakeholders to discuss the role of accounting in the market turmoil that began
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TOPICS / ACCOUNTING & REPORTING
FASB financial accounting & reporting
A New Day for Business Combinations
EXECUTIVE SUMMARY FASB outlined a major overhaul of GAAP related to mergers and acquisitions when it issued Statement no. 141 (revised), Business Combinations , in December 2007. The standard is effective for fiscal years beginning after Dec. 15, 2008. A fundamental concept at the core of Statement no. 141(R)
Securitized Profits
EXECUTIVE SUMMARY Securitizations in the mortgage industry are collateralized with home or commercial mortgage loans and are packaged into mortgage-backed securities (MBS) that are sold to institutional investors seeking to realize higher returns on investment-grade debt instruments compared with other securities of similar credit quality. Mortgage banks generate revenue through
Government
n FASAB has issued Technical Release 8, Clarification of Standard Relating to Inter-Entity Costs, and Technical Release 9, Implementation Guide for Statement of FASAB 29: Heritage Assets and Stewardship Land. TR8 provides guidance to federal entities on three aspects of full costing specified in SFFAS 4: (1) guidance on costs that
Framing the Future
In 2009, FASB’s Accounting Standards Codification will affect the day-to-day work of nearly every CPA who practices, teaches or researches accounting in accordance with U.S. GAAP. By July 2009, FASB is expected to make the codification the single source of authoritative GAAP, overriding all existing literature. In other words, the
The Role of Fair Value Accounting in the Subprime Mortgage Meltdown
As the credit markets froze and stocks gyrated, investors and pundits naturally looked for someone, or some thing , to blame. Fair value accounting quickly emerged as an oft-cited problem. But is fair value really a cause of the crisis, or is it just a scapegoat? And might it have
Financial Reporting
n FASB issued proposed FASB Staff Position FAS 117-a, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures. “The issues addressed by this FSP have widespread importance to the not-forprofit sector, especially organizations
Financial Reporting
FASB approved proposed FASB Staff Position no. FIN 48-2, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises, which defers the effective date of FIN 48 for qualified entities to the annual financial statements for fiscal years beginning after Dec. 15, 2007, unless they have issued a full
Highlights
The SEC’s Committee on Improvements to Financial Reporting voted in January to support a slate of preliminary recommendations designed to make the information presented by U.S. public companies more useful to investors while reducing the complexity of the financial reporting system. The preliminary proposals included a call for
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. “We were motivated to develop and issue this alert by the auditing challenges presented by the subprime credit situation and its effects
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
Features
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