Ideal for self-study or on-site training
Whether in industry or public practice, this course keeps you current and informed and shows how to apply the most recent standards and guidance.
Objectives: Apply the recently issued FASB guidance, AICPA Statements of Position, Statements on Auditing Standards (SASs), Statements on Standards for Accounting and Review Services (SSARSs), and Statements on Standards for Attestation Engagements (SSAEs), to accounting and auditing problemsPrerequisite: Experience in accounting and auditing.
Value Aid! Numerous examples, illustrations and the AICPA’s Audit Risk Alert.
In the video, moderator Mary S. Stone, Ph.D., CPA, Hugh Culverhouse Professor and Director of the Culverhouse School of Accountancy at the University of Alabama in Tuscalooza, AL interviews Cynthia M. Fornelli, Executive Director for the Center for Audit Quality in Washington, D.C.; Michael Glynn, AICPA Technical Manager, Audit and Attest Standards team; Chad Bonn, CPA, Practice Fellow at the Financial Accounting Standards Board in Norwalk, CT; Jay D. Hanson, CPA, Partner and National Director of Accounting at McGladrey & Pullen, LLP in Bloomington, MN and chair of the AICPA Accounting Standards Executive Committee; Chuck Landes, CPA, AICPA Vice President – Professional Standards and Services; and Judith H. O’Dell, CPA, CVA, President of O’Dell Valuation Consulting LLC in Chestertown, MD and chair of the FASB Private Company Financial Reporting Committee.
*(173-min. video) The DVD disk contains the video presentation and a viewable copy of the Manual. **The Additional Manual is for group study training only. Unlike other formats, it has no exam answer sheet and cannot be used to earn self-study credit.
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Chapter 3 - FSPs, EITF and Derivative Issues
Learning Objectives
Upon completing this chapter, you should be able to
- Identify new FSPs.
- Identify recent issues covered by the EITF.
- Identify new derivatives implementation issues.
Introduction
Beginning in February 2003, FASB Staff Positions (FSPs) replace Staff Implementation Guides and Staff Announcements. FSPs will be issued, after a 30-day comment period, to provide guidance when the questions raised are relevant to constituents and the FASB believes that the guidance should be disseminated widely. FSPs that relate to FASB Statements and Interpretations that are covered elsewhere in this manual are presented with those statements. Other recently issued FSPs are summarized in this chapter. The proposed and final FSPs are posted on the FASB website at www.fasb.org.
Consensus positions of the FASB's Emerging Issues Task Force (EITF) are category (c) U.S. GAAP as identified in SAS No. 69, The Meaning of "Present Fairly in Conformity with Generally Accepted Accounting Principles" in the Independent Auditor's Report, and in the FASB's proposed U.S. GAAP hierarchy. However, many issues discussed by the EITF have limited applicability.
2008 EITF Issues upon which consensuses were reached are summarized in the following text. Statement 133 Implementation Issues [Derivatives Implementation Group (DIG)] are authored by the FASB staff and provide guidance on questions that companies may face when implementing FASB Accounting Standards Codification (ASC) 815, Derivatives and Hedging (SFAS No. 133). The Board has discussed the issues at a public meeting and chosen not to object to dissemination of that response.
Each of the above documents, upon issuance, will be included in the FASB ASC.
Pre-Chapter Quiz
1. Although specific disclosures are required in an employer's financial statements about postretirement benefit plan assets, the employer should also consider the overall objectives of those disclosures.
a. True.
b. False.2. The Uniform Prudent Management of Institutional Funds Act may affect the classification of endowment funds held by not-for-profit organizations.
a. True.
b. False.3. An entity may use its own historical experience about renewal or extension arrangements when determining the useful life of a recognized intangible asset.
a. True.
b. False.4. The exception to consolidation because control is temporary, in FASB ASC 958, Not-for- Profit-Entities (SOP 94-3), has been eliminated.
a. True.
b. False.5. The FASB has proposed that an asset or liability assumed in a business combination that arose from a contingency should be initially measured at fair value.
a. True.
b. False.
FASB Staff Positions
Introduction
FSPs relate to identified FASB Standards and Interpretations, EITF Issues, and AICPA Audit and Accounting Guides and SOPs. Those that relate to guidance covered in earlier chapters of this manual are presented along with the discussion of that guidance. Other FSPs issued in 2008 or later that have more general applicability are presented below.
For final FSPs, the date in parentheses after the title is the date the FSP was posted to the FASB website. For proposed FSPs, the date after the title is the comment deadline.
Final FSPs
FSP EITF 99-20-1, Amendment to the Impairment Guidance of EITF Issue 99-20 (January 12, 2009)
Background
Two different models exist in U.S. GAAP for determining whether the impairment of a debt security is other than temporary. The model in FASB ASC 325, Investments-Other (EITF 99- 20), requires exclusive the use of market participant assumptions about future cash flows. The model in FASB ASC 320, Investments-Debt and Equity Securities (SFAS No. 115), requires consideration of market participant assumptions about future cash flows but also permits the use of reasonable management judgment of the probability that the holder will be unable to collect all amounts due.
Other-Than-Temporary Impairments
FSP 99-20-1 applies to beneficial interests within the scope of FASB ASC 325 (EITF 99-20). It amends FASB ASC 325 (EITF 99-20) to require the use of the FASB ASC 320 (SFAS No. 115) model for determining whether the debt security is impaired.
Effective Date and Transition
FSP 99-20-1 is effective for interim and annual reporting periods ending after December 15, 2008, and should be applied prospectively. Retroactive application is not permitted.
FSP FAS 132(R)-1, Employers' Disclosures about Postretirement Benefit Plan Assets (December 30, 2008)
This FSP establishes the objectives of the disclosures about plan assets of an employer's defined benefit pension or other postretirement plan. The objectives are to provide users of financial statements with an understanding of the following:
a. How investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies
b. The major categories of plan assets
c. The inputs and valuation techniques used to measure the fair value of plan assets
d. The effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period
e. Significant concentrations of risk within plan assets
An employer should consider those overall objectives in providing detailed disclosures about plan assets.
Specific disclosures are required about:
a. Investment policies and strategies.
b. Categories of plan assets.
c. Fair value measurements of plan assets.
d. Significant concentrations of credit risk.
This FSP also makes a technical amendment to FASB ASC 715, Retirement Benefits [SFAS No. 132(R)], which requires a nonpublic entity that sponsors one or more defined benefit pension or one or more defined benefit postretirement plans to disclose the net periodic benefit cost recognized for each annual period for which an annual statement of income is presented. This FSP is effective for fiscal years ending after December 15, 2009.
The full text of this FSP is available at: http://www.fasb.org/pdf/fsp_fas132r-1.pdf.
FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities about Transfers of Financial Assets and Interests in Variable Interest Entities (December 11, 2008)
This FSP:
a. Amends FASB ASC 860, Transfers and Servicing (SFAS No. 140), to require public entities to provide additional disclosures about transfers of financial assets.
b. Amends FASB ASC 810, Consolidation [FIN 46(R)], to require public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities.
c. Requires certain disclosures to be provided by a public enterprise that is (a) a sponsor of a qualifying special purpose entity (SPE) that holds a variable interest in the qualifying SPE but was not the transferor (nontransferor) of financial assets to the qualifying SPE and (b) a servicer of a qualifying SPE that holds a significant variable interest in the qualifying SPE but was not the transferor (nontransferor) of financial assets to the qualifying SPE.
The disclosures required by this FSP are intended to provide greater transparency to financial statement users about a transferor's continuing involvement with transferred financial assets and an enterprise's involvement with variable interest entities and qualifying SPEs.
This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, and applies to each interim and annual period thereafter. Earlier application is encouraged. This FSP is available at: http://www.fasb.org/pdf/fsp_fas140-4andfin46r-8.pdf.
FSP FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161 (September 12, 2008)
This FSP amends FASB ASC 815, Derivatives and Hedging (SFAS No. 133), to require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. This FSP also amends FASB ASC 460, Guarantees (FIN No. 45), to require an additional disclosure about the current status of the payment/performance risk of a guarantee. Further, this FSP clarifies the Board's intent about the effective date of FASB ASC 815, Derivatives and Hedging (SFAS No. 161).
The full text of this FSP is available at: http://www.fasb.org/pdf/fsp_fas133-1&fin45-4.pdf.
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