AICPA's Annual Accounting and Auditing Update Workshop (2009-2010 Edition)

• Chapter 1 - The U.S. GAAP Hierarchy and FASB Accounting Standards Codification™
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • The Hierarchy of Generally Accepted Accounting Principles
    • Introduction
    • U.S. GAAP Hierarchy
    • Effective Date
    • Proposed Statement of Financial Accounting Standards, The Hierarchy of Generally Accepted Accounting Principles–a replacement of FASB Statement No. 162
  • The FASB Accounting Standards Codification™
    • Key Items Regarding the FASB ASC
    • Population of FASB ASC
    • Essential and Nonessential Content
    • Topical Structure
    • Referencing the FASB ASC
    • A Helpful Tool
  • Questions
• Chapter 2 - Recent FASB Pronouncements
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Accounting for Financial Guarantee Insurance Contracts
    • Scope
    • Unearned Premium Revenue and Premium Receivable
    • Subsequent Measurement
    • Premium Revenue Recognition
    • Claim Liability
    • Disclosures
    • Effective Date and Transition
  • Business Combinations
    • Introduction
    • Scope
    • Key Terms
    • Identifying a Business Combination
    • The Acquisition Method
    • Disclosures
    • Effective Date and Transition
  • Noncontrolling Interests in Consolidated Financial Statements
    • Scope
    • FASB ASC 810, Consolidation (SFAS No. 160)
    • Noncontrolling Interest in a Subsidiary
    • Deconsolidation of a Subsidiary
    • Disclosures
    • Effective Date and Transition
  • Enhanced Disclosure Requirements for Derivative Instruments and Hedging Activities
    • Introduction
    • Summary
    • Effective Date and Transition
  • Fair Value Measurements
    • Introduction
    • Scope
    • Measurement
    • Valuation Techniques
    • Fair Value Hierarchy
    • Disclosures
    • Effective Date and Transition
  • FASB Staff Positions Relating to Fair Value Measurements
    • FSP FAS 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13
    • FSP FAS 157-2, Effective Date of FASB Statement No. 157
    • FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active
    • Proposed FSP No. FAS 157-e, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed
    • Proposed FSP FAS 115-a, FAS 124-a, and EITF 99-20-b – Recognition and Presentation of Other-Than-Temporary Impairments
  • The Fair Value Option for Financial Assets and Financial Liabilities
    • The Fair Value Option
    • Key Terms
    • Applying the Fair Value Option
    • Presentation of Items Measured at Fair Value
    • Disclosure Requirements
    • Application to Not-for-Profit Organizations
    • Effective Date
  • Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans
    • Introduction
    • Changes to Accounting for Defined Benefit Pension and Other Postretirement Plans
    • Reporting by a Business Entity
    • Reporting by a Not-for-Profit Organization
    • Effective Dates
    • Transition
    • FSP FAS 158-1, Conforming Amendments to the Illustrations in FASB Statements No. 87, No. 88, and No. 106 and to Related Staff Implementation Guides
  • Accounting for Uncertainty in Income Taxes
    • Interpretation
    • Effective Date and Transition
  • FSPs Related to Accounting for Uncertainty in Income Taxes
    • FSP FIN 48-1, Definition of Settlement in FASB Interpretation No. 48
    • FSP FIN 48-3, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises
    • Disclosures
    • Deferral of the Effective Date
  • Questions
• Chapter 3 - FSPs, EITF and Derivative Issues
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • FASB Staff Positions
    • Introduction
    • Final FSPs
    • Proposed FSPs
  • Recent EITF Issues
    • EITF Issue No. 08-10 (Draft), Selected Statement 160 Implementation Questions
    • EITF Issue 08-9 (Draft), Milestone Method of Revenue Recognition
    • Issue 08-8, Accounting for an Instrument (or an Embedded Feature) with a Settlement Amount That Is Based on the Stock of an Entity’s Consolidated Subsidiary
    • Issue 08-7, Accounting for Defensive Intangible Assets
    • Issue 08-6, Equity Method Investment Accounting Considerations
    • EITF 08-05, Issuer’s Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement
    • Issue 08-4, Transition Guidance for Conforming Changes to Issue No. 98-5
    • EITF 08-03, Accounting by Lessees for Nonrefundable Maintenance Deposits
    • 08-2, Lessor Revenue Recognition for Maintenance Services
    • 08-1, Revenue Recognition for a Single Unit of Accounting
  • EITF Topics
    • Topic No. D-98, Classification and Measurement of Redeemable Securities
  • Derivatives Implementation Issues
    • Proposed Issue No. C22, Scope Exceptions Related to Embedded Credit Derivatives
    • Issue No. B12, Embedded Derivatives: Beneficial Interest Issued by Qualifying Special-Purpose Entities (Revised 9/15/2008)
    • DIG Issue No. I1, Disclosures: Interaction of the Disclosure Requirements of Statement 133 and Statement 47 (Revised 4/21/2008)
    • Issue K04, Miscellaneous: Income Statement Classification of Hedge Ineffectiveness and the Component of a Derivative’s Gain or Loss Excluded from the Assessment of Hedge Effectiveness (Revised 4/21/2008)
    • Issue E23, Hedging–General: Issues Involving the Application of the Shortcut Method under Paragraph 68 (Posted 1/10/2008)
  • Questions
• Chapter 4 - FASB Exposure Drafts
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Proposed SFAS – Not-for-Profit Organizations: Mergers and Acquisitions
    • Background
    • Tentative Conclusion
    • Introduction
    • Scope
    • Key Terms
    • The Acquisition Method
    • Determining the Acquisition Date
    • Recognizing and Measuring the Identifiable Assets Acquired and the Liabilities Assumed
    • Exceptions to the Recognition Requirements
    • Measurement Requirements
    • Exceptions to the Fair Value Measurement Requirements
    • Recognizing and Measuring either Goodwill Acquired or a Contribution Received
    • Measurement Period
    • Assessing What Is Part of the Merger or Acquisition
    • Presentation
    • Disclosures
    • Effective Date and Transition
  • Proposed SFAS – Not-for-Profit Organizations: Goodwill and Other Intangible Assets Acquired in a Merger or Acquisition
    • Introduction
    • Scope
    • Intangible Assets Other Than Goodwill
    • Goodwill
    • Reporting Unit
    • Operating Segments
    • Assigning the Assets Acquired and Liabilities Assumed to the Reporting Units
    • Determining a Reporting Unit’s Primary Support
    • Applying the Qualitative Evaluation
    • Applying the Fair-Value-Based Evaluation
    • Goodwill Impairment Evaluation by a Subsidiary
    • Goodwill Impairment Evaluation When a Noncontrolling Ownership Interest in a Subsidiary Exists
    • Equity Method Goodwill
    • Financial Statement Presentation of Goodwill and Related Impairment Losses
    • Disclosures
    • Effective Date and Transition
  • Proposed SFAS – Going Concern
    • Summary
  • Proposed SFAS – Subsequent Events
    • Summary
  • Proposed FAS – Consolidated Financial Statements: Purpose and Policy
    • Introduction
    • Definition of Control
    • Implementation Guidance
    • Next Steps
  • Proposed FAS – Disclosure of Certain Loss Contingencies
    • Introduction
    • Required Disclosures
    • Tabular Reconciliation and Related Disclosures
    • Subsequent Events
    • Exemption from Disclosing Prejudicial Information
    • Effective Date
  • Proposed SFAS – Earnings per Share
    • Introduction
    • Amendments
    • Effective Date and Transition
  • Proposed SFAS – Accounting for Hedging Activities
    • Objectives
    • Hedge Effectiveness Requirements
    • Removal of Designation of Effectiveness
    • Hedged Risk
    • Measurement of Hedged Items in Fair Value Hedging Relationships
    • Measuring ad Reporting Ineffectiveness in Cash Flow Hedging Relationships
    • Disclosures
    • Effective Date and Transition
    • International Accounting Comparison
    • Alternative Views
  • Proposed SFAS – Accounting for Transfers of Financial Assets
    • Introduction
    • Objective
• Proposed FAS – Amendments to FASB ASC 810, Consolidation [FIN No. 46(R)]
  • Reasons for Issuance
• Questions
• Chapter 5 - FASB Projects
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Major Project – Conceptual Framework
    • Introduction
    • Summary
  • Preliminary Views – Conceptual Framework for Financial Reporting: The Reporting Entity
    • Summary
  • Convergence Project – Financial Statement Presentation
    • Objective
    • Phase A
    • Phase B
    • Phase C
    • Immediate Plans
  • Discussion Paper – Preliminary Views on Revenue Recognition in Contracts with Customers (December 19, 2008)
    • Introduction
    • Scope
    • Recognition
    • Measurement
    • Potential Effects on Present Practice
    • Next Steps
  • Preliminary Views – Financial Instruments with Characteristics of Equity
    • Background
    • The Basic Ownership Approach
    • The Ownership-Settlement Approach
    • The Reassessed Expected Outcomes (REO) Approach
    • The Board’s Conclusion
  • Classification Examples
  • Convergence Project – Accounting for Leases
    • Status
    • Summary of Decisions to Date
  • Financial Instruments – Improvements to Recognition and Measurement
    • Project Objective
    • Reducing Complexity Comment Letter Summary
    • Exposure Draft, Accounting for Hedging Activities
  • Insurance Contracts
    • Decisions Reached to Date (as of February 25, 2009)
    • Next Steps
  • FASB Project – Emissions Allowances
    • Background
    • Next Steps
  • FASB Project – Postretirement Benefit Obligations including Pensions (Phase 2)
    • Phase 1
    • Phase 2
  • Invitation to Comment – Selected Issues Related to Assets and Liabilities with Uncertainties
    • Introduction
    • Probability and Contingencies
    • Contingent Assets
    • Contingent Liabilities
    • Probability Recognition Criterion
    • Measurement
  • FASB Project – FIN 48 Applicability to Private Entities
  • FASB Project – Technical Corrections to FASB Statements and Other U.S. GAAP Literature
  • FASB Project – Recoveries of Other-Than-Temporary Impairments (Reversals)
    • Summary
  • FASB Project – Financial Instruments: Derecognition
    • Summary
  • FASB Project – SEC Oil and Gas Disclosure
    • Summary
  • International Convergence Project – Earnings per Share
  • Income Tax Convergence Project
    • Objective
    • Topics Included
    • Next Steps
  • Valuation Resource Group
  • Questions
• Chapter 6 - AcSEC Update
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Technical Practice Aids
  • Audit and Accounting Guides
    • Recently Issued
    • Exposure Draft
    • Projects
  • AICPA Technical Practice Aids
    • TIS Section 1900.01, Interim Financial Information – Condensed Interim Financial Reporting by Nonissuers (Issued January 2009)
    • TIS Section 1100.15, Statement of Financial Position – Liquidity Restrictions (Issued October 2008)
    • Investment Companies-Related TPAs
    • Other TPAs
  • Questions
• Chapter 7 - U.S. GAAP and IFRS Convergence
  • Learning Objectives
  • Introduction
  • The International Accounting Standards
    • The Standards Advisory Council
    • International Accounting Standards Board
    • IASB Standards
    • International Financial Reporting Interpretations Committee
    • Memorandum of Understanding
    • IASB Work Plan – Projected Timetable as of January 2009
    • IASB Projects
  • SEC’s Major Convergence Related Activities
    • Acceptance of IFRS Financial Statements
    • FASB/FAF Response to the SEC’s Proposed Rule
    • SEC’s Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers
    • Recent Changes in the IASC Foundation and IASB to Enhance Public Accountability
    • New SEC Chairperson
  • Questions
• Chapter 8 - Auditing in a Changing Environment
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Considering Economic Conditions to Lower Audit Engagement Risk
    • Current Economic Factors
    • PCAOB Staff Audit Practice Alert
  • The Changing Auditing Environment
    • Return to Core Values on Every Engagement
    • Lessons from Recent Events
  • Assessing the Risk of Fraud in a Financial Statement Audit
    • Auditor Responsibility for Fraud Detection
    • Three Conditions of Fraud
  • U.S. Treasury Department’s Focus on the Auditing Profession
  • Understanding the Implications of Sarbanes-Oxley
    • Public Company Accounting Oversight Board
    • Registering with the PCAOB
    • Defining “The Client”
    • Implications for Auditor Independence
    • Implications for the Public Company
    • Implications for Auditors of Non-Public Companies
    • Focus of AICPA Auditing Standards Board
  • Summary
  • Questions
• Chapter 9 - Auditing Standards Board Risk Assessment Standards
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • The Risk Assessment Standards
  • Overview of the Collective Effect of the Risk Assessment Standards
    • Applying the Risk Assessment SASs – An Overview
    • SAS No. 104, Amendment to SAS No. 1, Codification of Auditing Standards and Procedures (“Due Professional Care in the Performance of Work”)
    • SAS No. 105, Amendment to SAS No. 95, Generally Accepted Auditing Standards
    • SAS No. 106, Audit Evidence
    • SAS No. 107, Audit Risk and Materiality in Conducting an Audit
    • SAS No. 108, Planning and Supervision
    • SAS No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
    • SAS No. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained
    • SAS No. 111, Amendment to SAS No. 39, Audit Sampling
  • Technical Practice Aids Related to the Risk Assessment SASs
    • TIS 8200.05 – Testing the Operating Effectiveness of Internal Controls
    • TIS 8100.06 – The Meaning of Expectation of the Operating Effectiveness of Controls
    • TIS 8100.07 – Considering a Substantive Audit Strategy
    • TIS 8200.08 – Obtaining an Understanding of the Control Environment
    • TIS 8200.09 – Assessing Inherent Risk
    • TIS 8200.10 – Defaulting to Maximum Control Risk
    • TIS 8200.11– Ineffective Controls
    • TIS 8200.12 – Use of Walkthroughs
    • TIS 8200.13 – Documenting Internal Control
    • TIS 8200.14 – Suggesting Improvements in Internal Control
    • TIS 8200.15 – Identifying Significant Deficiencies
    • TIS 8200.16 – Examining Journal Entries
  • PCAOB Proposes New Standards Related to the Auditor’s Assessment of Risk
  • Summary
  • Questions
• Chapter 10 - New Standards Issued by the AICPA’s Auditing Standards Board
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Newly Issued Statements on Auditing Standards
    • SAS No. 114, The Auditor’s Communication With Those Charged With Governance
    • SAS No. 115, Communicating Internal Control Related Matters Identified in an Audit
    • SAS No. 116, Interim Financial Information
  • Recently Issued Auditing Interpretations
    • Interpretation No. 1: Use of Electronic Confirmations – AU §9330
    • Interpretation No. 14: Reporting on Audits Conducted in Accordance With Auditing Standards Generally Accepted in the United States of America and in Accordance With International Standards on Auditing – AU §9508
    • Interpretation No. 19: Financial Statements Prepared in Conformity With International Financial Reporting Standards as Issued by the International Accounting Standards Board – AU §9508
    • Interpretation No. 2: Financial Statements Prepared in Conformity With International Financial Reporting Standards as Issued by the International Accounting Standards Board – AU §9534
    • Interpretation No. 3: Financial Statements Audited in Accordance With International Standards on Auditing – AU §9534
  • Recently Issued Practice Alerts
    • Practice Alert 07-01 – Dating the Auditor’s Report and Related Practical Guidance
  • Recently Issued Technical Practice Aids
    • TIS 8100.01 – Determining the Effective Date of a New Statement on Auditing Standards for Audits of a Single Financial Statement
    • TIS 8100.02 – Determining the Effective Date of a New Statement on Auditing Standards for Audits of Interim Periods
    • TIS 8350.01 – Audit Evidence: Audit Documentation
    • TIS 9100.06 – Signing and Dating Reports
    • TIS 9120.08 – Reliance on Others
    • TIS 1900.01 – Interim Financial Information
  • Recently Issued Guidance for Attestation Engagements
    • SSAE No. 15, An Examination of an Entity’s Internal Control Over Financial Reporting That is Integrated with an Audit of Its Financial Statements
    • Interpretation No. 7 – Reporting on the Design of Internal Control
  • Statement on Quality Control Standard
    • SQCS No. 7, A Firm’s System of Quality Control
    • Practice Aid on Establishing and Maintaining a System of Quality Control
  • Summary
  • Questions
• Chapter 11 - On the Horizon: Issues for Audits of Nonissuer Entities
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • The ASB’s International Convergence Plan
    • The ASB Plan
  • The ASB’s Clarity Project
    • Background
    • Establishing Objectives of Standards
    • Improving Readability and Understandability
    • Clarity Drafting Conventions
    • Redrafting Existing Standards
    • Proposed, Redrafted, and Revised
  • Recently Issued Redrafted Standards
  • Current Clarity Project Exposure Drafts
    • Audit Sampling (Proposed Redraft of SAS No. 39)
    • Initial Audit Engagements, Including Reaudits–Opening Balances (Proposed Redraft of SAS No. 84)
    • Risk Assessment SASs (Proposed Redrafting of SAS Nos. 106-110)
    • Consideration of Fraud in a Financial Statement Audit (Proposed Redrafting of SAS No. 99)
    • Required Supplemental and Other Information (Proposed Redrafting of SAS Nos. 8, 29, and 52)
    • Service Organizations (Proposed Redrafting of SAS No. 70)
    • Overall Objectives of Audit (Proposed Redrafting of Preface to Codification and SAS No. 1)
    • Illegal Acts (Proposed Redrafting of SAS No. 54)
  • Overview of Existing Auditing Standards Board Projects
    • Exposure Draft – Amendments to SAS No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles, for Nongovernmental Entities
    • Exposure Draft – Compliance Audits
  • ASB Task Force Projects
    • Task Forces of the ASB
  • Other Activities of the Auditing Standards Board
    • Auditing Standards Committee of the American Accounting Association (AAA)
    • International Auditing and Assurance Standards Board (IAASB)
    • Professional Issues Task Force (PITF)
    • XBRL Assurance Task Force
  • Summary
  • Questions
• Chapter 12 - On the Horizon: Issues for Audits of Public Entities
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • PCAOB Standard-Setting Scope and Process
    • Rule 3100
    • Due Process
    • Standing Advisory Group
    • References to Auditing and Professional Practice Standards
  • Current PCAOB Auditing Standards
    • Establishment of Interim Standards
    • PCAOB Auditing Standard No. 1, References in Auditor’s Reports to the Standards of the Public Company Accounting Oversight Board
    • PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements [Superseded by Auditing Standard No. 5]
    • PCAOB Auditing Standard No. 3, Audit Documentation
    • PCAOB Auditing Standard No. 4, Reporting on Whether a Previously Reported Material Weakness Continues to Exist
    • PCAOB Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements
    • PCAOB Auditing Standard No. 6, Evaluating Consistency of Financial Statements, and Amendments to the Board’s Interim Auditing Standards
  • Proposed Auditing Standards – Risk Assessment
    • Brief Overview of the Seven Proposed Standards
    • Summary of Differences between the PCAOB’s and the ASB’s Proposed Risk Assessment Standards
  • Reproposed Auditing Standard
    • Reproposed Auditing Standard – Engagement Quality Review
  • Other PCAOB Audit Related Guidance
    • PCAOB’s “4010 Report” Relating to Auditor’s Responsibilities for Fraud
    • Rule 3101, Certain Terms Used in Auditing and Related Professional Practice Standards
    • Rule 3525, Audit Committee Pre-Approval of Non-Audit Services Related to Internal Control Over Financial Reporting
  • Small Business Concerns Related to Section 404
    • COSO’s Interpretive Guidance Related to Internal Controls for Smaller Public Companies
  • Summary
  • Questions
• Chapter 13 - Compilation and Review Update
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Overview of New Statements on Standards for Accounting and Review Services
    • SSARS No. 15, Elimination of Certain References to Statements on Auditing Standards and Incorporation of Appropriate Guidance Into Statements on Standards for Accounting and Review Services
    • SSARS No. 16, Defining Professional Requirements in Statements on Standards for Accounting and Review Services
    • SSARS No. 17, Omnibus Statement on Standards for Accounting and Review Services – 2008
    • SSARS No. 18, Applicability of Statements on Standards for Accounting and Review Services
  • New SSARS Interpretation and Revised Appendices
    • Interpretation No. 24: “Reference to the Country of Origin in a Review or Compilation Report” (AR 9100)
    • Interpretation No. 30: “Considerations Related to Financial Statements Prepared in Accordance with International Financial Reporting Standards and Compilations and Reviews Performed in Accordance with International Standards” (AR 9100)
    • Interpretation No. 31: “Preparation of Financial Statements for Use by an Entity’s Auditors” (AR 9100)
  • Recently Issued Technical Practice Aid
    • TIS 9150.25 – Determining Whether Financial Statements Have Been Prepared by the Accountant (Issued December 2008)
  • On the ARSC Horizon
    • Reliability Project
  • Overview of Compilation and Review Alerts
    • Consideration of Fraud in Compilation and Review Engagements
    • Generating Monthly Financial Statements Efficiently
    • Online Accounting Services
    • Different Levels of Assurance on a Single Set of Financial Statements (Split-Level Reporting) . 13-25 Applicability of the SSARSs to Financial Statements Included in Consulting Reports
    • Independence and Client Services
    • Distribution of Draft Financial Statements
    • Documentation
    • Management Representation Letters in Review Engagements
    • Representation Letters for the Compilation of Personal Financial Statements
    • Deciding When to Use OCBOA Financial Statements
  • Recurring Deficiencies Noted in Compilation and Review Engagements
  • Summary
  • Questions
• Chapter 14 - Other Issues Affecting Auditors
  • Learning Objectives
  • Introduction
  • Pre-Chapter Quiz
  • Recent GAO Guidance
    • Overview of Major Revisions
    • Interim Guidance on Reporting on Deficiencies in Internal Control for GAGAS Financial Audits and Attestation Engagements
    • Guidance on Complying with GAGAS Reporting Requirements for the Report on Internal Control for Audits of Certain Entities Subject to Sarbanes-Oxley and GAGAS Requirements
  • COSO’s Guidance on Internal Control for Smaller Public Companies
    • Smaller Public Companies
    • Internal Control Challenges for Smaller Businesses
    • Strengthening Internal Control for Smaller Businesses
    • Key Messages about Implementing Effective Internal Control
    • Organization of Guidance
  • COSO’s New Guidance about the Monitoring Component of Internal Control
    • Key Monitoring Concepts
    • Primary Elements of Monitoring
    • Communication of Monitoring
    • Three-Volume Set Available
  • COSO’s Enterprise Risk Management – Integrated Framework
    • What Is Enterprise Risk Management?
    • Overview of COSO’s Enterprise Risk Management Framework
  • Professional Ethics Activities
    • Code of Conduct Revisions
    • New Ethics Interpretations
    • Interpretation 501-8 – Failure to Follow Requirements of Governmental Bodies, Commissions, or Other Regulatory Agencies on Indemnification and Limitation of Liability Provisions in Connection With Audit and Other Attest Services
    • Guide for Complying with Rules 102–505
    • Proposed Interpretation 101-17, Networks and Network Firms, and Proposed Revisions to ET 92
  • Center for Audit Quality
  • AICPA Audit Committee Effectiveness Center
    • Dealing with Management Override
  • AICPA Employee Benefit Plan Audit Quality Center
  • AICPA Governmental Audit Quality Center
  • Summary
  • Questions
• Chapter 15 - Latest Developments
• Value Aid AICPA’s Audit Risk Alert

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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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