Private Co. Financial Reporting: Time for a New Approach?

Join us on June 22 from 1-2:30 pm EDT (1.5 CPE) for a free webcast on: Private Co. Financial Reporting: Time for a New Approach? The webcast, co-sponsored by Grant Thornton and FEI, will provide an update on the Blue Ribbon Panel on Standard-Setting for Private Co's (which met most recently on May 14, next mtg is July 19, minutes have been posted for the April 12 meeting). The Blue Ribbon Panel was formed jointly this year by the Financial Accounting Foundation (which oversees FASB), the AICPA, and the National Association of State Boards of Accountancy (NASBA).

Speakers on the webcast include GT partner John Hepp, who coauthored a white paper with Gary Illiano on this subject, Meredith Vogel, audit senior manager in GT's National Audit Support group and current FAF Staff fellow supporting the Blue Ribbon Panel, and FEI Committee on Private Company Standards (CPC-S) members George Beckwith (incoming vice-chair, CPC-S, and member of the FASB-AICPA Private Co. Financial Reporting Committee) and Andy Thrower (past chair, CPC-S, past member of FASAC, and member of FASB's Small Business Advisory Committee).

See more details about the webcast, and register here .

UPDATE: You will need to know this to register:

You will receive an email confirmation from LearnLive, GT's webcast platform provider, with instructions for attending the webcast.

If you need assistance registering please call LearnLive directly at 888.228.0988. If you have not previously attended a Grant Thornton Thinking webcast powered by LearnLive, follow these instructions:

Go to https://university.learnlivetech.com/gtt

Choose "New Student Registration" to create your account.

Enter company pass code "grant" where prompted.

Locate the webcast in the catalog (Course 16954) and sign up.

If you have attended a Grant Thornton webcast within the past year, simply log in to your account.

Please note: To receive CPE credit for attending this webcast, each individual participant must log on to the webcast separately.
______________________________________

Questions? Contact Loryn Wells at loryn.wells@gt.com or 312.602.8225.

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Senate, House Conf. Cmte. May Provide Sarbox Exemption For Small Co's

PwC reported in its Breaking News publication yesterday that the House and Senate conference committee working on the Financial Regulatory Reform legislation may provide an exemption from Sarbanes-Oxley Section 404b (external audit of internal control) for small companies (non-accelerated filers, generally defined as co's with less than $75 million market cap).

The PwC article states, in part:

Smaller companies have benefited from a series of temporary deferrals from the internal control audit requirements since they became effective for larger companies in 2004. The most recent deferral expired June 15, 2010. That means absent any further relief, smaller companies would be required to comply with the Sarbanes-Oxley internal control audit requirements for fiscal years ending on or after June 15, 2010 (e.g., June 30, 2010 year-end).

A select group of Senators and Congressmen (commonly referred to as a conference committee) is currently working to reconcile the separate versions of the legislation into a single bill. Although changes are still possible, the conference committee recently took steps to provide smaller companies with a permanent exemption from the Sarbanes-Oxley internal control audit1 requirements. The conference committee has also agreed to direct the SEC to conduct a study on how to reduce the cost of complying with the internal control audit requirements for companies with market capitalizations between $75 million and $250 million.

There are a number of steps that must be completed before any permanent exemption would become effective. The provision must be included in the final, agreed-to legislation ? called a conference report; the conference report must be approved by both houses of Congress; and the President must sign the bill into law. It is anticipated that the conference committee will complete its work during the week of June 21, 2010 with a final bill passed and forwarded to the President for his
signature sometime in July. While it is presently unclear, the SEC may need to
amend its rules and forms to facilitate a permanent exemption.

My two cents: (I remind you of the disclaimer on the right side of this blog) I have avoided providing minute-by-minute updates on the Sarbox exemption issue since I think it was very much in play and didn't want to lead anyone down a path of relying on an exemption (or not) until it was fairly certain, particularly given past statements of the SEC last fall when they issued what Chairman Mary Schapiro said at the time would be the final deferral, and given statements issued by organizations such as the Center for Audit Quality, CFA Institute, and Council of Institutional Investors last week arguing against such an exemption. However, as reported by PwC above and others, and in the more detailed Conference Committee Update linked below, it does appear the chance of a potential exemption, even at this very late date, is, if nothing else, a possibility. But it ain't over till its over.

General Conference Committee Update
The House Financial Services Committee, Chaired by Rep. Barney Frank, and the Senate Commitee on Banking, Housing and Urban Affairs, Chaired by Sen. Chris Dodd, issued what appear to be identical press releases yesterday providing a detailed update on the conference committee's progress on the entire bill (not only the Sarbox issue). See House press release, Senate press release.

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House-Senate Conf. Comm. Agrees On Fin Reg Reform Bill (Dodd-Frank Act), For Vote Next Week

After pulling a 20-hour marathon session, the House and Senate conference committees agreed early this morning on the Financial Regulatory Reform Bill, which will be voted on by the full House and Senate next week, and if passed, sent on to President Barack Obama to sign into law. Here are some of the early morning reports on major news websites:

Congress Reaches Deal on Financial Bill (Edward Wyatt, NYT)
U.S. Lawmakers Reach Accord on New Finance Rules (Damian Paletta, WSJ)
House, Senate Leaders Finalize Details of Sweeping Financial Overhaul (Brady Dennis, WashPost)
U.S. Lawmakers Approve Financial Overhaul; Marathon Session Produces $19 bn levy and Softening of Volcker Rule (Tom Braithwaite, Francesco Guerrera and Justin Baer, FT)

As to timing of when the bill could become law, as noted in the WashPost article cited above:

The dawn compromise set up a potential vote in both houses of Congress next week
that could send the landmark legislation to President Obama by July 4.

Proposed Name of Law: Dodd/Frank Act
Damian Paletta reported in the WSJ Blog this morning that the legislation, if signed into law, would be called the Dodd/Frank Act.

In a statement issued today, Sen. Dodd, Chairman of the Senate Committee on Banking, Housing and Urban Affairs, said:

Over the past two years, America has faced the worst financial crisis since the Great Depression. Millions of Americans have lost their homes, their jobs, their savings and their faith in our economy.?

?The American people have called on us to set clear rules of the road for the financial industry to prevent a repeat of the financial collapse that cost so many so dearly.?

?This bill meets that challenge.?

Check Financial Executives International's website, www.financialexecutives.org, and this blog www.financialexecutives.org/blog, for updates on legislation, accounting and tax news news, practical research reports from our research affiliate, the Financial Executives Research Foundation www.ferf.org, and more.

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FASB, IASB Release 'Staff Draft' of Proposal on Financial Statement Presentation

In a special "Action Alert" issued earlier today, FASB and the IASB announced the release of a "Staff Draft" of their upcoming Exposure Draft of significant proposed changes to financial statements, as part of the Financial Statement Project.

The boards note in today's announcement that outreach activities they plan to issue the ED in early 2011, and plan to engage in the outreach activities during the next six months, focusing on two areas:

1. The perceived benefits and costs of the proposals
2. The implications of the proposals for financial reporting by financial services entities.

In particular, the staff plans to:
1. Ask users of financial statements to evaluate how the proposed changes to the organization of, and information presented in, financial statements would benefit their analysis and resource allocation decisions.
2. Ask preparers of financial statements to evaluate the effort and cost involved in adopting these proposed changes in their unique circumstances.
3. Meet with preparers and users of the financial statements of financial services entities to discuss the proposed changes.
4. Gather additional information about benefits and costs by doing more field work on the proposals in the staff draft, including additional field testing, experimental research, or both.

As to timing of release of the actual Exposure Draft (ED), FASB and the IASB say they expect to publish the Exposure Draft (ED) in early 2011.

While an "Staff Draft" is not a formal request for comment (as opposed to the release of a formal Exposure Draft or ED), today's FASB/IASB announcement adds:"While neither the FASB nor the IASB is formally inviting comments, they welcome input from interested parties.

Links to Staff Draft, Related Info
Introduction to the Staff Draft (9 pages)
Staff Draft of an Exposure Draft on Financial Statement Presentation (155 pages)

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If You're Going To San Francisco...AAA Will Be There

If you're going to San Francisco between July 31 and August 4, you can catch the American Accounting Association's (AAA's) Annual meeting. I attended the Annual Meeting in Chicago in 2007, and I highly recommend it. The AAA is the professional association for academics, but many practitioners (financial executives, auditors, audit committee members, and others) belong to AAA as well. (I am a card-carrying member of AAA.)

Here are just a few highlights of the AAA Annual Meeting, and the CPE sessions that precede it:

• Conference on Teaching and Learning - with two tracks - one for practioners interested in learning about teaching now or in the future, and one for current teachers - I highly, highly recommend this program, which I attended in its earlier form in 2007; and again in NYC last year; various FEI members have attended over the years and found it a valuable and high level intro to what you'll face if you decide to enter teaching as an adjunct, part time, or full time prof; contact Dee Harris at AAA immediately if you are interested in this program at deirdre@aaahq.org or 941-556-4119, since space is limited.
• XBRL Teaching Workshop - preceding CPE Sessions and Annual Meeting - July 29-30.
• Concurrent CPE sessions take place from Friday evening July 30 - Sun. Aug. 1
• The AAA Annual Meeting takes place from Mon. Aug. 2 - Wed. Aug. 4
• FEI leadership and members speaking at the AAA CPE Sessions/Annual Meeting Panels include (a) Marie Hollein, FEI President and CEO, FEI, on Panel 1.7: "Auditors, Management and Boards: What They Need to Deter Fraud," moderated by Cindy Fornelli, Executive Director, Center for Audit Quality, with additional panelists Eric Allegakoen, Vice President and Chief Audit Executive of Adobe Systems Incorporated, Randy Fletchall, Americas Vice Chair, Quality and Risk Management, Ernst & Young; b) Betsy Rafael, (VP Corporate Controller and Principal Accounting Officer at Apple, Inc.), as luncheon speaker Tues. Aug. 3 from 12:00 - 1:45 on: "The Future of Accounting: A Preparer's Perspective of the Uncertain and Challenging Future of Accounting as Convergence, Rregulation, and New Business Models Meet"; (c) Rick Brounstein (EVP and CFO, NewCardio, Inc.) and Bob Laux (Senior Director of Financial Accounting and Reporting, Microsoft Corporation), on Panel 3.2: "User and Preparer Views on the Financial Statement Presentation Project," along with panelists Dane Mott (Senior Equity Analyst, J. P. Morgan) and Sandra Peters (Head, Financial Reporting, CFA Institute). Moderator is former SEC Acting Chief Accounting Scott Taub, now of Financial Reporting Advisors. This panel was organized by 2009-2010 AAA Financial Accounting and Reporting Section (FARS) Chair Teri Yohn (also an FEI member, and a former SEC Academic Fellow). Another panel featuring FEI member and former AAA President Gary Previts is described further below.
• Panel 5.1, Tues. Aug. 3, 2-3:30: The Pathways Commission (Charting a National Higher-Education Strategy for the Next Generation of Accountants)Moderator: Bruce Behn, The University of Tennessee; Panelists: Bill Ezzell, Deloitte LLP, Gary Previts, Case Western Reserve University (also an FEI member), Judy Rayburn, University of Minnesota, and Denny Reigle, American Institute of CPAs. The concept of charting a national higher education strategy was one issue identified in U.S. Treasury Advisory Committee on the Audit Profession's (ACAP's) 2008 report; the subcommitee on education/human resources was led by Gary Previts.
• Panel 7.5: "Operating an Accounting Blog,"Moderated by: Bill McCarthy, Michigan State University, Panelists: Dave Albrecht, The Summa (Concordia College), Joe Hoyle, Teaching Financial Accounting (University of Richmond), Ed Ketz, Accounting Cycle (Penn State), Francine McKenna, re: The Auditors
  Tom Selling, The Accounting Onion.
• Additional speakers at the AAA CPE Sessions and Annual Meeting each year include prominent members of the SEC, PCAOB, FASB and IASB board and staff.

The AAA Annual Meeting is a great opportunity to learn, mix and mingle with academics, practitioners and regulators. Think about it! But hurry and register soon if you haven't already!

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FASB/IASB's Rev. Rec.Proposal - GUEST POST by Ron Fink, CFOZone

NOTE: While I am on vacation, I invited some guest posts from some popular bloggers. Today's guest post below is from Ron Fink, Editor, CFOZone.

While convergence of international accounting standards may be a painfully slow process, US and international standard setters took a big if largely unnoticed step forward last June with a joint proposal for a new revenue recognition standard. In fact, no such standard currently exists within US GAAP, as various pronouncements by the Financial Accounting Standard Board over the years have largely been piecemeal responses to developments at the Emerging Issues Task Force that have vexed the board to one degree or another.

Indeed, the lack of an overarching standard for the top line on publicly traded companies' P&Ls has long been considered a huge gap in GAAP, so to speak. But despite its potential significance, the new proposal has gone largely unnoticed or at least remarked upon, particularly in the mainstream press, perhaps because most if not all eyes there have been on new fair-value rules that have stirred intense opposition from within the banking industry.

That said, a new, in-depth analysis of the proposed revenue recognition standard that was recently released could lead to more public awareness, at least for a while. For further details, refer to my August 9 blog post at CFOZone.com, "Better Revenue Recognition at Long Last?"

NOTE: If you have an established blog or publication and would like to submit a guest blog post for the FEI blog, please contact me at eorenstein@financialexecutives.org to discuss.

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Small Co's Relieved of SOX 404(b) Duties, Under Financial Reform Law - GUEST POST by Melissa R. Hoffmann

NOTE: While I am on vacation, I invited some guest posts from popular bloggers. Following is a guest post from Melissa R. Hoffmann, Editor, New York State Society of CPAs, and one of the contributing bloggers on NYSSCPA's CPA Blog.

Owners and auditors of small companies got a gift by way of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which now provides for them a permanent exemption from 404(b) reporting requirements put in place by the 2002 Sarbanes-Oxley Act.

Sarbanes-Oxley, a response to the Enron and WorldCom scandals in 2001, mandated that a publically traded company have an independent auditor attest to management?s assessment of the effectiveness of its internal controls. While large, accelerated filers already comply with this rule, the Securities and Exchange Commission (SEC) repeatedly delayed implementation for smaller companies with public floats of less than $75 million.

Eight years later, that implementation date was still being pushed back?until late 2009, when the SEC went on record saying that there would be no more delays: The smallest companies would be required to obtain the 404(b) attestation for the annual reports of companies with fiscal years ending on or after June 15, 2010.

The commission decided to give that final deadline after the release of a cost-benefit analysis conducted by the SEC showed that smaller companies pay a disproportionately higher cost to comply with 404(b) filing rules but that a significant portion of these costs are non-recurring, with the burden attenuating over time.

But the financial reform bill, signed into law July 21, made that deadline moot. No, there won?t be any more implementation delays. But that?s because there won?t be any implementation at all.

A provision of the financial reform bill?Section 989G?turns these repeated implementation delays into a permanent exemption, saying that the part of Sarbanes-Oxley mandating 404(b) compliance not apply to ?non-large, non-accelerated? filers. That particular section of the legislation also requires the SEC to conduct a study examining how best to reduce 404(b) compliance costs for companies with market capitalization between $75 million and $250 million while still maintaining investor protection. The study is to be released to Congress no later than nine months after the bill becomes law.

NOTE: If you have an established blog or publication and would like to submit a guest blog post for the FEI blog, please contact me at eorenstein@financialexecutives.org to discuss.

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SEC's Approves 3% Solution For Proxy Access

Earlier today, consistent with the provisions of the Dodd-Frank Act, the SEC approved what I'll refer to as the "three percent" solution for the contentious issue of proxy access. As summarized in detail by James Hyatt of Business Ethics Magazine:

Under the new rule approved by the Commission, shareholders seeking access to corporate proxy materials would:

--have to own at least 3% of the total voting power entitled to vote at the meeting.
--be able to aggregate holdings to meet the 3% requirement.
--be required to have held their shares for at least three years.
--not be able to use the new rule "if they are holding the securities for the purpose of changing control of the company."
--be able to include one nominee or a number up to 25% of the board, whichever is greater. (If a board had three members, shareholders could nominate one; if a board had eight members, up to two nominees could be proposed)....

The SEC said "'smaller reporting companies" would be subject to the rule only after a three-year phase-in period. Commission staff said the three-year delay would enable smaller companies to see how the rule works at larger companies and how it would affect them. It would also let the commission determine whether changes in the rule might be required, the staffers said....

The new rule -- called Rule 14a-11 -- requires shareholders to submit nominees no later than 120 days before the anniversary date of the mailing of the prior year proxy statement. Thus, if the rule becomes effective on Nov. 1, 2010, it would be available at companies that mailed their last annual meeting proxy statement no earlier than March 1, 2010....

As had been widely expected, the SEC acted on a 3-2 vote to adopt the new procedures, with Republican commissioners Troy Paredes and Kathleen Casey voting no.

Here is a link to SEC's press release issued after the open meeting, which includes a link to the 451-page final rule. As noted in the press release, the rule becomes effective 60 days after it is published in the Federal Register.

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When Litigation Kills the Accounting Profession-Don't Say You Weren't Warned!-GUEST POST by Jim Peterson

NOTE: While I am on vacation, I invited some guest posts from popular bloggers. Following is a guest post from Jim Peterson, a former senior in-house lawyer and partner with a then-Big Four accounting firm, and author of the blog Re:Balance. He formerly wrote a column for the International Herald Tribune and has taught MBA-level courses in risk management at business schools in the U.S. and in Paris. Jim's guest post follows.

With the devilish details of the Dodd-Frank Act now to be worked out and many special interests weighing in, legislative activity in the American financial sector returns to a standstill ? probably until after the elections of November 2012.

So what would bring to the forefront a topic that to most is sleep-inducing, although it keeps some few from sleep: namely, the very viability of the large accounting firms and their fragile franchise to audit the world?s global companies?

Nothing less, presumably, than an existential shock to the stability of one of the Big Four tetrapoly ? an unresolvable criminal investigation or a ?bad case? outcome in one of their nightmare civil cases.

The firms are on a fortunate streak: the credit-crisis cases resolved so far are within their pain tolerance ? namely, KPMG?s Countrywide settlement of $ 24 million, and its $ 44.74 million shareholder settlement and reported trustee resolution in New Century (on which, don?t miss Francine McKenna last week). And the Seidman firm has at least a temporary reprieve from its adverse $ 521 million verdict in the Bankest litigation in Miami (here).

Sadly it is not strategy, but wishfulness, to think that a further shock won?t or can?t happen, just because it hasn?t ? at least since Arthur Andersen?s post-Enron disintegration in 2002. This ?induction flaw? was illuminated by Nassim Nicholas Taleb in "The Black Swan" -- widely bought, and equally widely misunderstood or simply ignored.

Just as it would be naïve not to be actively concerned for another terrorist attack on American soil, or the next financial bubble already in gestation, so too the prospect of a disruptive blow to the audit market is too real to ignore. Recent bullets may have missed KPMG, but among the many loaded chambers in the game of Russian roulette are Washington Mutual (Deloitte), Glitnir Bank (PwC) and Lehman - particularly Lehman's Repo 105 transaction (Ernst & Young).

The 500 pound gorilla lurking in the room -- where lively debate really should be on-going -- is that the accounting firms? organizations and capital structure are incapable of withstanding financial outflows greater than about $ 1 to $ 2 billion ? a small fraction of the damages claimed in the largest of their big cases.

If this topic is not faced explicitly and head-on ? both by the profession?s critics whose howling takes no account of its limited resources, and by its advocates whose potential ?solutions? have lacked feasibility and credibility (here) ? then a discussion not only goes nowhere, it doesn?t even start.

[Notes: (Jim Peterson: Under then-US Secretary Henry Paulsen, the U.S. Treasury formed an advisory committee called the Advisory Committee on the Auditing Profession (ACAP), of which I was a vigorous critic ? e.g., here, here and here -- for its squandering a unique opportunity for real leadership.) (Editor (EO): See the FEI blog's most recent post relating to implementation of ACAP recommendations here which links to earlier posts on that ACAP.]

I?ve unpacked these numbers before ? here and here. The chance to dust them off was reason enough to take up Edith Orenstein?s kind invitation to offer a guest post. She will join me, I am sure, in welcoming your feedback ? either on my post directly on the FEI blog, or or on my own Main page at my blog, Re:Balance

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FEI Introduces New 'Associate' Member Category

Yesterday, Financial Executives International issued a press release announcing a new 'Associate Member' category:

The Board of Directors of Financial Executives International (FEI), the association of choice for CFOs and other senior-level finance executives, today approved the addition of a new class to its membership structure through the addition of the 'Associate' category.

This new category, which will take effect immediately, was established to enable talented, motivated financial professionals to have ongoing opportunities for personal and professional growth as their careers advance. The result of this addition will be a larger, more influential association in the finance and accounting community....

... Associate members will enjoy many of the rights, privileges and services of the existing FEI membership. All applicants for membership for this category must possess a minimum of seven years work experience in the finance profession and a minimum four year University/College Bachelors degree, which is subject to verification.

All interested applicants can obtain a full description of criteria requirements and download an application at www.financialexecutives.org/join .

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We're From The Government ...

You know how the rest of the saying goes, ?and we?re here to help.? As discussed in more detail below, you can see this practice in action in the SEC?s invitation for advance comment on rulemaking under the financial reform act released in July, and the SEC?s invitation for comment on the impact of its ?International Financial Reporting Standards (IFRS) Workplan? released earlier this year. Additionally, in remarks at a U.S. Chamber of Commerce conference in July, SEC Chairman Mary L. Schapiro noted: ?the path forward still poses significant challenges. But to be fully successful in meeting those challenges, it will require broad engagement?that means business, regulators, consumers and investors alike.?

Washington Policy Conference
Such engagement will be evident at FEI's upcoming Washington Policy Conference Sept. 20-21 at the Washington Court Hotel on Capitol Hill. Keynote remarks will be provided by SEC Commissioner Kathleen L. Casey, IRS Commissioner Douglas Shulman, and former GAO Comptroller General David M. Walker, who currently serves as President & CEO, Peter G. Peterson Foundation. Other high level government and business representatives (CFOs, Chief Tax Officers, Treasurers and others) will provide their perspectives on various panels; see the full agenda and list of speakers; register here. FEI members (and our new category of Associate Members) save money registering for this and other conferences, webcasts and events; the conference also welcomes non-members.

SEC Seeks Advance Comment on Rulemaking
Shortly after the President?s signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC announced: SEC Chairman Schapiro Announces Open Process for Regulatory Reform Rulemaking. In brief, the SEC is seeking advance comments for their staff (and Commissioners) to consider as it enters wide-ranging rulemaking required under the Dodd-Frank Act. (Other regulatory agencies will also be entering varying degrees of rulemaking flowing from the Act.)

Meetings With SEC Staff Will Be Impacted
Significantly, as observed by Broc Romanek in TheCorporateCounsel.net blog: ?[T]his "field day" may help to shorten the comment periods and get rules in place before next year's proxy season."

However, he added: "Perhaps even more important is the SEC's "newly-established best practices when holding meetings with interested parties," which include "Staff will try to meet with any interested parties seeking a meeting. When the number of requests exceeds availability, the staff will seek out parties with varying viewpoints. Staff may have to limit the number of meetings with similarly situated parties and will limit multiple meetings with the same party.?

Although Broc's views and my views are often on the same page, my views on the potential reduction of staff meetings differ somewhat from his. He states: "Given the level of rulemaking the Staff has on its plate, time management is of the essence and these "best practices" should help curtail wasteful meetings where the same points are made over and over again (and problems are identified but no solutions are proposed)."

My Two Cents
(I refer readers to the disclaimer posted on the right side of this blog.) On the one hand, I don?t recall such a broad request for advance comment on rulemaking, and I believe this move is very positive, with the added benefit of comment letters being posted real-time (as is the standard practice of the SEC.)

On the other hand, it can be challenging to provide substantive, practical comments on potential rulemaking prior to having some verbal if not written skeleton of potential alternative draft rulemaking (albeit comment periods will continue to take place on formal proposed rulemaking as usual). However, the pre-proposal brainstorming stage is where the verbal back and forth at meetings between constituents and staff (or Q&A at conferences) can be very helpful, to discuss various potential areas of thinking or directions the SEC staff (or other regulatory agency staff, as applicable) may consider even before they are at the stage of proposed rulemaking. (For example, as we see at PCAOB advisory group meetings and roundtables, and at SEC advisory group meetings and roundtables; more about the PCAOB further below.)

Hopefully increases to the SEC staff budget will allow meetings with constituents to continue relatively apace and still meet the Commission?s goals of transparency.

Sample of comment letters
The SEC?s request for comment on the Dodd-Frank Act covers 9 major areas. I recently took a look at the letters in the ?Other? category (so far 31 letters, dated as of Sept. 2, in that category.). The letters included, among others: a letter from Arnold & Porter on behalf of the State of Alaska urging the SEC to include States in the definition of ?accredited investor,? a letter filed by Meridian Fund Advisers re: ?The Need for Corporate Governance Reforms or Established Corporate Governance Best Practices for Hedge Funds,? numerous letters admonishing the SEC and Congress for reducing access to SEC documents under the Freedom of Information Act (FOIA), including one from a self-proclaimed whistleblower/Compliance Accountant Joe Jefferis, a letter from SIFMA on the importance of the upcoming GAO study of GASB. There are also some letters from a self-identified Citizen Voter and a Professor of Common Sense. My sense is that it is early in the process for specific advance comment on certain rulemaking-related matters throughout the Dodd-Frank Act, and, as usual, comments will follow from specific proposed rulemaking.

The most recent letter I noted in the file (dated Sept. 2) was sent by attorney Herbert Milstein, a former Associate Director of Enforcement in the Division of Corporate Finance [note: corrected title from original blog post] at the SEC (now with law firm Cohen Milstein Sellers & Toll PLLC), who writes that he represented a plaintiff in a case in which workpapers were requested from an oversees entity of a Big 4 international accounting firm, but the law in that country (China, in this case) precluded the international division of the firm from providing the requested documents.

Milstein notes some remarks taken from the transcript of the trial, and concludes in his letter to the SEC:

"I respectfully submit that it is in the interest of the Commission, the U.S. securities markets, and investors such as the state and municipal pension plans that my firm routinely represents, that the Commission adopt a rule that mandates that any company whose securities are registered to trade in the U.S. markets choose, as its outside auditor, a firm that has consented to the jurisdiction of the United States courts for service of process or subpoena and which has agreed to produce work papers and other documents relevant to its work for the company if they are validly requested in U.S. civil litigation."

SEC Request for Comment On IFRS Workplan
Separately, as noted by Compliance Week?s Melissa Klein Aguilar in her post last month in The Filing Cabinet, the SEC released two separate requests for comment in August relating to its IFRS workplan, one regarding the impact on investors, and one regarding the impact on issuers.

In related news, there is some conjecture among journalists, bloggers, affected parties and others as to what the future of IFRS will be, with the previously reported early retirement decision of Robert H. Herz to leave the FASB board, and with IASB Chairman Sir David Tweetie's scheduled retirement from the IASB board in 2011, as noted in this recent article by Mario Christodolou in AccountancyAge, Bringing the US on Board.

PCAOB Reopens Comment Period-Commun. w/Audit Comm.; Roundtable Coming
We can also see 'we're from the government and we're here to help" (or, in this case, we're from the quasi-governmental agency and we're here to help) in action with the PCAOB's recent announcement that it is (1) reopening the comment period on its proposal on communication with audit committees - something of keen interest to auditors, board members, and senior financial officers, and (2) holding a public roundtable Sept. 21 on this subject. The roundtable will be webcast. The PCAOB notes that in light of the roundtable, it is extending the comment period on the proposal until October 21. Here is the PCAOB's Briefing Paper for the roundtable; see also the Proposed Rule and Comments filed so far.

Hard-Working Agency
Rounding out this post, I recently received my 2010 edition of the SEC Alumni Association (more formally known as the Association of SEC Alumni or ASECA) Newsletter, which included the full text of the speech made by former Enforcement Director Bill McLucas, (now with law firm WilmerHale), recipient of the William O. Douglas Award, at the annual ASECA awards dinner in March. I found the following sections of McLucas' remarks among the most powerful:

I want to say a word to the Commission staff who are here this evening. All of us ? perhaps especially those of us who do battle with you daily and challenge you on a variety of fronts as we represent our clients, have been and will remain enormously supportive of this agency and most importantly, its mission. We?ve all heard the criticism and the attacks that have been mounted against the SEC over the past two years. Whatever criticism the agency has endured ? and while some of it may well be fair, much of it has been misplaced in my view ? I know the agency has taken it seriously and taken steps to address the issues, real or perceived. ?

You need to keep your focus, keep in mind all the successes the agency achieves for investors, most of which do not get the attention you?d like in this climate. You have to keep moving ahead?. First, you have strong leadership from the Chairman and the Commission?.Second, notwithstanding some tough days that have demoralized the agency, the staff is still among the best in government and the leadership team at the division and office levels is outstanding and as strong as it has ever been?.[See McLucas? complete remarks.]

I encourage you to visit ASECA's website, as well as that of the SEC Historical Society. I continue to believe that people who commit themselves to public service, for a period of time or as a life-long career, and those who leave such agencies to go to -as some in public service refer to with a wink - 'the dark side,' (i.e. the private sector, such as law firms, accounting firms, the corporate and financial sector) - and practice in the private sector armed with not only knowledge of how an agency works, but with an eye toward what is right, can enhance the regulatory system and the business environment generally. To reemphasize what McLucas noted above, "those of us who do battle with you daily and challenge you on a variety of fronts... have been and will remain enormously supportive of this agency and ... its mission."

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FASB To Release Discussion Doc. on MOU Completion/Implementation-'Significant Change To Financial Reporting System'

Chairing his final Financial Accounting Standards Board meeting on Sept. 29, 2010, Bob Herz noted in his opening remarks that FASB plans to release a Discussion Document in mid-October, seeking comment on various matters relating to implementation of the suite of remaining standards to be issued by FASB and the International Accounting Standards Board in accordance with the FASB-IASB Memorandum of Understanding.

Discussion Doc On MOU Standards Implementation Expected Mid-October
Herz referred to the Discussion Document as 'important,' noting that its purpose was to obtain "stakeholder feedback on the effective dates, transition methods, and other matters related to completion of the MOU projects."

"Once the MOU projects are completed," observed Herz, "the board recognizes those represent a significant amount of change in the financial reporting system." He noted that the boards are interested in "thoughtful feedback" on these issues.

Herz added, "My understanding is that the IASB will also be issuing a similar document to their constituents around the same time."

FASB Acts on EITF Consensuses
FASB agreed to ratify one final EITF consensus, and agreed to release three EITF consensuses for exposure (i.e. public comment). Further details on the board's discussion are in this FEI summary available to FEI members only; read about our new Associate Member category. Also watch for FASB's Summary of Board Decisions (which provides a factual summary) posted in FASB's News Center same-day or next day following FASB board meetings; the FEI summaries generally include additional 'color commentary' from the meeting.

"May You Continue To Make Informed And Wise Decisions"
In his closing remarks, Herz noted, "this is the last meeting I've had the honor of chairing this board," adding, "I don't use a gavel, but I am handing over a bell" to Leslie Seidman, named by the Financial Accounting Foundation (which oversees FASB) to serve as Acting Chairman beginning October 1.

"May you continue to make informed and wise decisions," Herz wished the board.

Seidman, speaking on behalf of the board members and staff, thanked Herz for his eight years of service at FASB, noting in particular how Herz "initiated a restructuring of the way GAAP is established in the U.S.," as well as overseeing the move to the Codification, and improved outreach to constituents.

With that, Herz rung his closing bell.

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Financial Stability Oversight Council To Seek Comments On Nonbank Financial Cos; ''Volcker Rule'

At its inaugural meeting last week, the Financial Stability Oversight Council approved its bylaw and a transparency policy applicable to the council. As noted in the FSOC's FAQ doc,the FSOC, created under the Dodd-Frank Act, "has a clear statutory mandate that creates for the first time collective accountability for identifying risks and responding to emerging threats to financial stability."

In other action at its Oct. 1 meeting, as noted in this FSOC press release, the council approved release of:

• an Advance Notice of Proposed Rulemaking (ANPR) on designating nonbank financial companies for heightened supervision, and


• a Notice and Request for Information (RFI) on the council's "Volcker Rule" (cite: wikipedia) study and recommendations. [The 'Volcker Rule,' according to FSOC, 'will help improve the safety of our nation's banking system by prohibiting proprietary trading activities and certain private fund investments.']

The above documents will be posted on FSOC's website concurrent with being posted in the Federal Register. There will be a 30-day comment period.

Separately, the council also agreed to an 'Integrated Implementation Roadmap' for the council and its independent member agencies, which include, among others, the SEC, CFTC, Fed, FDIC, Treasury, and OCC.

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Financial Statement Presentation Project 'Pauses;' Removed From FASB, IASB June, 2011 Priorities

In an article published today, FASB, IASB Suspend Financial Statement Presentations Project Due to Workload, BNA's Denise Lugo reports that at the final session of the FASB, IASB joint board meeting last week, the boards decided that the financial statement presentation project will be dropped from the list of priority agenda items on which they aim to converge by June, 2011.

Focus Of June, 2011 Convergence Plan Down To Four Remaining Projects
As such, the financial statement presentation project - and the separate project aiming at convergence of accounting for liabilities vs. equity (aka the 'liability-equity project), as noted in the article FASB, IASB Ditch Effort to Converge On Liability-Equity Accounting Issues by BNA's Stephen Bouvier - will not be included among the four convergence projects prioritized for completion by the June, 2011 convergence deadline set forth in the FASB-IASB MOU as updated last year.

BNA's Lugo notes:

The four high-priority projects the boards expect to finalize by June 2011 are:

1. financial instruments,

2. leases,

3. revenue recognition, and

4. insurance.

Some highlights from the FASB and IASB boards' discussion of the deferral of the financial statement presentation project (described as a 'pause' by one of the board members), as cited by BNA's Lugo, include:

IASB Chairman Sir David Tweedie: "The danger is we come out with something we haven't proved is such a big improvement [and it involves] system changes [among other issues that would] cause major headaches.? ... Tweedie said the boards would revisit the project in June when they will have more time to deal with it...

FASB Acting Chairman Leslie Seidman: ?Maybe some of [the projects within the Financial Statement Presentation project] are more easily implemented in a shorter time frame, and maybe if there's something that's perceived to be extremely costly in it, maybe that's the one that we would phase a little later. I don't think it's a foregone conclusion that this has to be implemented in one fell swoop.? ...

FASB Board Member Larry Smith: ?If we're going to be honest with ourselves, we don't have capacity within ourselves to help them out. We have the big four projects that are going to take up all of our time. In addition, I don't know if the constituents have the capacity...We continue to receive feedback that we're overloading the system and this would be piling on to that overload and I don't give this project as
much priority as the other projects in terms of what we need to get done by a
certain date, so I'm supportive of ?pausing? to give us more time to think about
what we should accomplish with it.?

BNA's Bouvier, Lugo, and other BNA outstanding reporters like Steve Burkholder and Steven Marcy continue to provide some of the best breaking news from FASB and the IASB. (Official results of the Oct. 22 meeting are to be posted by FASB and IASB.)

We look forward to BNA's coverage, and that of other fine reporters and bloggers (including my BBF - best blogger friend, Francine McKenna, of Re: TheAuditors (recently tapped as one of 10 Worth Watching, Women Who Inspire A Profession by WebCPA, along with Joanne Barry of the NYSSCPAs, Terri Polley of the FAF, Judy O'Dell of the PCFRC, Leslie Seidman of FASB, and others), at FEI's upcoming Current Financial Reporting Issues (CFRI) conference Nov. 15-16 in NYC. Consider registering also for the Convergence Update and Planning Approaches (aka 'IFRS bootcamp' sponsored by FEI and Deloitte on Nov. 17.

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SEC 'Dear CFO' Letter On Mortgage, Foreclosure, Loss Accrual (Including Litigation Risk) Not Limited To Financial Institutions

The SEC's 'Dear CFO' letter sent to public companies in October, 2010, posted on the SEC's website October 29, addresses "Accounting and Disclosure Issues Related to Potential Risks and Costs Associated with Mortgage and Foreclosure-Related Activities or Exposures."

Letter Lists Specific Disclosures 'To Be Considered'
Issued by staff of the SEC's Division of Corporation Finance, the October 29 'Dear CFO letter' contains a lengthy list of specific disclosures that "should be considered" in connection with mortgage (and mortgage securitization and sale-related) and foreclosure related activities.

Reminder Of MD&A Requirements
The letter also includes a reminder of certain MD&A requirements, including "any known trends or any known demands, commitments, events or uncertainties that you reasonably expect to have a material favorable or unfavorable impact on your results of operations, liquidity, and capital resources" (Item 303 Reg. S-K), and "legal proceedings, including proceedings known to be contemplated by governmental authorities" (Item 103 Reg. S-K).

Loss Accruals, Including Litigation
The SEC's October 29 'Dear CFO' letter also includes a reminder of current requirements for loss accruals and disclosures of contingencies, including Litigation-related contingencies, as currently required under FAS 5 (ASC SubTopic 450-20), and Rule 10-01(a)(5) of Reg. S-X. [Separately, The FASB recently announced that any new disclosure requirements under its proposed amendment of FAS 5 would not take effect this year, see our earlier post.]

Not Limited To Financial Institutions; Consider 'Similar Issues'
Significantly, although the Dear CFO letter was issued by the SEC to "certain public companies as a reminder of their disclosure obligations to consider in their upcoming Form 10-Qs and subsequent filings, in light of continued concerns about potential risks and costs associated with mortgage and foreclosure-related activities or exposures," the staff of the SEC take pains to note in the letter that:

• the list of disclosures to be considered is "not an exhaustive list" (see paragraph 2 of letter, and 3rd last paragraph of letter),
• the list of items to be considered, are, 'without limitation' to those items (paragraph 2 of letter).

Perhaps most significantly [in my view, see disclaimer on right side of this blog], public companies besides financial institutions should take note of the closing paragraph in the SEC's Dear CFO letter, in determining if the disclosures set forth therein are applicable to them:

Some of these issues are not limited to financial institutions that sold or securitized mortgages or mortgage-backed securities. Issuers that engage in mortgage servicing, title insurance, mortgagerefinancing.blogspot.com/" title="mortgage insurance">mortgage insurance, and other activities relating to residential mortgages should also consider the impact of these and similar issues for their disclosures.

Attendees at FEI's 29th annual Current Financial Reporting Issues (CFRI) conference Nov. 15-16 in NYC will hear about this and other SEC, FASB and IASB developments. (In other news, see also this FEI Summary: SEC Publishes 1st Progress Report on IFRS Workplan; IASB's Tweedie Emphasizes Single Set of Standards.)

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Determining the Midterm Election's Impact

With last week's midterm elections behind us, FEI's Government Affairs office in Washington DC has provided an analysis of the potential impact of the changing of the guard. Focusing on the impact of the elections on business, the FEI summary is entitled: Decision 2010: A Post-Election Analysis For Business. The primary author of the study is Tyler Roberts, Policy Analyst, FEI.

Separately, Francine McKenna, founder and managing editor of Re: The Auditors (and now a Forbes online columnist) posted her own thoughts and analysis of the midterm elections today, in her post: Put Your Money Where The Money Is: The Auditors And the U.S. Mid-Term Elections.

You can meet Francine at FEI's Current Financial Reporting Issues Conference next week, where she will be part of the press pool covering the event. Where else can you hear from leaders of the FASB, SEC and IASB, the finance and auditing profession, and rub elbows with leading journalists (print, online, blog, twitter, and everything in between) as well? We hope to see you there.

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FEI Membership For Government/Military Financial Exec's

In honor of Veteran's Day, I'd like to note that Financial Executives International offers a reduced membership rate to qualifying members of the government and military. As noted on our membership qualifications page, the following category is offered in addition to the categories of Executive membership, Associate membership, and Academic membership:

GOVERNMENT/MILITARY MEMBERSHIP
$195 (standard annual dues rate; no application fee)

This category is open to all senior financial executives who serve in a finance, accounting, budget, or treasury position for a local, state, or federal government agency, department, bureau or office. Applicants for this category should have direct responsibility over budgetary expenditures of at least $25 million.

On a personal level (I remind you of the disclaimer on the right side of this blog) I would also like to offer thanks to those who have served our country through government and military service, as well as those who serve with police, fire, emergency rescue and other departments and agencies who put themselves in harm's way for the sake of others.

Also in honor of this day, we repeat in this post the link to the Gratitude video (produced by The Gratitude Campaign - see also The Gratitude Campaign Blog) from our Memorial Day post in 2008. Once again thanks to Michelle Golden, author of the Golden Practices Blog, (a fellow member of AccountingWEB Bloggers' Crew, and one of the cameo avatars in a certain music video we posted earlier this year) for making us aware of the Gratitude Campaign & video via Twitter.

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Remembering BNA's Susan Webster

(L-R Francine McKenna, Edith Orenstein, Susan Webster, at FEI CFRI 2008)

This time of year, when it's CFRI season (on the eve of FEI's 29th annual Current Financial Reporting Issues Conference) I think back fondly to my first meeting with BNA Managing Editor Susan Webster.

That first meeting was over coffee after I finished working the registration desk the eve of CFRI 2007. I remember discussing with Susan at that first informal meeting not only current events of the day (in the world of accounting standard-setting and the regulatory environment) but also sharing stories about other common threads in our lives, including the challenges and joys of having teens and tweens, the advent of Hannah Montana/Miley Cyrus, and the use of social networks and technology by our generation vis-a-vis that of our children.

Our working relationship grew, albeit virtually, as I reached out to Susan for contacts/guidance on seeking permission to link to some of BNA's outstanding - indeed, exceptional - reporting, as I was a subscriber to BNA's Daily Report for Executives. She was very helpful in getting me in touch with the right people to be granted permission on occassion to reprint/post such material on our website and link to it in our blog. We also shared informal views with each other from time to time on topics of interest in our separate publications.

The following year, at CFRI 2008, I had the pleasure of joining together with Francine McKenna, Managing Editor of the blog Re: The Auditors, Steve Burkholder, BNA Staff Correspondent covering the FASB beat, and Susan Webster, for an informal dinner. [I remember specifically requesting that our entire conversation be 'off the record' and it was a fascinating evening indeed.]

Susan was also a member of a panel presentation coordinated and moderated by Francine at the Maryland Association of CPAs (MACPA's) June, 2009 Business Expo. Other panelists included former FEI President and CEO Colleen Cunningham, now Global Managing Director, Finance and Accounting, at Resources Global, and Joanne O'Rourke Hindman, Special Advisor to Board Member Steven B. Harris of the PCAOB. As usual, Susan shared the depth and breadth of knowledge that comes with the access BNA Editors and Correspondents have on Capitol Hill and beyond, and she provided helpful handouts from BNA explaining complex legislative developments and regulation.

The more I got to know leading journalists like Susan Webster, Steve Burkholder, Francine McKenna, and others, like CPA Trendlines Editor and Bay Street Group President & CEO Rick Telberg, the more I became interested in enhancing my journalistic skills to improve the quality of this blog. Susan and Rick were unmatched in their willingness to have me reach out to them and provide their support and insights, for which I am deeply grateful.

When CFRI rolled around again in November 2009, Susan was not able to attend (at the time, I did not know why). As Fall turned to Winter, she shared with me confidentially that she was facing some significant health issues. I remember speaking to her in January 2010 and our conversation was pretty much business as usual, without Susan dwelling on the gravity of her health issues; in fact, as I recall, I got the feeling that she was hopeful for the future.

Thus, it was with great sadness that I learned earlier this year of her passing away from her illness. I have wanted to write about her for quite some time since then, and now that CFRI 2010 is here (the 'anniversary' of my first meeting Susan) I feel it is time to put my thoughts to paper (to the screen?), in honor of her memory and how much she contributed to my own development and that of others who have shared their remembrances of Susan below.

In addition to those whose comments appear in this post, I welcome others to post a comment with your thoughts and memories of Susan, or thoughts about how a person within your own firm or organization, or in a shared industry or area of interest, has really make a difference in the lives of members of that profession or organization, and the profession or community at large. (Our readers tend to be a shy group, but we always welcome your comments.)

Steve Burkholder, BNA
BNA Staff Correspondent Steve Burkholder, well known on the FASB beat, shares these memories of Susan Webster:

Susan had a variety of roles at BNA by the time she was forced to dive into the cold waters of accounting rulemaking several years ago. She did so with her characteristic drive - completely and with total commitment, often scouring fairly obscure sources for her "FYI" messages meant as spark plugs for stories.

Susan cared deeply about the copy that made up the new publication she piloted. Just as important, she cared very much about the reporters who produced that copy. She is missed.

The then-new BNA publication referenced by Steve above, which Susan launched, was BNA's Accounting Policy and Practice Report (APPR). She had gathered an all-star advisory board for that publication (which included a number FEI members, serving in their personal capacity, leading analysts, and others.)

Jack Ciesielski, Analyst's Accounting Observer
One member of the BNA APPR advisory board was Jack Ciesielski, owner of R.G. Associates, Inc., an investment research and portfolio management firm, and publisher of The Analyst's Accounting Observer. Ciesielski is also a member of FASB's Investors Technical Advisory Committee, and (as reported by Jesse Westbrook and Ian Katz of Bloomberg in 2009) was a rumored candidate for the position of SEC Chief Accountant prior to SEC Chairman Mary L. Schapiro's selection of Acting Chief Accountant Jim Kroeker as Chief Accountant.)

Jack shares these memories of Susan:

I met Susan as a member of a BNA advisory board. She was a thoughtful, intelligent reporter and editor: always more concerned with a thorough consideration of the facts before publishing, rather than just being first with the news. I liked her graceful demeanor and enjoyed working with her tremendously.

Denise Lugo, BNA
Denise Lugo, BNA Staff Correspondent - New York, also well known on the FASB/FAF beat, shares these thoughts regarding Susan,

Susan was an exceptional editor with an uncanny ability to view one issue from five differing dimensions (at the same time). I actually joked about this to her once. I really admired her news instinct and writing style. She was thorough, detailed--could be tough as nails but combined it with fairness and integrity. During the four years I worked with her I grew tremendously as a reporter and can say she sharpened my skills and helped make me a better reporter.

Stephen Bouvier, BNA
These days, we can't talk about FASB without talking about the IASB as well.

BNA Correspondent Stephen Bouvier, well known on the IASB/EU/CESR beat, shares:

Although Susan and I never met in person, I have enjoyed the privilege of working with her at BNA as a London-based correspondent for almost five years. I never imagined that our collaboration would end quite so abruptly and cruelly for Susan.

It was thanks to Susan and her support, encouragement and, yes, criticisms, that I was able to direct my journalism toward what was for me a whole new direction. For that I shall be eternally grateful.

What many people might not realize is the role that Susan played in transforming my attendance at standard setting meetings into something that hopefully now resembles journalism and imparts useful information.

The joy of working with her was that although she had her expectations, somehow she always had the good grace to leave sufficient space for people to deliver on them.

The one area of my work that Susan initiated was the coverage since 2007 that we
have been running on IASCF funding. In some ways it was our own private initiative, but when we eventually forced the IASCF to publish information about funding on their website, Susan went out of her way in Washington to make sure that I got the credit.

I think that was Susan through and through, really. And although we never met, I miss her.

Steven Marcy, BNA
Steve Marcy, staff editor at BNA (one of the 'three Steve's' associated with the FASB-IASB beat) remembers Susan:

She was a demanding yet fair taskmaster, who always strove to make the publication and everyone around her better, and made clear that this was her intent. In this she succeeded, and we greatly appreciated her for it. She will always be missed.

Re: The Auditors' Francine McKenna
Francine McKenna, a consultant and managing editor of the popular blog, Re: The Auditors, shares this remembrance:

I remember meeting Susan for the first time in November of 2008 at the FEI CFRI
Conference. We had dinner with Steve Burkholder at that little bar in midtown. You took a great picture of the three of us. I remember when I got the call from Denise Lugo, one of the BNA reporters a couple of months ago prior for my comments on FAS 5. That conversation resulted in a quote for me in Susan's article in BNA, in the same paragraph as Lynn Turner! What a thrill!

Susan and I met again in Washington DC the following summer for the Compliance Week Annual Conference and spoke on the phone and emailed fairly often. I was so glad to have such an experienced journalist as a friend and mentor. She was always so giving with her time and advice. I didn't call this past May when I was in DC
because my schedule was so tight that week. How to know I would never see her
again? I hadn't even known she was sick.

It's a reminder to never take friends, family and those who are special to you for granted. You never know when they'll be taken unexpectedly. I miss her presence in my life in spite of the fact we were more virtual friends than day-to-day companions.

PCAOB's Colleen Brennan
Colleen Brennan, Deputy Director, Public Affairs at the PCAOB, formerly worked with Susan at BNA. She shares, "Susan was well liked and respected by her BNA colleagues back in my time (the early 90s) as well as now."

BNA President and CEO Greg McCaffery
BNA's President and CEO, Greg McCaffery, sent the following message to BNA employees to inform them of the sad news regarding Susan in June. (Thank you to BNA's Steven Burkholder and Steven Marcy for providing this info.)

Susan Webster passed away June 21 after a brief but courageous battle against
cancer.

Susan was an amazing managing editor, moving seamlessly and effortlessly between the narrow niches of banking regulation, health care law, and accounting regulation, mastering the arcane subject matter of each. In the banking arena, she was the managing editor of Washington Financial Reports,which was later renamed BNA?s Banking Report. She was instrumental in developing Health Law Reporter,which she managed for more than ten years and which remains our most successful health care product. Moving to the accounting field, she helped to create Accounting Policy & Practice Report,where she served as managing editor until her death.

Anyone who knew Susan was impressed by her agile and curious mind, by her tenacious commitment to her publications and to maintaining high journalistic standards at BNA, and by her willingness to help out wherever needed.

She was a member, and president, of the BNA Credit Union Board of Directors, she participated in various editorial quality programs and committees, and she helped launch an editorial training program for reporters.

Susan represented the best of BNA. She will be sorely missed.

In Susan's Own Words
Of course, no one could describe the essense of Susan better than she could. Here's what she wrote in her bio for the Twitter account she set up in December, 2009 to promote the BNA Accounting Policy and Practice Report (APPR), and this is why she is missed by so many. Although her loss leaves a terrible hole that can never be filled, particularly to her family, her mentoring, influence and friendship will be remembered fondly through the work and lives of many.

Susan Webster - Bio (on Twitter, 2009)
Editor: Accounting Policy & Practice Report, policy wonkette, social media fan,
wife, mother.

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FASB, Not Dozin' on Pozen Rec's, Announces Post-Implementation Review Process; FAF Announces Appointments

Last week the Financial Accounting Foundation or FAF, which oversees the Financial Accounting Standards Board, announced the launch of a post-implementation review process. This action follows, in part, on a recommendation made by the SEC's Committee on Improvements to Financial Reporting (CIFiR) aka the "Pozen Committee" - so named in honor of its chair, Bob Pozen. The recommendation was one of many recommendations aimed mainly at the SEC, but also at FASB and the PCAOB, in the final CIFiR report issued in August, 2008. (See, e.g. our previous posts: FASB's Anniversary Present to CIFiR, and SEC Ready To Roll With All Five Commissioners In Place; Pozen Committee Report Issued. )

As previously announced in July, Mark Schroeder, a recently retired senior partner at Deloitte & Touche LLP, was hired by the FAF as post-implementation review leader, assuming responsibility for the development, implementation, and management of the post-implementation review of standards and other authoritative pronouncements issued by the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).

FAF Appoints Terri Polley Pres. & CEO, Four New Trustees Named
In other news emanating from last week's FAF meeting, the FAF announced that Terri Polley has been named President and CEO of the FAF, the first time an officer with that title has been appointed to the FAF.

Additionally, the FAF announced the appointment of four new members: John Davidson of Tyco International, Stephen R. Howe, Jr. of Ernst & Young, Mack Lawhon, of Weaver, LLP, and Mary S. Stone, of the University of Alabama. All members of the FAF serve in their personal capacity; Davidson and Stone are also members of FEI.

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How Many GAAPs Will We Have in 2012? Blue Ribbon Panel to Finalize Rec's on Pvt Co Std-Setting to FAF Next Week

As the SEC continues its consideration of whether to permit - or require - U.S. public companies to file their financial statements using International Financial Reporting Standards published by the International Accounting Standards Board, vs. the longstanding practice of using U.S. Generally Accepted Accounting Principles published by the Financial Accounting Standards Board, private companies, the users of their financial statements, their auditors, lenders and others, as well as standard-setting bodies, have raised the question of how private company GAAP should look in a potentially post-IFRS world.

IFRS for Small and Medium Sized Enterprises (IFRS for SMEs) was published by the IASB a couple of years ago to as a standalone set of IFRS to better meet the needs of private companies and users of their financial swtatements. (In plain English, I will loosely define 'private companies' as used in IFRS for SMEs as companies that are not listed on public stock exchanges and do not have 'public accountability' such as banks and other financial institutions; refer to the IFRS for SMEs document for the precise definition of entities that fall in the scope ofo SMEs.)

Canada, which is on its way to adopting IFRS (i.e., public companies adopting IFRS as of Jan. 1, 2011; see related FEI Canada Research Foundation report on IFRS readiness published Aug. 2010) decided to issue a separate set of standards for private companies.

In the U.S., the FASB-AICPA Private Company Financial Reporting Advisory Committee - which is meeting this week, recommended to the Financial Accounting Foundation (FAF - overseer of the FASB) that the future of financial reporting for private companies in the U.S., including the related standard-setting model, be considered, particularly in light of the potential move to IFRS for public companies. Here is the agenda for this week's PCFRC meeting, which includes a joint meeting with FASB's Small Business Advisory Committee.

Blue Ribbon Panel on Private Co's ToFinalize Rec's to FAF
As previously reported (see FAF press release, and FEI blog post), at its October, 2010 meeting, the Blue Ribbon Panel indicated a preference for a new standard-setting model for private company generally accepted accounting principles, with a separate private company standards board. The new board, like the Financial Accounting Standards Board and the Governmental Accounting Standards Board, would be under the oversight of the Financial Accounting Foundation.

At next week?s (December 10) Blue Ribbon Panel Meeting (as noted at the conclusion of their October minutes):

?the panel members would be reviewing and discussing a draft report with the panel?s majority recommendation and minority views. [Mr. Anderson, Chair of the
Blue Ribbon Panel and Chairman and CEO of audit firm Moss Adams], Mr. Atkinson
[NASBA Chair], Mr. Melancon [AICPA President and CEO] and Ms. Polley [FAF
President and CEO] agreed that further discussion of the logistics and
operationality of the separate private company board would be needed at the
December meeting before the recommendation(s)/report could be finalized and
issued in January to the FAF trustees.?

The public portion of the Dec. 10 Blue Ribbon Panel meeting will be webcast; here is the agenda; meeting materials will also be posted.

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XBRL Update: FAF Publishes 2011 U.S. GAAP Taxonomy, Pending SEC Acceptance; IFRS Foundation Releases 2011 IFRS Taxonomy for Comment

Earlier today (January 18), the Financial Accounting Foundation announced that the 2011 U.S. GAAP Financial Reporting Taxonomy, applicable to filings in eXtensible Business Reporting Language (XBRL), was available.

The FAF's press release provides a link to the 2011 taxonomy, notes that the taxonomy is pending final acceptance by the SEC, and provides SEC contact information regarding the Commission's XBRL reporting requirements.

Additionally, the FAF notes:

The FAF is responsible for the ongoing development and maintenance of the taxonomy applicable to public issuers registered with the SEC.

The 2011 U.S. GAAP Financial Reporting Taxonomy contains updates for accounting standards and other improvements to the 2009 taxonomy currently used by SEC issuers.

FAF issued proposed improvements to the taxonomy in the fall, allowing users of the taxonomy to provide feedback on the updates and to provide SEC filers, service providers, software vendors, and other interested parties the opportunity to become familiar with and incorporate new element names for their filings.

Separately, the International Financial Reporting Standards Foundation released for public comment an Exposure Draft of its proposed 2011 IFRS Taxonomy.

As noted in the IFRS Foundation's press release, an interactive webcast on the proposed 2011 taxonomy will be held on January 27, and the comment deadline on the proposal is March 18.

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PCAOB Publishes Final Standards 8-15 on Risk, Materiality; Staff Practice Alert 7 on Litigation, Contingencies

Earlier today (January 18), the PCAOB published final Auditing Standards No. 8-15 on the auditor's assessment of, and response to risk, and related amendments to existing standards.

These final standards were approved by the SEC on Dec. 23, 2010, following the SEC's Notice and Comment period, and approval thereafter by the Commission. This procedure, in effect a secondary level approval process after approval of auditing standards by the PCAOB board, was set forth in the Sarbanes-Oxley Act.

The final standards published by the PCAOB on January 18 include:

AS 8 Audit Risk

AS 9 Audit Planning

AS 10 Supervision of the Audit Engagement

AS 11 Consideration of Materiality in Planning and Performing an Audit

AS 12 Identifying and Assessing Risks of Material Misstatement

AS 13 The Auditor's Responses to the Risks of Material Misstatement

AS 14 Evaluating Audit Results

AS 15 Audit Evidence

PCAOB Staff Audit Practice Alert 7 on Litigation

Separately, as highlighted by Broc Romanek in TheCorporateCounsel.net Blog today (Jan. 18), the PCAOB published on Dec. 20 PCAOB Staff Audit Practice Alert No. 7, "Auditor Considerations of Litigation and Other Contingencies Arising from Mortgage and Other Loan Activities." See also PCAOB's press release.

Romanek notes that the PCAOB release is in addition to a related SEC 'Dear CFO' letter released in the fall; see our previous posts on the SEC's Dear CFO Letter, and on the status of FASB's related project on contingency disclosures, including litigation.

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SEC Updates Disclosure Guidance (C&DI's) for Changes, Disagreements With Accountants

On Jan. 14, 2011 the SEC posted updated Compliance and Disclosure Interpretations (C&DI's) relating to disclosure of changes in, and disagreements with, the issuer's accountants.

Props to TheCorporateCounsel.net Blog's Broc Romanek for flagging this earlier today (January 18), with links to the updated C&DI Q&A's on this subject.

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FASB ASU 2011-01 Defers Eff. Date of Troubled Debt Restructuring Disclosures Required in 2010-20; All Other 2010-20 Disclosures Keep Orig. Eff. Date

Earlier today, the Financial Accounting Standards Board released Accounting Standards Update No. 2011-01 (ASU 2011-01). The ASU is entitled, Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.

ASU 2010-20, issued in July, 2010 is entitled: Receivables (Topic 310):Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.

ASUs are released to communicate changes made to accounting standards under FASB's Codification.

My two (three) cents (note: refer directly to the ASUs for the official requirements, the following is my own take on key points from the ASU; please refer to the disclaimer posted on the right side of this blog):

1. TDR disclosures are the only 2010-20 disclosures deferred: ASU 2011-01 defers the effective date of only a portion of the new disclosures under ASU 2010-20, specifically, those pertaining to Troubled Debt Restructurings (TDRs). Other than the deferral of the TDR disclosures announced today, all other disclosures required in ASU 2010-20 relating to the credit quality of financing receivables, and the allowance for credit losses, are still required as of the original effective date of ASU 2010-20 - essentially, for calendar year companies, the original effective date of ASU 2010-20 was 2010 for public co's, and 2011 for private co's.
2. TDR accounting/definition guidance and TDR disclosures will have coordinated effective date: The reason why FASB decided to defer the effective date for the new TDR disclosures relates mainly to the fact that FASB is separately working on guidance relating to the definition of a TDR, and in response to constitutent comments received on the earlier ASU, FASB decided to require the new disclosures of TDRs concurrent with the new definition of TDRs and related guidance. FASB states in ASU 2011-01: "Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011."
3. Private co's already subject to deferral of all disclosures in 2010-20: The deferral in ASU 2011-01 is specified as applicable to public companies only, because ASU 2010-20 already deferred the effective date for private companies (for all of the disclosures in ASU 2010-20) until annual periods ending on or after Dec. 15, 2011. That is, only public companies were required, under ASU 2010-20, to provide all of the new disclosures set forth in ASU 2010-20 for interim and annual periods ending after Dec. 15, 2010. Therefore, the immediate need (e.g. for calendar year-end companies) for a deferral of effective date of the TDR disclosures in ASU 2010-20 pertained to public companies only.

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FASB, IASB Release Revenue Recognition ED

Yesterday, the Financial Accounting Standards Board and the International Accounting Standards Board released for public comment their Exposure Draft (ED) of a proposed joint standard on Revenue Recognition. The ED, which carries a comment deadline of Oct. 22, 2010, has is entitled: Revenue Recognition (Topic 605): Revenue from Contracts with Customers (as posted on FASB version) and Revenue From Contracts With Customers (as posted on IASB website).

Major Changes In Proposed Standard
According to FASB-IASB's joint press release:

If adopted, the proposal would create a single revenue recognition standard for International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) that would be applied across various industries and capital markets. The publication of this joint proposal represents a significant step forward toward global convergence in one of the most important and pervasive areas in financial reporting. The proposed standard would replace IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. In US GAAP, it would supersede most of the guidance on revenue recognition in Topic 605 of the FASB Accounting Standards Codification.

The core principle of the draft standard is that an entity should recognise revenue from contracts with customers when it transfers goods or services to the customer in the amount of consideration the entity receives, or expects to receive, from the customer.

The proposed standard would improve both IFRSs and US GAAP by:
- removing inconsistencies in existing requirements;
- providing a more robust framework for addressing revenue recognition issues;
- improving comparability across companies, industries and capital markets;
- requiring enhanced disclosure; and
- clarifying the accounting for contract costs.

Public Comments Due in October; Roundtables Coming In November
According to FASB's homepage, public roundtables on the ED will be held on Nov. 5 and 8, 2010.

Links To Additional information
Additional information on what is informally referred to as the "Rev Rec" ED can be found in:

• FASB/IASB Joint press release
• FASB in Focus
• Podcast featuring FASB Board Member Leslie Seidman speaking on the Rev Rec ED
• Investor outreach for comments
• FASB's Rev Rec Project Page

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