Thursday, December 23, 2010

Seidman Appointed FASB Chairman; FEI Applauds Appointment

Earlier today, the Financial Accounting Foundation, which oversees the Financial Accounting Standards Board, named Leslie F. Seidman Chairman of the FASB. The appointment is effective immediately. Seidman had been serving as Acting Chairman of the FASB since the retirement of former FASB Chairman Bob Herz at the end of September. Read the FAF press release.

Financial Executives International issued the following statement applauding the appointment of Seidman as Chairman of the FASB:

"It is with great pleasure that FEI congratulates Leslie F. Seidman in her permanent appointment as Chair of the FASB. Ms. Seidman has been well regarded as a consensus builder over her several years with this important organization, bringing critical hands on experience in standards application. We believe that Ms. Seidman has done a remarkable job since taking on the role as Acting Chair in the fall of 2010. We are confident that she is well suited to lead the rest of the Board and work with organizations such as FEI to ensure the development of high quality accounting tandards during this critical time for global standard setting."
See FEI's press release.

Tuesday, December 21, 2010

FEI, Others Offer Condolences On Sudden Passing Of IFRS Foundation Chair, Tommaso Padoa-Schioppa

Tommaso Padoa-Schioppa, Chairman of the IFRS Foundation Board of Trustees, passed away suddenly on Saturday, December 18.

As reported in the New York Times in an article by Eric Sylvers yesterday:

Padoa-Schioppa, an economist and former Italian finance minister who was one of the driving forces behind the creation of the European Union’s single currency died Saturday in Rome. He was 70. Franco Bruni, a friend and professor of international monetary economics at Bocconi University here, said Mr. Padoa-Schioppa died from a heart attack suffered during a dinner he had organized for 100 friends
The IFRS Foundation Trustees issued this statement on December 19 regarding Padoa-Schioppa's sudden passing, including remarks of IFRS Foundation vice-chairmen Tsuguoki (Aki) Fujinuma and Robert Glauber, IASB Chairman Sir David Tweedie, and IFRS Foundation COO Tom Seidenstein. Among others offering their condolences were the Monitoring Board of the IFRS Foundation, the Financial Accounting Foundation (which oversees the FASB), and Financial Executives International (FEI).

FASB, IASB Receive Over 200 Comment Letters on Leasing Proposals

December 15 marked the comment letter deadline on FASB's Proposed Accounting Standards Update - Leases (Topic 840) and IASB's Exposure Draft: Leases.

Included among the over 200 comment letters received by FASB and the IASB on their proposed leasing standard(s) is a joint letter sent by FEI and five other professional associations on the IASB proposal. The letter, signed by President and CEO Marie Hollein, was addressed to Sir David Tweedie, chairman of the IASB, with a copy to Leslie Seidman, Acting Chairman of the FASB. In addition to FEI, the other organizations signing onto the letter were: the Equipment Leasing & Finance Association, the Finance & Leasing Association, the Japan Leasing Association and the U.S. Chamber of Commerce. Read more in the joint comment letter.

Separately, two FEI committees sent their own comment letters to FASB on its leasing proposal: FEI's Committee on Corporate Reporting, (FEI CCR letter) and FEI's Committee on Private Company Standards (FEI CPC-S letter).

Friday, December 3, 2010

Give A Little Bit

(Video credit: Rodger Hodgson (one of the original co-lead singers of Supertramp) performing "Give a Little Bit" live during Ottawa Bluesfest, 7/10/10, posted by 'Endlisnis' on YouTube. Song begins 2:08 into the video)

As accountants, finance professionals, legal and compliance professionals, and regulation-watchers, we tend to have our own way of thinking about things like:

But, there's another side to risks and uncertainties in our everyday world, outside our offices and in our communities, that relates to the uncertainty some people have over where their next meal will come from, whether they'll have a roof over their head that night, and other issues that gravely threaten their well-being, sometimes, seemingly, without a place to turn.

This is where, in addition to community and not-for-profit organizations struggling to meet these needs, some companies and associations encourage their employees (members) to voluntarily reach out to 'give a little bit' of time and/or financial resources to help those in need.

Numerous accounting and law firms, public and private companies, educational institutions, state societies of CPAs, bar associations, and other professional associations, encourage their employees and members to do volunteer work for the community throughout the year and especially during the holiday season.

We note below a voluntary initiative by FEI staff, along with a couple of other examples. Although you - our blog readers - tend to be the strong but 'silent type,' we invite you to post a comment noting what your organization is doing to encourage employee voluntarism of the financial kind or in-kind variety (e.g. pro bono work). You don't have to be highly specific if you need to maintain confidentiality, but we are looking to provide a forum to share ideas. Or, if you prefer, email me a brief blurb about what your firm/organization is doing, for consideration in a follow-up post.

FEI "Dress Down For A Good Cause"

Rudy Katzenberger, Manager, Accounting at FEI, and chair of FEI's Staff Activities Committee, explained that the idea for "Dress Down for a Good Cause" came as a follow-on to last year's voluntary clothing collection for the Market Street Mission, whose motto is 'meals, shelter, hope.'

"Having moved our office back to our Morristown Roots, we wanted to give something back to the community as a voluntary staff initiative," he said. "It also provides a 'bonding experience' for our staff to join together for a good cause, to help those in need."

"Dress Down for a Good Cause" invites FEI staff members to make voluntary donations of $5 a week from Thanksgiving through the end of the year, and for each week a donation is made, that staff member may 'dress down' (e.g. wear jeans to the office) on a particular day of the workweek.

Additional information about FEI can be found at , and additional information about the Market Street Mission can be found at .

Robert Half International Supports Boys and Girls Clubs
Joel Dibble, Public Relations Director, Financial Staffing Brands, Robert Half International, shared with us:

Robert Half International offices across the country are hosting holiday toy drives to benefit Boys & Girls Clubs and other nonprofit organizations. Please visit the Robert Half Facebook page for the list of participating offices. If you would like to donate a new unwrapped toy, please bring it to your local Robert Half International branch, or call the local contact to arrange a toy pick-up by an RHI representative

Eastern Michigan University - Academic Service Learning
Prof. Zafar Khan of Eastern Michigan University shared with us that in addition to promotining active faculty and staff participation in their local United Way program, EMU has a unique program called Academic Service Learning, described in brief as "a teaching methodology that utilizes community service as a means of helping students gain a deeper understanding of course objectives, acquire new knowledge, and engage in civic activity."

Happy Holidays to all of our readers. If you received this blog post from a 'friend' and would like to receive our blog by email, please send an email to and write in the Subject line: Sign Up.

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.

Wednesday, December 1, 2010

Priorities Listed, and Feedback Counts, FASB, IASB Note in 3rd MOU Convergence Update

In their 3rd Progress Report - published earlier this week - on the status of convergence projects outlined in their Convergence MOU (Memorandum of Understanding), the FASB and IASB list the 'priority' projects which are still slated for completion by June 2011 'if not sooner,' note lesser priority projects deferred, and emphasize that feedback from stakeholders is important as they complete these projects.

Priority Projects Slated for Completion by June, 2011

The progress report lists these projects as priority projects slated for completion by June, 2011:

  • financial instruments,

  • revenue recognition,

  • leases,

  • the presentation of other comprehensive income, and

  • fair value measurement.
Additional projects which the IASB targets to complete by June 2011 'if not sooner' include:
  • improved disclosures about derecognised assets and other off-balance-sheet risks (aligning with recently issued US GAAP requirements),

  • consolidations (particularly in relation to structured entities) and

  • insurance contracts.

Deferral of Lesser Priority Projects

The MOU Progress Report reiterates decisions on deferring certain lesser priority projects, listed below, in order to focus the boards' resources on completing the priority projects by June, 2011. (We previously reported on some of these deferral decisions here and here.)

The deferred joint projects include:

  • the broader financial statement presentation project,
  • financial instruments with characteristics of equity,
  • emissions trading schemes, and
  • the reporting entity phase of the conceptual framework
  • consolidation of investment companies
  • contingency disclosures (relating to FAS 5 and IAS 37).

The joint progress report states:

Even with those work plan changes, completion of the priority projects requires
a focused and intense effort by both us and our stakeholders. Our commitment is
to the development of high-quality, improved, and converged standards developed
using robust due process.

Feedback Counts
No matter what stakeholder category you fall into (investor, lender, preparer, auditor, board member, other), it is worth taking note of the fact that the boards actively seek your input as they continue to march down what I'll call 'Convergence Road,' to June, 2011.

As stated in the just-issued Progress Report:

The feedback that we have received (and will continue to receive) through comment letters and other outreach efforts is being considered carefully and will determine the focus of our redeliberations and other steps and efforts that will be required to finalise new standards. We are committed to conducting additional outreach during the redeliberations period, as necessary, to ensure the quality and effective implementation of the final standards.

Monday, November 22, 2010

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.

FASB Updates Private Cos.; Next Blue Ribbon Panel Mtg Dec. 10

Earlier today, the Financial Accounting Standards Board posted "FASB Update: Private Company Edition." This update, one of a series of updates for investors, private companies, and others published periodically by FASB, provides a detailed (and kudos for plain English!) update on three major proposals (Exposure Drafts) on which FASB is seeking comment from constitutents: (1) financial instruments, (2) revenue recognition and (3) leases.

The update also includes links to useful information for private companies (and others) on FASB's website.

Blue Ribbon Panel on Private Co's Will Meet Dec. 10
Separately, the next meeting of the Blue Ribbon Committee on Private Co Standard Setting will take place on Dec. 10. Additional information on the Blue Ribbon Committee, sponsored jointly by the Financial Accounting Foundation (which oversees FASB), the American Institute of CPAs, and the National Association of State Boards of Accountancy, will take place on Dec. 10 at
FAF HQ in Norwalk, CT.

Thursday, November 18, 2010

COSO Launches Project To Modernize 1992 Internal Control Framework

Earlier today, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) announced it has launched a project to moderize its landmark Internal Control-Integrated Framework.

The framework, first published in 1992, has been supplemented by various publications since that time, including publications geared toward small public companies, and on monitoring of internal controls.

PwC To Lead Project, Under Advisory Team Of COSO Board Members, Experts
Audit firm PwC has been selected to coordinate this project, under the guidance of an advisory committee consisting of COSO board members and other experts.

COSO's founding sponsoring organizations include FEI, the AICPA, IIA, IMA, and AAA.

Target Completion Date: 2012
According to COSO's press release, “The initiative is expected to culminate in an updated internal control framework publication in 2012, the 20th anniversary of the initial Framework.

FEI To Form Ad Hoc Task Force To Support Participation On COSO Project
Consistent with past COSO projects, FEI will be forming an interdisciplinary task force to review drafts of the COSO project, draft comment letters, and support FEI’s COSO board member- FEI President and CEO Marie Hollein, and the chair of the FEI task force (to be named), who will serve with Marie on the COSO Project Advisory Committee, with representatives of each of COSO’s sponsoring organizations. FEI members interested in serving on this ad hoc task force, please contact me at Nonmembers: don't forget we have a new category of membership: the Associate Member category - read more here.

Monday, November 15, 2010

Tweets Fly By At FEI CFRI, on FASB, IASB, Economy, & More

If you can't be at FEI's Current Financial Reporting Issues Conference in person today and tomorrow, where you can hear from leading board and staff members of FASB, IASB, SEC, and leading financial exec's and auditors - you can tune in virtually by following the tweets being posted under hashtag #CFRI2010. I hear there may even be an informal tweetup tonight (for those of you not attending the sold-out FEI Hall of Fame Gala) - watch for any word from the folks below by following them on twitter.

Below are a few highlights posted on twitter so far from the CFRI conference; more is likely to come in some of the below folks' and other journalists' publications tomorrow and later this week. Tomorrow's session will include a keynote by former SEC Commissioner Harvey Goldschmid, now a member of the IFRS Foundation Trustees; a Controllers Roundtable, an SEC update featuring SEC Chief Accountant Jim Kroeker and SEC Division of Corp Fin Chief Accountant Wayne Carlin, and a Q&A session with senior staff of FASB and the SEC. There are also concurrent breakout sessions at CFRI on specialized topics.

retheauditors: I always get nervous when I see guys in white shirts with pens in their pockets. #TheyAllDressTheSame #CFRI2010 about 4 hours ago via TweetDeck ...Listening to four from the Big 4 talk about financial reporting. Sam Ranzilla's @KPMG specs are super zexxy. #CFRI2010 about 4 hours ago via TweetDeck .... retheauditors: PCAOB asked all the audit firms how this Dear CFO letter will affect their audits and Ranzilla KPMG says it will. Looking at it. #CFRI2010 about 3 hours ago via TweetDeck .... My question: When SEC sent Dear CFO letter to fin inst re repurchase risk disclosures, did auditors get the letter too? #CFRI201

feiblog: Next up #CFRI2010 Hot Topics, Larry Salva Comcast; w/ Mike Gallagher PwC; Sam Ranzilla KPMG; Kevin Reilly E&Y; Jim Schnurr Deloitte.

retheauditors: The British always choose the right words: "The opprobrium is for the Fed not China for a change." ZM-B @economist #CFRI2010 about 6 hours ago via ƜberTwitter ...
Zanny Minton-Beddoes at #CFRI2010 gives a shout out to Reinhart and Rogoff and their book as a great source for understanding crisis
colleencunningh: Seidman #CFRI2010 FASB rec'd 2800 comment letters on Financial Instruments ED- most "not fan mail! " about 5 hours ago via Twitter for iPad .... colleencunningh: P&G cost est. For FASB Fin'l presentation project: Implementation: $300-500M - ongoing annual cost: $30-45M! #CFRI2010

complianceweek: IASB plans exposure draft of new standards for hedging in December. #CFRI2010 about 5 hours ago via Echofon

colleencunningh: Seidman #CFRI2010 FASB priorities: Financial Instruments, Revenue Rec, Leases,Insurance about 5 hours ago via Twitter for iPad

complianceweek: So where are all the cool tweeters meeting at #CFRI2010 tomorrow? @retheauditors @colleencunnighh
1 day ago via web

Friday, November 12, 2010

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

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.

Thursday, November 11, 2010

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:

$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.

FASB To Focus On Disclosures of Loss Contingencies Under Current Standards, Together With SEC, PCAOB Staff

For those of you who did not get to see our updated blog post yesterday, "Bean There, Done That" - or did not see the updated version in which we added a summary of yesterday's FASB meeting, we provide that info below, since it notes a significant decision by FASB to focus - together with staff of the SEC and PCAOB - on disclosures of loss contingencies (including litigation) provided based on current accounting standards, before finalizing any changes to those standards.

As background, significant changes to the existing standard (FAS 5) had been proposed by FASB, but met with a great deal of criticism from the legal community and many in the business community, who noted concerns about potentially weakening attorney-client privilege, and potentially weakening a defendant company's position in a lawsuit - even arbitrary lawsuits, through proposed disclosures in earlier Exposure Drafts.

Concerns had also been voiced on earlier proposals about practical issues surrounding some of the proposed quantitative and qualitative disclosures, and whether some of the proposals to provide even ostensibly 'factual' information would result in 'too much information' to the extent that it would make a discussion of contingencies (particularly in relation to lawsuits) less understandable to investors, rather than more understandable. (As background, see, e.g. our post summarizing a FASB roundtable held in 2009: Disclosure is Not a Place to Try a Lawsuit, ACC Tells FASB.)

For those of you who missed our post yesterday or missed the updated version, here's a synopsis of FASB's Summary of Board Decisions reached at their Nov. 10 board meeting:

Disclosure of Certain Loss Contingencies (including Litigation): FASB staff summarized comment letters received on FASB's proposal, and identified issues for redeliberation.

Significantly, signalling a holistic look at this issue, FASB's summary adds: "The board directed the staff to work with the staffs of the SEC and PCAOB to understand their efforts in addressing investor concerns about the disclosure of certain loss contingency through increased focus on compliance with existing rules. The Board also directed the staff to review filings for the 2010 calendar year-end reporting cycle to determine if those efforts have resulted in improved disclosures about loss contingences." [On this note, see also our earlier post regarding the SEC's recent Dear CFO letter, which addresses contingency disclosures among other things.]

Disclosures About an Employer's Participation in a Multiemployer Plan: FASB agreed not to make this proposed standard effective this year. Redeliberations will continue.

Investment Properties: The Board instructed the staff to develop a scope proposal that would include entities whose primary activities are investing in real estate and who have some characteristics similar to investment companies, for example, the entity has unrelated investors, and the entity intends to provide investors with returns from both rental income and capital appreciation. Additionally, the Board agreed that lessors of properties that are outside the scope of the investment properties guidance would be affected by the FASB Exposure Draft, Leases (Topic 840), and should therefore focus their attention and comments to the Board on that proposed guidance.

Going Concern. (No, not that Going Concern, this Going Concern.) Updated: FASB discussed a summary of key issues raised by external reviewers on a preliminary staff draft of a proposed Accounting Standards Update for this project and decided to deliberate these issues at a future board meeting. Additionally, the Board directed the staff to obtain SEC and PCAOB input on the revised draft standard.

FASB, IASB Meet Jointly (by videoconference) on Financial Instruments
FASB is also holding a series of joint board meetings with the IASB this week, via videoconference, focusing on the financial instruments project. Results of the joint board meetings are being posted here.

Wednesday, November 10, 2010

Bean There, Done That

Prof. Dave Albrecht of Concordia College reports in his blog, The Summa, that today (November 10) is that most raucous of commemorations, Accounting Day. (Actually, I added the raucous part.)

Curious? See Albrecht's recent post on this subject, Accounting Day 2010, (in which he notes Nov. 10 has been recognized as Accounting Day because "On November 10, 1494, volume 2 of Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportion) was published... [authored by] Luca Pacioli [the book] included a description of the bookkeeping/accounting system of Venice. In honor of this contribution, Pacioli has carried for centuries the title of Father of Accounting." More curious? See wikipedia's writeup on Pacioli.

Alas, Albrecht also points out in his post Accountant's Day Honors Pacioli, citing New Mexico State Univ. accounting professor Ed Scribner, “Recent DNA evidence reveals that Pacioli is not actually the Father of Accounting …”.

FASB, IASB Activities
How did our modern-day Pacioli's at the Financial Accounting Standards Board, and the International Accounting Standards Board, celebrate this day? (This may be a good time to remind you of the disclaimer posted on the right side of this blog.) I can imagine the board members and staff raising a glass of bubbly (ginger ale, that is, or maybe Alka Seltzer) in honor of Accounting Day...

But seriously, what was on the standard-setters plate(s) today? Here's a synopsis of FASB's Summary of Board Decisions reached at their board meeting earlier today:

Disclosure of Certain Loss Contingencies (including Litigation): FASB staff summarized comment letters received on FASB's proposal, and identified issues for redeliberation.

Significantly, signalling a holistic look at this issue, FASB's summary adds: "The board directed the staff to work with the staffs of the SEC and PCAOB to understand their efforts in addressing investor concerns about the disclosure of certain loss contingency through increased focus on compliance with existing rules. The Board also directed the staff to review filings for the 2010 calendar year-end reporting cycle to determine if those efforts have resulted in improved disclosures about loss contingences." [On this note, see also our earlier post regarding the SEC's recent Dear CFO letter, which addresses contingency disclosures among other things.]

Disclosures About an Employer's Participation in a Multiemployer Plan: FASB agreed not to make this proposed standard effective this year. Redeliberations will continue.

Investment Properties: The Board instructed the staff to develop a scope proposal that would include entities whose primary activities are investing in real estate and who have some characteristics similar to investment companies, for example, the entity has unrelated investors, and the entity intends to provide investors with returns from both rental income and capital appreciation. Additionally, the Board agreed that lessors of properties that are outside the scope of the investment properties guidance would be affected by the FASB Exposure Draft, Leases (Topic 840), and should therefore focus their attention and comments to the Board on that proposed guidance.

Going Concern. (No, not that Going Concern, this Going Concern.) FASB was slated to discuss the status of this project and the "timing for issuance of a Proposed Accounting Standards Update on disclosures about risks and uncertainties and the liquidation basis of accounting." Check back to FASB's Summary of Board Decisions for an update on the results of this discussion.

Joint Board Meetings on Financial Instruments: FASB is also holding a series of joint board meetings with the IASB this week, via videoconference, focusing on the financial instruments project. Results of the joint board meetings are being posted here.

How Did You Spend Accounting Day?
Getting back to our theme of Accounting Day - and by the way, many of our readers are attorneys, is there a Lawyer's Day? - Prof. Albrecht describes in his blog some of his plans to celebrate this day. Ready to join the fun? (And its not even busy season!) You can still enter Prof. Albrecht's Annual Bean Counter's Contest (online of course) if you post your entry by 11:59 pm CT tonight (Nov. 10).

So, how did you spend Accounting Day?

Monday, November 8, 2010

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.

Sunday, October 31, 2010

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, 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.)

Friday, October 29, 2010

SEC Publishes First Progress Report on IFRS Workplan

Earlier today, the SEC published its first progress report on its IFRS Workplan. Links to the progress report, the IFRS workplan, and related information can be found in the summary under "Latest News" on FEI's website. We will post links to additional analysis of the SEC's progress report after we and others have time to review it.

Wednesday, October 27, 2010

Majority Do Not Favor Fair Value For Loans, Liabilities, FASB Told

At today’s Financial Accounting Standards Board meeting, FASB staff presented a summary of feedback received from over 2,800 comment letters and other feedback on FASB’s proposed changes to accounting for financial instruments.

Staff noted a majority of constituents do not favor fair valuing loans, core deposits, or liabilities, and that users generally do not support retention of the fair value option for financial liabilities, although nonusers support use of the fair value option for liabilities in certain circumstances.

(In other action at today's board meeting, FASB clarified that its proposal amending disclosure of loss contingencies - including lawsuits - would not be effective this year; see separate post in the FEI blog.)

On the subject of financial instruments, FASB’s official Summary of Board Decisions, notes that staff summarized significant feedback on the May 2010 Exposure Draft, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities—Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815), that FASB plans to redeliberate the proposed credit impairment and interest income recognition models jointly with the IASB beginning with the November 10-12 joint board meetings, and that FASB plans to begin redeliberations of its proposed classification and measurement approach in December.

If you had been a fly on the wall among the observers at today's FASB board meeting (or a fly with headphones on listening to the webcast of the meeting like me), here are some additional highlights you would have heard from the live discussion.

Over 2800 Comment Letters Received On Proposal
Feedback received from preparers, investors and others, as detailed in today’s FASB board handout, included feedback from:

· 2,812 comment letters received to date,

· 5 public roundtables,

· 28 questionnaires allowing investors to provide confidential feedback

· 8 field visits with various entities, on a confidential basis, to discuss the operationality and the costs and benefits of the proposed [Accounting Standards] Update. Field visit participants included banking institutions of various asset sizes, nonfinancial entities, and an insurance company.

· 120+ investors and other users of financial statements employed by more than 60 firms through face-to-face meetings and calls with individual investors and groups of investors representing a variety of perspectives. Approximately 80 percent of these investors were buy-side analysts, with two thirds of these buy-side analysts investing on a long-only basis and the remainder employing a long/short strategy. The remaining investors were sell-side analysts specializing in either bank/insurance-related sectors or accounting, and ratings agencies analysts.

· numerous preparers, auditors, valuation specialists, and regulators through face-to-face meetings or calls with individual organizations or professional associations.

Majority Of Constituents Do Not Support Fair Valuing Loans, Core Deposits, Liabilities
Following are brief highlights from the staff’s verbal summary of feedback on the proposal:

Loans: almost all constituents agree fair value should not be the primary [measurement] attribute; [they] believe fair value for these instruments would increase subjectivity…. and potential negative effects to bank capital, lending…

Core deposits: virtually all constituents do not support fair value for core deposits, [they] believe [the] inputs are too subjective; a few users did support reporting value of core deposits; however, many of these users preferred full fair value, as opposed to [revaluing core deposits]

Liabilities: almost all constituents do not support fair valuing liabilities unless the entity has the ability and intent [to sell/liquidate the liability]… [these constituents] also believe that measuring a liability at fair value results in counterintuitive [treatment]… [in terms of] realizing gains from deterioration in credit quality of the entity; in most cases [those] gains will not be realized…

Fair value option: (1) Most users believe the fair value option should not be provided for financial liabilities; others believe [the fair value option should be] limited to [certain] situation[s]… a few users believe the fair value option should not be limited. Nearly all users believe disclosure [is important]. (2) Most nonusers support retention of the fair value option [in certain circumstances]; a few nonusers did not support the fair value option [in terms of reduction of comparability].

Hybrid instruments: Some nonusers [e.g. preparers, auditors] believe hybrid instruments should be bifurcated, but not assets, because they believe liabilities should be at amortized cost.

Path Forward Includes Identifying the 'Objective;' Convergence Considerations
Upon conclusion of their presentation summarizing feedback on the financial instruments proposal, staff asked the board if they agreed they would like to have staff bring all of the issues presented for more formal redeliberation at a future board meeting(s); the board agreed on that plan. Staff noted such meetings are currently slated to take place the week of November 11-12 and November 17.

FASB Board Member Marc Siegel observed, “We said at the [joint FASB-IASB board meeting, during the discussion of] Offsetting in London, there is a cross cutting issue when it comes to risk… whether or not we deal with risk in measurement, presentation, or disclosures.” He added, “When I started at my analyst firm, and we hired people to analyze banks, [using a] risk dashboard... credit, one of the [considerations]… interest, duration, liquidity, sort of morph together, and [the question of] do you have enough capital to support those risks. When we think about measurement, we have to also think about those risks.” A brief discussion ensued about providing information about risk and fair value through disclosure vs. measurement.

“Staff are thinking about it," noted a member of the FASB staff, including that the staff believes they should, "first think about the objective of classification and measurement, about the risk, the criteria, and work from there to understand what the board’s objective is.”

FASB Acting Chair Leslie Seidman suggested the staff’s approach could include, ”How we might want to proceed on the accounting model, and then, is there more information we need to provide, to provide a complete picture; that[‘s what] we thought we heard consensus on from investors.”

Following staff remarks about various types of approaches to organizing the redeliberation of the proposal, including feedback suggestion 2 categories or 3 categories to classify financial instruments, FASB Board Member Tom Linsmeier said, "I don’t know whether I think most productive to talk about loans by themselves, debt securities by themselves; I think it would be more productive for me, if we decide [that there should be] 2 categories or 3 [for classification of financial instruments], therefore, loans could be in 2-3 categories, debt could be in 2-3 categories; [the question is] is it an instrument specific approach, or debt specific approach; then disclosure issues [could be] address[ed], once we have a measurement basis in that category."

FASB staff observed, "I think most of the feedback we received, people focus on the criteria - not necessarily the legal form, but the intent. We would say, come back and look at the criteria, not the legal form, there are different risks from holding [certain] assets/liabilities, we don’t want to delay the conversation… we want to say, the perspective depend[s] on your perspective as holder of the instrument." FASB staff added that some constituent feedback suggested a model for measuring and/or classifying certain financial instruments based on management's intent, the 'business model' of the entity, and./or the characteristics of the underlying instrument (e.g. if the only way to sell or liquidate an instrument is in an active market, vs. instruments for which a market could become illiquid).

Staff noted some feedback recommended the board consider providing "detailed guidance on portfolio turnover, and on tainting."

Seidman instructed the FASB staff, "I want to give you some latitude to decide the best way to handle issues, [however] I just want a sense in the reasonably near future [of where we are going]."

Regarding the staff's suggestion to step back and consider the objective for the standard, Seidman advised, "It is important to have that discussion; [however] I see some practical issues with it; I want to make sure the issues are brought in a way [to show us] whether we will have a basis for possible convergence with the IASB." She emphasized, "I would like to have a sense in the relatively near term, whether we are going to pursue the approach in the ED for loans, core deposits, liabilities, so we can have a plan whether we’ve got a converged solution or not."

"I heard overwhelming feedback from investors," added Seidman, "even those who do not support fair value for these items in the balance sheet, they would like some information [about fair value, interest rate risk and liquidity risk]... I’d like to see it grounded in feedback from investors, on other feedback, so we can respond. I don’t think we can address all of this at the same time; with convergence, there is a need to address [the issues] in some order."

Board Member Larry Smith asked, "How are we going about redeliberations, vis-a-vis the IASB…" particularly with respect to impairment and derivatives.

Board Member Russell Golden (who recently was appointed to the board to fill the vacancy created by former FASB Chairman Robert Herz' retirement; Golden was formerly Technical Director of the FASB) noted, "I would recommend, we go through redeliberations; once we think we have a model on measurement, classification, we go ahead and present to [the IASB]; in the event [the models are] not identical, we have a discussion with them about opening up IFRS 9 [the IASB's standard on financial instruments]."

Board Member Tom Linsmeier said, "To be completely honest, this isn’t our decision, they have decided not to engage with us until we are done with our model."

Seidman said, "I thought we had an understanding we would start our redeliberations, see what the shape of our basic accounting model would be [for financial instruments]; once we have a sense whether we have a lot of things with common ground, or a few things, we would know if [we could] bring together as a converged standard. [Let's]find out where these deliberations go, and find out whether we have enough decisions to bring our standards together."

Wildcard: Impact Of New Board Members, When Appointed
Linsmeier raised a question as to the potential impact of new board members in finalizing the financial instruments proposal. (As announced by the Financial Accounting Foundation in August, the FAF decided to increase the size of the FASB board to seven members, from its current five members. The FASB had traditionally consisted of seven members from its founding in 1973 until 2008, when the FAF restructured some FASB operations.)

"We know new board members will be joining us, we won’t know timing of that for a while, but do we move on [identifying various] buckets [for purposes of classification and/or measurement], or wait?"

Smith responded, "Personally, I think we’ll be able to move [on redeliberations], take a vote; if [the vote is] 5-nothing, it's fairly obvious, if 3-2, we know it could change; unfortunately the [potential new board members'] selection and timing is out of our control; we can’t just sit back, we need to think about how to get them up and running, that’s a separate discussion."

Seidman noted, "We as an organization have [a responsibility] to [new] board members... I looked back to what was on our agenda when I joined the board, [we were] in the middle of stock comp.. [and other major projects]… we as a regular matter should proceed in a thoughtful manner, and we will do what we need to do to bring new board members up to speed. New board members can ask for help, if they feel they need to abstain [they can], our goal would be to bring them up to speed, on this project and every other project."

She then asked the staff to recap their immediate plans and what's on board for further discussion of this project.

Staff noted, "We will bring you a plan at some point in the next few days," adding they plan to come back to the board on November 12 with four issues:

1 yield and income , if you would include impact of credit losses or not

2. what we should include in how we determine the amount of (credit?) losses, (if we would… forecast or not, as well as if you are going to PV or not the cash flows, when we deal with the amount, as well as, if we are going to look at amt of losses you expect to incur thru life, vs. part of

3. when: timing of the recognition of a loss

4. some talk on an approach referred to as the 'Good Book/Bad Book,' a way for , if losses are not recognized on Day 1, at a certain point in time, if losses are going to be [recognized over] time.

Staff added, "We have November 10-12 [at the joint FASB-IASB board meeting noted above]; also dates the following week [including] November 17." Staff also noted they planned to have board memos available next week to share with the board, with 3 memos being prepared by FASB staff, and one by the IASB staff.

FASB Delays Effective Date of Loss Contingencies Proposal

At its board meeting earlier today, the Financial Accounting Standards Board agreed to clarify that its proposed amendments to disclosure of loss contingencies (including lawsuits) will not be effective this year-end.

Although the staff intends to bring issues for redeliberation to the board before the end of the year - with the goal of moving toward a final standard - staff recommended (and the board agreed) that based on constituent feedback received on the July 2010 Exposure Draft, Contingencies (Topic 450): Disclosure of Certain Loss Contingencies, and based on the current timing for redeliberation of the proposal, that it was important to state this clarification now, to remove any uncertainty as to whether the proposal could be effective this year. (The July 2010 proposal had stated an effective date of fiscal years ending after Dec. 15, 2010, which would have made it effective this year.)

The call for the vote today, as summed up by FASB Acting Chair Leslie Seidman, was to “clarify that under any circumstance, this proposed standard would not become effective this year-end.” The FASB board's vote in favor of that clarification was unanimous.

The offical results of the meeting (at which feedback on FASB's financial instruments proposal was also discussed, highlights of which are in a separate post in the FEI blog) can be found in FASB’s Summary of Board Decisions.

Monday, October 25, 2010

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.

Friday, October 22, 2010

FASB Leasing Proposal - Y2K or Meh?

As we reported in August, FASB released an Exposure Draft of a Proposed Accounting Standards Update with proposed amendments to FASB Codification Topic 840: Leases. The IASB concurrently issued its own proposal.

How Will Proposal Impact You?
What will the impact of the leasing proposal be? One real estate executive (quoted below) has said it could be the 'Y2K for the real estate industry,' while blogger Adrienne Gonzalez, author of the Jr. Deputy Accountant Blog, appears to catalogue the accounting proposal as a 'meh' type event in the overall scheme of things, comparing it to 'shuffling the deck chairs on the Titanic.'

Here's the quote from an Oct. 21 article in the Philadelphia Business Journal, FASB Change Would Put Leases On Firms' Balance Sheets:

“There’s a bit of denial out there,” said Lou Battagliese Jr., a principle with Jackson Cross Real Estate Partners, who advises corporate clients in their real estate needs. “The experts believe it’s just a question of when, not if. The joke is this is Y2K for the real estate industry.”
After taking an inventory, Battagliese advises corporate tenants to take a stab at determining the financial impact of accounting leases on a balance sheet, particularly since there is likely to be a “significant first-year impact.”

How Can You Impact The Proposal?
To estimate the impact of the proposal on your business (or potentially on your supply chain partners or your customers), here's where you can get some important information:
1. read the proposal; do your analysis, or initial analysis
2. listen to FASB's webcast on the proposal, Oct. 28 from 11am - 12 noon Eastern time.
3. attend educational events such as FEI's Current Financial Reporting Issues (CFRI) Conf. Nov. 15-16 in NYC, which includes high level FASB/IASB updates, an SEC Update, various general sessions, and concurrent sessions on specialized topics, including a concurrent session (among various concurrent sessions you can choose from) on the leasing proposal. The concurrent Leasing session at CFRI will be moderated by Gregg Nelson of IBM, and includes panelists John Bober of General Electric Co., Ross Prindle of Duff & Phelps, and Danielle Zeyher, Project Manager, FASB.
4. do your analysis/continue your analysis
5. talk to others in your industry and field (FEI CFRI and other FEI networking opportunities including local chapters, national committees, and other events provide such an opportunity; as previously reported, FEI has a new Associate Membership category)
6. consider the impact of FASB's proposal, including costs & benefits, practical & theoretical (conceptual) issues
7. file a comment letter on the proposal; view other comment letters filed.

The comment deadline on the leasing proposal is Dec. 15, 2010.

UPDATE: Lorraine Malonza, Senior Manager, Accounting Policy and Financial Research, FEI, reminds me that FASB is also holding joint roundtables with the IASB in January, 2011 on the Leasing proposal, to gather additional input. As noted in FASB's press release on the leasing roundtables, a request to be considered as a participant in the roundtables must be filed with FASB by Nov. 1, and a preliminary comment letter must be filed by roundtable participants by Dec. 1, with their final comment letter due by the Dec. 15 deadline.

Wednesday, October 20, 2010


Some news bytes happening around the globe in the world of financial and regulatory reporting:

FASB, IASB Seek Comment On Effective Dates, Transition For MOU Standards
Yesterday, the Financial Accounting Standards Board announced the release of a Discussion Paper (DP) seeking input from constituents on the effective dates and transition methods for the remaining standards to be issued under the Memorandum of Understanding between FASB and the International Accounting Standards Board on convergence. Concurrently, the IASB announced the release of a Request For Views (RFV) on the same topic. Comments on FASB's DP and IASB's RFV are due by Jan. 31, 2011.

IFRS Foundation Monitoring Board Meets Next Week in NYC
In other news, the IFRS Foundation (formerly called the International Accounting Standards Committee Foundation, or IASCF) which oversees the IASB, announced yesterday that a meeting of the IFRS Foundation Trustees and the IFRS Foundation Monitoring Board (a group of international regulators, including the U.S. SEC, and others), will meet on October 28 in New York City. The meeting will be held at the SEC's NY Regional Office.

As described on IASB's website here:

The IFRS Foundation is an independent, not-for-profit private sector organisation working in the public interest. Its principal objectives are:

•to develop a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) through its standard-setting body, the IASB;
•to promote the use and rigorous application of those standards;
•to take account of the financial reporting needs of emerging economies and small and medium-sized entities (SMEs); and
•to bring about convergence of national accounting standards and IFRSs to high quality solutions.

The governance and oversight of the activities undertaken by the IFRS Foundation and its standard-setting body rests with its Trustees, who are also responsible for safeguarding the independence of the IASB and ensuring the financing of the organisation. The Trustees are publicly accountable to a Monitoring Board of public authorities.
SEC Proposes Rules On Say-On-Pay, Golden Parachutes
Earlier this week, the U.S. Securities and Exchange Commission announced the release of proposed rules setting forth new requirements for proxy voting on executive compensation issues including 'say-on-pay' and 'golden parachutes.' Additional disclosure requirements on the above matters are also set forth in the proposals. Read more in SEC's Proposed Rule on: Shareholder Approval of Executive Compensation and Golden Parachute Compensation, and SEC's Proposed Rule on: Reporting Of Proxy Votes On Executive Compensation and Other Matters.

Learn More At FEI Conference!
Learn more about the above topics, and more, at FEI's 29th Annual Current Financial Reporting Issues (CFRI) Conference, taking place Nov. 15-16 at the Marriott Marquis Hotel in New York City, where you can hear from FASB Acting Chair Leslie Seidman, IFRS Foundation Member, and former SEC Commissioner Harvey Goldshmid, The Economist's U.S. Economics Editor Zanny Minton-Beddoes, and senior members of the FASB, IASB and SEC staff, including SEC Chief Accountant Jim Kroeker and SEC Division of Corporation Finance Chief Accountant Wayne Carnall. Enjoy the networking opportunities (and CPE!)

As noted in FEI's press release issued today, FEI President and CEO Marie Hollein, CTP said:

"CFRI continues to be one of the largest annual gatherings among the finance profession, and we see it as an excellent forum for both financial executives and regulators to discuss key issues and provide relevant insight...It is clear that most executives are concerned about the road ahead, and FEI has aptly designed this year's conference to focus on this topic. We'll have an exciting roster of speakers and
panels aimed at providing attendees with perspectives on the regulatory and
financial reporting landscape for 2011 and beyond."
What better place to consider the future of financial and regulatory reporting than Times Square? Join us at FEI's CFRI conference in November; see the CFRI agenda, list of speakers, and registration info.

Hall of Fame
FEI's CFRI is once again being held in conjunction with the annual FEI Hall of Fame Gala (Nov. 15 - separate registration/payment required, the Hall of Fame Gala is currently sold out with a waiting list). This year's Hall of Fame inductees are Karl M. von der Heyden and Ulyesse J. LeGrange; additional info is in this press release and at

IFRS Boot Camp
Additionally, as in past years, FEI's 2-day CFRI conference will be followed on November 17 by the IFRS Boot Camp: Convergence Update and Planning Approaches (separate registration and payment required) cosponsored by Deloitte LLP and FEI.