Monday, January 31, 2011

Nothin' But Net: FASB, IASB Release Proposed Amendment To Netting (Offsetting) Requirements

If your weekend reading did not include Friday's proposal(s) released by the FASB and IASB to align their requirements on netting (offsetting) of balance sheet items, you can view them now: see FASB's proposal ("Proposed Accounting Standards Update—Balance Sheet (Topic 210): Offsetting") and IASB's proposal ("Exposure Draft ED/2011/1 - Offsetting Financial Assets and Financial Liabilities"). The comment deadline on each proposal is April 28.

The jist of the proposal(s) is (are) described in the IASB and FASB's joint press release:
Offsetting, otherwise known as netting, takes place when entities present their rights and obligations to each other as a net amount in their statement of financial position.

At present, the circumstances when financial assets and financial liabilities may be presented in an entity’s statement of financial position as a single net amount, or as two gross amounts, differs depending on whether the entity reports using International Financial Reporting Standards (IFRSs) or US generally accepted accounting principles (GAAP).

The accounting differences result in the single largest quantitative difference in reported numbers in statements of financial position prepared in accordance with

The boards are proposing that offsetting should apply only when the right of set-off is enforceable at all times, including in default and bankruptcy, and the ability to exercise this right is unconditional, that is, it does not depend on a future event. The entities involved must intend to settle the amounts due with a single payment or simultaneously. Provided all of these requirements are met, offsetting would be required. The proposals would amend IFRSs and US GAAP and eliminate several industry-specific netting practices.

The joint press release includes links to an IASB webcast conducted earlier today on the offsetting proposal, as well as an IASB 'Snapshot Summary' of the document. A 'FASB in Focus' summary of their proposal is forthcoming on

Those of you expecting to see a McDonald's commercial starring basketball players based on the title of this blog post, we don't want to disappoint you: here is the 2010 Nothin' But Net commercial; and if you don't recognize the fellow at the end of that video, see the 1993 Nothin' But Net.

Wanted: Your Input For COSO Survey, To Update Internal Control Framework

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) wants you to know it will continue to review feedback submitted via its online survey, aimed to assist in informing COSO as it proceeds with its current project to update its Internal Control-Integrated Framework. You (or someone else from your company, if they are more familiar with applying the COSO Internal Control framework at your company) can complete COSO's online survey here.

The COSO Internal Control framework has had broad applicability and acceptance since it was first published in 1992. For example, COSO's internal control framework is referenced in SEC and PCAOB rulemaking implementing Sarbanes-Oxley Section 404 as a suitable framework for purposes of management's and the auditor's internal control assessments under Section 404. Additionally, AICPA standards applicable to private company audits also reference the COSO Internal Control framework.

COSO, whose founding organizations include the AAA, AICPA, FEI, IIA and IMA, announced last year the launch of a project to update the 1992 Internal Control framework.

The original deadline on the online survey was today (Jan. 31); COSO has extended the deadline to continue reviewing feedback.

Early feedback, particularly prior to March, will help inform COSO's Advisory Task Force formed to oversee the drafting team from audit firm PwC, selected to coordinate this effort, as the COSO Advisory Task Force is currently slated to meet again in March.

No Foolin': FASB, IASB Seek Comment By April 1 On Proposed 'Expected Loss' Model of Impairment

The FASB and IASB announced today the release of their jointly developed proposals providing a common approach in moving from the current 'incurred loss' approach for impairment of financial instruments, to an 'expected loss' approach. April 1 is the comment deadline on the proposals.

See FASB's proposal ("Supplementary Document—Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities—Impairment") and the IASB's proposal ("Supplement to ED/2009/12 Financial Instruments: Amortised Cost and Impairment - Financial Instruments: Impairment").

The applicability and impact of the proposals, as noted in a joint press release issued by FASB and the IASB earlier today, would apply to, among other things, "impairment of financial assets such as loans managed in an open portfolio." The change in methodology represented in the proposal(s) vs. the current method of accounting for impairment of financial instruments, is described by the two accounting standards boards as follows:

At present, International Financial Reporting Standards (IFRSs) and US generally
accepted accounted principles (GAAP) currently account for credit losses using an incurred loss model, which requires evidence of a loss (known as a trigger event) before financial assets can be written down. The boards have proposed moving to an expected loss model that provides a more forward-looking approach to how credit losses are accounted for, which they believe better reflects the economics of lending decisions.
In announcing the release of the proposals, IASB Chairman Sir David Tweedie noted:
A major complaint in the financial crisis was that when loan losses were recognized, it was a case of ‘too little, too late’. Such a situation highlighted the need for a more-forward looking approach to loan losses to ensure provisions are made much earlier than before. The proposed move to an expected loss model will address this issue, in addition to aligning IFRSs and US GAAP.
FASB Chairman Leslie F. Seidman added:
The FASB and IASB have heard the urgent call for an improved, converged approach
to impairment of debt instruments. We are keenly interested in whether investors think this revised approach provides relevant and timely information about credit losses, and whether reporting entities find the proposed requirements operational.
'Snapshot' Summaries, Podcasts/Webcasts Available
To enhance constituent's understanding of the proposals, each board has released a 'snapshot summary' (IASB 'snapshot summary' posted today; FASB 'In Focus' Summary forthcoming on

Additionally, each board is holding podcasts/webcasts on the impairment proposals. IASB's interactive live webcast will take place on February 4; FASB's recorded podcast (January, 2011) featuring FASB board member Larry Smith speaking about the impairment proposal was posted earlier today.

Additional References
The FASB-IASB's joint Financial Crisis Advisory Group, among others, had explored moving impairment standards from an 'incurred loss' to an 'expected loss' approach. See our earlier posts, EU's McCreevy, IASB's Smith, On Financial Reporting In A Changing World (May
8, 2009). See also: The Turner Review: U.K. FSA Recommends Response To Global Banking Crisis.

For public companies listed in the U.S., SEC reporting requirements must also be considered; see our earlier post, SEC's 'Dear CFO' Letter on MD&A Disclosure Of Loan Loss Provisions, ALLL' (August 18, 2009).

Thursday, January 27, 2011

Blue Ribbon Panel on Private Cos. Issues Report to FAF

Yesterday, the Blue Ribbon Panel on Standard-Setting for Private Companies (BRP) issued its report and recommendations to the Financial Accounting Foundation. See BRP on Private Co's Report.

Recommendations for 'Near-Term' Relief
In the near-term, the BRP ( co-sponsored by the FAF, the AICPA and the National Association of State Boards of Accountancy ) recommends "certain short-term and transitional actions by the FAF and the FASB to provide near-term relief for private companies."

Such relief would include more exceptions and modifications to FASB standards, with respect to their use by private companies, and would be guided by a private company framework, which the BRP notes could be drafted by the FASB board and staff, focused on the needs of users of private company financial statements, to provide a consistent framework for such exception/modification decisions. This recommendation would not require a separate standard-setting board or a separate set of private company GAAP.

Long-Term Recommendations
However, in the longer term, the BRP report states that a 'supermajority' of the panel's members recommend that a separate standard-setting board be set up alongside FASB and GASB, under the oversight of the FAF, to provide even more focus on the needs of private companies and the users of their finanical statements, in developing the 'exceptions and modifications' needed to the standard U.S. GAAP model, as called for by the BRP.

Additional Highlights From BRP Report
Read some additional highlights from the BRP Report.

Other Models Considered by BRP
Among models considered by the BRP, were IFRS for SMEs (IFRS for Small and Medium Sized Entities) a self-contained (230 page) set of GAAP applicable to private companies (other than those with 'fiduciary duties' such as banks, insurance companies, and certain other entities) released by the IASB in July, 2009. Separately, as Canada's public companies switch to adopt IFRS, Canada released a set of GAAP for its private companies to use.

The BRP notes in its report that the panel considered such models, and others, during its deliberations, but ultimately rejected establishing a completely separate set of GAAP, sometimes referred to as 'dual GAAP' or 'big GAAP/little GAAP,' in favor of establishing a separate framework on which to base private company exceptions to GAAP, and in favor of the 'supermajority' recommendation to form a separate board to focus on this.

Pros and Cons of Separate Board Considered
The BRP report, describing its recommendation for a new standard-setting board under the FAF as the 'supermajority' view of the panel, also lists the 'pros' and 'cons' considered by the panel with respect to that recommendation.

Additionally, a glimpse into the diversity of views among panel members is evident in the statements made by leaders of the three sponsoring organizations of the BRP, as noted in their joint press release (note: the quotes below are taken from the press release, but not the additional descriptive material around the quotes):

  • AICPA President and CEO Barry Melancon was supportive of the supermajority recommendation, saying: "This was an overwhelming recommendation from the diverse panel members to establish a separate private company board with urgency." He added: “This issue has been discussed for 30-plus years and the time for FAF to act is now. While some changes have been made to the process to be more responsive to private companies, the panel concluded those were insufficient. This is an important day for the 50 percent of the U.S. economy in private business.”
  • NASBA Chairman Billy Atkinson voiced concern with the supermajority recommendation, saying: "In our view, a separate accounting standard-setting body for private companies would lead to differential standards and result in other unintended consequences. We urge the FAF to carefully consider the potential effect on the financial reporting system.” He added: " “We share the panel’s concerns regarding the relevance, complexity, and cost of today’s accounting standards. As this is a significant public policy issue that is not unique to private companies, we believe the best approach for needed change is through the existing FAF-governed FASB, which should be more strategically aligned to continuously address these concerns."
  • FAF President and CEO Teri Polley, taking a middle ground as the FAF prepares to study the BRP's report and recommendations, said: "The FAF applauds the efforts of the blue-ribbon panel and will thoughtfully and thoroughly consider the issues raised by the panel, as well as the recommended solutions. The panel’s report, along with further analysis and constituent input, will be valuable in reaching sound decisions that improve standard setting and financial reporting for private companies.”

As noted in their report, the BRP acknowledged that one of its members, Daryl Buck (also a member of FEI, and a former member of the Private Co. Financial Reporting Committee or PCFRC, formed jointly by FASB and the AICPA) was appointed to the FASB board, along with Hal Schroeder, as announced by the FAF earlier this month. See our prior post: FASB, PCAOB Board Members Named. The appointment of Buck, who has significant private company experience, addresses one of the recommendations made by the BRP. (Separately, the other new board member, Hal Schroeder's most recent experience, is as a professional investor.)

FEI CPC-S, FERF Cited as Resources
The BRP report cites within one of the models that had been considered (Model 5) recommendations made by FEI’s Committee on Private Company Standards (CPC-S).

Additionally, the BRP report cites in its bibliography a report previously issued by FEI’s research affiliate, the Financial Executives Research Foundation (FERF), entitled, What Do Users of Private Company Financial Statements Want?

FASB Chairman's Initial Reaction to BRP Report
For FASB Chairman Leslie F. Seidman's initial reaction to seeing a draft of the BRP report earlier this week, see our post: FASB Chairman on Being Responsive to Needs of Private Co's.

Next Steps
As noted in this article by Alexandra DeFelice, FAF, FASB's Parent Organization, Names Its First CEO, published in the Nov. 2010 AICPA Journal of Accountancy:

[The] FAF is likely to discuss these recommendations at its February meeting
but may need to deliberate further.

Many speculate that FAF trustees will expose any proposed structural or process changes for public comment, consider that feedback and finalize a set of changes. Timing of the decisions around those changes and potentially creating a private company board would be tied to how quickly FAF can take action.

In addition to potentially seeking public comment on structural or strategic issues relating to private companies, it is possible (in my view, see disclaimer posted on the right side of this blog) that the FAF may include other recommendations in a document issued for public comment, pertaining to all of its constituents, or FASB or GASB constituents, based on broader input received by members of the FAF including Polley, FAF Chairman Jack Brennan, and others during their 2009 'listening tour' which is also referenced in the JofA article cited above, and in the article "FASB Overseers To Seek Input On New Strategic Plan," published June 23, 2009 by Reuters' Emily Chasan.

FAF's Polley recently launched an online interactive forum, "From the President's Desk," on the FAF website, to provide updates on the FAF to constituents; constituents may also direct questions to the FAF via email as noted in Polley's January, 2011 communication linked above.

Wednesday, January 26, 2011

Fair Value vs. Amortized Cost for Financial Instruments: FASB Moves Toward Business Strategy Criterion, Permitting Loans To Be Held At Amort. Cost

At yesterday's (Jan. 25) Financial Accounting Standards Board meeting, the board tentatively decided to use a 'business strategy' criterion for the classification and measurement of financial instruments at fair value vs. amortized cost. Significantly, this represents a change in the board's earlier proposal to carry loans at fair value. Separately, as previously reported, FASB and the IASB recently announced they would work toward bringing their differing proposals on accounting for credit losses closer together.

Yesterday's decision by FASB on valuation of financial instruments can be thought of in simple terms as falling into 3 'buckets:'

  1. Trading activities, Held for Sale: Fair Value, with all changes in fair value recognized in net income. (FV-NI)
  2. Investments - i.e. investing with a focus on managing risk exposures and maximizing total return: Fair value measurement with qualifying changes in fair value recognized in other comprehensive income. (FV-OCI)
  3. Loans, Customer Financing (managing asset for collection of contractual cash flows through lending/customer financing activity): Amortized Cost.

As reported by BNA's Steve Burkholder today in FASB Shifts to Cost Treatment of Loans,
Away From Proposed Fair Valuation
(subscription required):

The preliminary decision on what FASB's chairwoman, Leslie Seidman, and board
colleagues called “plain vanilla” debt instruments held for contractual collection of payments, as well as receivables, was applauded by the American Bankers Association. Security analysts interviewed by BNA after the meeting were
less happy.

Reclassifications, 'Tainting'
On the question of reclassifications among the above categories, and regarding 'tainting' of remaining assets in a category for which the intent regarding certain assets had changed (e.g. if certain long-term investements were sold for short-term liquidity purposes), FASB decided:

  • reclassifications between categories of financial assets would not be permitted, and

  • subsequent sales would not “taint” an entity’s financial assets classified at amortized cost.

Additional details regarding decisions reached at yesterday's FASB board meeting can be found in FASB's Summary of Board Decisions.

Tuesday, January 25, 2011

SEC Adopts Say-on-Pay, Golden Parachute Rules; Proposes Amendments To Definition of 'Accredited Investor;' Systemic Reporting By Private Funds

At an open commission meeting earlier today, the U.S. Securities and Exchange Commission:

Details can be found in the SEC press releases in the press releases linked above.

FASB Chairman On IFRS-U.S. GAAP Convergence; Emerging Issues

During a webcast entitled "2011 FASB Chairman's Outlook" earlier today, FASB Chairman Leslie F. Seidman described FASB's major priorities, including efforts on major convergence projects slated for completion by June, 2011, and separate projects to improve U.S. GAAP. Regarding convergence, she noted she would like to have the FASB staff conduct a study and 'inventory' the remaining 'deferred' convergence projects to determine if the differences make a difference to investors, and as a result, potentially reprioritize the 'deferred' convergence projects, and potentially drop some of the convergence projects if the difference between U.S. GAAP and IFRS on a particular project is not significant to investors. In that case, she indicated, FASB may consider adopting the IFRS standard for U.S. GAAP.

The FASB Chairman noted that two priority convergence projects are expected to be completed first quarter, 2011. Those are:
The three priority convergence projects currently on FASB's plate (i.e., slated to be finalized 2nd quarter 2011) discussed in depth by Seidman include:
Standards Need To Provide Useful Info; Be Auditable, Enforceable
Seidman noted that, "In recent years, [FASB has] made communication with constituents a priority: we want constituents to be aware of what we are working on, and ... decisions made.."

She added:

We use a variety of means to involve stakeholders in the process
- We webcast our board meetings, and you can observe [the meetings in person] in Norwalk, or London [when the FASB meets jointly with the IASB board in London]
- podcasts, short summaries
- Reaching out proactively to constituents
… to give us more information to assess the costs and benefits [of proposed standards]
o Benefit: does this proposal provide useful information; does it help the company communicate about its own activities
o Cost: [information about the cost] to company to implement, and cost to users of NOT providing this information; we use a variety of [methods] to gather this information

Seidman reviewed FASB's variety of methods of outreach to constitutents (including investors, preparers, auditors and others) and encouraged constituents to provide feedback on proposed standards through comment letters and other means such as field tests and roundtables, and observed:

FASB's goal is to provide useful information to investors, lenders, donors to
nonprofits... [for which] the resulting information fairly presents financial infornmation and performance, so current and potential [investors, lenders and donors]… can make informed decisions about how to deploy their resources...
She added:
Standards also need to be auditable and enforceable, so the resulting information is viewed as a credible presentation of financial information and performance of the entity."

FAF Beta Testing Independent Post-Implementation Review
In response to a question posed by moderator Denise Lugo, a correspondent with BNA, as to whether FASB conducts a post-implementation review of standards, as the IASB does, Seidman

As a matter of fact... the FAF (Financial Accounting Foundation), our oversight body, announced last November they are establishing a function within the foundation for post-implementation reviews of FASB and GASB standards.

The function is independent, but will be staffed by FASB and GASB staff, but [not the staff that worked on development of that particular standard].

My understanding is that a beta test of the process is in the works, and they will select a standard or two in very near future.

I don’t intend to rely on that function [as the only source of post-implemementation feedback] we will keep our normal channels of communication open

SEC Staff Coordinating Meetings On Emerging Issues
Also on the subject of feedback, the FASB Chairman added:

I am very supportive of recent efforts of the SEC staff to provide a series of roundtables… to discuss emerging reporting issues. It offers a really good opportunity to more accurately diagnose, and be sure the right organization… [is addressing the issue]....It is not always a standard-setting matter… e.g. may be an auditing issue… [or other issue].

She indicated participants in such roundtables are a diverse group of SEC/FASB constituents and regulatory/standard-setting agencies.

Calls for such broad-based (multi-agency, multi-constituent) post-implementation review were made by the SEC Advisory Committee on Improvements to Financial Reporting (CIFiR, aka the 'Pozen Committee' for its chairman, Bob Pozen) and others.

FASB Chairman On Being Responsive To Need of Private Co's

During broad-ranging remarks about FASB's upcoming priorities in general, and efforts to be responsive to the needs of private company constituents and the users of their financial statements, FASB Chairman Leslie Seidman made several major points. Highlights below are based on my listening to the webcast of "2011 FASB Chairman's Outlook," moderated by BNA correspondent Denise Lugo. The points below are specific to the private company issue, but the vast majority of her remarks were on broad-ranging standard setting priorities of the FASB that are applicable to both public and private co's.

Regarding private companies:
  1. FASB Chairman Agrees With Blue Ribbon Panel's short-term recommendations: Seidman said she has seen a draft of the report/recommendations of the FAF-AICPA-NASBA sponsored Blue Ribbon Panel on Standard-Setting for Private Co's, [note: the report is expected to be delivered to the FAF by the end of this month]. She noted: "I personally agree with the panel's short/term recommendations," which FASB will "take steps to implement."
  2. Blue Ribbon Panel recommendation 'sends a strong message': Although she stopped short of saying she did not personally agree with the longer-term recommendation reached at the BRP's December meeting - to form a separate board under the FAF, alongside FASB and GASB, to focus on private co. accounting - she acknowledged that the panel's recommendation "sends a strong message … [that FASB is] not responsive enough.. [to private companies and their users]." In response to that view, she emphasized: "Our goal is to restore their confidence in our ability to address their concerns… in addition to outreach, we have assigned staff to ..[address] private co concerns [on each FASB project] ."
  3. FASB developing white paper: Additionally, Seidman noted that "we are developing a white paper on the unique needs of users of private company financial statements." She noted issues to be considered include cost-benefit, including the unique needs of smaller private companies. "She added, "we want to address their concerns, we want to be responsive...[and] do a better job," of addressing the concerns of private co's and the users of their financial statements.
  4. New FASB Board Member, Daryl Buck, Will Add To Private Co Perspective: Seidman added, "I think our new board member Daryl [Buck]," who she described later in in the FASB webcast (entitled "Chairman's Outlook") as having significant private company experience, "will be very effective in bringing the private co perspective to the table." (Seidman added that the other new FASB board member, Hal Schroeder, has a diverse background, most recently as a professional investor.)

The FASB Chairman's Outlook webcast held earlier today, will be archived on FASB's website. Registration is required to listen to the free webcast, and accompanying slides can be downloaded.

Thursday, January 20, 2011

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.

Tuesday, January 18, 2011

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

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:

PCAOB Staff Audit Practice Alert 7 on Litigation
Separately, as highlighted by Broc Romanek in 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.

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.

Monday, January 17, 2011

Top 10 FEI Blog Posts - 2010

Last year we began publishing a list of the Top 10 posts of the year in the FEI blog, based on pageviews. Continuing the tradition, here are the Top 10 posts for 2010.

NOTE: Where posts in the top 10 of 2010 (based on page hits in 2010) were originally posted in 2009, or where some of the top posts were authored by guest bloggers, we have listed those posts in order (from highest to lowest among the top 10), but not labeled those posts with a number, to differentiate from our original posts in 2010.

Top 10 Posts in FEI Blog, 2010 (based on page hits in 2010)

FASB Issues FAS 166, 167 Amending FAS 140, FIN 46R on Securitizations, SPEs (originally posted June 12, 2009; the biggest page hit winner of 2010 in the FEI blog, as the new standards became effective).

Auditors In Love (Pre-Valentines Day Humor in the form of a YouTube music video filmed with avatars in Second Life, starring other leading bloggers, produced by the Maryland Association of CPAs (MACPA). The video has received over 10,000 hits on YouTube to date; the chorus talks about whether the person intending to get married will get 'sale treatment' (married) or is only being 'borrowed,' which relates to changes effected through FAS 166 and FAS 167, amending FAS 140 and FIN 46R, the number one page-hit getter of 2010 noted above.

1. FASB Considering 'Big Bang' vs. Staggered Effective Dates

The Problem With A Non-CPA CFO (guest post by Francine McKenna, my BBF (best blogger friend) and managing editor of the blog: Re: The Auditors)

Top 10 Posts of 2009 (aggregation)

Sarbanes-Oxley Exemption Passes Congressional Committee (originally posted Nov. 2009; continued to receive great deal of page hits in 2010, making the top 10 list in 2010)

Subsequent Events Proposal Issued by FASB; Final ASUs Incorp. FAS 166, 167 Into Codification (originally posted 12/31/09, one of the biggest page hits of 2010)

2. SEC Speaks: We Listen (selected highlights from Day 1 of PLI's SEC Speaks Conference)

IASB Releases IFRS 9: Financial Instruments (originally posted Nov. 2009, one of biggest page hits of 2010)

3. FASB Amends Subsequent Events; Update on Financial Instruments

4. FASB Goes Gaga For Input On Upcoming Standards For Public, Private Co's

H.R. 4173, Wall Street Reform and Consumer Protection Act, Passes House; Summary of Accounting and Audit-Related Provisions (originally posted 12-12-09, continued to receive large number of page hits in 2010).

5. SEC Issues 'Dear CFO' Letter Requesting Info on Repo's.

6. Supreme Court Decides PCAOB Violates Separation of Powers, But Recommends a Cure

7. SEC Charges Goldman Sachs With Fraud; Was Matt Taibbi Right About the 'Giant Vampire Squid'?

8. SEC 'Dear CFO' Letter on Mortgage, Foreclosure, Loss Accrual (Including Litigation Risk) Not Limited to Financial Institutions

9. Financial Statement Presentation Project 'Pauses'

10. FASB, IASB Release Revenue Recognition ED

More About The FEI Financial Reporting Blog
Any other personal favorites of our readers not on this list, from among our 2010 posts, which you found helpful in keeping current or understanding complex developments in the world of accounting and financial reporting? Feel free to post a comment on our blog. The FEI blog is also available on Twitter at You can sign up to receive blog updates by email by sending an email to and write in Subject line: Sign Up. As noted in the Disclaimer posted on the right side of our blog, the FEI blog does not necessarily represent the views of FEI, its members, staff or board. Visit FEI's website at

If you or your/company would like to be considered as an advertiser for the FEI blog, to potentially have your ad appear on our blog and/or in a hyperlinked/banner ad in our transmittal emails to our blog subscribers, please contact Bonnie Rhodes, Director, Partner Relations and Development, FEI at brhodes[AT]financialexecutives[DOT]org .

Friday, January 14, 2011

FASB, PCAOB Board Members Named

Earlier today, the Financial Accounting Foundation announced that Daryl E. Buck, currently CFO of Reasor’s Holding Company, Inc. and R. Harold Schroeder, currently a partner in Carlson Capital have been appointed members of the Financial Accounting Standards Board. As noted in the FAF's press release, the appointments return the size of the FASB board to seven.

The news follows by a week the announcement by the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board of the appointment of three new board members of the PCAOB: Jim Doty (a partner at law firm Baker & Botts, and a former SEC General Counsel, appointed as Chairman of the PCAOB), along with new PCAOB board members Jay Hanson, a partner at audit firm McGladrey and Pullen, and Lew Ferguson, a partner at law firm Gibson, Dunn and Crutcher (and a former General Counsel of the PCAOB). See the SEC’s press release, and the PCAOB’s press release.

Regarding the new board appointments to the FASB and PCAOB, FEI President and CEO Marie N. Hollein stated,

I congratulate the new FASB and PCAOB board members, in particular FEI member Daryl Buck, chair of FEI’s Committee on Private Company Standards, (CPC-S), and a member of the FEI board, for his appointment to the FASB board.

In addition, Buck has also served as on the Blue Ribbon Panel on Standard Setting for Private Companies co-sponsored by the AICPA, FAF and NASBA, and formerly served as a member of the Private Company Financial Reporting Committee (PCFRC) co-sponsored by the FAF and AICPA.

Thursday, January 13, 2011

FASB, IASB To Propose Joint Approach For Accounting For Credit Losses

Earlier today, FASB and the IASB announced they plan to revamp their previously differing proposals on accounting for credit losses, and publish for public comment a joint proposed approach later this month.

Differences between the board's earlier proposals proved controversial, in part due to the desire to move toward convergence long-term. Here is the comment letter filed by FEI's Committee on Corporate Reporting on the IASB's earlier proposal, and CCR's comment letter on FASB's earlier proposal on financial instruments, including credit impairment.

As noted in today's IASB-FASB joint press release:

The [IASB and FASB] boards will propose an impairment model based on accounting for expected losses. This approach provides a more forward looking approach to accounting for credit losses. It builds on the work of the Expert Advisory Panel, an external group comprising risk management experts that was set up to consider how to address the operational difficulties of applying an expected loss model.

The proposals respond to requests by the Group of 20 (G20) Leaders, the Financial Stability Board, the Basel Committee on Banking Supervision and others for the IASB and the FASB to reach a common solution for impairment accounting.

COSO Releases Additional Papers On ERM

Earlier this week, the Committee of Sponsoring Organizations of the Treadway Commission (COSO), a private-sector organization sponsored by five professional associations (the AAA, AICPA, FEI, IIA and IMA), dedicated to supporting guidance and thought papers on fraud prevention and detection, internal control and risk management, published two additional thought papers on Enterprise Risk Management:

Highlights can be found in COSO's Jan. 11, 2011 press release.

The papers released this week follow the release in December, 2010 of two other thought papers relating to ERM:

Highlights of the December survey-based reports can be found in this COSO press release.

Jan. 31 Deadline for Response to COSO Internal Control Survey
As a reminder, Jan. 31 is the deadline for responses to COSO's online survey on its internal control framework. Survey responses will be used by COSO to help inform their current project to update COSO's landmark 1992 Internal Control - Integrated Framework.

Wednesday, January 5, 2011

FEI CEO: Top Challenges For 2011

Financial Executives International's President and CEO Marie N. Hollein lists the top challenges for senior-level financial executives for this year. Read the list here. The list appears in the January/February 2011 issue of Financial Executive in the Financial Reporting Column.

In brief, the list (in no particular order), detailed further in the article, includes the following issues:
  • Economic Recovery and the U.S. Fiscal Outlook
  • Health Care Law
  • Financial Regulatory Reform
  • Global Convergence of U.S GAAP and IFRS
  • Private Company Accounting System Reform
  • Uncertain Tax Positions (UTP)
  • Business Taxation
  • Pending International Business Issues
  • Climate Change

COSO Survey Seeks Input By Jan. 31 On Update Of Internal Control Framework

Yesterday, the Committee of Sponsoring Organizations of the Treadway Commission (COSO), launched an online survey to gather stakeholder feedback from financial statement preparers, auditors, investors, board members, academics and others, as part of its project to update COSO's original (1992) Internal Control-Integrated Framework. The update is expected to provide more comprehensive and relevant conceptual guidance and practical examples, with a target publication date of 2012. Read COSO's press release which links to COSO's online survey. The survey deadline is January 31.

The project to update COSO's 1992 internal control-integrated framework is being led by PwC, under the guidance of a COSO project task force consisting of the COSO board members from COSO's 5 sponsoring organizations (FEI, AICPA, AAA, IIA and IMA). FEI President and CEO Marie Hollein represents FEI on the COSO board.

Additional experts from each of COSO's 5 sponsoring organizations serve on the COSO project task force, including FEI member representative Raymond Purcell, Director of Financial Controls, Pfizer.