FASB Reaffirms Codification To Become Official GAAP July 1; Update On Going Concern

At its board meeting earlier today, FASB reaffirmed that its Accounting Standards Codification will become the single source of official U.S. GAAP on July 1. In practical terms, the board also agreed that the effective date for the amendment to the GAAP Hierarchy to effect this change, anticipated to be issued in FAS 168 – the final FASB standard under the old numbering system – will be effective for financial statements for interim or annual periods ending on or after September 15, 2009.

FASB Chairman Robert Herz described this as the last standard that will be issued “BC” or Before the Codification. (Note: Presumably FAS 166 and FAS 167 will be issued as the upcoming amendments to FAS 140 and FIN 46R.) Moments ago, FASB issued a press release confirming today's decision on the Codification.

Also at today’s board meeting, FASB agreed to consider certain changes to its proposed standard on Going Concern, and they will likely re-expose the proposed standard for public comment. The staff noted that some constituents had suggested providing a more prescriptive or quantifiable means of determining what ‘substantial doubt’ (as to remaining a going concern) meant, and staff proposed changing the definition to ‘more than remote.’ This met with some opposition from some of the board members, who thought that changing the definition to more than remote, on top of changing the time horizon from a 12 month bright line to something more qualitative, could potentially result in 90% of companies reporting a going concern.

FASB Technical Director Russ Golden summed up where the board and staff are at on their redeliberation of the proposed standard on Going Concern as follows: " I hear you like a low, more-than-remote threshold for additional disclosures... we will look at [SOP] 94-6 [Disclosure of Significant Risks and Uncertainties], come back with [proposed] improvements - low threshold for discloures, high [threshhold] for liquidation basis, time frame to consider is also important... [i.e. the wording with respect to what to consider that may occur after 12 months]." There was some discussion about whether some of these issues are in the realm of PCAOB auditor guidance vs. FASB guidance; FASB staff said they have been dialoguing with PCAOB staff and will continue to do so.

With more changes being made to the original proposed standard on Going Concern, Board member Leslie Seidman noted, "We are almost certainly going to reexpose" the proposed standard for public comment.

In other matters discussed by the board today, FASB decided to make certain changes to proposed guidance relating to embedded derivatives (Proposed DIG Issue C-22) . FASB staff anticipate releasing the revised proposal in July for a 45 day comment period. Further details on this issue are on pdf pages 11-19 of today’s board handout.

Results of FASB meetings are posted in Summary of Board Decisions in FASB's News Center; additional information will be posted in a summary on FEI's website. For the latest news on FASB, tune into FEI’s June 9 webcast, “What’s New With FASB?” featuring FASB Technical Director Russ Golden, Deloitte Partner Bob Uhl, E&Y Partner Carlo Pippolo, and moderator Steve Burkholder of BNA. Free for FEI members, $50 for nonmembers. Register here.

FEI Hall of Fame Nom’s Due June 13; CFIT To Ring Opening Bell June 5

Nominations are open until June 13 for Financial Executives International’s Hall of Fame. The FEI Hall of Fame:

• recognizes individuals who epitomize the performance, leadership and integrity of the most exemplary financial executives throughout their careers, and in doing so, have made significant contributions to the betterment of their respective organizations and to the finance profession as a whole.
• celebrates the history and legacy of the finance profession, with a focus on enhancing the future direction of finance
• benefits the work of the Financial Executives Research Foundation (FERF). (Proceeds from the Hall of Fame Gala, Nov. 16, 2009 in NYC, benefit FERF.)

FEI membership is not required to nominate someone, or to be nominated.

Visit the FEI Hall of Fame website at www.feihall.org for information about the nomination process, past inductees, sponsorship opportunities, FAQ’s, and the Hall of Fame Gala.

Further information is available from Cheryl Graziano, VP FERF Research and Operations, at cgraziano@financialexecutives.org, 973.765.1064

FEI CFIT To Ring Opening Bell at NYSE-Euronext
In other news, on Friday, June 5, FEI’s Committee on Finance & Information Technology (CFIT) will ring the Opening Bell at the NYSE-Euronext.

The ceremony starts at 9:30am and can be viewed live at this link; the archived event will be available after approximately 30 minutes.

Questions about FEI CFIT can be directed to Bill Sinnett, Director of Research, FERF at bsinnett@financialexecutives.org, 973-765-1004.

SEC Posts FAQs, More In Advance of Its June 10 XBRL Seminar

On Friday, May 29, staff in the SEC's Office of Interactive Disclosure posted a set of Frequently Asked Questions Regarding the Interactive Data Program. The FAQs relate to SEC's Final rule published Jan. 30, 2009, approved at the SEC's Dec. 18, 2008 open commission meeting, which will require public companies to begin filing financial statements and certain other data in an interactive format - specifically eXtensible Business Reporting Language or XBRL, beginning this year (phased in over a three year period based on company size, described further below).

Also on May 29, staff in SEC's Division of Corporation Finance posted some new and updated Compliance and Disclosure Interpretations or C&DI's - some relating to XBRL, and some relating to other areas including Executive Compensation and more. The C&DI's were described by Broc Romanek in TheCorporateCounsel.net blog earlier today, and we have listed the links further below.

SEC Will Hold Public Seminar June 10 on XBRL
Publication of the XBRL FAQs and C&DI's comes in advance of the SEC's upcoming seminar on interactive data, slated for June 10. As described in SEC's May 18 press release, the seminar is being conducted to help companies and preparers comply with the new XBRL requirements, and will be held at the SEC's Washington, DC headquarters. The seminar will be open to the public; it will also be webcast. As noted in the May 18 press release, the SEC also invites questions to be submitted in advance of the seminar -see the press release for details.

To recap, here are the effective date requirements in the final rule on XBRL, as described on pg. 42 of the SEC's Final rule:

• Domestic and foreign large accelerated filers using U.S. GAAP with worldwide public common equity float above $5 Billion as of the end of the second fiscal quarter of their most recently completed fiscal year : Quarterly report on Form 10-Q or annual report on Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2009.
• All Other Large Accelerated Filers Using U.S. GAAP: Quarterly report on Form 10-Q or annual report on Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2010.
• All Remaining Filers Using U.S. GAAP: Quarterly report on Form 10-Q or annual report on Form 20-F or Form 40-F containing financial statements for a fiscal period ending on or after June 15, 2011.
• Foreign Private Issuers with financial statements prepared in accordance with IFRS as issued by the IASB: Annual reports on Form 20-F or Form 40-F for fiscal periods ending on or after June 15, 2011.

Here are links to the XBRL FAQs and new and updated C&DI's on XBRL and other matters posted on May 29:
FAQs: Frequently Asked Questions Regarding the Interactive Data Program
C&DI's : Interactive Data, (XBRL) May 29, 2009; Regulation S-T, (General Rules and Regulations for Electronic Filings) May 29, 2009
Regulation S-K (UPDATED 05/29/09) : Question 119.18, Question 119.19, Question 120.05,
Question 120.06 , Question 120.07, Question 122.03, Interp. 217.14, Interp. 246.15
Exchange Act Form 8-K (UPDATED 05/29/09): Question 117.16, Question 119.01

SEC, In Settlement With Caseware, Agrees Not to Use "IDEA"
In other news, Michael Cohn of WebCPA broke the news last week that the SEC will not use the name IDEA for its interactive data retrieval program. (As background, as noted in our 8.21.08 post, the SEC announced last year its plan for a new interactive data retrieval system - which it had named IDEA - to eventually replace EDGAR. The SEC was subsequently sued for trademark infringement in March , 2009 by a Canadian company called Caseware International.)

In an article published by WebCPA on May 27, entitled SEC Settles IDEA Trademark Suit with CaseWare, Cohn wrote: "The Securities and Exchange Commission has settled a trademark dispute with CaseWare International over the use of the IDEA name for the SEC’s interactive financial statement repository... As part of the settlement, the SEC has agreed to permanently discontinue its use of the mark IDEA in any form as a trademark or other source identifier on or in connection with SEC software and related goods and services. The settlement also provides that the SEC acknowledges that CaseWare International Inc. is the owner of the trademark IDEA. In return, CaseWare has voluntarily dismissed its civil suit against the SEC." See also Caseware's May 27 press release on the settlement.

Personally, I used IDEA software in a case studies in forensic accounting class I took at NYU's school of continuing ed a few years ago. (The part I remember the most is that the case study had a fictional CFO named Bob Cuthbert, which I found interesting given Caseware's real-life COO is Bob Cuthbertson. I don't know if they are still using the IDEA program in that class.)

Broc Romanek writes in TheCorporateCounsel.net blog today (under subheading: IDEA is Dead! Long Live EDGAR!) that: "In my opinion, this is a blessing in disguise for the SEC since Edgar is well-branded with investors and I thought it was a huge mistake to change the name last year. It looks like the SEC already has purged any vestiages of "IDEA" from its website. I sure hope they just stick with "Edgar" and not pick another new name. Long live Edgar!" He cites to a National Law Journal article by Sheri Qualters published last week which, like the WebCPA article noted above, quotes SEC spokesman Eric Hotmire saying: "Changing the name of the disclosure database will not affect the interactive data rules implementation this spring or summer." Hotmire added, according to WebCPA: "Any plans to change the name of this disclosure database will be announced in the future.”