PwC FlashLine 2008-43 (October 23, 2008)

PricewaterhouseCoopers - 10.23.08

PwC's weekly accounting and auditing alert. This week's topics include:

• PwC DataLine Highlights New Disclosure Requirements for Credit Derivatives and Certain Guarantees
• FASB and IASB Announce Further Details on Global Approach to Credit Crisis
• EITF Agenda Committee Adds Two Items to EITF Agenda
• PCAOB Proposes Seven New Risk Assessment Standards

PCAOB Proposes Seven New Risk Assessment Standards

The Public Company Accounting Oversight Board (PCAOB) has decided to propose seven new auditing standards related to the auditor's assessment of and responses to risk. The proposed standards would realign the existing subject matter of several PCAOB interim standards into a topical framework that is common with the recently-clarified risk assessment standards of the International Auditing and Assurance Standards Board (IAASB).

EITF Agenda Committee Adds Two Items to EITF Agenda

The Emerging Issues Task Force (EITF) Agenda Committee met on October 10 and discussed two potential new issues:

• Accounting for Share Lending Arrangements in Contemplation of Convertible Debt Issuances and the Related Determination of Earnings per Share
• Selected Statement 160 Implementation Questions

FASB and IASB Announce Further Details on Global Approach to Credit Crisis

The FASB and the International Accounting Standards Board (IASB) have announced further details about their joint effort to deal with reporting issues arising from the global financial crisis.

PwC DataLine Highlights New Disclosure Requirements for Credit Derivatives and Certain Guarantees

In September, the Financial Accounting Standards Board (FASB) issued a FASB Staff Position (FSP No. FAS 133-1 and FIN 45-4) that (1) introduces new disclosure requirements for credit derivatives and certain guarantees and (2) clarifies the effective date of FASB Statement No 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161). The new disclosure requirements are aimed at providing financial-statement users with similar disclosures for financial instruments with similar risks and rewards relating to credit risk, regardless of their legal form as a credit derivative or guarantee arrangement.

Amendment to IAS 39, 'Financial instruments: Recognition and measurement'

On 13 October 2008, the IASB agreed to amend IAS 39, 'Financial instruments: Recognition and measurement', to allow the reclassification of certain financial assets previously classified as 'held for trading' or 'available for sale' to another category under limited circumstances.

Breaking News: FASB Issues Clarifying Guidance on Determining Fair Value of Financial Assets in Markets That Are Not Active

The Financial Accounting Standards Board (FASB) issued guidance clarifying how FASB Statement No. 157, Fair Value Measurements (FAS 157), should be applied when valuing securities in markets that are not active. The guidance, released as a FASB Staff Position (FSP), provides an illustrative example that applies the objectives and framework of FAS 157 to determine the fair value of a financial asset in a market that is not active. It also reaffirms the notion of fair value as an exit price as of the measurement date.

SEC Office of the Chief Accountant and FASB Staff Clarifications on Fair Value Accounting

Washington, D.C., Sept. 30, 2008 — The current environment has made questions surrounding the determination of fair value particularly challenging for preparers, auditors, and users of financial information. The SEC's Office of the Chief Accountant and the staff of the FASB have been engaged in extensive consultations with participants in the capital markets, including investors, preparers, and auditors, on the application of fair value measurements in the current market environment.

Alert: SEC Registrants May Need to Update Their Shelf Registration Statements by December 2008

In 2005, the SEC revised its shelf registration rules to provide an "expiration date" for many shelf registration statements*. A shelf registration statement that is subject to expiration may not be used to offer securities more than three years after the registration statement's initial effective date (subject to a limited grace period). The SEC's "expiration date" rules became effective December 1, 2005. For shelf registration statements that became effective before December 1, 2005, the expiration date is December 1, 2008.

The three-year expiration date rule affects the following types of securities:

• Securities registered on an automatic shelf registration statement: Any automatic shelf registration statement filed by a well-known seasoned issuer, for any type of offering, is subject to the three-year limitation.
• Securities offered on a delayed or continuous basis: These offerings include universal equity and debt registration statements and are generally registered on Form S-3 or Form F-3 (Rule 415(a)(1)(ix) or (x) of Regulation C).
• Mortgage-related securities: These include securities such as mortgage-backed debt and mortgage participation or pass through certificates (Rule 415(a)(1)(vii) of Regulation C).
  

*Many SEC registrants maintain effective "shelf" registration statements (usually filed on Form S-3 or Form F-3). These registration statements are referred to as "shelf" registration statements because the process of registering securities (including SEC staff review) takes place on the front-end of the process. When the decision is made to offer the securities for sale, they are "taken off the shelf" with no further review/involvement by the SEC staff.

Note: The purpose of this tip is to raise awareness of the potential expiration of many shelf registration statements in order to avoid the possibility that access to the capital markets may be interrupted. Registrants should consult with their securities counsel for specific information about the SEC's three-year shelf expiration date rules as well as the potential availability of a "grace period."

Other-Than-Temporary Impairment (OTTI)

Many debt and equity securities that are accounted for in accordance with FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities (FAS 115), have experienced significant and extended declines in fair value due to current economic conditions. Companies should consider whether these declines represent an "other-than-temporary impairment" (OTTI). If they do represent an OTTI, companies will have to recognize any unrealized OTTI losses stemming from such debt and equity securities in earnings.

Breaking News: FASB Delays Issuance of a Standard on Disclosure of Certain Loss Contingencies

Source: PricewaterhouseCoopers Author name: PwC assurance services
Published: 09/24/2008

Summary:Today, the Financial Accounting Standards Board announced its intentions to re-deliberate the proposal that would require new disclosures of certain loss contingencies intended to replace the loss contingency disclosures required by FASB Statement No. 5, Accounting for Contingencies (FAS 5), and FASB Statement No. 141(R), Business Combinations (FAS 141(R)). These actions will delay the issuance of any new standard until sometime in 2009. The FASB's decision is an acknowledgement of the concerns expressed about its proposal and the time it will take to further study and deliberate the issues raised by constituents during the comment period.

PwC DataLine 2008-24: Third Quarter Considerations Given Current Market Conditions

Summary:
Given current market conditions and recent economic events, the third quarter is likely to be particularly challenging from an accounting and reporting perspective for many companies. Although the Financial Services sectors have been especially impacted, all sectors are beginning to feel the effects of the current market conditions. Accordingly, it is important for all companies to consider the range of potential impacts that current market conditions may have on third quarter results and disclosures. This DataLine discusses a number of the issues that we believe should be top-of-mind as engagement teams and management address these challenges.

PwC DataLine 2008-23: Third Quarter Considerations for Investors in Auction Rate Securities as a result of Broker-Dealer Settlements

Summary:
Many of our clients hold investments in auction rate securities ("ARS") that may have been impacted by illiquidity in the ARS marketplace. Certain investors in ARS and regulatory agencies have alleged that financial institutions that sold ARS ("broker-dealers") may have violated laws relating to proper sales and marketing practices when advising their clients to invest in ARS. Recently, a number of these broker-dealers entered into settlement agreements ("settlements") with the Securities and Exchange Commission ("SEC") and various state regulatory agencies relating to their ARS activity. This DataLine addresses the accounting considerations for investors related to certain aspects of these settlement agreements.

Breaking News: SEC Proposes Roadmap for Potential Use of IFRS by U.S. Issuers

오늘 미국 증권 거래 위원회 (SEC)는 (1) 미국내 상장사들에 대해 국제재무보고기준 (IFRS)의 의무적용을 제시하는 로드맵과 (2) 특정 자격이 있는 미국내 상장사들에게 IFRS의 선택적 조기 적용을 허용하는 규칙을 발표/의견수렴을 하는 안을 만장일치로 통과시켰습니다.

IASB completes the second phase of the business combinations project

오늘 국제회계기준위원회 (IASB)는 IFRS 3R과 IAS 27R를 공표했습니다. 이 두 국제회계기준서는 2007년 12월 4일, 미국 재무회계기준위원회 (FASB)가 공표한 FAS 141(R)과 FAS 160과 작은 차이를 제외하고 회계기준 원칙이 동일하다 하겠습니다. 위의 회계기준서들은 FASB와 IASB가 전 세계의 회계기준을 하나로 통합하기 위해 공동으로 진행하고 있는 순차적 회계기준 통합 프라젝트의 첫번째 산물로서 그 의미가 크며 재무보고에 있어서 더 많은 공정가치 (fair value)의 사용을 의무화하는 노력의 연장이라 할 수 있습니다.

Possible Adoption of IFRS in the United States - 한국어 해설

IFRSs (International Financial Reporting Standards)는 현재 유럽연합 (EU)을 비롯, 약 100여개 국가의 12,000개 이상의 기업에서 사용하고 있는 원칙중심 (principle base)의 국제회계기준입니다. 요즘 미국에서도 기업, 금융정책당국, 투자자 및 감사인들 사이에 IFRS를 도입에 대한 관심이 높아지고 있습니다. 그 예로, 미국증권거래위원회(SEC)는2007년 7월, 다음의 두가지 중대한 공표를 했습니다.