Global Accounting Standards?

Businessweek reports: "The uproar over fair value accounting practices, which some critics have blamed for the depths of the global financial crisis, threatens to sink a long-sought move by countries around the world toward a single set of international financial reporting standards (IFRS). The U.S. Financial Accounting Standards Board (FASB) has been working with London's International Accounting Standards Board (IASB) since 2002 toward what accounting professionals call convergence. The Securities & Exchange Commission (SEC) is expected to announce its road map for conversion sometime this month, which will probably include early adoption in 2010 for about 110 of the largest U.S. companies with business operations throughout the world."

"With finance ministers from the 20 wealthiest nations set to meet in Washington this weekend to discuss ways to reform the global financial system, the time seems ripe for a move to harmonize accounting standards (BusinessWeek.com, 11/8/08) across borders, making it easier for investors to compare companies operating in different geographic regions. The major stumbling blocks, critics say, include the IASB's lack of independent funding and its tendency to cave into political pressure."

"In October, the IASB bowed to pressure from the European regulators and relaxed its stance on fair value accounting by allowing companies to transfer nonderivative financial assets out of classifications that are reported at fair value into categories that use amortized cost to value assets. IASB rationalized the amendment by saying it would create a level playing field with an existing FASB standard called SFAS 115, which permits companies "in rare circumstances" to make the very same transfer. The IASB argued the current financial crisis essentially qualifies as rare circumstances because of the illiquid marketplace for financial products."

AICPA Backs FASB on Mark-to-Market Study

WebCPA reports: "The American Institute of CPAs has written to the Securities and Exchange Commission urging it to allow the Financial Accounting Standards Board to continue to set standards for mark-to-market accounting."

"The SEC is conducting a study on mark-to-market and fair value accounting mandated by the financial rescue bill, which it plans to complete by Jan. 2. In a letter to SEC deputy chief accountant James Kroeker, AICPA president and CEO Barry Melancon said that FASB should remain the organization to address the study's recommendations. The American Bankers Association has asked the SEC to override FASB guidance on fair value accounting and to create an accounting oversight board that could overrule FASB (see Bankers Call for New Accounting Oversight Board)."

"Melancon defended FASB's role in setting standards. "We believe that the FASB, with appropriate oversight by the SEC given its investor protection mandate, is best able to decide what is the most appropriate financial reporting for the capital markets," he wrote."

FASB Considers QSPE Disclosures

Market Media reports: "Companies that either transfer assets off their balance sheets or have significant variable interest in qualified special purpose entities may soon face increased disclosure requirements under U.S. GAAP."

"A proposed staff position under Financial Accounting Standards Board consideration this week requires new disclosures to be provided both by sponsors with variable interest in a variable interest entity and enterprises that hold a significant variable interest in a QSPE but were not the transferor of the asset."

"FASB decided in April to amend FAS 140 and Interpretation 46(R) to remove QSPEs from accepted accounting. The comment deadline for the amendments is Nov. 14."

U.S. to Revamp Credit Rules,

The Wall Street Journal reports, "The nation's top economic policy makers plan to release today their broadest blueprint yet for avoiding a recurrence of the credit crunch now threatening the economy. "

"Their recommendations extend to nearly every niche in the credit markets -- from mortgage brokers to the Wall Street firms that package home loans into securities, to the credit-rating firms that assess the risk of those securities, to the regulators who police the system."

"Amid the housing market's deepening slump, mounting defaults by cash-strapped homeowners and an upswing in foreclosures have made investors wary of mortgage-linked securities and have made those securities increasingly difficult to value and trade. That's led to turmoil in global financial markets."

"In some areas, regulators intend to become more assertive immediately. The recommendations call on bank supervisors to give much more scrutiny to the due diligence, risk management, and risk awareness policies at banks. Regulators will be pushed to work more closely with the Financial Accounting Standards Board to revisit accounting issues and make sure that exposures at financial companies are properly measured 'across business lines.'"

FASB to propose increased disclosure of pension plan asset classes and value assumptions

CCH reports, "The Financial Accounting Standards Board (FASB) has instructed its staff to issue an FASB Staff Position (FSP) paper that proposes to improve disclosures about postretirement benefit plan assets now required by Financial Accounting Statement (FAS) No. 132(R), Employers’ Disclosures about Pensions and Other Postretirement Benefits."

"The FASB proposal, discussed at its February 13, 2008 meeting, would make the following three changes in current rules:"

"First, the proposal would require the disclosure of more asset categories than currently are required. A FASB staff review of 2006 annual reports of many companies in the Standard & Poor’s 500 found that most companies primarily disclose the categories of equity, debt, real estate, and 'other.'"

"Second, the proposal would require the disclosure of assumptions used to determine the fair value of plan assets. The FASB notes that FAS No. 132(R) already requires the disclosure of assumptions used to determine plan liabilities. "

"Finally, the proposal would reinstate an earlier requirement that a nonpublic entity 'disclose the annual amount of net periodic benefit cost recognized.'"

Haliburton Accounting Scandal Exposed in Iraq

AICPA Encourage CPA State Mobility

WebCPA reports, "The American Institute of CPAs has ramped up its mobility efforts to allow CPAs to practice in other states, with mobility bills enacted now in 12 states and legislation pending in 22 other states."

"Seven states (Illinois, Indiana, Louisiana, Maine, Rhode Island, Tennessee and Texas) approved mobility legislation in 2007, and New Mexico enacted it this year. Meanwhile, Washington State, Idaho and Utah have passed such legislation and are awaiting the signatures of their governors."

"California may pass mobility legislation in 2008 or 2009, and Florida and the Carolinas in 2009. Legislation is also pending in many other states, including Alabama, Arizona, Colorado, Connecticut, Delaware, Georgia, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey Oklahoma, Pennsylvania and West Virginia."