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SEC Update and Advanced GAAP Hot Topics for Issuers

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Introduction

In the rapidly changing environment, it can become challenging to be up to date on hot topics in the accounting industry. Topics such as the convergence of United Stated Generally Accepted Accounting Principles (“US GAAP”) and International Financial Reporting Standards (“IFRS”); Audit Quality and Audit Committee Involvement; Security Exchange Commission (“SEC”) filing matters; Application of Accounting Standards; and Foreign Operations, may be topics of importance for you and your company, as they are certainly hot topics at the SEC and for public company accountants. SEC-Update-Advanced-GAAP

In our presentation, SEC Update and Advanced GAAP Hot Topics for Issuers, we will inform you of the latest hot topics impacting public companes.

For more information, contact:  Peter Bible, CPA, CFF, Partner, EisnerAmper AuditMichael Breit, CPA, CFE, Partner, EisnerAmper Audit 

  • Convergence of US GAAP and IFRS:
    • " The Staff will need a few additional months to produce a final report on an approach to IFRS incorporation"
    • " An indefinite joint convergence project is not a viable long-term solution"
    • " If there is no Global Standard, consistency will always remain an illusion"
     
  • Use of third-party pricing services:
    • "Management has responsibilities for determining fair value, even if they use third-party pricing services"
    • "Preparers and auditors need to fully understand the process, inputs, and assumptions that pricing services use"
     
  • Audit Quality and Audit Committee Involvement:
    • "Audit Committees are encouraged to look for fresh ways to improve their oversight on behalf of Shareholders"
    • " More can be done to reinforce auditor independence, objectivity and professional skepticism"
    • "The PCAOB's concept release on the auditor's report seeks ways to enhance auditor communications"
     
  • Providing transparent disclosures:
    • SEC Review Process: "Effective January 2012 comment letters and responses will be released no earlier than 20 business days after review"
    • Disclosure Overload: "The Staff does not expect disclosure of immaterial matters"
    • Non-GAAP financial measures: "The Staff will object to misleading non-GAAP financial measures in SEC filings and elsewhere"
      • "Just knock it off"
       
     
  • SEC filing matters:
    • "Pro forma adjustments should not estimate the impact of renegotiated contracts or proposed workforce reductions"
    • "Pre-acquisition goodwill impairments are not appropriate pro forma adjustments
     
  • Application of accounting standards:
    • Loss Contingencies: " Sufficient information must be provided to allow investors to make an informed evaluation of the risk of loss"
    • MD&A: "Pension Plans were hit with a double whammy of low interest rates coupled with a decline in vale of plan assets"
     
  • Application of accounting standards:
    • Leases: " A material adverse change clause can result in capital lease classification"
    • Errors and restatements: "Changing presentation to correct an error is not a reclassification"
      • The staff defined a reclassification as : "A change from an acceptable presentation under US GAAP to another acceptable presentation under US GAAP"
       
    • Goodwill impairment- impact of optional new "Step Zero" : The Staff does not expect the implementation of ASU No 2011-8 to create material changes in the outcomes of goodwill impairment tests
      • No changes to MD&A early warning disclosures
       
     
  • Foreign Operations:
    • "Registrants should ensure that those responsible for preparing US GAAP financial statements are fully qualified"
     
    • "Expanded disclosures about involvement with foreign VIEs may be necessary"
    • " The Staff expects consistency in disclosures of foreign currency fluctuations from period to period"
    • "Some countries have low income tax rates that may not be sustainable because of fiscal imbalances; disclosures may be necessary"
  • Broker-dealer audits:
    • "Broker-dealers and their auditors should continue to look to the existing requirements of Rule 17a-5 "
     
    • "SEC's proposed amendments have not been finalized"
    • " Auditors of non-issuer Broker-dealers are not required to follow the SEC independence rules implemented in response to SOX: partner rotation, preapproval of services, audit partner compensation, etc."
  • Other Matters:
    • "The Staff expects expanded disclosures about exposures to debt instruments of Greece, Ireland, Italy, Portugal, Spain or any other at-risk jurisdiction, including indirect exposures, regardless of whether the 1% threshold for banks is met
    • "A new SEC Advisory Committee is expected to provide recommendations that address issues of concern to small and emerging companies "
     
  • Other Matters:
      • MD&A:
        • No boiler-plate language
        • Key Liquidity Indicators
        • Use of an Overview Section – "How did we do"
        • Early warning disclosures
        • Avoid redundancy with financial statements
         
      • FASB/IASB Convergence Projects
        • Revenue Recognition
        • Leases
        • Financial Instruments
        • Insurance
         
      • FASB/IASB Projects Completed in 2011
        • Other Comprehensive Income
        • Fair Value Measurements
          

Videotape Discussion

  • Chairman James Dotty
  • Jim Kroeker, Chief Accountant of the SEC
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