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The Financial Accounting Standards Board (FASB) in December issued Statement no. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion no. 29. The revised guidance is based on the principle that exchanges of nonmonetary assets should be measured according to the fair value of such assets. The statement replaces the narrow exception for nonmonetary exchanges of “similar productive assets” with a broader one for exchanges of “nonmonetary assets that do not have commercial substance.” The guidance, whose provisions will be applied prospectively, is effective for nonmonetary asset exchanges that take place in fiscal periods beginning after June 15, 2005, although application is permitted for such transactions occurring in periods beginning any time after the date of issuance.

GASB issued Statement no. 46, Net Assets Restricted by Enabling Legislation, an amendment of GASB Statement no. 34 (www.gasb.org/news/nr123004A.html). The subject legislation authorizes the raising of new resources but imposes limits on how they may be used. The guidance, which is effective for periods beginning after June 15, 2005, clarifies that external parties—for example, citizens or the judiciary—can legally enforce such laws in order to compel a government to use resources only as stipulated in their enabling legislation.

GASB also issued a technical bulletin, Recognition of Pension and Other Postemployment Benefit [OPEB] Expenditures/Expense and Liabilities by Cost-Sharing Employer (www.gasb.org/news/nr123004B.html), that clarifies the application of requirements regarding accounting for employers’ contractually required contributions to cost-sharing pension and OPEB plans issued in Statement no. 27, Accounting for Pensions by State and Local Governmental Employers, and Statement no. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, respectively. The bulletin addresses questions raised and encourages cost-sharing employers to apply those statements’ recognition requirements. Both publications can be ordered from the GASB order department at 800-748-0659 or online at http://store.yahoo.com/gasbpubs/publications.html.

The Federal Accounting Standards Advisory Board (FASAB) issued two statements of federal financial accounting standards (SFFAS) (www.fasab.gov/standards.html). SFFAS 27, Identifying and Reporting Earmarked Funds, clarifies the term trust fund, which, in the federal budget, pertains to nonfiduciary assets—mostly government-owned assets intended to fully or partially finance specific federal programs. The guidance in SFFAS 27 is effective for periods beginning after September 30, 2005. SFFAS 28, Deferral of the Effective Date of Reclassification of the Statement of Social Insurance, defers for one year the effective dates of SFFAS 25, Reclassification of Stewardship Responsibilities and Eliminating the Current Services Assessment, and SFFAS 26, Presentation of Significant Assumptions for the Statement of Social Insurance: Amending SFFAS 25.

The International Accounting Standards Board (IASB) amended two international accounting standards (IASs) (www.iasb.org/news). One amendment, to IAS 19, Employee Benefits, allows entities to fully recognize actuarial gains and losses (that is, unexpected changes in a benefit plan’s value) in the period in which they occur, outside profit or loss, in a statement of changes in equity titled “statement of recognized income and expense.” Previously, the standard had required that actuarial gains and losses be recognized in profit or loss either in the period in which they occurred or spread over employees’ terms of service. Under the amendment entities that currently spread the gains and losses are allowed, but are not required, to change their approach.

Other amendments, to IAS 39, Financial Instruments: Recognition and Measurement, provide transitional relief from retrospective application of “day 1” gain and loss recognition requirements. These changes, which converge with U.S. GAAP, permit, but do not require, entities to adopt an easier-to-implement transition approach than that in the previous version of IAS 39.

The International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) issued, proposed or withdrew several forms of guidance (www.ifac.org).

International Standard on Auditing (ISA) 700, The Independent Auditor’s Report on a Complete Set of General Purpose Financial Statements, provides a framework for separating audit reporting requirements in connection with ISA audits from additional supplementary reporting responsibilities that are required in certain jurisdictions.

Two complementary exposure drafts, ISA 320 (revised), Materiality in the Identification and Evaluation of Misstatements, and ISA 540 (revised), Auditing Accounting Estimates and Related Disclosures (Other than Those Involving Fair Value Measurement and Disclosures), are intended to help auditors assess whether management may be applying aggressive earnings-management techniques to their estimating procedures. Comments are due by April 30, 2005.

Effective December 31, 2004, the IAASB withdrew four international auditing practice statements that were rendered obsolete by new standards and technology: IAPS 1001, IT Environments—Stand-Alone Computers; IAPS 1002, IT Environments—On-Line Computer Systems; IAPS 1003, Environments—Database Systems; and IAPS 1009—Computer-Assisted Audit Techniques.

IFAC’s education committee released International Education Paper 3, Assessment Methods, to help national accountancy organizations ensure candidates’ competency before certifying them, and its International Public Sector Accounting Standards Board issued International Public Sector Accounting Standard 21, Impairment of Non-Cash Generating Assets, which prescribes the basis entities should use to determine whether an impairment-related loss should be recognized.

According to the 2004 National Management of an Accounting Practice (MAP) survey—conducted by Practice Management for CPA Success (PCPS): the AICPA Alliance for CPA Firms and the Texas Society of CPAs—local and regional firms across the nation reported revenue growth, salary increases and expansion of core services in 2004 and are optimistic about their business prospects for 2005. Revenue grew at least 10% for nearly one-third of the more than 2,000 firms responding, and 14% said it had increased by more than 20%. As in the 2003 survey, firms’ leading income sources were tax services (48.5%), compilations (12.5%) and write-ups and data processing (12%). Richard J. Caturano, PCPS Executive Committee chair, said, “This year’s survey results confirm what we’ve heard anecdotally—that local and regional CPA firms are thriving in the current business environment.” The survey also found some practitioners hadn’t adequately planned for the sale or transfer of their practices upon their retirement. (A recent JofA article offered advice on how to approach this challenge: See “Succession-Planning Dos and Don’ts,” JofA, Feb.05, page 47; www.aicpa.org/pubs/jofa/feb2005/dennis.htm)

The survey results are available for a fee (no charge to PCPS members) at www.pcps.org/member/national_results_nm1112.html, where information on PCPS membership can be obtained.

The IRS and the Treasury Department issued final regulations containing nondiscrimination and other requirements for cash or deferred arrangements under section 401(k) and for matching and employee contributions under section 401(m) of the Internal Revenue Code (www.treas.gov/press/releases/reports/401k122804td9169.pdf). These regulations update and simplify many of the current rules for 401(k) plans and strengthen the nondiscrimination rules that ensure benefits for rank-and-file employees. They require employers to spread contributions over a large group of such employees before boosting high-paid employees’ ability to defer income under the plan. Although the regulations will be fully effective for plan years beginning on or after January 1, 2006, employers may implement them for plan years ending after December 28, 2004.

The Small Business Administration (SBA) issued two rules to help companies in the information technology (IT) and testing laboratory industries qualify for contracting opportunities and federal assistance (www.sba.gov/news/04-03.pdf). The SBA expects the changes, which affect limitations on revenue and number of employees, to benefit more than 1,700 small IT businesses and 120 testing laboratories that previously were ineligible for SBA help.

Larry E. Rittenberg, CPA, was named chair of the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Rittenberg, who replaced John H. Flaherty, CPA, had previously served as president, as well as vice-president of research, of the Internal Auditors Association Research Foundation.

To help CPAs market their practices, the AICPA released a new brochure, Tax Savings Tips for 2004, with a corresponding speech and PowerPoint presentation. To access them online at www.aicpa.org/cpamarketing, log in as user cpamarketing with password toolkit1!

The Institute and the Virginia Society of CPAs released a four-color 2005 Financial Fitness Calendar, designed for clients and other members of the public as part of the profession’s national effort to improve Americans’ ability to understand and manage their finances. The Virginia society is accepting orders at www.financialfitness.org.

As was first mentioned in the January News Digest, CPAs employed in public accounting, private industry or government are encouraged to participate in a brief online survey (http://facultyfp.salisbury.edu/kjsmith3) gathering information to improve the quality of life for members of the profession. To log on, enter username kjsurvey3 and password stress54.

Information on the survey is available from Kenneth J. Smith (410-548-5563; kjsmith@salisbury.edu), a professor in the department of accounting and legal studies of Salisbury University in Maryland.