Summaries of Recently Issued SOPs & Guides

SOP on the Scope of the Investment Companies Guide. In June 2007, AcSEC issued Statement of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies.

The SOP provides guidance for determining whether an entity is within the scope of the AICPA Audit and Accounting Guide Investment Companies (the Guide). For those entities that are investment companies under the SOP, it also addresses whether the specialized industry accounting principles of the Guide (referred to as investment company accounting) should be retained by a parent company in consolidation or by an investor that has the ability to exercise significant influence over the investment company and applies the equity method of accounting to its investment in the entity (referred to as an equity method investor). In addition, the SOP includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain Investment Company accounting in the parent company’s consolidated financial statements or the financial statements of an equity method investor.

The SOP is effective for fiscal years beginning on or after December 15, 2007, with earlier application encouraged.

FASB Defers Effective Date of SOP 07-1. On February 14, 2008, the FASB issued FASB Staff Position (FSP) 07-1-1. The FSP delays indefinitely the effective date of AICPA SOP 07-1. Entities that early adopted SOP 07-1 before December 15, 2007, are permitted but not required to continue to apply the provisions of the SOP. No other entities may adopt the provision of the SOP, subject to the exception in the following sentence. If a parent entity that early adopted the SOP chooses not to rescind its early adoption, an entity consolidated by the parent entity that is formed or acquired after that parent entity’s adoption of the SOP must apply the provisions of the SOP in its stand-alone financial statements. For a copy of the FSP, visit the FASB's website at http://www.fasb.org/pdf/fsp_sop07-1-1.pdf.

Copies of the SOP (product no. 014945) can be ordered online or by phone at 888-777-7077. AICPA members can purchase it at a discounted price of $14.00, non-members will be charged $17.50.

To obtain copies of SOPs, please go to CPA2Biz.com. To order via phone, please call 888-777-7077.