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AcSEC exposes a draft statement of position, Accounting for Derivative Instruments and Hedging Activities by Not-for-Profit Health Care Organizations, and Clarification of the Performance Indicator, that would amend the audit and accounting guide on health care organizations (www.aicpa.org/members/div/acctstd/edo/index.htm). The ED provides guidance on how nongovernmental not-for-profit health care organizations should report gains or losses on hedging and nonhedging derivative instruments under FASB Statement no. 133. The draft also clarifies issues relating to the performance indicator, or earnings measure, such organizations report. Comments are due August 13.

The auditing standards board issues SAS no. 97, Amendment to Statement on Auditing Standards (SAS) no. 50, Reports on the Application of Accounting Principles. The new statement (see Official Releases, page 90), which is effective for written reports issued or oral advice provided on or after June 30, amends SAS no. 50 to prohibit an accountant from providing a written report on the application of accounting principles not involving facts and circumstances of a specific entity. Copies of the SAS (product no. 060699JA) can be ordered from the AICPA at 888-777-7077.

The AICPA audit and attest standards team provides guidance on the applicability of SSARS no. 1, Compilation and Review of Financial Statements (www.aicpa.org/members/div/auditstd/interp_ar_9100.htm), for accountants in public practice who perform controllership or other management services (see Official Releases, Jul.02, page 92). Interpretation no. 21 addresses situations in which those services involve financial statement submission.

In SOP 02-1, Performing Agreed-Upon Procedures Engagements That Address Annual Claims Prompt Payment Reports as Required by the New Jersey Administrative Code, the auditing standards board presents recommendations on the application of statements on standards for attestation engagements to agreed-upon procedures engagements performed to comply with New Jersey regulations relating to health and dental benefit plan claims payment reports. Those provisions apply to health, medical, dental or hospital service corporations, insurance companies and HMOs that issue such plans in the state and to the agents, employees or other representatives of entities that process claims for them (see Official Releases, page 92). Copies of the SOP (product no. 014934JA) can be ordered from the AICPA at 888-777-7077.

The auditing standards board releases a proposed Statement on Auditing Standards, Auditing Fair Value Measurements and Disclosures (www.aicpa.org/members/div/auditstd/fair_value.htm). The ED discusses auditing issues relating to measurement, presentation and disclosure of assets, liabilities and specific components of equity presented or disclosed at fair value in financial statements. Comments are due August 28.

The Business Roundtable, a trade group representing 150 of the nation’s largest companies, issues Principles of Corporate Governance (www.brtable.org/pdf/704.pdf). The publication provides a set of best practices for senior management, the board of directors and others in the corporate hierarchy to ensure companies comply with applicable regulations and deal fairly and candidly with shareholders, employees and the communities in which they do business.

The AICPA and NASBA sign an agreement with Prometric, a designer of technology-based testing services, under which CPA candidates will be able to take a computerized uniform examination at more than 300 locations in early 2004 (www.aicpa.org/news/2002/p052802.htm). The electronic test will differ from its paper predecessor not only in format, but also in content, with greater emphasis on information technology and general knowledge. Other new features of the computerized version include an assessment of research and communication skills and a broader scope with respect to audit and attest functions. Candidates’ last paper-based exam will be in November 2003.

The Department of Labor made final a rule (www.dol.gov/pwba/regs/fedreg/final/2002008499.htm) giving employee benefit plan administrators the option of using e-mail, the Internet and other computer-based systems for making, to participants and beneficiaries, disclosures required by the Employee Retirement Income Security Act of 1974 (ERISA). Under the provision, which takes effect on the initial day of a plan’s first year beginning on or after October 9, plan participants and employees must give their consent to electronic delivery and be able to obtain paper versions of the documents on request.

The SEC proposes rules requiring CEOs and CFOs of publicly traded companies to certify their organizations’ quarterly and annual reports are accurate, timely and contain all the information a “reasonable” investor would consider “significant” (www.sec.gov/news/press/2002-88.htm). The rules also would cut to two business days—from the current five to 15—the time companies have to file Form 8-K, reporting a change in their independent auditor, the resignation of directors and other required disclosures. Comments are due August 26.

A GAO report (www.gao.gov/new.items/d02676t.pdf) on the use of purchase cards at the Education, Navy, Agriculture, Interior and Transportation departments reveals internal control weaknesses permitted thousands of unauthorized or questionable transactions between 1998 and 2001, involving potentially millions of dollars in waste and abuse. The watchdog agency discovered failures to follow purchasing guidelines, inadequate card-usage training and oversight and, at some agencies, outright fraud. To prevent further losses, the GAO recommends improved management scrutiny of purchase-card transactions (in fiscal year 2001, 400,000 employees from about 60 federal agencies spent nearly $14 billion) and increased training for participating employees.

GASB issues Statement no. 39, Determining Whether Certain Organizations Are Component Units (www.gasb.org/news/nr052802.html). Under it state and local governments with certain fundraising organizations, such as not-for-profit foundations that have a relationship with public universities and/or school districts, must include in their financial statements separate presentations of those subordinate entities’ financial activities. The new guidance amends Statement no. 14, The Financial Reporting Entity (June 1991). It is effective for financial statements covering periods beginning after June 15 and is available from GASB at 800-748-0659 or at www.gasb.org. In a separate announcement on its Web site (www.gasb.org/tech/GASB_39_error.html), GASB provides wording inadvertently omitted from the first printed copies of Statement no. 39; copies of it distributed after June 3 contain the statement’s full text.

The European Union adopts a provision requiring EU-listed companies, including banks and insurers, to prepare their financial statements, beginning in January 2005, in accordance with international accounting standards (www.fee.be/european/eunews.htm). European regulators believe the directive will increase the reliability, transparency and comparability of member states’ consolidated accounts, thus promoting cross-border capital investment.

The International Accounting Standards Board (IASB) exposes a draft proposal to revise 12 of its 34 active standards. The ED (www.iasb.org.uk) is part of an IASB project to improve the quality and consistency of financial reporting by, for example, drawing on best practices from around the world—an effort with added urgency in view of the European Union’s decision to have publicly listed companies use international standards starting in 2005. The ED proposes prohibiting the labeling of income or expense amounts as extraordinary items either in the income statement or in notes and eliminating certain reporting options, such as Lifo. Comments are due September 16.

The International Federation of Accountants releases Guiding Principles for International Education Statements (www.ifac.org/News/index.tmpl), which establishes a framework for the development of global standards governing precertification education and the continuing development of professional accountants. Comments are due September 30.

The IASB amends International Accounting Standard no. 19, Employee Benefits (www.iasb.org.uk), to correct certain conceptual and practical problems that led to the reporting of illogical financial results. For example, in some circumstances an actuarial loss in an entity’s pension plan could produce a reported gain in its financial statements and a gain in the fund could create a reported loss.

The AICPA professional ethics executive committee issues an exposure draft (www.aicpa.org/members/div/ethics/ed020617.htm) with revisions of five independence interpretations and/ or rulings. The proposed changes relate to trustee or executor relationships with clients, former practitioners and firm independence, relationships with entities included in government financial statements, auditors of insurance companies and depository relationships with clients’ financial institutions. Comments on the ED are due August 17.

The Financial Accounting Standards Advisory Board issues Implementation Guide to the Statement of Financing in Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting (www.fasab.gov/pdf/ig7sof.pdf). It illustrates concepts underlying the statement of financing, in which federal agencies explain the difference between the budgetary accounting system’s net obligations and the proprietary accounting system’s net cost of operations.

Illinois CPA Society President and CEO Martin Rosenberg, CPA, retires after 24 years in office. From 1968 to 1976 Rosenberg held various AICPA management positions in the areas of examinations and education, state society relations and in professional ethics, where he helped develop and implement the profession’s national joint ethics enforcement plan.

The Association of Certified Fraud Examiners names Toby J.F. Bishop, CPA, CFE, its president and chief executive officer. Previously, Bishop headed Andersen’s fraud research and development division.