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FASB issues an Invitation to Comment, Accounting for Stock-Based Compensation: A Comparison of FASB Statement No. 123, Accounting for Stock-Based Compensation, and Its Related Interpretations, and IASB Proposed IFRS, Share-based Payment (www.fasb.org/draft/itc_intropg_stock_based_comp.shtml). The new FASB document examines the differences and similarities between the two rules. Both standard setters concluded that companies using stock options or other goods or services to compensate employees or others should report them as an expense and that the reported amount should be calculated on the basis of the items’ fair value when granted. The International Accounting Standards Board’s proposed international financial reporting standard can be found at www.iasb.org.uk/cmt/ and a summary of the 1995 FASB statement at www.fasb.org/st/summary/stsum123.shtml. Responses to the FASB invitation are due February 1. Comments on the IASB ED are due March 7.

AcSEC releases Statement of Position (SOP) 02-2, Accounting for Derivative Instruments and Hedging Activities by Not-for-Profit Health Care Organizations, and Clarification of the Performance Indicator. The SOP is effective for fiscal years beginning after June 15, 2003. It amends the AICPA audit and accounting guide Health Care Organizations to address how nongovernmental, not-for-profit health care organizations should report gains or losses on hedging and nonhedging derivative instruments under FASB Statement no. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The SOP also amends the guide to clarify that the performance indicator—or earnings measure—health care organizations report is analogous to income from continuing operations of a for-profit enterprise. Copies of the statement (product code 014935JA) are available from the AICPA at 888-777-7077.

FASB issues Interpretation no. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. It adds to guidance in FASB Statement no. 5, Accounting for Contingencies; Statement no. 57, Related Party Disclosures; and Statement no. 107, Disclosures About Fair Value of Financial Instruments, and it incorporates without change the provisions of Interpretation no. 34, Disclosure of Indirect Guarantees of Indebtedness of Others, which it supersedes. The document addresses the need for better reporting of guarantees companies issue in conjunction with certain transactions, as when a seller guarantees its customer’s repayment of funds borrowed to pay the seller for the customer’s purchases. There are exceptions to the guidance’s applicability, among which are guarantee contracts insurance companies issue. The interpretation’s initial recognition and measurement provisions apply prospectively to guarantees issued or modified after December 31, 2002, regardless of when the guarantor’s fiscal year ends. Its disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. Copies of the interpretation can be obtained online at http://store.yahoo.com/fasbpubs/i45.html or by calling 800-748-0659.

The Auditing Standards Board exposes a suite of seven draft statements on auditing standards (SASs) (www.aicpa.org/members/div/auditstd/auditrisk120202.asp) to improve auditors’ application of the audit risk model. The proposed SASs require auditors to develop a better understanding of audited entities and their environments, to use that knowledge to more rigorously assess the risks of material misstatement of the entities’ financial statements and to better link the nature, timing and extent of audit procedures with assessed risks. The ED comprises the following proposed SASs: Amendment to Statement on Auditing Standards no. 95, Generally Accepted Auditing Standards; Audit Evidence; Audit Risk and Materiality in Conducting an Audit; Planning and Supervision; Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Assessing Risks); Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained; and Amendment to SAS no. 39, Audit Sampling. Comments are due April 30.

The International Federation of Accountants issues exposure drafts of three international standards on auditing (ISAs) and one amendment to an existing ISA (www.ifac.org/Members/Source_Files/Exposure_Drafts/ED-Audit_ Risk_Oct021.pdf). Comments are due by March 31 on the proposed guidance, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; The Auditor’s Procedures in Response to Assessed Risks; Audit Evidence; and Amendment to ISA 200, Objective and General Principles Governing an Audit of Financial Statements. IFAC says the standards, when made final, will lead to improved linkage between audit procedures and assessed risks, enabling auditors to focus more clearly on areas where the risk of financial statement inaccuracies is greatest.

The International Accounting Standards Board releases two exposure drafts on accounting for business combinations (www.iasb.org.uk/cmt/). The IASB’s proposals are contained in ED 3, Business Combinations, and Exposure Draft of Proposed Amendments to IAS 36, Impairment of Assets, and IAS 38, Intangible Assets. Among their most significant provisions are mandatory use of the purchase method of accounting (and the consequent ban of the pooling method) for business combinations within the ED’s scope and prohibition of amortization of goodwill or intangible assets with indefinite useful lives. Comments are due April 4.

The AICPA issues its annual ranking of the ten technologies that are most likely to significantly affect practitioners, their clients and their employers in the coming year. Topping the current list (www.cpa2biz.com/toptechs) is information security, followed by business information management, application integration, Web services, disaster recovery planning, wireless technologies, network intrusion detection, remote connectivity, customer relationship management and also privacy.

The AICPA and the Association of Certified Fraud Examiners release a free one-hour PC-based training program. How Fraud Hurts You and Your Organization, that can be downloaded at no charge from http://antifraud.aicpa.org/Resources/
How+Fraud+Hurts+Your+Organization.htm The course also is available on CD from the AICPA at 888–777–7077 (product code 056513JA). It includes definitions of fraud, examples of fraudulent activity and actual case studies and is suitable for CPAs and their companies.