Editorial Staff

Publisher/Editor-in-Chief
Colleen Katz

Managing Editor
Elizabeth Uva

Senior Editors
Laura Baron
Katharine W. Coveleski
Peter D. Fleming
Michael Hayes
James Quaglietta
Robert Tie

Senior Assistant Editor
Sarah Cobb

Assistant Editor
Vincent Nolan

Contributing Editors
Anita Dennis
Lesli S. Laffie
Joan Mancuso
Barbara J. Shildneck
Stanley Zarowin

Production Director
Peter M. Tuohy 

Art Director
Jeryl A. Costello

Production Manager
Gene Cioffi

Senior Manager—
Production Services—
Publishing Technology
Robert DiCorcia

Production Editor
D. Hillel Lofaso

Senior Production Associates
Valrie Mason
Ingrid Medina

Associate Publisher
Thomas R. Greve

Advertising Team Manager
Karin DeMarco

Advertising Representatives
Joseph Torres
Kurt Weber

Advertising Coordinator
John Weinberg

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201-938-3292
e-mail: joaed@aicpa.org

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201-938-3767

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Highlights

FASB ISSUES ED ON STOCK OPTIONS
In March FASB published an exposure draft (ED), Share-Based Payment (www.fasb.org/draft/ed_intropg_share-based_payment.shtml), that would require public companies to treat stock options and all other forms of share-based payments to employees the same as other kinds of compensation—by recognizing the related cost in the income statement. The proposal generally would require the expense of such awards to be measured at fair value on the date granted.

The board said it issued the ED to improve the completeness and quality of information investors and others obtain from companies’ financial statements. The draft’s provisions would replace existing requirements under FASB Statement no. 123, Accounting for Stock-Based Compensation, and Accounting Principles Board Opinion no. 25, Accounting for Stock Issued to Employees.

The proposal to treat stock options as an expense continues what appears to be a growing trend among regulators and reporting entities alike. Earlier this year the International Accounting Standards Board and the Canadian Accounting Standards Board issued rules whose provisions resemble those of the FASB ED, and as many as 500 U.S. public companies are reported to be currently treating stock options as an expense or planning to do so in the near future.

FASB plans to hold public roundtable meetings to gather additional input on the proposal. Comments are due June 30.

SEC PROPOSES EDGAR REPORTING CHANGES
The Securities and Exchange Commission (SEC) proposed rules in March that would require certain open-end management companies—also known as mutual funds—to provide information related to their series and classes when submitting electronic filings to the SEC’s Electronic Data Gathering and Retrieval System (EDGAR) (www.sec.gov/rules/proposed/33-8401.htm). The provisions also would require insurance companies to supply similar information on their separate accounts’ contracts. Comments are due May 24.

SOCIAL SECURITY AND MEDICARE BUDGET WOES CONTINUE
The board of trustees of the Federal Old-Age and Survivors Insurance and Disability Trust Fund in March issued its 2004 annual report on the current and projected future financial status of the fund, which supports the Social Security and Medicare programs (www.ssa.gov/OACT/TR/TR04). In the report the board said existing financing arrangements for Social Security and Medicare appear to be inadequate, given the two programs’ projected growth rates. Specifically, growing annual cash deficits in both programs will exhaust trust fund reserves for Medicare hospital insurance—which covers inpatient care—in 2019 and for Social Security in 2042. In addition, Medicare supplementary medical insurance, which pays for physician services and the new prescription drug benefit, will require substantial additional funding to remain solvent.

INSTITUTE POLL LOOKS AT SMALL BUSINESS CONCERNS
The AICPA Virtual Grassroots Panel in March released the results of an online poll of its members, which focused on challenges facing small businesses. The panel, representing all membership segments and consisting of approximately 500 participants appointed to one-year terms, said—based on the poll results—that health care and tax issues are extremely important to small businesses, that CPAs’ objectivity, integrity and ability to create trustworthy and high-quality relationships are very significant to small business owners and managers, that small businesses often turn to specific industry groups or associations for information and that tax-related legislative and regulatory issues affect small businesses more than other factors do. A summary of the poll results is available from Leigh Knopf (lknopf@aicpa.org) of the AICPA’s strategic-planning team.

Editorial Advisers

Catherine R. Allen, Kenneth D. Askelson, James Bean, John C. Boma, Jacob R. Brandzel, Steven J. Brown, Jolene C. Brucks, Thomas F. Burrage, Linda Burt, J. Gregory Bushong, R. Patrick Cargill, Benson J. Chapman, Rosemarie T. Dunn, Thomas Emmerling, Elizabeth Fender, Robert J. Freeman, Kim Gibson, Alan Glazer, Randi K. Grant, Patrick T. Hanratty, DeAnn Hill, James E. Hunton, Frank J. Kopczynski, Jeffrey B. Kraut, Dennis B. Kremer, William F. Laurie, Alan Levin, John Lewison, Joseph P. Liotta, Mano Mahadeva, Benjamin F. Mathews, David McIntee, Anita Meola, Debra Mitchell, Roger H. Molvar, Brenda Morris, Craig Murray, Lyne P. Noella, Edward T. Odmark, Mary P. Ricciardello, Mark L. Richardson, Marshall B. Romney, Peggy Scott, Carolyn Sechler, Gary Shamis, Ivan J. Sotomayor, Alan Steiger, Paul C. Sullivan, Gary R. Trugman, Robert Willens, Mark A. Yahoudy