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The Institute’s accounting standards staff releases a technical practice aid (TPA) (www.aicpa.org/members/div/acctstd/general/tpa5.htm) to clarify financial accounting and reporting issues relating to Statement of Position (SOP) 97-2, Software Revenue Recognition. The TPA uses a question-and-answer format to cover matters such as the commencement of an initial or renewal software license term and an arrangement containing an option to extend a time-based license indefinitely. The TPA is included in the publication, Technical Practice Aids, which is available from the AICPA order department at 888-777-7077.

The AICPA auditing standards board issues three standards. The first, Statement on Auditing Standards (SAS) no. 98, Omnibus 2002, contains amendments to SAS nos. 1, 8, 25, 29, 47, 52, 58 and 95. SAS no. 98 also amends SAS no. 70 by rescinding Interpretation no. 6, incorporating its guidance into that statement. Two other standards, SSAE no. 12, Amendment to SSAE No. 10, Attestation Standards, and Statement on Quality Control Standards (SQCS) no. 6, Amendment to SQCS No. 2, System of Quality Control for a CPA Firm’s Accounting and Auditing Practice, clarify that, although an effective quality control system is conducive to compliance with GAAS or the attestation standards, deficiencies in, or noncompliance with, a firm’s quality control system do not, in and of themselves, indicate a failure to perform an engagement in accordance with the applicable professional standards. All three standards appear in Official Releases, page 112, and are also available from the AICPA order department at 888-777-7077.

The Office of the Comptroller of the Currency issues Bulletin 2002-39, Investment Portfolio Credit Risks: Safekeeping Arrangements (www.occ.treas.gov/ftp/bulletin/2002-39.doc), alerting national banks to potentially significant credit risks inherent in custody relationships involving their own assets. Recently, several financial institutions suffered losses when deposit brokers (entities that broker, among other things, certificates of deposit), to which they had sent funds for the purchase and safekeeping of CDs, failed. The OCC guidance consequently emphasizes the risks of entrusting assets to even registered broker/dealers and the importance of reviewing their credit histories, and it outlines steps banks can take to see that FDIC insurance covers their purchased CDs.

The SEC issues final rules (www.sec.gov/rules/final/33-8124.htm), effective August 29, requiring a public company’s principal executive and financial officers to certify the financial and other information in their organization’s quarterly and annual reports. The commission also solicited, through October 9, public comments on the advisability of extending this requirement to definitive proxy and information statements.

The International Federation of Accountants (IFAC) releases a paper, Financial Reporting on the Internet—Responsibilities of Directors and Managers (www.ifac.org/Store/Details.tmpl?SID=1030393082223229), outlining the managerial actions necessary to ensure online financial reports are as accurate and complete as those issued in print. Among the matters the report discusses are the control considerations pertaining to the approval of financial information appearing on a corporate Web site and the security infrastructure, the frequency with which the organization updates such information and how the site helps its visitors differentiate between audited and nonaudited data. The paper is available at no charge on the IFAC Web site.

IFAC’s international auditing and assurance standards board (IAASB) issues International Standard on Auditing (ISA), Auditing Fair Value Measurements and Disclosures (www.ifac.org/News). The guidance addresses the valuing, measuring, presenting and making of disclosures related to the material assets, liabilities and specific components of equity presented or disclosed at fair value in financial statements. A print copy of the standard can be purchased by calling IFAC at 212-286-9344. In addition, all ISAs issued through December 31 of this year can be obtained by subscribing to the IAASB online handbook at the IFAC Web site (www.ifac.org/store). (Beginning January 1, 2003, ISAs can be downloaded from the site at no charge.)

The Office of the Comptroller of the Currency reports that in the second quarter, U.S. commercial banks increased the amount of derivatives in their portfolios by $3.8 trillion to $50.1 trillion—the second highest amount ever recorded (www.occ.treas.gov/ftp/release/2002-70.doc). According to the OCC, bank risk managers used this strategy to hedge their investment positions in response to heightened uncertainty in the financial markets.

The Association of Government Accountants honors the GAO, the National Science Foundation, the Nuclear Regulatory Commission, the Social Security Administration and the Departments of Energy, Interior, Labor and State with Certificates of Excellence in Accountability Reporting (www.agacgfm.org/cear/index.htm) for the fiscal year 2001 reports they issued on their financial affairs and programs.

The Institute of Internal Auditors elects LeRoy E. Bookal, CIA, chairman of its board for a term of one year.