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AUDITING
The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) is considering whether to amend guidance the DOL issued in 1975—Interpretive Bulletin 75-9—on evaluating the independence of auditors retained by employee benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA). EBSA seeks comments from the public by December 11, 2006 (www.regulations.gov; docket ID EBSA-2006-0043), on whether the bulletin provides adequate guidance for plan administrators, other plan fiduciaries, participants, beneficiaries, accountants and other affected parties on determining when a qualified public accountant is independent. To help CPAs understand the more common independence rules affecting ERISA audits, the AICPA Employee Benefit Plan Audit Quality Center has prepared a comparison of the current DOL and AICPA rules (http://ebpaqc.aicpa.org/resources/independence).

BANKING
The Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision jointly proposed rules that would implement new risk-based capital requirements in the United States for large, internationally active banking organizations (www.fdic.gov/news/news/press/2006/pr06082.html). In addition the agencies proposed revisions to the market risk capital rules they have used since 1997 to regulate banking organizations significantly exposed to market risk. Among other provisions, the proposal would make the rules applicable to certain savings associations they currently do not cover. The agencies also proposed supervisory reporting templates for use in applying the new rules. Comments are due 120 days after the proposals are published in the Federal Register.

FINANCIAL REPORTING
The SEC issued Staff Accounting Bulletin (SAB) no. 108, which provides guidance on quantifying financial statement misstatements, including the consideration of the effects of the carryover and reversal of prior-year misstatements (www.sec.gov/interps/account/sab108.pdf). Typically, entities have quantified such errors in one of two ways—as the amount by which the current-year income statement is misstated or the amount that the current-year balance sheet is misstated. The commission staff believes companies should evaluate misstatements under both approaches and adjust their financial statements whenever either approach results in a misstatement that is material when all relevant quantitative and qualitative factors are considered.

The staff said it will not object if a registrant records a one-time cumulative-effect adjustment to correct errors, from prior years, that had been considered to be qualitatively and quantitatively immaterial, based on appropriate use of the registrant’s previously employed approach. The SAB adds section N to Topic 1, “Financial Statements,” of the Staff Accounting Bulletin series.

The Government Accountability Office issued a report, “Financial Statement Restatements: Trends, Market Impacts, Regulatory Responses and Remaining Challenges,” in response to a request from Senator Paul S. Sarbanes (D-Md.), chairman of the Senate Committee on Banking, Housing and Urban Affairs (www.gao.gov/new.items/d03138.pdf). The objective of the report was to provide information on the number of, reasons for and trends in restatements, their impact on the restating companies’ stock market capitalization and on investor confidence in financial reporting and the capital markets, and the resulting SEC enforcement actions. A summary is available on the Web site of the AICPA Center for Public Company Audit Firms (www.aicpa.org/CPCAF).

GOVERNMENT ACCOUNTING
The Financial Accounting Foundation, the parent body of the Governmental Accounting Standards Board (GASB), commissioned the first in a series of periodic surveys asking its stakeholders to share their views on how effectively GASB fulfills its mission. Overall, the 1,200 respondents said GASB has been carrying out its standard-setting charge appropriately and effectively. A minority, however, expressed dissatisfaction with the extent to which GASB standards meet the needs of all constituents and with the cost of implementing the rules.

All three stakeholder groups—auditors, those who prepare financial statements and those who use them—called the standards development process, especially the publishing of draft proposals for public comment, highly effective. But more than half of the respondents were at least moderately concerned that comments on proposed standards repeatedly come from the same group of stakeholders. The survey results are available at www.gasb.org/perception_study/GASB_Final_Report.pdf.

INTERNATIONAL
The International Federation of Accountants (IFAC) issued an exposure draft and several information papers on education in ethics, corporate sustainability and internal control.

IFAC’s International Accounting Education Standards Board released an exposure draft of an International Education Practice Statement, Approaches to Developing and Maintaining Professional Values, Ethics and Attitudes (www.ifac.org/eds). Comments are due December 15, 2006. The board also released a related and similarly titled information paper reporting results of a wide-ranging research project on ethics education (www.ifac.org/Store/Details.tmpl?SID=1155152665859443).

In addition, IFAC’s Professional Accountants in Business Committee issued two papers on sustainability—managing the social, environmental and economic aspects of business performance—that provide an overview of the subject and of the role of accountants in measuring, recording and interpreting sustainability-related information, as well as interviews with 11 senior professionals working in this area around the world.

Another IFAC publication, Internal Controls—A Review of Current Developments, summarizes key internal control frameworks, highlights recent legislation and initiatives, and discusses the role of internal control in enhancing corporate governance. The papers are available free at www.ifac.org/store.

PROFESSIONAL ISSUES
The AICPA, under the leadership of immediate past Chair Leslie Murphy, launched the Young CPA Network, to address the needs of professionals early in their careers. The network offers a monthly electronic newsletter, The Edge, and a dedicated Web site (www.aicpa.org/YoungCPANetwork) that provide tools and resources to help develop skills and get advice on networking, work-life balance and satisfying CPE requirements. An online Q&A service enables young professionals to anonymously ask career-related questions of more experienced CPAs.

FYI
The AICPA’s annual National Healthcare Industry Conference will take place November 2–3 in New Orleans. “This is another important part of our ongoing commitment, which includes organizing a Disaster Recovery Resource Center and an AICPA volunteer center to provide pro bono tax assistance to Katrina’s victims,” said AICPA President and CEO Barry C. Melancon. The conference is designed for practitioners in firms that serve health care clients and financial managers, administrators and CFOs of hospitals, physician groups and managed care organizations. To register, visit www.cpa2biz.com or call 888-777-7077.

The IRS issued Publication 1460, Highlights of Tax Relief Provided to Taxpayers in Response to Hurricanes Katrina, Rita, and Wilma (www.irs.gov/pub/irs-pdf/p1460.pdf), which provides information on extended application deadlines, rules on claiming casualty losses and other important topics.

Optimism about the U.S. economy has declined among CPAs serving as corporate executives, according to a June 2006 AICPA survey. Fifty-four percent of respondents were neutral to very pessimistic about the economy, up from 41% in a December 2005 survey. But most—68%—were confident about prospects for their own companies. More than half—58%—projected moderate to substantial growth by the end of the year and said spending would remain strong, especially for information technology and new product development.

The AICPA Center for Public Company Audit Firms added new information resources on enhanced business reporting and XBRL for practitioners and members in industry who work for SEC registrants. Information on membership in the center is available at www.aicpa.org/CPCAF.

The Institute made it easier for CPAs to apply for its Certified Information Technology Professional credential (www.aicpa.org/CITP). Qualification standards have not changed, but the application process has been streamlined for convenience.

The AICPA Library Service at the University of Mississippi has begun providing Web-based access to its Digital Accounting Collection. A wide range of historical documents is available at www.olemiss.edu/depts/ or by clicking on the AICPA Library at Ole Miss link at www.aicpa.org.