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AcSEC issues an exposure draft (ED) of a proposed statement of position (SOP), Allowance for Credit Losses, that addresses creditors’ recognition and measurement of the allowance for credit losses related to all loans, as defined—with certain exceptions—in FASB Statement no. 114, Accounting by Creditors for Impairment of a Loan. The ED amends existing guidance in the AICPA Audit and Accounting Guide, Certain Financial Institutions and Entities That Lend to or Finance the Activities of Others, and it applies to all creditors other than state, local and federal government entities. If approved, the proposed SOP would be effective for financial statements for fiscal years beginning after December 15, 2003, with earlier application encouraged. Comments on the ED, which is available at www.aicpa.org/members/div/acctstd/edo/2003_06_credit_losses.asp, are due September 19.

AcSEC publishes Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. Among the topics the SOP covers are the presentation of—and interest in—separate accounts, gains and losses on the transfer of assets from the general account to a separate account and liability valuation. It is effective for financial statements covering fiscal years beginning after December 15, 2003. Earlier adoption is encouraged, but retroactive application to prior years’ financial statements is prohibited. Entities should apply the SOP for the first time as of the beginning of their fiscal year. Copies of the statement (product code 014936JA) are available from the AICPA at 888-777-7077.

The Institute’s accounting standards staff releases a technical practice aid (TPA) (www.aicpa.org/download/acctstd/tpa_6400_35.pdf) to clarify a reference in paragraph 4.07 of the AICPA Audit and Accounting Guide, Health Care Organizations, to “other-than-temporary impairment” losses. The TPA explains how the term applies to not-for-profit health care organizations’ investment losses related to debt securities and equity securities with readily determinable fair values.

The AICPA accounting and review services committee releases an interpretation of AR section 100, “Compilation and Review of Financial Statements” (see Official Releases, JofA, Aug.03, page 104), of the AICPA Professional Standards. The interpretation, “Applicability of Statements on Standards for Accounting and Review Services When an Accountant Engaged to Perform a Business Valuation Derives Information From an Entity’s Tax Return,” is available at www.aicpa.org/members/div/auditstd/interp_ar_9100_23.htm.

The GAO publishes its fourth revision of Government Auditing Standards (also known as the Yellow Book). First issued in 1972, the volume contains generally accepted government auditing standards (GAGAS) for audits of government organizations, programs, activities and functions as well as for audits of government assistance to contractors, nonprofit organizations and other nongovernment organizations. The new release supersedes the 1994 version, including amendments 1 through 3, and changes standards in three ways: It redefines the types of audits and services covered, makes the fieldwork and reporting requirements consistent and clarifies the language. The revisions are effective for financial audits and attestation engagements for periods ending—and for performance audits beginning—on or after January 1, 2004, although the GAO permits and encourages early application. The new version is available online at www.gao.gov/govaud/ybk01.htm; printed copies are available from the U.S. Government Printing Office (202-512-1800).

GASB issues Technical Bulletin no. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the Statement of Net Assets, which supersedes Technical Bulletin no. 94-1, Disclosures about Derivatives and Similar Debt and Investment Transactions. It applies to derivatives not reported at fair value on the statement of net assets (including balance sheets) and provides an updated definition of derivatives based on FASB Statement no. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The bulletin’s provisions are effective for reporting periods ending after June 15, 2003, and can be downloaded at no charge from the GASB Web site at www.gasb.org/exp/tb2003-a.pdf or ordered in print form for $7.50 at 800-748-0659 or http://store.yahoo.com/gasbpubs/gtb0301.html.

The U.S. Office of Management and Budget revises Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. This regulation establishes guidelines and policy related to audits of federal awards—also known as single audits. One of the revision’s most significant provisions increases—to $500,000 from $300,000—the minimum award requiring an audit. The new guidance is effective for fiscal years ending after December 31, 2003, and is available online at www.whitehouse.gov/omb/fedreg/062703_audits.pdf. Early application is prohibited.

The Federal Accounting Standards Advisory Board (FASAB) issues Interpretation no. 6 of Federal Financial Accounting Standards, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4, to clarify that paragraph 110 of SFFAS no. 4, Managerial Cost Accounting Standards and Concepts, does not limit the recognition of intradepartmental costs, which should be accounted for in accordance with the SFFAS’s full-cost provisions. The interpretation is effective for periods beginning after September 30, 2004, with earlier implementation encouraged. It is available online at www.fasab.gov/pdf/intprt6.pdf and in print from FASAB at 202-512-7350.

The Treasury Department, the Office of Management and Budget and the General Accounting Office—the sponsors of the Federal Accounting Standards Advisory Board (FASAB)—sign a memorandum of understanding giving the board additional input from the federal government’s legislative branch by adding a member from the Congressional Budget Office (CBO) (www.fasab.gov/pdf/mou05222003.pdf). Dr. Douglas Holtz-Eakin, the CBO director, joins FASAB as its tenth member, bringing expertise in economics and public policy as well as additional insight into Congress’s information needs.

FASAB publishes Statement of Federal Financial Accounting Standards no. 25, Reclassification of Stewardship Responsibilities and Eliminating the Current Services Assessment (www.fasab.gov/concepts.htm). The statement changes the classification of certain requirements in SFFAS no. 5, Accounting for Liabilities of the Federal Government, and no. 17, Accounting for Social Insurance, and it eliminates a requirement of SFFAS no. 8, Supplementary Stewardship Reporting.

The international auditing and assurance standards board of the International Federation of Accountants issues an exposure draft (ED) containing a proposed international auditing standard (ISA), Review of Interim Financial Information Performed by the Auditor of the Entity. The proposal provides guidance on the scope of such reviews, which differs from that of reviews performed by a practitioner—who is not the entity’s auditor—in accordance with ISA 910, Engagements to Review Financial Statements. The ED is available at the IFAC Web site (www.ifac.org/Guidance/EXD-Details.php?EDID=0020). Comments are due September 30.

The International Accounting Standards Board (IASB) releases International Financial Reporting Standard (IFRS) 1, First-time Adoption of International Financial Reporting Standards. It requires an entity to comply with every IASB standard in force in the first year the entity adopts IFRSs, with certain exceptions related to the cost of full compliance. The IASB is issuing the standard as implementation guidance for the more than 90 countries that will either require or permit the use of IFRSs during the next five years. The standard can be ordered from the IASB by e-mail (publications@iasb.org.uk).

The Federal Deposit Insurance Corp. awards a 10-year, $39 million contract to Unisys Corp., which, with the assistance of PricewaterhouseCoopers, Microsoft Corp., EDGAR Online Inc. and other technology companies, will use XBRL (extensible business reporting language) and other tools to modernize and streamline federal bank regulators’ collection, processing and distribution of banks’ quarterly financial reports (www.aicpa.org/innovation/baas/xbrl/030617xbrl.asp). XBRL was developed by an AICPA-led consortium. Reports for September 2004 are expected to be the first filed under the new system.

The AICPA elects former four-term Iowa Governor Terry Branstad one of the three public, or non-CPA, members of its board of directors. Recently, as chairman of President George W. Bush’s Commission on Excellence in Special Education, Branstad developed a plan to improve disabled students’ scholastic performance (www.aicpa.org/download/news/2003_0527.pdf). He is a financial adviser with Robert W. Baird & Co. of West Des Moines and a partner of Kaufman, Pattee, Branstad & Miller, a Washington, D.C., public policy and government relations firm.

The Financial Accounting Foundation (FAF) appointed George J. Batavick, CPA, to a five-year term as a member of the Financial Accounting Standards Board, effective August 1 (www.fasb.org/news/nr071403.shtml). Manuel H. Johnson, FAF chairman, cited his extensive experience in financial reporting. Batavick capped a 27-year career at a large public company (the former Texaco Inc.) by serving as comptroller from 1999 to 2002.

The staff of the Governmental Accounting Standards Board (GASB) releases a comprehensive implementation guide covering Statement nos. 3, 9, 10, 14, 25, 26, 27, 31 and 34. The board will issue such guides annually to revise and supplement information as new GASB pronouncements take effect. The guide is available from GASB at 800-748-0659.