Click below to read Defining Issues, a publication of KPMG's Department
of Professional Practice. Defining Issues provides developments
in financial reporting, including developments that impact audit
committees.
- NEW:
Revised Proposal to Clarify Embedded Credit-Derivative Scope Exception October 2009 No. 09-45
- NEW: ISSUES IN-DEPTH: Implementing the New Consensuses on Multiple Element Revenue Arrangements Issue no: 09-3
- SEC Grants Six-Month Extension for Non-Accelerated Filers to Begin Complying with Final Stage of Sarbanes-Oxley October 2009 No. 09-44
- Measuring the Fair Value of Investments in Investment Companies October 2009 No. 09-43
- G-20 Leaders Call for a Single Set of High-Quality, Global Accounting Standards by 2011 September 2009 No. 09-42
- FASB Reduces Nonpublic Entities’ Disclosures for Uncertainty in Income Taxes September 2009 No. 09-40
- FASB Proposal to Expand Disclosures about Fair-Value Measurements September 2009 No. 09-39
- The Scope of Accounting Requirements for Decreases in Ownership of a Subsidiary September 2009 No. 09-38
- New Guidance on Measuring Liabilities at Fair Value August 2009 No. 09-37
- FASB Decisions on Loss-Contingency Disclosures August 2009 No. 09-36
- ISSUES IN-DEPTH: A Closer Look at IFRS for SMEs August 2009 No. 09-2
- FASB Decisions on the Fair Value of Investments in Investment Companies August 2009 No. 09-35
- Financial Crisis Advisory Group’s Recommendations to Improve Financial Reporting July 2009 No. 09-34
- FASB and IASB to Significantly Change the Recognition and Measurement of Financial Instruments July 2009 No. 09-33
- FASB to Develop a Disclosure Framework July 2009 No. 09-32
- IASB Issues Simplified Version of IFRS that U.S. Nonpublic Companies May Use July 2009 No. 09-31
- FASB Codification to Be Sole Reference Source for Authoritative GAAP July 2009 No. 09-30
- Proposed Disclosures about the Credit Quality of Financing Receivables and Allowance for Credit Losses July 2009 No. 09-29
- EITF Reaches Consensus June 2009 No. 09-28
- Final Statements on Transfers of Financial Assets and Variable Interest Entities June 2009 No. 09-27
- SEC Conforms Staff Guidance on Business Combinations and Noncontrolling Interests to FASB Standards June 2009 No. 09-26
- Proposal on the Fair Value of Investments in Investment Companies June 2009 No. 09-25
- New Accounting for Not-for-Profit Mergers and Acquisitions June 2009 No. 09-24
- FASB Statement on Subsequent Events May 2009 No. 09-23
- Proposal to Reduce Interpretation 48 Disclosures and Add Guidance for Nonpublic Entities May 2009 No. 09-22
- Proposal on Measuring Liabilities at Fair Value May 2009 No. 09-21
- Final FASB Staff Positions on Fair-Value Measurements, Other-Than-Temporary Impairments, and Interim Disclosures of Fair Value April 2009 No. 09-20
- Proposed FASB Statement Would Make Codification GAAP, April 2009 No. 09-19
- Implications of Modifying Underwater Share Options, April 2009 No. 09-18
- Recognition and Measurement in a Business Combination of Assets and Liabilities Arising from Contingencies , April 2009 No. 09-17
- FASB to Issue Guidance on Fair-Value Measurements, Other-Than-Temporary Impairments, and Interim Disclosures of Fair Value, April 2009 No. 09-16
- FASB-IASB Preliminary Views on Lessee Accounting, March 2009 No. 09-15
- EITF Reaches Proposed Consensuses, March 2009 No. 09-14
- FASB Proposals on Fair-Value Measurements and Other-Than-Temporary Impairments, March 2009 No. 09-13
- FASB-IASB Advisory Group Requests Input on the Standard-Setting Implications of the Financial Crisis , March 2009 No. 09-12
- FASB Roundtable on Proposed Loss-Contingency Disclosures, March 2009 No. 09-11
- ISSUES IN-DEPTH: XBRL Fundamentals and the SEC’s New Rule, February 2009 No. 09-1
- Proposal to Require Interim Disclosures about Fair Value of Financial Instruments, January 2009 No. 09-9
- FASB Drops Proposal for Disclosures about Financial Assets, Adds Another , January 2009 No. 09-8
- EITF Deliberates the Scope of Statement 160, January 2009 No. 09-7
- Proposed Clarification of Credit-Derivative Scope Exception, January 2009 No. 09-6
- Disclosures in 2009 about Postretirement Benefit Plan Asset, January 2009 No. 09-5
- Changes in Impairment Accounting for Some Financial Instruments, January 2009 No. 09-4
- SEC Study Supports Fair-Value Accounting, Recommends Improvements, January 2009 No. 09-3
- Preliminary FASB-IASB Views on Revenue Recognition, January 2009 No. 09-2
- FASB Adds One-Year Deferral of Interpretation 48 for Nonpublic Entities, January 2009 No. 09-1
Revised Proposal to Clarify Embedded Credit-Derivative Scope Exception
This edition of KPMG's Defining Issues reports on the FASB’s revised proposal clarifying that embedded credit-derivative features related only to the transfer of credit risk in the form of subordination of one financial instrument to another would not be subject to potential bifurcation and separate accounting. Other embedded credit-derivative features would require further analysis to determine whether they must be accounted for separately. The proposed clarification provides guidance on whether bifurcation and separate accounting would be required for embedded credit-derivative features in financial instruments issued by structures such as collateralized debt obligations (CDOs) and synthetic CDOs.
ISSUES IN-DEPTH: Implementing the New Consensuses on Multiple Element Revenue Arrangements
This edition of KPMG’s Issues In-Depth describes the recently issued FASB Accounting Standards Updates on the separation criterion for recognizing revenue for multiple-deliverable revenue arrangements and on the applicability of the requirements for software revenue recognition to software-enabled devices. This edition also discusses potential challenges and provides implementation guidance for those responsible for applying the new requirements.
SEC Grants Six-Month Extension for Non-Accelerated Filers to Begin Complying with Final Stage of Sarbanes-Oxley
This edition of KPMG's Defining Issues reports on the SEC’s six-month extension for non-accelerated filers to begin complying with the final stage of the Sarbanes-Oxley Act of 2002. Section 404(b) now requires auditors to report on the effectiveness of internal control over financial reporting beginning with their annual reports for fiscal years ending on or after June 15, 2010 instead of December 15, 2009.
Measuring the Fair Value of Investments in Investment Companies
This edition of KPMG's Defining Issues reports on the FASB’s new Accounting Standards Update that allows investors to use net asset value to estimate the fair value of investments in investment companies that do not have a readily determinable fair value if the investees have the attributes of investment companies and the net asset values or their equivalents are calculated consistent with the AICPA Audit and Accounting Guide, Investment Companies, which generally requires investments to be measured at fair value. The approach has been made available as a “practical expedient” for investors in investment vehicles such as hedge funds, private equity funds, venture capital funds, and funds of funds, and in foreign and other vehicles, such as real estate funds.
G-20 Leaders Call for a Single Set of High-Quality, Global Accounting Standards by 2011
This edition of KPMG's Defining Issues reports on the Group of 20 meeting where leaders called on international accounting standard setters to redouble their efforts to achieve a single set of high-quality, global accounting standards through their independent standard-setting processes and complete their convergence project by June 2011.
FASB Reduces Nonpublic Entities’ Disclosures for Uncertainty in Income Taxes
This edition of KPMG's Defining Issues reports on a new FASB Accounting Standards Update that rescinds for nonpublic entities two disclosure requirements for uncertainty in income taxes and adds implementation guidance for all entities on applying the related accounting requirements. The implementation guidance is presented in examples and is not intended to change practice for those already applying the requirements.
FASB Proposal to Expand Disclosures about Fair-Value Measurements
This edition of KPMG's Defining Issues reports on a new FASB proposal that would require reporting entities to disclose information about how alternative inputs could affect their fair-value measurements as well as additional information about their fair-value measurements, all at a greater level of disaggregation. The additional disclosures would include information about the effect of “reasonably possible” alternative Level 3 inputs and transfers in and/or out of the Level 1 and 2 categories of inputs, increased disclosures of activity in Level 3 fair-value measurements, and other disclosures about inputs and valuation techniques.
The Scope of Accounting Requirements for Decreases in Ownership of a Subsidiary
This edition of KPMG's Defining Issues reports on a new FASB proposal to clarify the scope of the requirements for recognizing a decrease in the ownership of a subsidiary that were established in FASB Statement 160 on noncontrolling interests in financial statements. The proposal would require that Statement 160’s guidance be applied to all subsidiaries and groups of assets that are businesses or nonprofit activities, but not to in-substance sales of real estate. The proposal would also clarify that the Statement 160 decrease-in-ownership requirements would apply to transfers of a subsidiary that is a business or nonprofit activity to an equity-method investee or joint venture and to exchanges of a group of assets that constitute a business or nonprofit activity for a noncontrolling interest in another entity.
New Guidance on Measuring Liabilities at Fair Value
This edition of KPMG's Defining Issues reports on new FASB guidance that permits companies determining the fair value of a liability to use the perspective of an investor that holds the related obligation as an asset. The guidance, which modifies provisions originally in FASB Statement 157, addresses practice difficulties caused by the tension between fair-value measurements based on the price that would be paid to transfer a liability to a new obligor and contractual or legal requirements that prevent such transfers from taking place.
FASB Decisions on Loss-Contingency Disclosures
This edition of KPMG's Defining Issues reports on FASB decisions made in the course of considering input on its exposure draft on loss-contingency disclosures. The FASB did not rule out the possibility of requiring companies to provide additional loss-contingency disclosures in 2009 financial statements even though a great deal of work remains to be done to finalize a new standard on those disclosures, identified an objective and principles for disclosures about litigation contingencies, and began work on potential revisions to the exposure draft’s provisions.
ISSUES IN-DEPTH: A Closer Look at IFRS for SMEs
This edition of KPMG's Defining Issues reports on the IASB’s simplified version of IFRS available for use by “small and medium-sized entities,” or SMEs, if they are nonpublic entities without “public accountability” and local jurisdictions permit its use. Most U.S. nonpublic companies fit the SME definition and its use is permitted. This edition identifies decision-making considerations for U.S. entities evaluating whether to convert to IFRS for SMEs, compares IFRS for SMEs to U.S. GAAP, and explains the SME standard’s transition provisions.
FASB Decisions on the Fair Value of Investments in Investment Companies
This edition of KPMG's Defining Issues reports on the FASB’s decision to expand the circumstances in which a “practical expedient” may be used to estimate fair value to include investments in foreign and other entities (e.g., real estate funds) that have attributes of investment companies, report net asset value or its equivalent (e.g., partners’ capital) to their investors, and calculate net asset value or its equivalent consistent with the measurement principles of the AICPA Investment Companies Guide. This edition also covers other decisions made in deliberating the recently exposed draft standard on investments in investment companies.
Financial Crisis Advisory Group’s Recommendations to Improve Financial Reporting
This edition of KPMG's Defining Issues describes the recommendations made by the Financial Crisis Advisory Group, a body created by FASB and IASB to advise the Boards on the standard-setting implications of the financial crisis. The Advisory Group recommends that the FASB and IASB give financial-instrument accounting their highest priority and in doing so should pursue a simplified mixed-attribute model rather than require full fair value through earnings. The recommendations cover improving financial reporting, responding to the limitations in financial reporting, converging accounting standards, and strengthening standard setters’ independence and accountability.
FASB and IASB to Significantly Change the Recognition and Measurement of Financial Instruments
This edition of KPMG's Defining Issues reports on the positions of the FASB and IASB on how financial instruments should be recognized and measured, a joint project that could greatly change related requirements. The two Boards have deliberated separately thus far, and only the IASB has issued an exposure draft. They will be meeting together on July 24 to discuss future steps on the project.
FASB to Develop a Disclosure Framework
This edition of KPMG's Defining Issues reports on the FASB’s new project to develop a disclosure framework that is aimed at making financial-statement disclosures more effective, more coordinated, and less redundant, but is not necessarily intended to develop new disclosure requirements. The FASB anticipates issuing a preliminary views document in the first half of 2010.
IASB Issues Simplified Version of IFRS that U.S. Nonpublic Companies May Use
This edition of KPMG's Defining Issues reports on the IASB's simplified "public accountability" as an alternative to U.S. GAAP. The new IASB standard could be used by "small and medium-sized entities," or SMEs, if permitted by their local jurisdictions. U.S. nonpublic entities that do not have public accountability may be able to issue IFRS financial statements using either full IFRS or IFRS for SMEs, and U.S. auditors are not prohibited from issuing unqualified audit opinions on those financial statements.
FASB Codification to Be Sole Reference Source for Authoritative GAAP
This edition of KPMG's Defining Issues reports on a proposed FASB Statement that would require companies to disclose additional information about the allowance for credit losses and the credit risks inherent in loan and lease portfolios, starting with the first interim or annual reporting period ending after December 15, 2009. The disclosures would include information about accounting policies for estimating the allowance for credit losses, qualitative and quantitative information about the credit risk inherent in the financing receivable portfolio, the methods used in determining the components of the allowance for credit losses, and quantitative information about the changes in receivables and the related allowance for credit losses.
Proposed Disclosures about the Credit Quality of Financing Receivables and Allowance for Credit Losses
This edition of KPMG's Defining Issues describes the fundamentals of the FASB’s Accounting Standards Codification and how new FASB Statement 168 will make it the exclusive authoritative reference for nongovernmental U.S. GAAP for use in financial statements issued for interim and annual periods ending after September 15, 2009, except for SEC rules and interpretive releases, which are also authoritative GAAP for SEC registrants. Statement 168 divides nongovernmental U.S. GAAP into the authoritative Codification and guidance that is nonauthoritative, doing away with the previous four-level hierarchy.
EITF Reaches Consensus
This edition of KPMG's Defining Issues describes the EITF’s Consensus on share-lending arrangements in connection with a convertible debt offering and its Proposed Consensuses on the separation criterion for recognizing revenue for arrangements with multiple deliverables and on the scope of the AICPA Statement of Position on software revenue recognition. This edition also covers the Task Force’s discussions on applying the milestone method of revenue recognition, accounting for in-process-research-and-development assets acquired in a transaction that is not a business combination, and a seller’s accounting for contingent consideration.
Final Statements on Transfers of Financial Assets and Variable Interest Entities
This edition of KPMG's Defining Issues reports on new FASB Statements 166 and 167, which are expected to cause more variable interest entities (VIEs) to be consolidated and will establish more stringent criteria to govern whether transfers of financial assets are accounted for as sales. The new Statements change the initial measurement of a transferor’s interest in transferred financial assets, eliminate the concept of a “qualifying special-purpose entity” (QSPE), require reporting entities to evaluate former QSPEs for consolidation, revise the approach to determining a VIE’s primary beneficiary (the reporting entity that must consolidate the VIE), and require companies to more frequently reassess whether they must consolidate VIEs.
SEC Conforms Staff Guidance on Business Combinations and Noncontrolling Interests to FASB Standards
This edition of KPMG's Defining Issues reports on new SEC Staff Accounting Bulletin 112, which conforms SEC staff guidance on business combinations and noncontrolling interests to FASB Statements 141R and 160.
Proposal on the Fair Value of Investments in Investment Companies
This edition of KPMG's Defining Issues reports on a proposed FASB Staff Position that, as a practical expedient, would permit investors to estimate the fair value of investments in investment companies for which the investment does not have a readily determinable fair value using net asset value per share or its equivalent, such as partners’ capital per share for an investment in a partnership.
New Accounting for Not-for-Profit Mergers and Acquisitions
This edition of KPMG's Defining Issues reports on new FASB Statement 164, which gives not-for-profit organizations specific guidance on accounting for mergers and acquisitions, ending their reliance on analogies to business-combination accounting and preparing the way for more uniform presentations. The Statement’s requirements prescribe how to determine whether a combination is a merger or an acquisition, how to account for each, and the disclosures that should be made.
FASB Statement on Subsequent Events
This edition of KPMG's Defining Issues reports on FASB Statement 165, which incorporates accounting and disclosure requirements related to subsequent events into U.S. GAAP, making management directly responsible for subsequent-events accounting and disclosure. The Statement’s requirements for subsequent-events accounting and disclosure are not significantly different from those in auditing standards.
Proposal to Reduce Interpretation 48 Disclosures and Add Guidance for Nonpublic Entities
This edition of KPMG's Defining Issues reports on a proposed FASB Staff Position that would eliminate some disclosures nonpublic entities are now required to make under Interpretation 48 on accounting for uncertainty in income taxes and would provide additional guidance for both pass-through and tax-exempt not-for-profit entities on how to comply with the Interpretation. The Staff Position would be effective when issued for all nonpublic entities currently applying Interpretation 48. Nonpublic entities that elected to defer adopting the Interpretation would have to apply the Staff Position when adopting the Interpretation for annual periods beginning after December 15, 2008.
Proposal on Measuring Liabilities at Fair Value
This edition of KPMG's Defining Issues reports on a proposed FASB Staff Position that would make the prices of traded investments in debt obligations a key part of the obligor’s measurement of the fair value of its liability. The proposed guidance addresses the tension between Statement 157’s measurement concept that envisions exchanges between market participants and common contractual terms that prevent transferring liabilities to other parties.
Final FASB Staff Positions on Fair-Value Measurements, Other-Than-Temporary Impairments, and Interim Disclosures of Fair Value
This edition of KPMG's Defining Issues reports on the FASB’s final Staff Positions that clarify the application of Statement 157 to fair-value measurements in the current economic environment, modify the recognition of other-than-temporary impairments of debt securities, and require companies to disclose the fair values of financial instruments in interim periods. The final Staff Positions are effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009, if all three Staff Positions or both the fair-value measurements and other-than-temporary impairment Staff Positions are adopted simultaneously.
Proposed FASB Statement Would Make Codification GAAP
This edition of KPMG's Defining Issues describes a new proposal that, assuming adoption without modification, would make the FASB Accounting Standards Codification the sole source of authoritative GAAP as of July 1, 2009, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants.
Implications of Modifying Underwater Share Options
This edition of KPMG's Defining Issues describes the accounting implications of the more common approaches to modifying share options and some basic factors that should be considered when a company tailors a modification strategy to its specific circumstances.
Recognition and Measurement in a Business Combination of Assets and Liabilities Arising from Contingencies
This edition of KPMG's Defining Issues reports on a new FASB Staff Position that reinstates most of Statement 141’s requirements for recognizing and measuring preacquisition contingencies in business combinations, thereby eliminating Statement 141R’s threshold for recognizing noncontractual contingencies at fair value and its requirement to measure all contractual contingencies at fair value. However, companies applying the Staff Position are likely to recognize most warranty obligations at fair value.
FASB to Issue Guidance on Fair-Value Measurements, Other-Than-Temporary Impairments, and Interim Disclosures of Fair Value
This edition of KPMG's Defining Issues reports the FASB’s decision to issue three related Staff Positions to clarify the guidance in Statement 157 for fair-value measurements in inactive markets, modify the recognition and measurement of other-than-temporary impairments of debt securities, and require companies to disclose the fair values of financial instruments in interim periods. The final Staff Positions will be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.
FASB-IASB Preliminary Views on Lessee Accounting
This edition of KPMG's Defining Issues reports on preliminary views jointly developed by the FASB and IASB that would require lessees to put all leases on their balance sheets, including those currently classified as operating leases, recognizing a right-of-use asset and a finance liability for each lease. The Boards’ goal is to issue final lessee accounting standards in 2011.
EITF Reaches Proposed Consensuses
This edition of KPMG's Defining Issues describes the EITF’s new proposed Consensuses on applying the milestone method of revenue recognition and on share-lending arrangements in connection with a convertible debt offering. This edition also covers the Task Force’s progress on accounting for in-process research and development assets acquired in a transaction that is not a business combination, the separation criterion for recognizing revenue for arrangements with multiple deliverables, and whether the scope of the AICPA Statement of Position on software revenue recognition should exclude software-enabled devices.
FASB Proposals on Fair-Value Measurements and Other-Than-Temporary Impairments
This edition of KPMG's Defining Issues reports on new, fast-track proposed FASB Staff Positions that would change how companies determine whether an observed transaction price or a quote from a broker or pricing service is a “forced liquidation price” or a “distressed sale price” and therefore assumed not to be representative of fair value, and how other-than-temporary impairments of investments in debt and equity securities are recognized and measured. If adopted without change, the proposals would be effective prospectively for interim and annual periods ending after March 15, 2009. Comments are due by April 1.
FASB-IASB Advisory Group Requests Input on the Standard-Setting Implications of the Financial Crisis
This edition of KPMG's Defining Issues reports on the request by the Financial Crisis Advisory Group of the FASB and IASB for written comments on specific questions and issues. The purpose of the Advisory Group’s request is to obtain assistance in its consideration of accounting and reporting matters related to the financial crisis and in making recommendations to the Boards.
FASB Roundtable on Proposed Loss-Contingency Disclosures
This edition of KPMG's Defining Issues reports on the FASB’s recent public roundtable meetings on disclosing loss contingencies, at which participants discussed concerns about the potential disclosure in the financial statements of information that could be prejudicial in litigation, how to balance such concerns with investors’ requests for more information about contingencies, and several other matters constituents raised in letters commenting on the related proposed FASB Statement. Board members participated in both roundtable sessions along with public-and private-company preparers, financial-statement users, attorneys, regulators, and auditors.
ISSUES IN-DEPTH: XBRL Fundamentals and the SEC’s New Rule
This edition of KPMG's Issues In-Depth briefly explains the fundamentals of reporting in the XBRL computer language that SEC registrants other than investment companies will be required to start using to submit exhibits to their filed financial statements in a phased-in program over the next three years. The exhibits must include XBRL-formatted financial statements, notes, and financial-statement schedules. This edition explains how XBRL works, what the new rule requires, and how to keep up with XBRL developments.
Proposal to Require Interim Disclosures about Fair Value of Financial Instruments
This edition of KPMG's Defining Issue reports on a proposed FASB Staff Position that would require companies to disclose the fair value of financial instruments within the scope of Statement 107 in interim financial statements, adding to the Statement’s requirement to make those disclosures in annual financial statements. The Staff Position would be effective for interim periods ending after March 15, 2009, and would require comparative interim disclosures only for comparative interim periods ending after the proposed effective date.
FASB Drops Proposal for Disclosures about Financial Assets, Adds Another
This edition of KPMG's Defining Issue reports on the FASB’s decision not to issue a final Staff Position on its original proposal to require additional disclosures about financial assets that are not measured at fair value through earnings—i.e., debt securities classified as held-to-maturity or available-for-sale, loans, and long-term receivables. Instead, the Board agreed to propose changes to Statement 107 that would require companies to disclose the fair value of financial instruments in interim financial statements as well as annual financial statements.
EITF Deliberates the Scope of Statement 160
This edition of KPMG's Defining Issue reports on the Emerging Issues Task Force’s deliberations on EITF 08-10’s questions about the applicability of Statement 160 to three types of transactions. The three transactions are sales of an interest in a subsidiary that is in substance real estate, transfers of an interest in a subsidiary to an equity-method investee, and transfers of an interest in a subsidiary in exchange for a joint-venture interest. The Task Force continues to support the conclusions on these transactions that were exposed for public comment, but will reconsider EITF 08-10 in light of broader issues on Statement 160’s applicability at its March meeting.
Proposed Clarification of Credit-Derivative Scope Exception
This edition of KPMG's Defining Issue reports on a proposed FASB amendment of Statement 133 to clarify when embedded credit-derivative features, including those in collateralized debt obligations (CDOs) and synthetic CDOs, are not embedded derivatives subject to potential bifurcation and separate accounting. The proposal holds that an embedded credit-derivative feature related only to the concentration of credit risk in the form of subordination of one financial instrument to another is not an embedded derivative that is subject to Statement 133. Comments on the proposal are due February 13, 2009.
Disclosures in 2009 about Postretirement Benefit Plan Assets
This edition of KPMG's Defining Issue reports on a new FASB Staff Position that will require employers to make additional disclosures about plan assets for defined benefit pension and other postretirement benefit plans beginning with annual periods ending after December 15, 2009. The requirements apply to entities that are subject to Statement 132R’s disclosure requirements.
Changes in Impairment Accounting for Some Financial Instruments
This edition of KPMG's Defining Issue reports on a new FASB Staff Position that requires companies to recognize other-than-temporary impairments of beneficial interests in securitized financial assets within the scope of EITF 99-20 if current information and events indicate it is “probable” that there has been an adverse change in the instrument’s future cash flows. Interest income for such beneficial interests must be based on the same cash flow estimate. The Staff Position must be applied prospectively in interim and annual reporting periods ending after December 15, 2008 (in the fourth quarter of 2008 for public companies with a calendar year-end).
SEC Study Supports Fair-Value Accounting, Recommends Improvements
This edition of KPMG's Defining Issue reports on major findings in the SEC’s Congressionally mandated study of fair-value accounting, including that investors generally support fair-value accounting, that it did not cause banks and other financial institutions to fail during 2008, and that it should not be suspended. The study’s recommendations for improvement include reconsidering the accounting standards for recognizing impairment losses on financial instruments and providing additional guidance on measuring fair value in illiquid or inactive markets.
Preliminary FASB-IASB Views on Revenue Recognition
This edition of KPMG's Defining Issue describes a preliminary views paper on revenue recognition the FASB jointly developed with the IASB, a key step in their efforts to develop comprehensive, converged requirements. The Boards favor measuring revenue based on the original transaction price in the contract, and the preliminary views paper is a key step in the development of a single, comprehensive model for revenue recognition, an approach that would eliminate the extensive industry-specific guidance in U.S. GAAP.
FASB Adds One-Year Deferral of Interpretation 48 for Nonpublic Entities
This edition of KPMG's Defining Issue reports on a new FASB Staff Position that defers for an additional year the effective date of Interpretation 48, on accounting for uncertainty in income taxes, for all nonpublic entities that have not already applied the Interpretation in a full set of annual financial statements and are not consolidated in a public company’s GAAP financial statements. The new effective date, for periods beginning after December 15, 2008, extends the one-year deferral for nonpublic entities granted in February of last year.
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