The Salbergco News & Events Review

Auditor Independence

2011-08-15T17:02:00.000-04:00

The Public Company Accounting Oversight Board plans to hold an open meeting to discuss its proposed regulations calling for greater auditor independence and mandatory rotation of audit firms.

The PCAOB will consider a “concept release” that would solicit public comments on ways to enhance the independence, objectivity and professional skepticism of audit firms. Among the proposals the PCAOB plans to consider is one requiring mandatory audit firm rotation.

How to recognize a troubled debt restructuring

2011-07-15T13:00:00.000-04:00

With the recent economic downturn still currently in focus, the Financial Accounting Standards Board has noted that creditors have significantly increased the volume of debt they are restructuring or modifying. Read more at http://news.cpamerica.org/salberg/newsletter/article.asp?a=98

IFRS Updates

2011-07-09T10:12:00.001-04:00

As the Securities and Exchange Commission moves closer to deciding whether to incorporate International Financial Reporting Standards, debate intensifies over how it should -- and, more fundamentally, whether it should. Some fear that politics will influence international standards setting. Another argument against the international standards is that accounting transparency in the U.S. has attracted international investors, and it would be foolish to give up that advantage.

PCAOB Issues Concept Release

2011-06-21T12:22:00.001-04:00

PCAOB Issues Concept Release
On Auditor's Reporting Model

The Public Company Accounting Oversight Board today issued a concept release to discuss alternatives for changing the auditor's reporting model. The Board also announced that it will convene a public roundtable to discuss the concept release in the third quarter of 2011.

PCAOB Adopts Interim Inspection Program for Broker-Dealer Audits

2011-06-17T15:07:00.000-04:00

The Public Company Accounting Oversight Board (PCAOB) adopted without material change a proposed temporary rule that establishes an interim inspection program for audits of securities brokers and dealers as permitted by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The board said that insights gained through the interim program will inform the eventual determination of the scope and elements of a permanent program, which the board expects to propose by 2013.

New PCAOB Guide

2011-06-08T19:28:00.000-04:00

The PCAOB has released its new "In Depth Guide to Public Company Auditing". You can access it at:

http://www.thecaq.org/publications/In-Depth_GuidetoPublicCompanyAuditing.pdf

If you need auditing services for your public company contact Salberg & Company, P.A. at 561-995-8270 or email at info@salbergco.com.

SEC proposes U.S. GAAP reporting taxonomy using XBRL

2010-09-02T16:56:00.003-04:00

The Securities and Exchange Commission and the Financial Accounting Foundation have released a proposed taxonomy using eXtensible Business Reporting Language that public companies must use while filing U.S. GAAP financial reports in 2011. The SEC is accepting public comments on its proposal until Oct. 30 and plans to release a final mandate early next year.

To read more click on the WebCPA link in the title above.

Proposed Accounting Standards May Require Operating Leases to be Recorded on the Balance Sheet

2010-08-22T22:22:00.000-04:00

Currently, lease accounting requires certain leases to be recorded as assets and related liabilities for payments due when the terms of the lease meet certain criteria that in substance makes them similar to a purchase. In general, leases that do not meet this criteria are considered operating leases. Operating leases are considered to be executory contracts that do not result in obligations (liabilities)and therefore the payments due in the future under such leases are disclosed only in the footnotes as commitments and no assets are recorded on the balance sheet. Approval of this proposal may cause assets and liabilities on balance sheets to increase significantly. Since assets are depreciated using various methods while lease liabilities are amortized based on the interest rate and payments made, this change to lease accounting will likely change certain key company ratios such as the current ratio which provides indications of liquidity.

Dodd-Frank Financial Regulatory Reform Bill

2010-07-28T19:29:00.000-04:00

On July 21, 2010 the President signed the Dodd-Frank Reform Bill. Two significant new regulations in the bill relating to publicly-held companies and auditors are that it exempts smaller businesses from SOX 404(b) internal control audit requirements and it make auditors of broker-dealers subject to PCAOB regulation.

Next Phase of XBRL Reporting Due for June 30, 2010 Form 10-Qs

2010-06-03T13:32:00.001-04:00

The next phase-in date is June 30, 2010 for large accelerated filers to file XBRL Data in their SEC filings

The following are excerpts from the SEC final rule released last year in April 2009:

Companies Covered by New Rules and Phase-in

The new rules will cover all companies that report either in U.S. GAAP, including smaller reporting companies and foreign private issuers that report in U.S. GAAP or, in the case of foreign private issuers, in accordance with IFRS as issued by the IASB. 129

When companies must begin including XBRL data in their filed reports

For public companies, the requirement to provide interactive XBRL data with their filings is phased in as follows:

U.S. domestic and foreign large accelerated filers with a world-wide public equity float above $5 billion as of the end of the second fiscal quarter of their most recently completed fiscal year and that file using U.S. GAAP (approximately 500 companies) must provide interactive data in their reports beginning with their first report on Form 10-Q , or first annual report on Form 20-F or Form 40-F , that contains financial statements for a fiscal period that ends after June 14, 2009.

All other domestic and foreign large accelerated filers that file using U.S. GAAP must provide interactive data reports beginning with their first report on Form 10-Q , or first annual report on Form 20-F or Form 40-F , that contains financial statements for a fiscal period that ends after June 14, 2010.

Other companies, including smaller reporting companies, that file using U.S. GAAP must provide interactive data in their reports beginning with their first report on Form 10-Q , or first annual report on Form 20-F or Form 40-F , that contains financial statements for a fiscal period that ends after June 14, 2011.

Foreign private issuers that file using International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) must provide interactive data in their reports beginning with their first annual report on Form 20-F or Form 40-F that contains financial statements for a fiscal period that ends after June 14, 2011.

Under this phase-in system, an issuer's first filing with required interactive XBRL data is a quarterly report on Form 10-Q or, in the case of a foreign private issuer that does not file U.S. domestic forms, an annual report on Form 20-F or Form 40-F .

Release 33-9002 says the SEC staff will consider requests to defer the phase-in on a case-by-case basis for issuers with special circumstances, particularly where the filer is committed to switching its basis of reporting to IFRS as issued by the IASB. Issuers can make such requests by applying for a continuing hardship exemption under amended Rule 202 of Regulation S-T .

After the phase-in is completed, new filers will be required to submit XBRL data beginning with their first periodic report on Form 10-Q or, for foreign private issuers, the first annual report on Form 20-F or Form 40-F

Consequences of Non-Compliance and Hardship Exemption

The new rules provide, as proposed, that if a filer does not make the required interactive data submission, or post the interactive data on the company Web site, by the required due date, the filer will be unable to use short form registration statements on Forms S-3, F-3, or S-8. 294 This disqualification will last until the interactive data are provided. During the period of disqualification, the filer also will be deemed not to have available adequate current public information for purposes of the resale exemption safe harbor provided by Rule 144. 295 Once a filer complies with the interactive data submission and posting requirements—provided it previously filed its financial statement information in traditional format on a timely basis—it will be deemed to be timely and current in its periodic reports.

Audit Committee Alert: Current Accounting Issues and Risks

2010-05-11T21:04:00.004-04:00

The AICPA has published an alert to aide audit committees.

Regulatory Information and Financial Reporting:

Audit committees must be aware of the provisions of the Sarbanes-Oxley Act, along with associated regulations promulgated by bodies such as the Securities and Exchange Commission, the National Association of Securities Dealers, the New York Stock Exchange and others. This section offers a rundown of relevant regulations.

Click above for the full articles:

Legislation of some accounting standards for financial reporting?

2010-05-11T20:47:00.001-04:00

Seven accounting and business organizations have signed a letter objecting to the Brown amendment, which would legislate some accounting standards for financial reporting. Click here for full story.

IFRS Delayed Until 2015

2010-03-10T00:32:00.000-05:00

The Securities and Exchange Commission on Wednesday unanimously supported work on a plan under which 2015 would likely be the earliest possible date for the required use of International Financial Reporting Standards by U.S. public companies. The plan envisions continued study of IFRS and a 2011 vote on whether to mandate conversion to the international standards. SEC Chairman Mary Schapiro stressed that the commission is "on track to make a recommendation in 2011." (Source: CPA Letter)

SEC Approves the PCAOB Engagement Quality Review Standard For Public Company Audits

2010-01-18T20:58:00.002-05:00

The new PCAOB Auditing Standard No. 7 expands the existing requirements for concurring reviews. According to the PCAOB, a well-performed engagement quality review can serve as an important safeguard against erroneous or insufficiently supported audit opinions and contribute to audit quality. The review serves as a check on the work performed by the engagement team, and the PCAOB believes it would increase the likelihood that a registered public accounting firm would identify any significant engagement deficiencies before it issues its audit report. (Source: WebCPA)

The standard is significantly more stringent than the current concurring review requirement and of course will add some more time and cost to the audits.

XBRL Fast Approaching

2010-01-15T16:51:00.001-05:00

Most U.S. public companies that will be required to file their financial statements with the Securities and Exchange Commission using eXtensible Business Reporting Language (XBRL) are actively preparing to do so. Most filers report taking more than 120 hours to prepare for the first round of submissions, according to a survey by the AICPA and XBRL US. Source CPA Letter and JournalofAccountancy.com

Audit committee self -assessment

2009-12-29T19:56:00.000-05:00

The AICPA recently published an article: Self-Evaluation: A Primer for Audit committees. It discusses how Audit committees should consider conducting an annual comprehensive self-evaluation of their performance and effectiveness. The audit committee’s self evaluation should employ a straightforward approach that will aid the committee in assessing its strengths and lay a foundation for future improvement. To read more click below:

http://www.aicpa.org/download/audcommctr/Audit_Comm_dec09_linked.pdf

Another CPA firm is de-registered from the PCAOB and charged with fraud.

2009-12-23T12:12:00.003-05:00

Another CPA firm is de-registered from the PCAOB and charged with fraud. Issuers should be careful when selecting a PCAOB registered auditor. Selecting the "low priced" auditor will often result in low quality service, issuer restatements and issuer reaudits costing the issuer more money in the long run and possibly damaging trading prices of the issuers capital stock. Below is the summary disciplinary proceeding posted yesterday by the PCAOB and a link to the PCAOB website with the full story.

ORDER INSTITUTING DISCIPLINARY PROCEEDINGS,
MAKING FINDINGS, AND IMPOSING SANCTIONS

In the Matter of The Blackwing Group, LLC and Sara L. Jenkins, CPA, Respondents.
PCAOB Release No. 105-2009-007
December 22, 2009

http://www.pcaobus.org/Enforcement/Disciplinary_Proceedings/2009/12-22_Blackwing.pdf

Happy Holidays!

2009-12-20T11:57:00.000-05:00

SEC abandons surprise audit rule for certain advisers

2009-12-17T10:16:00.000-05:00

The Securities and Exchange Commission dropped a proposal to require additional audits for investment advisers whose only fees are deducted from client accounts. The SEC also approved revised regulations that do not call for the audit of advisers that do not have custody of assets. Earlier this year, the AICPA made specific recommendations to the proposed rule amendments, including that the focus of the applicability of the surprise examination requirement be on advisers posing the greatest degree of risk. (Source: The Washington Post)

House Passes Sweeping FInancial Reform

2009-12-14T11:01:00.000-05:00

The U.S. House of Representatives on Dec. 11 adopted a sweeping financial regulatory reform bill, "The Wall Street Reform and Consumer Protection Act of 2009," by a vote of 223 to 202. The bill would create a new Consumer Financial Protection Agency, under which CPAs who provide financial planning, tax planning and tax return preparation, as well as financial literacy education to consumers, would not be subject to new and duplicative CFPA regulation under a provision won by the AICPA. In addition, the bill gives the Public Company Accounting Oversight Board authority to inspect or exempt auditors of introducing broker-dealers through a regulatory process and exempts non-accelerated filers with market values below $75 million from Sarbanes-Oxley Section 404(b) internal control (Source: The CPA Letter)

Now onto the Senate. The Senate is working on its own version of the package.

FASB Codification Article from AICPA

2009-12-12T08:31:00.002-05:00

FASB Accounting Standards Codification:

A Primer For Audit Committees

This major restructuring of accounting and reporting standards is designed to simplify user access to all authoritative GAAP.

What is FASB Accounting Standards Codification?

The Financial Accounting Standards Board’s Accounting Standards Codification (FASB ASC) represents a major shift in the organization and presentation of U.S. generally accepted accounting principles (GAAP). This major restructuring of accounting and reporting standards is designed to simplify user access to all authoritative GAAP by providing the authoritative literature in a topically organized structure.

What steps were taken to achieve FASB ASC?

FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the Emerging Issues Task Force, and the AICPA) to organize them under approximately 90 topics and include all accounting standards issued by a standard setter in levels A–D of the current U.S. GAAP hierarchy. FASB ASC also includes relevant portions of authoritative content issued by the SEC, plus selected SEC staff interpretations and administrative guidance issued by the SEC.

What else do I need to know about FASB ASC?

FASB ASC is not the offi cial source of SEC guidance and does not contain the entire population of SEC rules, regulations, interpretive releases and staff guidance. Moreover, FASB ASC does not include governmental accounting standards. ASC is not intended to change U.S. GAAP or any requirements of the SEC.

Among other things, the FASB ASC project aims to:

• Reduce the time and eff ort required to solve an accounting research issue

• Mitigate the risk of noncompliance with standards through improved usability of the literature

• Provide accurate information with real-time updates as new standards are released

• Assist FASB with research and convergence eff orts required during the standard setting process

• Become the authoritative source of literature for the completed XBRL taxonomy

When will this have an impact on my company?

On June 3, the Financial Accounting Standards Board announced it is officially launching the FASB Accounting Standards Codifi cation™ (FASB ASC) on July 1. The codifi cation will be eff ective for interim and annual periods ending after September 15, 2009 – meaning preparers must start June 2009

AUDIT COMMITTEE BRIEF
From the Audit Committee Effectiveness Center 2510-347

DISCLAIMER:
This publication has not been approved, disapproved or otherwise acted upon by any senior technical committees of, and does not represent an offi cial position of, the American Institute of Certifi ed Public Accountants. It is distributed with the understanding that the contributing authors and editors, and the publisher, are not rendering legal, accounting, or other professional services in this publication. If legal advice or other expert assistance is required, the services of a competent professional should be sought.

© 2009 The American Institute of Certifi ed Public Accountants

2009-11-28T11:22:00.000-05:00

Salberg & Company, P.A. is a PCAOB registered CPA firm focusing on financial statements audits for small and micro cap publicly-held companies. Contact us at 561-995-8270 or info@salbergco.com.

Scott Salberg, CPA