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The Resource for the Global Finance Profession

Governance, Accounting and Compliance Weekly: September 12, 2011

  • By Salome Tinker, CPA
  • Published: 2011-09-12

Greetings All,

Here is your weekly governance, accounting and compliance update.


AFP will host a Foreign Bank Account Reporting (FBAR) webinar on September 22 at 3:30 ET. The webinar, titled Dispelling the Myths of the FBAR's Individual Reporting Requirements - What's My Corporate and Individual Exposure, will discuss FBAR changes, to whom they are applicable to, deadlines and extensions granted, issues with obtaining the required information, and noncompliance issues. For more information or to register please click on the below link:

AFP will also host a webinar titled, What Now?  Making Sense of the Current Environment for Cash Investors, on September 15, 2011 at 3:30 pm ET.  BlackRock's cash management portfolio management team will give their perspectives around current market conditions, reviewing the environment for cash investors in the U.S. and international markets while providing their insights into cash investment strategies for the short and medium term. For more information or to register please click on the below link:


At its September 7 meeting, FASB proposed adding both qualitative and quantitative disclosures for interim and annual reporting periods on liquidity and interest rate risk (annually only for nonpublic and nonfinancial entities).

For interest rate risk and liquidity risk arising from financial instruments, an entity would qualitatively disclose the exposure to risks and how they arise; its objectives, policies, and processes for managing the risks and the methods used to measure the risks; and any changes in from the previous period.

All reporting entities would provide quantitative disclosure about their available liquid funds, which includes unencumbered cash and high-quality liquid assets, and borrowing availability such as lines of credit. This disclosure would include a discussion about the effect of regulatory, tax, legal, and other restrictions that could limit the transferability of funds among entities in the consolidated group, for example, between the parent company and subsidiaries.  Nonfinancial entities would provide a tabular disclosure of their undiscounted cash obligations, including off-balance-sheet obligations.

FASB also concluded that only financial institutions would provide quantitative disclosures about interest rate risk.

Two topics related to classification and measurement of financial instruments were also discussed.

Conditional Fair Value Option for Groups of Financial Assets and Financial Liabilities

FASB decided that at initial recognition, an entity would be permitted to measure a group of financial assets and financial liabilities at fair value with changes in fair value recognized in net income if the entity (1) manages the net exposure relating to those financial assets and financial liabilities (which may be derivative instruments) and (2) provides information on that basis to the reporting entity's management.

Hybrid Financial Assets

FASB decided that for hybrid financial assets, an entity would be permitted, at initial recognition, to apply a conditional fair value option to avoid bifurcation and separate accounting of an embedded derivative feature. An entity would be permitted to measure a hybrid financial asset at fair value in its entirety after the entity has determined that an embedded derivative feature exists that otherwise would require bifurcation and separate accounting.

FASB chairman added a short-term, narrow-scope project to the FASB agenda to simplify the manner in which an entity tests other indefinite-lived intangible assets for impairment.


The International Accounting Standards Board (IASB) published an effect analysis for IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, and IFRS 11 Joint Arrangements. The effect analysis provides detailed insights into the potential impacts of the new requirements using case studies and other quantitative and qualitative material, as appropriate.


The Federal Deposit Insurance Corp. (FDIC) announced the launch of a new program to encourage small investors and asset managers to partner with larger investors to participate in the FDIC's structured transaction sales for loans and other assets from failed banks. The Investor Match Program will help to facilitate partnerships in order to bring together sources of capital and expertise. Participants in the program will use a customized database to identify potential collaborations, which will be identified at the sole discretion of the participating firms.


The Securities and Exchange Commission (SEC) is seeking public comment on the process it should use to conduct retrospective reviews, such as how often rules should be reviewed, the factors that should be considered, and ways to improve public participation in the rulemaking process. Public comments should be received by Oct. 6, 2011.  This action is in response to the President's order issued on July 11 that recommended that independent regulatory agencies consider how they might best analyze rules that may be outmoded, ineffective or excessively burdensome, and modify, streamline or repeal them. The order also recommends analysis of regulations that might need to be strengthened or modernized, which may entail new rulemaking.


The Public Company Accounting Oversight Board (PCAOB) announced the names of the participants in the roundtable discussion next week on its concept release on possible changes to the auditor's reporting model.  As announced on Aug. 25, 2011, the objective of the roundtable is to obtain insight from investors and other users and preparers of financial statements, audit committee members, academics and auditors into the alternatives presented in the concept release for changing the auditor's reporting model, as well as any other alternatives not discussed in the concept release. Some of the participants include:

• Steven Buller, Managing Director, BlackRock Inc.
• Mary Hartman Morris, Investment Officer, Global Equity, California Public Employees' Retirement System (CalPERS)
• Gary R. Kabureck, Vice President and Chief Accounting Officer, Xerox Corp.
• Mark LaMonte, Managing Director, Chief Credit Officer – Financial Institutions Group, Moody's Investors Service
• Peter H. Nachtwey, Chief Financial Officer, Legg Mason Inc.
• Mark Newsome, Managing Director, ING Capital LLC

Senate Banking Committee

The Senate Banking Committee unanimously approved Martin J. Gruenberg as chairman of the FDIC board, Thomas J. Curry as comptroller of the currency and S. Roy Woodall, Jr. to be the independent voting member on the Financial Stability Oversight Council with expertise in the insurance market.

House Financial Services Committee

Republicans on the Financial Services Committee, concerned that the increasing regulatory burden is hurting job creation, are questioning Treasury Secretary Timothy Geithner on whether the Administration is living up to a promise that it would "streamline and simplify" regulations when implementing the Dodd-Frank Act.  During a news conference in the Capitol on Thursday, Committee Chairman Spencer Bachus and other Republican members released their letter to Secretary Geithner asking for a status report on what is being done to lessen the negative impact Dodd-Frank's 400 new regulations will have on private sector job creators.


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