Subsequent Events Proposal Issued By FASB; Final ASUs Incorporating FAS 166, 167 Into Codification

A few days prior to year-end, FASB released a Proposed Accounting Standards Update—Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. (See the Proposed ASU-Subsequent Events). The main provisions are as follows:

• An entity that files or furnishes financial statements with the SEC would be required to evaluate subsequent events through the date that the financial statements are issued.
• If an entity does not file or furnish financial statements with the SEC, it would evaluate subsequent events through the date the financial statements are available to be issued unless the entity has a current expectation of widely distributing its financial statements to its shareholders and other financial statements users, in which case it would evaluate subsequent events through the date that the financial statements are issued.
• An entity that files or furnishes fiancial statements with the SEC would not be required to disclose the date through wich subsequent events have been evaluated. This change would alleviate potential conflicts between Subtopic 855-10 and the SEC's requiremens.
• The glossary of Topic 855 would be amended to remove the definition of a public entity. The definition of a public entity in Topic 855 was used to determine the date through which subsequent events should be evaluated. Based on the proposed amendments, that definition would no longer be necessary for purposes of Topic 855.

Issue Raised Following Issuance of FAS 165, Subsequent Events
As noted in the Background Information and Basis for Conclusions section in the proposed ASU, an issue regarding application of FAS 165, Subsequent Events, arose after that statement was issued on May 28, 2009. As described in para. BC2 and BC3 of the proposed ASU (reformatted into bullets):

• After the issuance of its guidance on subsequent events in Topic 855 (originally issued as FASB Statement No. 165, Subsequent Events), the Board was informed that the SEC has specific requirements related to the identification and disclosure of subsequent events that potnetially conflucted with certain aspects of the guidance.
• Furthermore, SEC requirements are clear on registrants' responsiblities for evaluating subsequent events.
• This proposed Update would amend U.S. GAAP to no longer require disclosure of either the original issuance date when an entity files or furnishes financial statements with the SEC.
• However, the board decided to clarify that this proposed Update would have no effect on disclosure of the original issuance date for an entity that does not file or furnish financial statements with the SEC.
• When the Board issued its subequent events guidance, it was primarily concerned that the disclosure of the date for the evaluation of subsequent events be updated when an entity resated its financial statements, that is, revised for either correction of an error or retrospective application of U.S. GAAP.
• Therefore, the Board decided to clarify which reissuances would be subject to those disclosures by replacing the term reissuance with restated. Restated financial statements include financial statements revised as a result of correction of an error or retrospective application of U.S. GAAP.

The comment deadline on the Proposed ASU on Subsequent Events is Jan. 28, 2010.

Final ASUs Issued Incorporating FAS 166, 167 Into Codification
Separately, on December 23, FASB posted two final ASUs, which communicate that FASB has formally place FAS 166 and FAS 167 into the FASB codification:

· ASU No. 2009-17—Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities
· ASU No. 2009-16—Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets

Read about some earlier FASB-IASB-SEC-PCAOB releases here, and see info about an upcoming deadline to apply for the SEC Professional Accounting Fellow (PAF) program here.

Happy New Year to all of our readers, your families, colleagues and friends!

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SEC Seeks PAFs: Jan. 13 Deadline

[EMAIL SUBSCRIBERS: SEE "IMPORTANT NOTICE TO EMAIL SUBSCRIBERS" AT TOP RIGHT OF BLOG]

In case you did not notice the Notice earlier this year in the SEC News Digest, the SEC's Office of the Chief Accountant is now accepting applications for Professional Accounting Fellow (PAF) positions, with an application deadline of Jan. 13, 2010. PAF's generally serve for two years (although some have extended their term, and some have joined permanent staff at the Commission at the conclusion of their PAF-hood.)

As described in the notice included in the Oct. 8, 2009 SEC News Digest:

The PAF program, which began in 1972, is designed to provide participating fellows with outstanding opportunities for public service to investors, personal development, and career advancement. During their fellowship, the successful candidates will be involved in the study and development of rule proposals under the federal securities laws, liaison with accounting, auditing and other professional standard-setting bodies, and consultation with registrants on reporting matters. The Office of the Chief Accountant plans to select up to seven candidates for the following positions:

...up to three candidates with significant experience in the application of U.S. GAAP and/or International Financial Reporting Standards (areas of specialty may include, but are not limited to, accounting topics such as revenue recognition, compensation, business combinations, and financial instruments);

... one candidate with significant experience in performing and reviewing valuations for financial reporting purposes (areas of specialty may include, but are not limited to, business enterprise valuations, financial instruments and other complex securities, along with intangible assets);

...one candidate with significant experience with International Financial Reporting Standards and/or International Standards on Auditing; and

...up to two candidates with significant experience in internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act and analyzing and implementing auditing, independence, and/or quality control standards.

Application Requires Essay
The PAF application requires, in addition to completion of specified application forms, "an eight-to-twelve page essay ...on a subject directly related to a current accounting or auditing topic," and the application deadline is Jan. 13, 2010.

Further details about the current PAF program, the required essay, and application process can be found in the notice in the Oct. 8, 2009 SEC News Digest.

Conditions of Appointment
For background only - NOT to be relied upon, here is some background information on "Conditions of Appointment" regarding the PAF program that was posted on the SEC website about the PAF program in Nov. 2002. The information about "Conditions of Appointment" is not addressed in the Oct. 8, 2009 News Digest notice, and you may find it of interest; however, I emphasize, do not rely on info from the Nov. 2002 posting, contact the SEC (contact info is provided in Oct. 8, 2009 News Digest linked above) if you have any questions.

My Two Cents
Full disclosure: As disclosed in my bio linked in the right margin of this blog, (and I remind you of the disclaimer posted there as well), I have worked in the SEC's Office of the Chief Accountant (Dec. 1999-Jan. 2004) and I highly, highly recommend working there, as permanent staff (i.e. regular hire program), or as a PAF (2 year program).

For those of you who are not certain you want to leave the private sector to join the federal government but wish to experience working for the SEC for a specified period of time, the PAF program may be right for you. This is particulary the case if you believe you can bring something of value to the SEC through your experience in the field (note: external auditors and internal finance staff can apply for the PAF program) and likewise, if you believe working at the SEC will help inform your career (and career path) when you return to the private sector.

Perhaps the greatest value in working for the SEC - in addition to learning the nuts and bolts of how the SEC conducts its work from the inside - which can be helpful in learning how to avoid being called into the Commission other than for a friendly roundtable, and in learning how to be most responsive to the Commission when you are back on the outside - may be in how the experience impacts the attitudes of people who go back out into private practice. That is, there is an intangible value to working for the SEC that quite possibly exceeds any tangible value you can ascribe to it.

I encourage others who have worked at the Commission (or anyone who has had an employee serve in the PAF program) to post comments on their experience; you can do so anonymously, or you can provide your name.

UPDATE: An alternate view regarding pros and cons of the PAF program, is that some may view aspects of it as being symbolic of a perceived 'revolving door' syndrome at the SEC. In related news, H.R. 4173, the financial regulatory reform legislation passed earlier this month in the House (which still awaits Senate action, and then conference) includes Section 7414, "Study on SEC Revolving Door." Specifically, Sec. 7414 would require the GAO to conduct a study with respect to SEC employees working for financial institutions after they leave the SEC, including, among other things: "if the volume of employees of the Securities and Exchange Commission who are later employed by financial institutions has led to inefficiencies in enforcement;... if employees of the Securities and Exchange Commission who are later employed by financial institutions have engaged in information sharing or assisted such institutions in circumventing Federal rules and regulations while employed by such Commission...[and] other additional issues as may be raised during the course of the study conducted under this subsection." GAO must submit a report to Congress on this study, within one year of enactment of the law. As noted above, the financial regulatory reform bill is still pending in the Senate. Additional info on H.R. 4173 (particularly on aspects relating to accounting and auditing) can be found in our Dec. 12 post.

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