January 18, 2011

Corp Fin Posts 10 New CDIs Re: Changes in Accountants

On Friday, Corp Fin posted 10 new Compliance and Disclosure Interpretations that deal with accountants as follows:

1. Regulation S-K: Section 111. Item 304 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:
New Question 111.01
New Question 111.02
New Question 111.03
New Question 111.04
New Question 111.05
New Question 111.06
New Question 111.07

2. Form 8-K: Section 114. Item 4.01 – Changes in Registrant’s Certifying Accountant:
New Question 114.01
New Question 114.02
New Question 114.03

In Friday’s blog, I conducted a poll regarding your guess as to when the SEC would adopt final say-on-pay rules. The 30% who believed that the SEC would adopt them before or on January 21st (which is the date of annual meetings that Dodd-Frank begins to apply mandatory say-on-pay) are proven wrong because the SEC has now calendared an open Commission meeting for this Thursday – but the two agenda items apply to asset-backed securities and not SOP.

So we shall now see if the 38% who believed the SEC would act before the end of this proxy season are right – or the 28% who believed it would be after the proxy season. Or the 10% who believed they would never be adopted. PS – The math doesn’t add up to 100% because folks were allowed to make more than one selection.

AICPA Conference: Notes and Corp Fin Presentations

As it typically does, the SEC has posted these PowerPoint presentations used by its staffers during last month’s annual AICPA Conference:

“Current Corp Fin Developments” – Wayne Carnall, Corp Fin Chief Accountant and others

“Current Corp Fin Developments” – Wayne Carnall, Corp Fin Chief Accountant (this is in addition to the above)

“Areas of Frequent Staff Comment” – Stephanie Hunsaker, Corp Fin Associate Chief Accountant

“International Reporting Issues” – Craig Olinger, Corp Fin Deputy Chief Accountant

We have also posted detailed notes from this conference in our “Conference Notes” Practice Area.

On Friday, the Financial Accounting Foundation bumped the FASB Board back up to 7 members by announcing that Daryl Buck, CFO of Reasor’s Holding Company, and Harold Schroeder, Partner of Carlson Capital, have joined the Board.

PCAOB Issues Staff Practice Alert on Litigation & Loss Contingencies

In late December, the PCAOB issued a Staff Audit Practice Alert #7 highlighting auditing considerations related to litigation and other loss contingencies arising from mortgage and other loan activities. Here is analysis from Tom White of WilmerHale: “The Alert stems from recent reports regarding possible liabilities from alleged misrepresentation of mortgage quality as well as irregularities in the foreclosure process. The Alert parallels the SEC’s recent “Dear CFO” letter regarding accounting and disclosure issues related to potential risks associated with mortgage and foreclosure-related activities. Like the Dear CFO letter, the PCAOB alert notes the standards for loss contingencies, and the alert specifically notes the standard (AU 337) for auditing litigation, claims and assessments, including obtaining letters from the reporting entity’s lawyers.”

Last week, the SEC delegated authority to its Chief Accountant to propose and adopt rules from the PCAOB – among other things – in an effort to streamline the process.

– Broc Romanek