AcSEC Meeting
November 15-16, 2005
AICPA Boardroom
New York
AcSEC MEETING HIGHLIGHTS
All AcSEC members were in attendance. John Althoff attended on the 16th and David Morris
participated in the Loan Losses discussions by phone.
Other participants in the meeting were:
Healthcare Guide – William R. Titera, Chair, Robert Wright
FAS 140 ED comment letter – Linda Bergen, Roshell Reid
Loan Losses – Carol Larson, Chair
Airline Guide - David Dickson, Robert Gordon
AICPA staff: Dan Noll, Fred Gill, Yelena Mishkevich, Myrna Parker (by phone),
Irina Portnoy
FASB staff: Russ Golden, Jason Jacobs, Rosemarie Sangiuolo
Nontraditional Loan Products
AcSEC discussed a proposed FASB Staff Position, SOP 94-6-a – Nontraditional Loan Products,
and will issue a comment letter to FASB.
Healthcare Guide
At its November 15-16, 2005 meeting, AcSEC reviewed chapter 10, “Revenues, Expenses,
Gains, and Losses” and related third-party settlement activity disclosures of the proposed revised
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Health Care Organizations Guide. AcSEC suggested that the Task Force further modify the
proposed guidance for revenue recognition criteria in accordance with the existing accounting
framework (as opposed to the guidance found in SAB 104), and recommended certain other
minor clarifications.
AcSEC also agreed that proposed by the task force disclosures for
settlement activity should be included in the illustrative financial statements of the revised
Guide.
Health Care Task Force also prepared drafts of Chapter 5, “Receivable” and charity care sample
disclosures for discussion with AcSEC; however, AcSEC ran out of time and would address
them at its future meetings.
FASB 140 ED comment letter
On November 15, 2005, AcSEC discussed a draft of a comment letter on the Proposed Statement
of Financial Accounting Standard, Accounting for Transfers of Financial Assets, an Amendment
of FASB Statement No. 140. The SFAS No. 140 Task Force Chairwoman, Linda Bergen and
John E. Stewart, a member of the Task Force led the discussion. FASB has issued three
proposed standards that would amend Statement 140. AcSEC submitted a comment letter on the
other two proposals Accounting for Certain Hybrid Financial Instruments, an Amendment of
FASB Statements No. 133 and 140 (File No. 1210-001), and, Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140 (File No. 1220-001)
(http://www.aicpa.org/download/acctstd/FAS_140_comment_letter_2_.pdf)
Although AcSEC
appreciates the efforts of the Board to address specific concerns of constituents, they agreed that
it would be more productive if the Board took a fresh look FAS 140 in its entirety in conjunction
with the International Accounting Standards Board, with a goal of creating a principles based
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standard acceptable to both, in accordance with the efforts at convergence, rather than attempting
to make piecemeal changes to an already complex document. AcSEC suggested additional
changes to the letter and it was approved subject to negative clearance by all of AcSEC.
Loan Losses
AcSEC voted (15 yes, 0 no) to proceed to a ballot draft of an exposure draft Statement of
Position, Disclosures Concerning Credit Losses Related to Loans. AcSEC agreed that the
proposed SOP should apply to all entities that hold loans as assets and voted (11 yes, 4 no) that
there should be no scope exception for smaller reporting entities.
AcSEC voted (15 yes, 0 no) to change the proposed requirement in paragraph 22 of the draft that
creditors disclose the recorded investment in loans by a minimum of five credit risk categories to
a requirement to disclose the recorded investment in loans by however many credit risk
categories are used in the creditor’s internal risk grading process, with an option to combine
categories into a minimum of five categories if the creditor uses more than five categories for
internal purposes. AcSEC also recommended the addition of an illustrative disclosure for a
small not-for-profit organization and a number of clarifications to the draft.
Airline Guide
AcSEC continued discussing chapter 6, “Other Accounting Considerations,” of a proposed
revised Audit and Accounting Guide Audits of Airlines.
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AcSEC suggested a number of
clarifications to that chapter. AcSEC will discuss the intangible assets section of chapter 6 at its
January meeting.
AcSEC also started discussing chapter 4, “Acquiring and Maintaining Property and Equipment.”
AcSEC suggested several clarifications to the section on aircraft modifications. In discussing the
section on manufacturer purchase incentives, AcSEC suggested that airlines should use relative
fair value method for allocating the price of the aircraft between the aircraft and purchase
incentives. However, the residual method would be acceptable in situations in which the fair
value of the aircraft is not readily determinable. AcSEC also suggested that the task force
consider the guidance in EITF Issue No. 02-16, “Accounting by a Customer (Including Reseller)
for Certain Consideration Received from a Vendor,” for situations in which manufacturers
provide credits that increase based on the number of aircraft ordered or in which the value of
credits changes subsequent to taking delivery of aircraft for other reasons. AcSEC will continue
discussing chapter 4 at its future meetings.
Chair’s Report
The Chair reported the following:
•
AICPA staff released TPA Q&As related to accounting for operating leases. For a copy
of the Q&As, please visit
http://www.aicpa.org/members/div/acctstd/general/recent_tpas.asp
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•
The PSC heard preliminary thoughts about the formation of an AICPA cross-functional
working group to consider accounting and auditing issues pertaining to what are
commonly referred to as alternative investments (for example, investments in private
equity funds). The topic likely is to be of great interest to a number of industries, not-forprofit organizations, and employee benefit plans.
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