wayne carnall chief accountant division of corporation finance april 30, 2009

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CURRENT DEVELOPMENTS IN THE

DIVISION OF CORPORATION FINANCE

8th AnnualFinancial Reporting Conference

Baruch College

Wayne CarnallChief Accountant

Division of Corporation FinanceApril 30, 2009

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The Securities and Exchange The Securities and Exchange Commission, as a matter of policy, Commission, as a matter of policy, disclaims responsibility for any disclaims responsibility for any private publication or statement by private publication or statement by any of its employees. Therefore, the any of its employees. Therefore, the views expressed today are our own, views expressed today are our own, and do not necessarily reflect the and do not necessarily reflect the views of the Commission or the other views of the Commission or the other members of the staff of the members of the staff of the Commission.Commission.

DisclaimerDisclaimer

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AgendaAgenda

• Rules• Communications• Reviews/Current Environment• Miscellaneous Items • Goals for the Future

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Rules

• IFRS in the US - Proposal Two Parts – roadmap and limited early use

Comment period – recently ended

• Oil and Gas Disclosure

Accounting

• FIRE• XBRL• Technical Amendments

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COMMUNICATIONS INTERNAL/ EXTERNAL

&

TRANSPARENCY

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CommunicationsCommunications

• Outreach Program Accounting Firms

Investor Groups

Other Organizations

• Letters – waivers, interpretations, etc. dcaoletters@sec.gov

• E-mail vs. phone calls Efficiency

Future Guidance

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SFAS 157 – Dear CFO LettersSFAS 157 – Dear CFO Letters

Letters sent to approximately 30 financial institutions, plus posted on our website given the much broader applicability of the guidance

http://www.sec.gov/divisions/corpfin/guidance/fairvalueltr0308.htm

http://www.sec.gov/divisions/corpfin/guidance/fairvalueltr0908.htm

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Wayne Carnall, Chief AccountantWayne Carnall, Chief Accountant

Steven Jacobs, Associate Chief AccountantSteven Jacobs, Associate Chief Accountant

Hugh West, Accounting Branch ChiefHugh West, Accounting Branch Chief

Mark Kronforst, Accounting Branch ChiefMark Kronforst, Accounting Branch Chief

Kevin Woody, Accounting Branch ChiefKevin Woody, Accounting Branch Chief

Angela Crane, Accounting Branch ChiefAngela Crane, Accounting Branch Chief

Kevin L. Vaughn, Accounting Branch ChiefKevin L. Vaughn, Accounting Branch Chief

Joel Parker, Accounting Branch ChiefJoel Parker, Accounting Branch Chief

Brian Bhandari, Accounting Branch ChiefBrian Bhandari, Accounting Branch Chief

Division of Corporation FinanceDivision of Corporation Finance

November 2008November 2008

SEC Staff Review of Common Financial Reporting Issues Facing Smaller Issuers

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PCAOB Forum - Smaller IssuersTopics - 2008

• Overview of the Agency and Division• Recent Developments• The Comment Letter Process• Financial Reporting Issues Frequently

Raised in Comment Letters• Management Report on Internal Control

over Financial Reporting • Resources

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PCAOB Forum - Smaller IssuersNew Topics - 2009

• Impairments and Related Disclosure (including SOP 94-6)

· Back-door Registrations and the Reporting Requirements

· Related Party Transaction

· Restricted Net Assets

· SRC Transitions and Determinations

· ICFR

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History of the “Training ManualHistory of the “Training Manual””

• Developed around 1990• Prepared by the staff of the Division of

Corporation Finance for the staff of the Division of Corporation Finance

• Last version was 2000• Goals for updating

End of Summer 2008 – 11:44am September 22

October 31, 2008

12:08pm December 9, 2008

• Contest for new name

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Financial Reporting Manual

• Location

http://sec.gov/divisions/corpfin/cffinancialreporhttp://sec.gov/divisions/corpfin/cffinancialreportingmanual.pdftingmanual.pdf

• UpdatingMarch 31, 2009

Next update

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Financial Reporting Manual

Topic 1 – Registrant’s Financial StatementsTopic 2 – Other Financial StatementsTopic 3 – Pro Forma InformationTopic 5 – Smaller Reporting CompaniesTopic 6 – Foreign Private IssuersTopic 7 - Related Party MattersTopic 8 – Non GAAP MeasuresTopic 9 – MD&ATopic 12 – Reverse Acquisitions Topic 13 – Subsequent EventsTopic 14 – Tender OffersTopic 15 – Employee Stock Benefit PlansTopic 16 - MJDS

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CF-OCA: ReorganizationCF-OCA: Reorganization

Craig OlingerDeputy Chief Accountant

(Operations)

Associate Chief Accountants

Mark KronforstDeputy Chief Accountant

(Policy) New

Associate Chief Acct (New),Staff

Accountant, Academic Fellow

Wayne CarnallChief Accountant

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ReorganizationReorganizationReason & ResponsibilityReason & Responsibility • Reason for the new group• Responsibilities of the new group

Work closely with the AD groups to facilitate the sharing of Work closely with the AD groups to facilitate the sharing of information with and the resolution of issues among the information with and the resolution of issues among the accounting staff in the entire Divisionaccounting staff in the entire Division

Coordinating the updating and publication of the Financial Coordinating the updating and publication of the Financial Reporting Manual on a real time basisReporting Manual on a real time basis

Creating and issuing other forms of guidance – primarily Creating and issuing other forms of guidance – primarily internal, but also external guidance on financial reporting internal, but also external guidance on financial reporting and disclosureand disclosure

Developing/revising policies and programs with respect to Developing/revising policies and programs with respect to the Division’s accounting, technical and interpretative the Division’s accounting, technical and interpretative programprogram

Organizing and developing accounting training sessionsOrganizing and developing accounting training sessions

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REVIEWSREVIEWS

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Filing Review ProcessFiling Review Process

• Document on our website that explains Document on our website that explains the review process and provides names the review process and provides names and numbers with people to call with and numbers with people to call with questionsquestions

http://www.sec.gov/divisions/corpfin/cffilingrehttp://www.sec.gov/divisions/corpfin/cffilingreview.htmview.htm

• Responding to comment letters Bad practice Bad practice

Good practiceGood practice

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Current Issues

• Impairment of goodwill Market cap below book value Determining fair value of reporting unit Not just accounting – implications to the business MD&A disclosure – critical accounting assumptions

• Accounting for income taxes Valuation allowances

Disclosures Implications to the business

APB 23 – Undistributed earnings

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Current Issues

• Pension – assumptions, curtailments

• Investments – OTTI New FSPs

• Segments – Disclosure

Reporting units – impairment

Aggregation

• Liquidity

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Current Issues

• Going concern• IFRS 7 • Statement of cash flows• TARP, TALF, etc• Codification

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MaterialityMateriality

• Experiences this past yearExperiences this past year• In preparing a “SAB 99” memoIn preparing a “SAB 99” memo - -

Companies are simply listing the 8 points in Companies are simply listing the 8 points in SAB 99 and indicating “no” and concluding SAB 99 and indicating “no” and concluding the error is not materialthe error is not material

Companies should provide company specific Companies should provide company specific information on their assertioninformation on their assertion

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Miscellaneous ItemsMiscellaneous Items

• Disposal of interest in equity affiliates and significance test for 3-09 financial statements

• Form S-8 – change in financial statements that require retroactive application

• Item 11(b) of Form S-3 – SFAS 160 et al • Transitional Provisions of FSP APB 14-1• Consents – C&DI – Question 141.02• Non GAAP – C&DI – Question 102.05

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Goals for the FutureGoals for the Future

• Complete CF-OCA reorganizationComplete CF-OCA reorganization• Continue the outreach programContinue the outreach program• Keep current the Keep current the Financial Reporting ManualFinancial Reporting Manual

and develop interpretations that will be part of and develop interpretations that will be part of C&DIsC&DIs

• Update/eliminate certain information on our Update/eliminate certain information on our websitewebsite

• Develop “No Action” style letters for certain Develop “No Action” style letters for certain itemsitems

• Keep current the guidance for smaller issuers Keep current the guidance for smaller issuers • Issue guidance on areas of focus for Issue guidance on areas of focus for

community bankscommunity banks