Ask FERF (financial executives research foundation) about ... recent regulatory highlights.

• Author: Orenstein, Edith G.
• Position: Resources

The challenge of implementing a confluence of new accounting and auditing standards arising in the post-Sarbanes-Oxley era is addressed in an article on page 54.

Below are highlights of some far-reaching new standards and proposals. (More complete listings are available in Financial Executives Research Foundation (FERF) publications at www.ferf.org.)

Financial Accounting Standards Board (FASB)

Share-Based Payments

June 30 was the deadline for comments to be sent to FASB on its Exposure Draft (ED) of a proposed standard on share-based payments. A diversity of views was voiced in Congressional hearings on this matter, as well as in the thousands of comment letters FASB received, and at its public hearings in Palo Alto, Calif., and Norwalk, Conn. A final standard is expected to be issued during the fourth quarter.

Conceptual Framework Projects--Fair Value, Revenue Recognition

FASB has embarked on various broad conceptual framework projects, including a Fair Value (FV) methodology (a proposed 3 "Level" approach, with various sources of fair value ranging from actively quoted markets, to less active or more customized markets, to situations requiring valuation models to be employed). As this article went to press, FASB had anticipated issuing an ED on FV by June 30. FASB also anticipated issuing a related ED on Business Combinations. Both EDs have a 75-day comment period and public hearings on the FV ED are scheduled for September 2.

Revenue Recognition

FASB's contemplated direction on this project has been described by some as leading to a major change in financial reporting, by moving from a focus on completion of the earnings process and realizability (with certain resulting deferred items being maintained on the balance sheet) to a model focused on valuing the balance sheet effects of a transaction first, with resulting revenue (expense) falling out of that. FASB anticipates issuing two EDs related to the Revenue Recognition project in the fourth quarter (see relatd article on page 23).

Users and preparers of financial statements are advised to focus on the implications of these projects--which could form the basis of a sea-change in practice.

Securities and Exchange Commission (SEC)

Comprehensive Disclosure Requirements for Asset-Backed Securities--Proposed "Reg AB"

July 12 is the deadline for comments to the SEC on its proposed Reg AB. This proposal codifies existing practice and informal guidance for shelf registration of asset-backed...