AICPA BACKS FASB ON MARK-TO-MARKET STUDYThe American Institute of CPAs has written to the Securities and Exchange Commission urging it to allow the Financial Accounting Standards Board to continue to set standards for mark-to-market accounting.
The SEC has been conducting a study on mark-to-market and fair value accounting mandated by the financial rescue bill, which at press time was scheduled to be completed on Jan. 2.
In a letter to SEC deputy chief accountant James Kroeker, AICPA president and chief executive Barry Melancon said that FASB should remain the organization to address the study's recommendations. The American Bankers Association has asked the SEC to override FASB guidance on fair value accounting and to create an accounting oversight board that could overrule FASB.
Melancon defended FASB's role in setting standards: "We believe that FASB, with appropriate oversight by the SEC given its investor protection mandate, is best able to decide what is the most appropriate financial reporting for the capital markets," he wrote.
He also called for transparency in standards and said that the SEC and FASB should continue to work with the International Accounting Standards Board on converging U.S. and international standards on fair value accounting.
Separately, regional accounting firm Rothstein Kass has released a white paper report intended to help hedge funds, private equity firms, funds of funds and other alternative investment firms understand the challenges of implementing fair value accounting standards.
The report is available online at www.rkco.com/pdflib/sfas_157_fair_value.pdf. It features a framework for determining fair value hierarchy, as well as a "frequently asked questions" section.
INSTITUTE REVISES ELECTRONIC CONFIRMATIONS STANDARD
New York - The American Institute of CPAs' Auditing Standards Board has revised a standard on the use of electronic confirmations to provide further guidance on reliability.
The guidance notes that confirmations obtained electronically can be considered to be reliable audit evidence if the auditor is satisfied that:
* The electronic confirmation process is secure and properly controlled;
* The information obtained is a direct communication in response to a request; and,
* The information is obtained from a third party who is the intended respondent.
Various means might be used to validate the source of the electronic information and the respondent's knowledge about the requested information. For example, the use of encryption, electronic digital signatures and procedures to verify Web site authenticity may improve the security of the confirmation process.
If a system or process that facilitates electronic confirmation between the auditor and the confirmation respondent is in place, and the auditor plans to rely on it, an assurance trust services report or another auditor's report on that process may assist the auditor in assessing the design and operating effectiveness of the electronic and manual controls.
HERITAGE-CRYSTAL CLEAN ENGAGES GRANT THORNTON
The board of directors at waste management and oil collections services provider Heritage-Crystal Clean Inc. dismissed Big Four firm KPMG as the company's independent accounting firm and named Grant Thornton as its new auditor.
The Elgin, Ill.-based company said that the audit reports by KPMG for the years ended 2006 and 2007 did not contain any adverse opinion or disclaimer of opinion.
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