Summary of New A&A Standards

Standard
Presentation of Comprehensive Income

11/29/2012 6:35:00 AM

Effective Date
Years ending after December 15, 2012 (for private companies); fiscal years and interim periods within them beginning after December 15, 2011 (for public companies) Years ending after December 15, 2012

Main Points
Comprehensive income may no longer be included in the Statement of Changes in Stockholders Equity

Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Heath Care Entities

Testing Goodwill for Impairment

Fiscal years beginning after December 15, 2011

Requires bad debts to be shown as a deduction from revenue (instead of as bad debt expense); new disclosures (by payor source): (1) policy for assessing collectability and (2) patient service revenue (net of contractual allowances and discounts) before the provision for bad debts Allows the entity to first evaluate qualitative events and circumstances to determine whether it is more likely than not the reporting entitys carrying value exceeds its fair value; if no, then two-step impairment test not required; if yes, then perform two-step quantitative test is required

Standard
Disclosure about an Employers Participation in a Multiemployer Plan

Effective Date
Years ending after December 15 2012 (for private companies); periods ending after December 15, 2011 (for public companies) For annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods Years ending after December 15, 2012

Main Points
This is a disclosure-only standard; multiemployer plans usually used by union employees (e.g., telephone companies)

Disclosure About Offsetting Assets and Liabilities

Clarity Project Auditing Standards

Yellow Book

Years ending after December 15, 2012

This is a disclosure-only standard; offsetting is generally prohibited with some exceptions (allowed where the right of offset exists often used by financial institutions, brokerdealers and construction companies) New audit opinion, representation letter and engagement letter; new group audit requirements; new requirements for attorney letter request, inspecting licensing and regulatory correspondence New requirement to document the skill, knowledge and experience of the person assuming responsibility for the financial statements; preparation of financial statements by auditor considered a nonattest service; use safeguards in response to identified independence risks

Standard
SAS 126 The Auditors Consideration of an Entitys Ability to Continue as a Going Concern

Effective Date
For periods ending on or after December 15, 2012

Main Points
Evaluate and conclude whether substantial doubt about the entitys ability to continue as a going concern for a reasonable period of time (defined as a period of time not to exceed one year beyond the date of the financial statements being audited); if managements plan alleviates substantial doubt, then consider need for additional disclosures and obtain written representations from management (i.e., representation letter); if substantial doubt is not alleviated, then add an emphasis of a matter paragraph to the auditors report and communicate nature of conclusions and effect on auditors report to those charged with governance; if the auditor believes there is substantial doubt (prior to considering managements plans), there are additional work paper documentation requirements (mainly documenting conditions and how concerns were overcome)

Standard
Amendments to Achieve Common Fair Value Disclosure Requirements

Effective Date
Years ending December 31, 2012 (private companies); annual or interim periods beginning after December 15, 2011 (public companies)

Main Points

Adds clarifying language on several fair value issues and requires disclosures (including separate changes in level 3 recurring fair values); also requires disclosure of quantitative information about significant unobservable inputs used (e.g., interest rate used to compute level 3 value); description of valuation methods used; transfers between level 1 and level 2 (public company only) A Creditors Years ending on or Although the definition of a Determination of Whether after December TDR remains essentially A Restructuring is a 15, 2012, also unchanged, clarification of Troubled Debt includes interim certain points may result in Restructuring periods within the the identification of more year (for nonpublic TDRs than before the new companies); first guidance was applicable; interim or annual requires lenders to consider period beginning the probability of payment on or after June default (even though a 15, 2011 (for borrower is not currently in public companies) default)

This form is not intended to be an all-inclusive summary of all new A&A issues, but highlights some of the A&A issues you will face in late 2012 and the year 2013.