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Staff Report on Accredited Investor Definition Issued

The Securities and Exchange Commission (“SEC”) is seeking public comments on its staff report regarding the definition of an “accredited investor.” Prepared by members from the SEC’s Divisions of Corporation Finance and Economic and Risk Analysis, the report discusses the history behind the accredited investor definition and includes the following: Feedback on the definition from public commenters and various committees; Alternative ways to define an accredited investor; Staff recommendations for possible revisions to the current definition; and Analysis of the effect the potential approaches could have on accredited investors. More on the staff report is available in the SEC’s December 18th press release .

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Companies Advised to Use Established Internal Controls Guidance

Speaking last month on concerns regarding the reporting requirements for internal controls, Securities and Exchange Commission (“SEC”) Deputy Chief Accountant Brian Croteau recommended companies and auditors to use the agency’s existing two-part evaluation process. Per his speech at the American Institute of Certified Public Accountants’ Conference on Current SEC and Public Company Accounting Oversight Board Development, Croteau said companies should evaluate whether a material misstatement about their financial reporting controls is possible by using the interpretive guidance in Release No. 33-8810, Commission Guidance Regarding Management’s Report on Internal Control Over Financial Reporting Under Section 13(a) or 15(d) of the Securities. Read More.

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Labor Union Wants More Disclosures on Business Acquisitions

In recent comment letters concerning the Securities and Exchange Commission’s (“SEC”) Disclosure Effectiveness program, Unite Here! has asked for additional disclosures about pending company acquisitions. Responding to Release No. 33-9929, Request for Comment on the Effectiveness of Financial Disclosures About Entities Other Than the Registrant, the 250,000-member labor union said that Rule 3-05 of Regulation S-X does not require businesses to give sufficient information suitable for making an informed decision. Disclosure requirements depend on the size of the business acquisition, and Rule 1-02(w) of Regulation S-X details what is significant for financial information. United Here! suggests lowering the threshold of. Read More.

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FASAC Members Want More Transparency on Non-GAAP Measures

During talks last month on possible uniform non-GAAP measures in companies’ financial statements, several members of the Financial Accounting Standards Board’s (“FASB”) Financial Accounting Standards Advisory Council (“FASAC”) advocated requiring companies to provide more details about their non-standard earnings metrics. Indiana University professor Patrick Hopkins acknowledged that some non-GAAP measures allow companies to disclose industry-specific information not reflected in accounting standards. He also argued that if the FASB or Securities and Exchange Commission required more transparency regarding how measures are defined, investors and analysts could better understand the information. Supporting Hopkins’ call for increased transparency was Douglas Oare, managing director. Read More.

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GASB Issues Measurement Guidance for Qualified External Investment Pools

On December 23rd, the Governmental Accounting Standards Board (“GASB”) published a standard that offers measurement guidance for some state and local government investment pools. Issued as GASB Statement (GASBS) No. 79, Certain External Investment Pools and Pool Participants, the standard allows qualified external investment pools to measure pool investments at their amortized cost. GASBS No. 79 is effective for financial statements for reporting periods that have begun since June 15th. State and local governments are encouraged to apply the statement for periods ahead of that date. The standard’s requirements to reduce the risk in a pool’s assets and the provisions. Read More.

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SEC Chair Supports Idea for Supplemental IFRS Information

One year after Securities and Exchange Commission (“SEC”) Chief Accountant James Schnurr suggested allowing public companies to voluntarily supplement International Financial Reporting Standards (IFRS) information with their U.S. GAAP financial statements, the SEC’s Mary Jo White endorsed the plan during a speech in December. At the American Institute of Certified Public Accountants’ Conference on Current SEC and Public Company Accounting Oversight Board Developments, the agency chair said Schnurr’s idea could potentially be helpful as the next step in U.S. companies increasing their use of global accounting standards. Also at the conference, White mentioned that staff members have developed a recommendation. Read More.

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