August-November 2009 Issue of News up to November 15, 2009 1 Global IFRS and Offerings Service U.S. Reporting Newsletter (Internal) for Non-U.S. Based Companies Recent Developments This newsletter reports recent accounting and auditing developments that may be of interest to non-US engagement teams working on U.S. listed companies. In this issue: Accounting Matters • Q&As Updated in Accounting Standards Codification Manual • Q&As Updated in U.S. SEC Reporting Interpretations Manual • Enhanced Disclosures on Provisions and Allowances for Loan Losses in MD&A • FIN 48 (ASC 740) for Private Companies Resources • Pre-Codified Deloitte Accounting Manual to Be Retired • Practice Alert on Foreign Currency Exchange Controls in Venezuela and Selection of an Inflation Index • New Technical Library Launched • IRS Clarifies the Grant Date of a Stock Option Under Internal Revenue Code Section 162(m) Audit Matters • U.S. GAAP Checklists Updated • New U.S. GAAP Checklist Tool • 2009 U.S. Middle Market AS/2 Pack issued • 2009 U.S. Investment Companies and U.S Media/Publishing AS/2 Packs Issued • 2009 U.S. Trade/Retail Industry AS/2 Pack Issued • 2009 U.S. Public Sector, U.S. Higher Education/Not-for-Profit, and U.S. Brokers and Dealers in Securities AS/2 Packs Issued • Guidance Issued on Use of the Deloitte Client Acceptance Application • Form DA JET 01, AAM G900 Procedures - Deloitte Audit JET • U.S. Tax Alert 09001: Textron - The Status of Work Product Protection for Tax Accrual Workpapers • Audit Quality Alert 09-2, Audit Considerations for Pension and Other Postretirement Benefits • New Job Aid Available to Improve Primary Reviews • U.S. DPM 3920, Audits of Companies Incorporated in Another Country • Tax Information Reporting and Withholding — a Potentially Significant Liability • Interim Summary of the 2009 PCAOB and Internal Inspection Findings • New Policy Added to AAM Requiring Audit Engagement Partner's Primary Review of Working Papers Related to All Significant Matters • Policies and Guidance Issued on IFRS Accreditation for U.S. Member Firm Audit Professionals • Revisions Made to AAPMS REP 215 and REP 575P as a Result of the FASB Accounting Standards Codification • Practice Alert 09-20, Potential Accounting Issue Regarding Miscalculation of Share-Based Compensation Resulting From Use of Common Third-Party Software • Form 1310SSE, Illustrative Audit Engagement Letters — Broker Dealers, Is Revised • DTT Global Audit Sarbanes Oxley Update September 2009 IFRS Resources Technical Library Recap 2 Accounting Matters Q&As Updated in Accounting Standards Codification Manual Various Q&As were updated in the following sections of the Accounting Standards Codification Manual including: • ASC 360, Property, Plant, and Equipment • ASC 605, Revenue Recognition • ASC 740, Income Taxes • ASC 840, Leases • ASC 810, Consolidation • ASC 805, Business Combinations • ASC 820, Fair Value Measurements and Disclosures • ASC 230, Statement of Cash Flows • ASC 718, Compensation—Stock Compensation • ASC 815, Derivatives and Hedging • ASC 323, Investments — Equity Method and Joint Ventures • ASC 350, Intangibles — Goodwill and Other • ASC 330, Inventory • ASC 450, Contingencies • ASC 946, Financial Services — Investment Companies The updated AAPMS infobase is now available on the Deloitte Audit Plus website. Q&As Updated in U.S. SEC Reporting Interpretations Manual Various Q&As were added to the following sections of the U.S. SEC Reporting Interpretations Manual including: • Unconsolidated Subsidiaries and Equity Method Investees: Measuring Significance • Guarantor Financial Statements The updated AAPMS infobase is now available on the Deloitte Audit Plus website. Enhanced Disclosures on Provisions and Allowances for Loan Losses in MD&A Financial Reporting Alert 09-3 summarizes a recent letter sent by the SEC’s Division of Corporation Finance to certain financial institutions concerning Management’s Discussion and Analysis (MD&A) disclosure considerations regarding the provisions and allowances for loan losses. While the letter was sent only to financial institutions, the SEC staff’s suggested disclosures, when relevant and material, are applicable to all registrants. The letter reminds registrants that have significant allowances for loan losses to consider the SEC’s requirements for disclosures in MD&A. Regulation S-K, Item 303, requires registrants, among other things, to discuss in their periodic filings “any known trends or any known demands, commitments, events, or uncertainties” that the registrants reasonably expect to have a material impact, either favorable or unfavorable, on their results of operations, liquidity, or capital resources. FIN 48 (ASC 740) for Private Companies Resources Many private companies are in the process of or will soon be addressing FIN 48 (ASC 740) implementation. Resources including client discussion decks, engagement letters, an implementation workplan, and more are available on the FIN 48 for Private Companies resource page. Click here to access the resource page. Pre-Codified Deloitte Accounting Manual Retired Effective September 30, 2009, updates to Deloitte’s pre-codified U.S. Accounting Manual has been discontinued. The FASB Accounting Standards Codification is now the authoritative source for U.S. GAAP, superseding pre-codified 3 accounting literature. The Codification manual and related Deloitte guidance (available on Technical Library) replace the pre-codified manual. The links in the Codification manual’s “Find the GAAP” tool allow users to jump from pre-codification references to corresponding guidance in the Codification. In addition, the Codified manual’s Q&As contain “pre- codification references” that indicate where Deloitte guidance was located in the pre-codified manual. Note that pre- codified accounting literature, as issued by the standard setters, will continue to be available and appropriately marked as superseded. Practice Alert on Foreign Currency Exchange Controls in Venezuela and Selection of an Inflation Index Practice Alert 09-17 highlights recent developments related to (1) foreign currency exchange controls in Venezuela and (2) the appropriate index to use in the assessment of Venezuela’s highly inflationary status. New Technical Library Launched An upgraded version of Deloitte Technical Library with both U.S. and DTT content is now available to all Deloitte professionals. The new site is designed to enhance our professionals' research proficiency to help them exercise professional judgment. IRS Clarifies the Grant Date of a Stock Option Under Internal Revenue Code Section 162(m) On July 17, 2009, the Internal Revenue Service (IRS) released an internal legal memorandum (ILM) (AM2009-006) that analyzes how to determine the grant date of a stock option under I.R.C. §162(m). The ILM concludes that “[d]iscounted stock options are not qualified performance-based compensation under §162(m)(4)(C) even if, before or after exercise, the executive reimburses the employer for the discount or the option is repriced based on the fair market value on the actual grant date.” The ILM underscores that to ensure that awards are appropriately classified as qualified performance- based compensation under I.R.C. §162(m), taxpayers need to review options exercised in open tax years to make sure that (1) a purported option grant date is the actual grant date (provided an appropriate standard was used to determine the date) and (2) the exercise price is the price on that day (again, provided an appropriate method was used to determine the price). This review may have both financial reporting and income tax implications, which are discussed in the Deloitte’s Global Employer Rewards Internal Bulletin 09-36. For more information, see the Release Memorandum on the IRS’s Web site. Audit Matters U.S. GAAP Checklists Updated Infobases US5010R.NFO and US2224.NFO, for use with the AS/2 Packs, are updated through September 2009. A supplement that indicates changes since the issuance of the December 2008 U.S. GAAP Compliance Checklist and that is appropriate for external distribution is available on the Deloitte Audit Plus Web site and on Technical Library. For engagements with years ending on or after December 15, 2009, these infobases, as well as the December 2008 U.S. GAAP Compliance Checklist and Supplements will be replaced and superseded by the new U.S. GAAP Checklist Tool (see next news item). New U.S. GAAP Checklist Tool The new U.S. GAAP Checklist Tool, which supersedes the current AS/2 Form Series 2224 and 5010 and the Microsoft Word U.S. GAAP Compliance Checklist and supplements, will assist engagement teams in evaluating an entity’s compliance with U.S. GAAP. The new tool allows users to view the accounting and disclosure guidance contained in the FASB Accounting Standards Codification. Clients using the tool will need to be subscribers to Deloitte Technical Library to view the Codification in the tool. 4 An Executive Summary is available on the U.S. Audit Briefing Center located on the Deloitte Audit Plus website that directs users to (1) a Quick Start Guide on the tool, which provides an overview of the changes as well as helpful tips on getting started with the checklist and (2) the U.S. GAAP Checklist User Guide, which provides detailed instructions on using the checklist. The new tool is currently available to the U.S. member firm only. Member firms outside the U.S. are likely to have access to the tool by the last week of December 2009. 2009 U.S. Middle Market AS/2 Pack Issued The 2009 U.S. Middle Market AuditSystem/2 (AS/2) Pack (08-09) is issued. The changes to the pack apply to engagements with fiscal years ending on or after December 15, 2009. For audit engagements with fiscal years ending before December 15, 2009, teams are not required to upgrade to the 2009 pack and are encouraged to use their existing packs to complete their audit engagements. Read Form 0000SMM for important information about changes and upgrades. After its issuance, the pack was reissued to correct an input error in Form 1540, Understand the Computer Processing Environments; specifically, the SAS document did not allow the user to input the applicable name in the table in the Information Security section. Engagement teams that have installed the 08-09 Pack that was issued on August 21, 2009, and have carried forward the prior year audit file should follow the instructions in NFOItem 09-397 to avoid any data loss upon installing the updated 11-09 Pack. Engagement teams that have not installed the 08-09 Pack that was issued on August 21, 2009, or that have installed that version of the Pack but have not yet created an audit file with it, should use the AS/2 Pack Manager utility to install the revised 11-09 Pack from their LAN or Deloitte Audit Plus to their local drive. 2009 U.S. Investment Companies and U.S Media/Publishing AS/2 Packs Issued The 2009 U.S. Investment Companies AS/2 Pack (08-09) and U.S. Media/Publishing Pack (08-09) are issued. The changes to the packs apply to engagements with fiscal years ending on or after December 15, 2009. For audit engagements with fiscal years ending before December 15, 2009, teams are not required to upgrade to the 2009 packs and are encouraged to complete their audit engagements by using their existing packs. Read Form 0000SIC (for the Investment Companies Pack) or Form 0000SMP (for the Media/Publishing Pack) for important information about changes and upgrades. 2009 U.S. Trade/Retail Industry AS/2 Pack Issued The 2009 U.S. Trade/Retail AS/2 Pack (09-09) is issued. The changes to the pack apply to engagements with fiscal years ending on or after December 15, 2009. For audit engagements with fiscal years ending before December 15, 2009, teams are not required to upgrade to the 2009 pack and are encouraged to complete their audit engagements by using their existing pack. Read Form 0000STD for important information about changes and upgrades. 2009 U.S. Public Sector, U.S. Higher Education/Not-for-Profit, and U.S. Brokers and Dealers in Securities AS/2 Packs Issued The changes to the packs apply to engagements with fiscal years ending on or after December 15, 2009. For audit engagements with fiscal years ending before December 15, 2009, teams are not required to upgrade to the 2009 packs and are encouraged to complete their audit engagements by using their existing packs. Read Form 0000SGS (for the Public Sector Pack), Form 0000SHN (for the Higher Education/Not-for-Profit Pack), or Form 0000SSE (for the Brokers and Dealers in Securities Pack) for important information about changes and upgrades. U.S. Guidance Issued on Use of the Deloitte Client Acceptance Application Transitional U.S. guidance has been issued to specify that practitioners should use the U.S. Deloitte Client Acceptance (DCA) application to complete the process for acceptance of prospective audit or attestation clients. For prospective audit or attestation clients, the DCA application replaces the use of the following manual forms: 1) Form 3210AS, Review and Evaluation of Prospective Audit or Attestation Clients or New Engagements for Audits, Reviews, or Compilations of Financial Statements; 2) Form 3230AS, Background Check Request for Audit or Attestation Clients or Engagements; and 5 3) Form 3210AINDS, Performance of Independence and Conflict Checks in Evaluating Acceptance of a “Prospective Audit or Attestation Client.” Form DA JET 01, AAM G900 Procedures — Deloitte Audit JET Form DA JET 01 describes the procedures performed to evaluate the achievement of the quality control objectives and audit control objective for DA JET in accordance with U.S. AAPMS AAM G900 (U.S. – specific topic), The Use of Computer Programs on Audit Engagements. Engagement teams using DA JET are to file DA JET 01 in working papers after inserting references to the applicable working paper(s) and completing the overall conclusion on quality and audit control objectives. U.S. Tax Alert 09001: Textron — The Status of Work Product Protection for Tax Accrual Workpapers This U.S. Tax Alert discusses the recent decision of the First Circuit Court of Appeals in United States v. Textron. The court held that work product protection does not extend to tax accrual workpapers prepared by the taxpayer because such items were not prepared “for use in possible litigation.” This decision reversed both the lower trial court decision and the original First Circuit panel opinion holding that the tax accrual workpapers at issue were protected under the work product doctrine. It is possible that the taxpayer in Textron will seek to have its case heard by the U.S. Supreme Court. In light of this decision, many Deloitte professionals have been contacted by client personnel requesting information regarding Deloitte’s policies on review and retention of tax opinions and other documentation to support analysis of tax reserves. The Textron decision should have no effect on these policies. The Tax Alert is intended to provide an understanding of the Textron decision so that Deloitte professionals are in a better position to respond to client inquiries. Click here to access the U.S. Tax Alert Audit Quality Alert 09-2, Audit Considerations for Pension and Other Postretirement Benefits This Audit Quality Alert discusses considerations for practitioners regarding audits of an entity’s pension and other postretirement benefit calculations and disclosures. Audit Quality Alert 09-2 supersedes Practice Alert 08-18, Audit Considerations for Pension and Other Postretirement Benefits Affected by Turmoil in the Credit Markets, and supplements Financial Reporting Alert 09-5, Reporting Considerations for Pension and Other Postretirement Benefits. New Job Aid Available to Improve Primary Reviews To improve the consistency and effectiveness of the primary review, a new job aid, Primary Review — Leading Practices Overview, has been developed that identifies leading practices. This job aid is intended for use by audit engagement teams. The job aid is available on the Deloitte Audit Plus website. U.S. DPM 3920, Audits of Companies Incorporated in Another Country This policy affects engagements related to an audit of a company that is incorporated in the jurisdiction of another DTT Member Firm. U.S. DPM 3920, Audits of Companies Incorporated in Another Country, is reissued and effective immediately. The updates provide additional policies and guidance on situations in which a Member Firm (1) performs the audit of an entity that is incorporated or established in another Member Firm’s jurisdiction and (2) is prohibited from signing the audit report. It is important for engagement teams to review the reissued policy to facilitate timely communication between DTT Member Firms on the additional procedures that may need to be performed. Tax Information Reporting and Withholding — a Potentially Significant Liability Generally, a foreign entity (nonresident alien, foreign partnership, foreign corporation, etc.) is subject to U.S. tax on what is referred to as its "U.S. source income." U.S. source income includes interest, dividends, royalties, rents, or personal service receipts paid by domestic corporations, U.S. citizens or resident aliens, or entities formed under the laws of the U.S. or a state. A U.S. company that makes these sorts of payments is deemed to be a “withholding agent” and is 6 responsible for withholding estimated U.S. tax on these payments and for properly reporting this withholding on the required tax forms. Failure to comply with these requirements can result in penalties and interest to the withholding agent. The IRS has recently increased its enforcement activities in this area. Although most prevalent with financial institutions, this increased scrutiny applies broadly. While noncompliance in this area could have a material impact on a company’s financial statements, many companies are not aware that they are subject to such requirements. In situations in which additional audit procedures are required for our attest clients, Deloitte Tax information reporting specialists can assist the audit engagement team in the design and implementation of appropriate procedures to properly address this area. Interim Summary of the 2009 PCAOB and Internal Inspection Findings AAPMS Release 09-3 [AAM] is issued. Release 09-3 includes key findings of the 2009 PCAOB Inspection and Internal Inspection of the U.S. member firm and emphasizes the importance of taking the necessary actions to address these findings as part of current-year audit and attestation engagements. New Policy Added to U.S. AAM Requiring Audit Engagement Partner's Primary Review of Working Papers Related to All Significant Matters U.S. AAM P040, Review Working Papers, is revised to add a policy requiring the Audit Engagement Partner to perform a primary review of the working papers related to all significant matters, in addition to the primary review performed by the Audit Manager. Conforming changes were made to certain other U.S. AAM sections. The addition of this policy aligns the requirements in the AAM with the requirements in the Audit Performance Improvement Plan. Policies and Guidance Issued on IFRS Accreditation for U.S. Member Firm Audit Professionals U.S. DPM 3970A, IFRS Accreditation for U.S. Member Firm Audit Professionals, provides policies and guidance on the specific accreditation requirements for U.S. Member Firm audit professionals to obtain the experience, training, and skills necessary to perform work on audit engagements for entities reporting under IFRSs. Additional policies and guidance are also included in U.S. DPM 3970, IFRS Accreditation for Audit Professionals. Revisions Made to AAPMS REP 215 and REP 575P as a Result of the FASB Accounting Standards Codification Revisions were made to AAPMS REP 215, Consistency, and REP 575P, Reporting on a Review of Interim Financial Information for Public Entity Audit Clients, to update illustrative examples of explanatory paragraphs concerning the adoption of a new accounting principle as a result of the FASB Accounting Standards Codification. Practice Alert 09-20, Potential Accounting Issue Regarding Miscalculation of Share-Based Compensation Resulting From Use of Common Third-Party Software The Practice Alert affects engagement teams with clients that use Equity Edge software to track and account for share- based payment awards. Equity Edge has announced a change made in the most recent version (Version 8) of its software to correct certain computational errors that were present in prior versions of the software. The update addresses the computation of the "true up" of the forfeiture rate for share-based payment awards (1) with a graded-vesting pattern and (2) that are being accounted for as one award rather than multiple awards as permitted by ASC 718-10-35-8 (formerly paragraph 42 of Statement 123(R)). We believe that entities that used the software's computation method before the change was made were not in compliance with the requirements of ASC 718-10-35-8. This alert describes the issue in detail and provides an example. Engagement teams that believe their client's computation of share-based compensation is affected by this software update should contact National Office — Accounting Consultation as specified in the alert. 7 U.S. Form 1310SSE, Illustrative Audit Engagement Letters — Broker Dealers, Is Revised The Practice Alert affects audit engagements for broker dealers. U.S. Form 1310SSE is reissued and effective immediately for engagements for which an engagement letter has not yet been issued. Among other things, this Form was modified to include language for the performance of agreed-upon procedures on the Transitional Assessment Reconciliation ("Form SIPC-7T") to the Securities Investor Protection Corporation as required by SEC Rule 17a-5(e)(4) for entities with periods ending between April 1, 2009, and December 31, 2009. Refer to NFOItem 09-373 for an explanation of this and other modifications made to this Form. DTT Global Audit Sarbanes Oxley Update September 2009 The DTT Global Audit Sarbanes Oxley Update September 2009 has been issued. The document provides information on DTT Global US133 e-learning unit – Sarbanes-Oxley s404 2009 Update, PCAOB’s adoption of the new auditing standard on engagement quality review and the new COSO paper on board risk oversight. The Sarbanes Oxley Update document is available on the Deloitte Audit Plus website. IFRS Resources IFRS Headlines IFRS Headlines highlights key developments relating to IFRSs, including recent publications and important discussions by the IASB and IFRIC, amendments to the Deloitte Touche Tohmatsu (DTT) International Accounting Manual, and new DTT publications on IFRSs. The latest issue of the Newsletter is available in the International Accounting Manual, Newsletters and Publications section on the Technical Library. IFRSs and US GAAP: A Pocket Comparison The 2008 edition of IFRSs and US GAAP: A Pocket Comparison is now available on IAS Plus Website and in Technical Library. The publication provides a standard-wise comparison of significant differences between IFRSs and US GAAP. Click here to access the publication on IAS Plus website. Talking to attest clients about IFRS A new document explains how we can assist attest clients as they evaluate & implement IFRS. It includes recommendations to ensure we are sufficiently involved at the appropriate level throughout the process and guidance on what services may be provided to attest clients during IFRS conversions. Click here to access the publication. U.S. GAAP – IFRS Questionnaire The latest version of U.S. GAAP – IFRS questionnaire is now issued and available for use on projects for conversion of financial statements from U.S. GAAP to IFRS and from IFRS to U.S. GAAP. The questionnaire is available under ‘Other Forms’ section within ‘INFORM’ section of the Technical Library. Technical Library Recap The following is a selection of guidance available in the Deloitte Audit Plus Technical Library that is new or revised since the date of the last newsletter. Please refer to Deloitte Audit Plus Technical Library for complete and current updates. U.S. AAPMS • SEC 425, Meetings With Underwriters is revised to update the list of underwriters with which Deloitte & Touche LLP has signed an Agreement Regarding Oral Due Diligence 8 • RLE/AAM 2720, Compare the Information for the Preliminary Analytical Review in an Audit of a Real Estate Entity and RLE/AAM 6500, Perform Financial Statement Review in an Audit of a Real Estate Entity is issued to set forth the quantitative measurements and ratio analyses that preliminary analytical review and financial statement review may include for an audit of a real estate entity • RLE/REP 605, Reports on Supplemental Fair Value Information is revised to clarify guidance on disclosures related to a reconciliation of revaluation equity and to update references to the FASB's Accounting Standards Codification • AAM G461, Considerations for Auditing Investments Without a Readily Determinable Fair Value, REP 225, Emphasis of a Matter and IND/EBP/REP 200, Auditors' Reports Expressing Opinions on Financial Statements were revised to remove the requirement for us to obtain approval from the Financial Services IPPD or Investment Companies IPPD if we are not including an emphasis of a matter paragraph in our audit report describing the inherent uncertainty in management's estimate of fair value and certain criteria are met • REP 230, Uncertainties and REP 235, Going Concern Uncertainties revised to update the list of underwriters with which Deloitte & Touche LLP has signed an Agreement Regarding Oral Due Diligence • AAM G900, The Use of Computer Programs on Audit Engagements is revised to add the Deloitte Audit JET Version 1.4 program to the list of software programs reviewed centrally for achievement of quality control objectives regarding program design and program functions • AAM R061, Procedures to Address Current Valuation and Liquidity Issues as Part of Our Interim Review is revised to remove the requirement to consult with the Regional Professional Practice Director (RPPD) or the Regional Lead Financial Instruments and Valuation SMR if, as of the end of the interim period, the entity has material amounts of financial instruments that are (1) complex, structured, or illiquid and (2) valued by the entity based on broker quotes and/or a pricing service and such broker or pricing service has used a proprietary model to estimate the fair value of the financial instruments • EBP/REP 200, Auditors' Reports Expressing Opinions on Financial Statements revised to provide references to the examples • Practice Alert 09-17, Foreign Currency Exchange Controls in Venezuela, and Selection of an Inflation Index to Assess Highly Inflationary Status added to AAM • SCR/AAM G615, The Profiling Approach in an Audit of a Securities Broker and Dealer issued to conform to the format of AAM G615, The Profiling Approach. For audits of a securities broker and dealer, the section includes updated (1) illustrative examples of when the profiling approach may be appropriate and (2) potential characteristics of audit interest • AAPMS Release 00-7 [IND/SCR/AUD/REP], Securities, Commodities, and Government Securities Brokers and Dealers — Auditing and Reporting for Audits Not Subject to the Standards of the PCAOB revised to update the agreed-upon procedures letter report pursuant to Rule 17a-5(e)(4) (see Example A-15) • Release 93-30 [HTH], Involvement of Tax Specialists in Tax-Exempt Health Care Engagements and Release 95- 32 [HTH], Health Care Providers' Accounting for Postretirement Health Care Benefits deleted because of obsolescence • GEN 115, Identification and Resolution of Potential Conflicts, REP 155, Restatement of Financial Statements for the Correction of an Error, VAL 900, Identification and Resolution of Conflicts and DPM 10207, Acceptance and Continuance of Marketplace Business Relationships revised for conforming changes to update references for the issuance of the Deloitte Cross-Border Conflict Check Form • AAM G345 (and issued related appendixes) reissued, effective for consultations initiated on or after October 12, 2009 (earlier implementation is encouraged), and issued AAM G346 (and related appendix), effective immediately. • Various sections of Audit Approach Manual (AAM), Other Specialized Services Manual (OSS), Reporting Advisory Services Policies Manual (RAS), and U.S. Deloitte Policies Manual revised to conform to changes to AAM G345 and the issuance of AAM G346 (DPM) • Practice Alert 09-19, Foreign Currency Exchange Controls in Venezuela — Use of Official Rate for Translation (Update) is added to the AAM. • Practice Alert 09-18, The Monitoring Process for Implementation of the New Audit Methodology is added to the AAM • Release 09-2, New Audit Methodology is revised to (1) provide a reference to Practice Alert 09-18, The Monitoring Process for Implementation of the New Audit Methodology; (2) add clarification on identifying controls that achieve relevant control objectives and on the application of assertions; and (3) make other minor editorial changes • Practice Alert 08-19, New Consultation Policy Related to Impairment Testing of Goodwill and Indefinite-Lived Intangible Assets, Practice Alert 09-2, Involvement of Internal Fair Value Specialists in Testing Impairment of Goodwill and Other Intangible Assets and Practice Alert 09-3, Auditing Fair Value Measurements are updated for the reissuance of AAM G345, Consultation 9 • Practice Alert 09-19, Foreign Currency Exchange Controls in Venezuela — Use of Official Rate for Translation (Update) is added to the AAM • AAM 2900, Prepare the Audit Planning Memorandum is revised to clarify the timing of the approval of the audit plan (when required) by the EQAR reviewer • AAM 2330, Understand the Entity’s Selection and Application of Accounting Policies, REP 205, Audit Reports on Financial Statements — Nonpublic Entities: General Matters, REP 220, Rule 203 Opinions (Departure From a Promulgated Accounting Principle), and REP 240, GAAP Departures are Revised to update references because of the withdrawal of AICPA SAS 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles (as amended), and the related interpretation, The Auditor's Consideration of Management's Adoption of Accounting Principles for New Transactions or Events. • Release 00-7 [SCR/AUD/REP], Securities, Commodities, and Government Securities Brokers and Dealers — Auditing and Reporting for Audits Not Subject to the Standards of the PCAOB are revised to update the agreed- upon procedures letter report pursuant to Rule 17a-5(e)(4) • AAM G345A, Appendix — Consultation Resources is revised to update the description of certain National Office Professional Practice Groups or Departments to conform to U.S. DPM 10610, Professional Practice Network, Quality and Risk Management Resources & Other Consultation Resources • AAM G345B, Appendix — National Clearing Authority Resources is revised to add additional partners/directors with national clearing authority • OSS 210, Merger & Acquisition Services Policy Manual (M&A Policy Manual) is revised to (1) update references to policies, guidance, and forms regarding access to audit working papers by prospective purchasers, prospective investors, or prospective lenders; (2) clarify the purpose of the Risk Management (Lender Access) Committee; and (3) update M&A Contacts • Various sections of AERS Policy Manual — Enterprise Risk Services is revised to reflect role name changes in the ERS Quality Risk Management network and to clarify how certain example language for engagement letter terms contained in U.S. DPM 7240, Proposals and Documentation of Engagement Terms, may be used by U.S. practitioners • DPM 10610, Professional Practice Network, Quality and Risk Management Resources & Other Consultation Resources is revised to update certain consultation resources for Audit Professional Practice Directors, the SEC Department, and Merger & Acquisition Services • Practice Alert 09-20, Potential Accounting Issue Regarding Miscalculation of Share-Based Compensation Resulting From Use of Common Third-Party Software added to AAM • AAM G340, Specialists revised to add the requirement to request that the entity obtain (and provide us with a copy of) an External Specialist's written permission for us to use the External Specialist's report as audit evidence if the External Specialist's report restricts the use of the report to the entity or to third parties other than Deloitte firm. • AAM G012, Tax Specialists, AAM G015, Fair Value Specialists, AAM G016, Actuarial Specialists — Employee Benefits and AAM G017, Actuarial Specialists — Insurance-related Liabilities are revised to conform to changes to AAM G340: • AAM G346, Resolving Disagreements is revised to remove the "Applicable National Office Professional Practice Department Partner in Charge” from the successively higher level of resources for resolving disagreements and for other minor editorial changes • REP 215, Consistency and REP 575P, Reporting on a Review of Interim Financial Information for Public Entity Audit Clients are revised for FASB Accounting Standards Codification • SEC 310, Procedures Regarding 1933 Act Engagement and Other Offerings is revised to (1) add a policy requiring consultation with the National Professional Practice Director (NPPD) and an assessment of our ability to reissue our report if an entity has an open SEC comment letter that contains substantive unresolved SEC comments and (2) modify the consultation requirement if the audit engagement has been assessed as presenting greater than normal risk • REP 150, Reissuance of Reports and Dating Thereof, REP 205P, Audit Reports on Financial Statements — Public Entities: General Matters, REP 575P, Reporting on a Review of Interim Financial Information for Public Entity Audit Clients and SEC 140, Communications With the SEC are revised to conform to changes to SEC 310. • SEC 315, Audit Reports in Registration Statements and Prospectuses and SEC 320, Experts and References to Us as Experts (under PCAOB AS 5) are revised for minor editorial changes. • OSS 210, Merger & Acquisition Services Policy Manual (M&A Policy Manual) is revised to provide a reference to additional guidance on access to audit or tax working papers and to clarify M&A Services that we should not provide 10 • UTL/OSS 300, Illustrative Attestation Report Related to Section 1603 of the American Recovery and Reinvestment Act of 2009 is issued to provide an illustrative attestation report on our examination of management's assertion regarding the eligibility of costs claimed as part of the basis of the property • AAPMS Release 09-3 [AAM], Interim Summary of the 2009 PCAOB and Internal Inspection Findings is issued • AAM P040, Review Working Papers is revised • AAM P020, Prepare and Control Working Papers, AMM G330, Primary Review of Working Papers, AAM G335, Overriding Review of Working Papers and AAM G355, Audit Engagement Partner is revised to conform to changes to AAM P040 • AAPMS Release 00-7 [IND/SCR/AUD/REP], Securities, Commodities, and Government Securities Brokers and Dealers — Auditing and Reporting for Audits Not Subject to the Standards of the PCAOB is revised to update the agreed-upon procedures letter report pursuant to Rule 17a-5(e)(4) (see Example A-15) to require consultation with the Industry Professional Practice Director (IPPD) — Securities if there are other specified parties in addition to the SEC, Financial Industry Regulatory Authority (FINRA), and Securities Investor Protection Corporation (SIPC) that require use of the agreed-upon procedures letter on SIPC assessment. • AAPMS SEC 425, Meetings With Underwriters is revised to update the list of underwriters with which Deloitte & Touche LLP has signed an Agreement Regarding Oral Due Diligence. • Release 09-2 [AAM], New Audit Methodology is revised (1) the New Audit Methodology Bridge Document (available in this Release and on Deloitte Audit Plus) and (2) the 2009 New Audit Methodology FAQs (available on Deloitte Audit Plus) • Audit Quality Alert 09-1 [AAM], Auditing of Claims-Based Liabilities — Frequent Audit Deficiencies is added to AAM • Audit Quality Alert 09-2 [AAM], Audit Considerations for Pension and Other Postretirement Benefits is added to AAM U.S. Deloitte Policies Manual • DPM 3730, Access to Working Papers is revised to clarify which access and authorization letters to use in the United States and to update certain references • DPM 3210A, Initial Acceptance of Audit or Attestation Clients and Engagements and DPM 3230A, Background Checks is issued • DPM 3210A, Initial Acceptance of Audit or Attestation Clients and Engagements is revised to update information about Industry Professional Practice Directors and applicable SIC codes • DPM 10610, Professional Practice Network, Quality and Risk Management Resources & Other Consultation Resources is reissued and renamed to (1) reflect the new structures of the Attest Professional Practice Network and Enterprise Risk Services Quality and Risk Management and (2) update certain consultation resources for other function-specific subsidiaries of Deloitte LLP. Other sections of the U.S. AAPMS and DPM have also been updated for conforming changes • 3970, IFRS Accreditation for Audit Professionals is revised to provide additional policies and guidance on IFRS accreditation as well as to (1) indicate cross reference to specific requirements provided in U.S. DPM 3970A for U.S. Member Firm Audit Professionals and (2) conform changes to the DTT Deloitte Policies Manual • 3970A, IFRS Accreditation for U.S. Member Firm Audit Professionals is issued. • 10610, Professional Practice Network, Quality and Risk Management Resources & Other Consultation Resources is revised to update consultation resources for Audit Professional Practice Directors and add an IFRS Accreditation Contact • DPM 3920, Audits of Companies Incorporated in Another Country is reissued. • DPM 3970A, IFRS Accreditation for U.S. Member Firm Audit Professionals is revised to specify that accreditation is required for IFRS reporting engagements for which we will perform audit procedures on all, or substantially all, account balances of a significant subsidiary or branch of the parent company (including Foreign Private Issuers) NFO Items & Other Updates • Updated: INFORM.NFO, US_AAPMS.NFO, US_ITM09.NFO, US_DPM.NFO, CODMAN.NFO, USACCMAN.NFO, USSECFRR.NFO, USSECSAB_NEW.NFO, WINSEC.NFO, and USSECSP.NFO • Form ERS0002S, External Communications Mailbox Submission Instructions and Template is revised (NFOItem 09-305) • Form VAL1031, Illustrative Amendment to Engagement Agreement is revised (NFOItem 09-306) • U.S. Investment Companies Pack for AS/2 Release 4 is issued (NFOItem 09-310). [...]... Letter — Model Form — Securities is revised (NFOItem 09-409) Webcasts Click here to view the full series of upcoming webcasts Playbacks Click here to access the archive of webcasts This U.S Reporting Newsletter (Internal) for Non-U.S Based Companies must not be distributed externally to clients or prospective clients Please note that these updates originate from the U.S Firms Please refer to Deloitte Audit... Assertion Related to the Cost Basis of Qualified Property Eligible for Payments for Specified Energy Property in Lieu of Tax Credits pursuant to Section 1603 of the American Recovery and Reinvestment Act of 2009 issued (NFOItem 09-342) Form 1007S, Planning for New Audit Methodology Questionnaire issued (NFOItem 09-349) Form 2350S, Management Representation Letter — Model Form revised (NFOItem 09-346) Form... Assertion related to the Cost Basis of Qualified Property Eligible for Payments for Specified Energy Property in Lieu of Tax Credits pursuant to Section 1603 of the American Recovery and Reinvestment Act of 2009 is issued (NFOItem 09-388) Form 2395S, Illustrative Letter From Third-Party Actuary to Permit Use of an Otherwise Restricted Report is revised and renamed (NFOItem 09-389) Error Extrapolation Worksheet... are revised (NFOItem 09-316) Illustrative Engagement Agreements and certain Standard Forms for Valuation Services revised (NFOItem 09329) Form 663A, Illustrative Confirmations — Actuarial Inquiries — 2009 AS/2 Industry Packs revised(NFOItem 09339) Deloitte Cross-Border Conflict Check Form issued (NFOItem 09-340) Form OSS210H, Illustrative Professional Advisor, Credit Rating Agency, and M&A Insurance... legal structure of Deloitte Touche Tohmatsu and its member firms Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries Copyright © 2009 Deloitte Development LLC All rights reserved Member of Deloitte Touche Tohmatsu 12 . August-November 2009 Issue of News up to November 15, 2009 1 Global IFRS and Offerings Service U.S. Reporting Newsletter (Internal) . Under Internal Revenue Code Section 162(m) On July 17, 2009, the Internal Revenue Service (IRS) released an internal legal memorandum (ILM) (AM2009-006)