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No. 2009-35
(June 2009)
SUBJECT: SUBSEQUENT EVENTS
PRONOUNCEMENT ANALYZED: Statement of Financial Accounting Standards
(SFAS) No. 165
EFFECTIVE DATE: For financial statements covering interim or annual periods ending after June 15, 2009
SUMMARY AND HIGHLIGHTS
SFAS NO. 165 ESTABLISHES STANDARDS OF ACCOUNTING AND REPORTING FOR EVENTS OCCURRING AFTER THE BALANCE SHEET DATE. BY AND LARGE, SFAS NO. 165 CARRIES FORWARD THE GUIDANCE FROM AU SECTION 560 OF THE AUDITING LITERATURE.
INTRODUCTION
As it stood, the principal guidance concerning subsequent events was found in the auditing literature (AU Section 560, "Subsequent Events"). The FASB believes that such guidance should be directed to management as well as to an entity's auditors (and thus should also be included the authoritative GAAP literature). Accordingly, the FASB has issued SFAS No. 165, Subsequent Events, which establishes standards of accounting and reporting for transactions and events occurring after the balance sheet date. Note that, for the most part, the guidance in AU Section 560 has been carried forward (with only minor modifications) without redeliberation; thus, the SFAS No. 1 65 is not expected to result in significant changes to current practice. Also note that the Auditing Standards Board has proposed to eliminate the guidance now contained in AU Section 560.
NEW STANDARDS
Scope and Applicability of SFAS No. 165
SFAS No. 165 is applicable to subsequent events not addressed in other GAAP pronouncements; if an event or transaction falls within the scope of such other GAAP, the guidance therein should be followed. Examples of other authoritative pronouncements covering the accounting...