Comments sought on EDs concerning environmental remediation, mortgage loans and ethics.The AICPA AICPA See American Institute of Certified Public Accountants (AICPA). has issued exposure drafts on environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a liabilities, mortgage loans and ethics and is calling for comments on each. Environmental remediation liabilities The accounting standards executive committee (AcSEC) has issued an exposure draft of a proposed statement of position, Environmental Remediation Liabilities (including auditing guidance). For more information about this subject, see "Environmental Remediation Liabilities," by Frederick R. Gill, page 81. Mortgage loan borrowers The task force on participating mortgages has issued an exposure draft of a proposed statement of position, Accounting by Participating Mortgage Loan Borrowers. The SOP would establish the borrower's accounting for a participating mortgage loan if the lender participates in any market value increases of the mortgaged real estate project, the results of operations of that project or in both. The proposed statement, which would be effective for fiscal years beginning after June 15, 1996, requires that * At origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real , the borrower should record the participating mortgage loan without allocating any of the proceeds to a liability related to the participation feature. * At each month's end, a participation liability should be reported equal to the amount that would be required to extinguish Extinguish Retire or pay off debt. that liability if certain criteria were met. * As estimates of the participation liability change because of new estimates of the property's market value, the borrower should recalculate re·cal·cu·late tr.v. re·cal·cu·lat·ed, re·cal·cu·lat·ing, re·cal·cu·lates To calculate again, especially in order to eliminate errors or to incorporate additional factors or data. the effective interest rate to reflect differences in expected future payments. * Certain disclosures must be included in the financial statements. Ethics division interpretations and rulings The ED, Omnibus omnibus: see bus. Proposal of Professional Ethics professional ethics, n the rules governing the conduct, transactions, and relationships within a profession and among its publics. professional ethics liability, n 1. Division Interpretations and Rulings, prepared by the professional ethics executive committee, would revise the following definition and three rulings: * Proposed revision of definition under ET section 92. The committee would change the Code of Professional Conduct definition of "financial statements" to reflect current professional literature. This definition is only for use in determining compliance with the code's rules, interpretations and rulings, the ED notes. * Proposed ruling under Rule 101--Member's indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from of a client. This ruling would provide guidance to members who are asked to sign an agreement indemnifying a client for losses, costs or damages due to client acts. * Proposed ruling under Rule 102--Client advocacy and expert witness services. This would clarify the application of Interpretation 102-6--Professional services involving client advocacy to expert witness services. * Proposed ruling under Rule 203--Applicability of Rule 203 to members performing litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services clarifies the effect of this accounting principles rule on these services. Procedure for commenting The comment deadlines for these EDs are * Environmental Remediation Liabilities (product no. 800091JA)--October 31, 1995. * Accounting by Participating Mortgage Loan Borrowers (product no. 800092JA)--October 5, 1995. * Omnibus Proposal of Professional Ethics Division Interpretations and Rulings (product no. 800089JA)--September 19, 1995. Any individual or organization may obtain one copy of each of these EDs at no charge until the end of the comment period by calling the AICPA order department at (800) 862-4272, menu #1; fax no. (800) 362-5066. Environmental Remediation Liabilities is also available for downloading, free-of-charge, on the AICPA Accountants Forum on CompuServe. For instructions on how to download an item, see "Accountants Forum Users' Manual: Lesson 1," page 97. |
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