BDO SEIDMAN, LLP’S June 2007 FINANCIAL REPORTING UPDATE

1. BDO SEIDMAN, LLP’SJune 2007FINANCIAL REPORTING UPDATE

2. Speakers and Replay Information • Speakers • Sue Lister • Jeff Lenz • Ben Neuhausen • Replay Access • www.bdo.com/about/publications/assurance

3. Agenda • Internal Control Reporting Update • SEC Update • GAAP Update • Questions and Answers

4. ICFR UPDATEJune 2007

5. ICFR Update • SEC Interpretive and Rulemaking Releases • http://www.sec.gov/news/press/2007/2007-101.htm • AS-5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements • http://www.pcaobus.org/Rules/Docket_021/2007-05-24_Release_No_2007-005.pdf

6. SEC UPDATE June 2007

7. SEC Update – Agenda • Recent Rulemaking • SEC Roundtables • OCA Projects • Personnel Changes • Paulson Committee on the Auditing Profession

8. Rulemaking – Final Rules • Foreign Private Issuer Deregistration • Deregistration eligibility based on average daily trading volume • Release 34-55540 http://www.sec.gov/rules/final/2007/34-55540.pdf

9. Proposed Rules – Modernizationof Smaller Company Regulations Proposed May 23, 2007 – • Eliminate “small business” regulatory system • Open eligibility for delayed primary shelf offerings to smaller public companies • Facilitate private offerings - • By allowing limited advertising for private securities offerings to a newly defined category of “qualified purchasers” • By shortening the holding periods that must be met before restricted securities can be resold under Securities Act Rule 144.

10. Proposed Rules – Modernizationof Smaller Company Regulations • Exempt compensatory employee stock options from Exchange Act registration requirements • Require the electronic filing of Form D by companies making private offerings Press Release 2007-102: http://www.sec.gov/news/press/2007/2007-102.htm

11. SEC Roundtables • Proxy Process (May 2007) • Voting mechanics, shareholder proposals, purpose and effect of the federal proxy laws • IFRS Road Map to Eliminating Reconciliation (March 2007) Next steps to occur this summer: • Proposing release on allowing IFRS w/o reconciliation • Concept release on allowing domestic filers to use IFRS See SEC press releases at http://www.sec.gov/news/press.shtml

12. Office of the Chief AccountantProjects • Materiality – OCA and Corp Fin considering interim materiality and when a quantitatively material item can be immaterial • Complexity – PCAOB, FASB and SEC are working to establish a committee for addressing complexity

13. Personnel Changes • Jim Kroeker appointed Deputy Chief Accountant • Chief Accountant of the Division of Corporation Finance, Carol Stacey, resigned • Replacement not yet announced

14. Paulson Committee on the Auditing Profession Secretary Paulson announced formation of the committee on May 17, 2007http://www.ustreas.gov/press/releases/hp408.htm • Arthur Levitt and Don Nicolaisen to co-chair • Address audit industry concentration, financial soundness, and qualified personnel

15. GAAP Update June 2007

16. Agenda • FASB Statement No. 159 • FASB Exposure Drafts • AICPA Statement of Position 07-1 • FASB Staff Positions • EITF Consensuses • EITF Open Issues

17. FASB Statement No. 159 • Fair value option for financial assets and liabilities • Most financial assets and liabilities eligible, including own debt • If elected, subsequent changes in fair value are recorded in earnings • Individual instrument election • Election generally irrevocable • Effective for fiscal years beginning after 11/15/07 • Requirements of FASB Statement No. 157 must be adopted at the same time

18. FASB Statement No. 159 • Primary motive is to enable economic hedging where hedge accounting under FASB Statement No. 133 is difficult to achieve • When to make election: • Upon initial acquisition of asset/incurrence of liability • Transaction that requires a new measurement, like a business combination • For existing financial assets/liabilities upon adoption of Statement 159 • Upon adoption for existing assets/liabilities, adjust retained earnings for difference between fair value and carrying amount • Proposed abusive transactions to exploit transition provisions rejected

19. FASB Exposure Drafts • Exposure Drafts from 2005 on Business Combinations and Noncontrolling Interests likely to be issued as final Statements in June • Disclosures about Derivative Instruments and Hedging Activities • Accounting for Financial Guarantee Insurance Contracts

20. AICPA Statement of Position 07-1 • Clarifies scope of AICPA Guide, Audits of Investment Companies • What entities meet the definition of investment company • When it is appropriate for a parent company (or equity method investor) to carry forward the specialized accounting of an investment company that is a subsidiary (or an equity method investee) • To be issued in June

21. FASB Staff Positions—Update • FAS 126-a: Revision to the Definition of a Public Entity to Include an Obligor for Conduit Debt Securities—now FAS 126-1 • EITF 00-19-b: Registration Rights Agreements—now EITF 00-19-2 • EITF 03-6-a: Whether employee stock compensation arrangements represent participating securities for EPS purposes—still open

22. FASB Staff Positions—Update • FAS 141-b, 142-e, and 144-b: Transition guidance on fair value measurements until Statement 157 becomes effective—will not be issued in final form

23. FASB Staff Positions—Final • FSP FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 • FSP FIN 46(R)-7, Application of FASB Interpretation No. 46(R) to Investment Companies • FSP FAS 158-1, Conforming Amendments to Pension and Postretirement Illustrations from FASB Statement No. 158 • FSP FIN 39-1, Amendment of FASB Interpretation No. 39

24. FASB Staff Positions—Proposed • FSP FAS 154-a, Considering the Effects of Prior-Year Misstatements • FSP FAS 128-a, Computational Guidance for Computing Diluted EPS under the Two-Class Method • FSP FAS 144-c, Classifying and Accounting for a Depreciable Asset as Held-for-Sale When an Equity Method Investment is Obtained

25. EITF Update SELECTED EITF ISSUES

26. Final Consensus • 06-10, Collateral Assignment Split-dollar life insurance • Need to analyze substance to determine whether employer has a postretirement obligation to employee

27. Final Consensus • 06-6, Modification of a conversion right • 06-7, Previously bifurcated conversion right that no longer needs to be bifurcated • 06-6 nullifies Issue 05-7 consensus • Two more in long string of EITF issues dealing with convertible debt • Complex models • EITF recommendation that FASB give accelerated consideration to convertible debt

28. Final Consensus • 06-8, Buyer’s continuing investment in condominium transactions • For seller to use percentage-of-completion method, buyer’s continuing investment must meet Statement 66 requirements • To accomplish, buyer either (1) makes payments to amortize debt during construction or (2) makes extra down payment

29. Final Consensus • 06-9, Change or elimination in difference in fiscal years between investor and equity method investee • Accounting change under FASB Statement No. 154 • Retrospective application unless not practicable as defined in Statement 154

30. Tentative Consensus • 07-3, Nonrefundable Advance Payment for Goods or Services to Be Used in Future R&D Activities

31. Open EITF Issues—Update • 06-H, Application of AICPA Broker-Dealer Guide to commodity traders—now a FASB project about commodity inventories • 06-I, Joint development, manufacturing, and marketing arrangements in biotechnology and pharmaceutical industries—now EITF 07-1

32. Other Open EITF Issues • 06-11, Accounting for Tax Benefits from Dividends on Employee Stock Compensation Awards • 07-2, Accounting for Convertible Debt that Requires or Permits Cash Settlement • 07-D, Application of the Two-Class Method to Master Limited Partnerships