In September 1990, the chairman of the Securities Exchange Commission criticized carrying investments at amortized cost and argued that, in the banking and savings

& loan industries, "serious consideration must be given to reporting all investment securities at market value." Following several years of inconsistent accounting practices across industries, and calls to mark selected assets to market, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which responds largely to the issue of consistency, partly to the issue of market value, and, in the process, leaves some room for management discretion in managing earnings.

Required: 

Using the newspaper and magazines file in NEXIS, Mead Data Central's automated data retrieval system, or newspapers and magazines in a library, select an article about a publicly traded company's accounting for financial instruments. Using the annual report file in the National Automated Accounting Research System (NAARS), or copies of annual reports in a library, select the annual report of the same company issued for the fiscal year referred to in the article. Draft a report that accomplishes the following:

1. Summarizes the article, indicating key issues, like management's or the financial community's reaction to the effect of disclosures about financial instruments on reported income.
2. Lists and explains questions an auditor would likely pose to the management of the company you've selected.
3. Summarizes the company's disclosures about financial instruments that appear in the footnotes (e.g., the footnote summarizing accounting policies, usually Note 1).