Monthly newsletter that briefly describes key regulatory and professional developments that occurred in the field of accounting.
Highlights of the January 2016 edition of Accounting Roundup include the following:
- The FASB’s release of (1) a final ASU on classification and measurement of financial instruments, (2) a proposed ASU on certain cash flow classification issues, and (3) two proposals related to employee benefit plans.
- The IASB’s publication of (1) its new leasing standard, IFRS 16; (2) amendments to the guidance on income taxes in IAS 12; and (3) amendments to the guidance on cash flow disclosures in IAS 7.
- Adoption and transition observations related to the FASB’s and IASB’s new revenue standard.
- The SEC’s release of guidance related to the FAST Act.
Year in Review — 2015
In 2015, the FASB made significant progress on its simplification initiative (i.e., the Board’s efforts to reduce the cost and complexity of U.S. GAAP). In addition to eliminating the concept of extraordinary items from U.S. GAAP, the Board released ASUs that streamline:
- The balance sheet classification of deferred taxes.
- The accounting for measurement-period adjustments.
- The measurement of inventory.
- Customers’ accounting for cloud computing costs.
- Retirement benefit plan measurement.
- The accounting for debt issuance costs.
The FASB also issued ASUs that (1) significantly change the consolidation analysis required under U.S. GAAP and (2) expand the disclosures insurance entities must provide about short-duration insurance contracts. Further, the Board released several ASUs in response to consensuses reached by the EITF — namely, on (1) applying the NPNS scope exception to certain electricity contracts within nodal energy markets, (2) disclosures for investments in certain entities that calculate net asset value per share, (3) effects on earnings per unit of master limited partnership dropdown transactions, and (4) the accounting for employee benefit plans.
The FASB’s and IASB’s May 2014 revenue standard (issued as ASU 2014-09 by the FASB and IFRS 15 by the IASB) also continued to be a major focus. In addition to their ongoing efforts to address issues associated with the implementation of the new guidance, the boards each released amendments that defer the effective dates of the new standards by one year.
In other news, the FAF recently completed its three-year assessment of the PCC and released a document outlining the revisions it is making to the PCC’s responsibilities and operating procedures. Meanwhile, the SEC’s conflict minerals rule continued to grab headlines. In August 2015, the U.S. Court of Appeals for the District of Columbia Circuit (the “Appellate Court“) upheld its April 2014 ruling that parts of the rule and of Section 1502 of the Dodd-Frank Act violate the First Amendment to the extent that they require issuers to disclose that their products have “not been found to be ’DRC conflict free.’“ Other significant SEC developments included its publication of final rules on crowdfunding and pay ratio disclosures.
Accounting Roundup: Year in Review — 2015 covers final guidance released during 2015 that could affect reporting and disclosures for the coming reporting season. With the exception of documents issued in December, proposed guidance, such as exposure drafts (EDs) and invitations to comment, is not addressed. Please see our 2015 monthly and quarterly issues of Accounting Roundup for more information about these documents.
Highlights of the November 2015 edition of Accounting Roundup include the following:
- The FASB’s (1) ASU simplifying the balance sheet presentation of deferred taxes and (2) proposed ASUs on fair value measurement disclosures, disclosures about government assistance, and clarifying the definition of a business.
- The FASB’s completion of its lease redeliberations.
- The IASB’s proposal to clarify its guidance on investment property.
- The completion of the FAF’s three-year review of the PCC.
- The GAO’s report on a sample of SEC registrants’ disclosures under the conflict minerals rule.
Highlights of the October 2015 edition of Accounting Roundup include the following:
- The SEC’s final rule permitting eligible companies to use “crowdfunding” to offer and sell securities over the Internet.
- The completion of the IASB’s redeliberations related to its leases project.
- The GASB’s proposal to amend its guidance for governmental entities participating in certain multiple-employer defined benefit pension plans.
- The CAQ’s publication of two alerts underscoring risks auditors should consider for the 2015 audit cycle.
Third Quarter in Review — 2015
In the third quarter of 2015, the FASB made further progress on resolving issues related to its new revenue standard (ASU 2014-09) by releasing (1) an ASU that defers the standard’s effective date by one year for all entities and permits early adoption on a limited basis and (2) two proposed ASUs to clarify and improve its guidance. The FASB also issued:
- Two ASUs as part of its simplification initiative (on inventory and measurement-period adjustments).
- Two ASUs (on employee benefit plans and the NPNS exception) and two proposed ASUs (on derivative-related topics) in response to final consensuses and consensuses-for-exposure, respectively, reached by the EITF.
- An ASU clarifying the SEC staff’s position on the presentation of debt issuance costs.
- A proposed ASU that would amend the FASB Accounting Standards Codification to indicate that the omission of disclosures about immaterial information is not an accounting error.
On the international front, there were also a number of developments related to the IASB’s own revenue standard, IFRS 15 (issued jointly with the FASB’s ASU 2014-09). Like the FASB, the IASB amended its revenue standard to defer its effective date by one year and issued a proposal that would clarify certain aspects of the standard, including identifying performance obligations, principal-versus-agent considerations, licensing, and transition. Further, the FASB’s and IASB’s joint revenue transition resource group (TRG) held a meeting to discuss nine topics, two of which (portfolio practical expedient and application of variable consideration constraint, completed contracts at transition) are expected to be further considered at a future meeting.
The IASB also decided to propose a deferral of the effective date of IFRS 9 (on financial instruments) for entities that primarily issue insurance contracts. Specifically, the IASB decided to propose amendments to IFRS 4 to give insurance entities the option of deferring — from 2018 to 2021 — IFRS 9’s effective date.
In other news, the U.S. Court of Appeals for the District of Columbia Circuit (the “Appellate Court”) upheld its April 2014 ruling that parts of the SEC’s conflict minerals rule and of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act violate the First Amendment to the extent that they require issuers to disclose that their products have “not been found to be ’DRC conflict free.’” The Appellate Court had agreed to review its April 2014 ruling in light of a separate case involving country-of-origin labeling of meat products.
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