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News

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Highlights from the FASB’s July 24 meeting

Jul 28, 2015

At its July 24, 2015, meeting, the FASB discussed its projects on (1) long-duration insurance contracts, (2) financial performance reporting, and (3) disclosures by entities about government assistance.

  • Insurance: targeted improvements to the accounting for long-duration contracts — The FASB tentatively decided that insurance entities should use a retrospective approach with an unlocked net premium ratio when calculating and recording the effect of updating assumptions for traditional long-duration contracts and limited-payment contracts. See De­loitte's related journal entry for more in­for­ma­tion.
  • Financial performance reporting — The FASB staff updated the Board on its research related to different ways an entity could use remeasurement concepts when determining earnings components to provide additional disaggregation of the performance statement. No tentative decisions were made; however, the Board has asked the staff to research other methods for distinguishing between different earnings components.
  • Disclosures by business entities about government assistance — The FASB made tentative decisions about scope, disclosure requirements, materiality and level of aggregation, confidentiality, interim disclosures, private-company considerations, and transition. The Board directed the staff to prepare a proposed Accounting Standards Update for a vote by written ballot. See De­loitte's related journal entry for more in­for­ma­tion.

For more in­for­ma­tion, see the ten­ta­tive Board de­ci­sions on the FASB’s Web site.

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Global financial reporting implications related to regions experiencing economic struggles

Jul 24, 2015

Economic conditions, particularly in Europe and Puerto Rico, continue to be volatile. A vote by Greece’s parliament on July 15 to accept new austerity measures, as well as other recent actions by eurozone leaders, may have allayed some fears and reduced the risk that Greece will exit from the eurozone (i.e., discontinue using the euro as the country’s currency). However, the situation remains uncertain for the time being. Outside the eurozone, Puerto Rico, a commonwealth of the United States, is also suffering from a combination of a large debt burden, weak economic growth, and population declines.

To help entities deal with the implications under U.S. GAAP and IFRSs with respect to the economic struggles in these regions, Deloitte has issued two publications:

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FASB staff issues FAQ on proposal related to financial statements of not-for-profit entities

Jul 24, 2015

The FASB staff has issued an FAQ on issues that the Board may consider during future deliberations of its proposed Accounting Standards Update “Presentation of Financial Statements of Not-for-Profit Entities.”

The FAQ answers the following questions:

  • “Is the FASB proposing that the revised terminology be used verbatim or is there sufficient latitude to use other meaningful labels?”
  • “How would an NFP classify gifts received under ‘donor-advised’ gift arrangements if the NFP has a standing policy to set aside all such gifts for investment until such time as it receives the donor’s advice as to their use?”
  • “Must all depreciation expense be classified as an operating expense?”
  • “Are there cost-effective techniques that an NFP can use in developing operating cash inflows and outflows for presentation, as proposed, under the direct method?”
  • “Is FASB still seeking participants for one of its public roundtables and how do I register?”

For more information, see the FAQ on the FASB’s Web site.

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FASB issues ASU to simplify the measurement of inventory

Jul 23, 2015

The FASB has issued Accounting Standards Update (ASU) No. 2015-11, “Simplifying the Measurement of Inventory,” as part of its simplification initiative. Under the ASU, inventory is measured at the “lower of cost and net realizable value,” which would eliminate the other two options that currently exist for “market”: (1) replacement cost and (2) net realizable value less an approximately normal profit margin.

The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” No other changes were made to the current guidance on inventory measurement.

For public busi­ness en­ti­ties, the ASU is ef­fec­tive for interim and annual periods be­gin­ning after De­cem­ber 15, 2016. For all other en­ti­ties, the ASU is ef­fec­tive for annual periods be­gin­ning after De­cem­ber 15, 2016, and interim periods within annual periods be­gin­ning after De­cem­ber 15, 2017. Early ap­pli­ca­tion is per­mit­ted for all en­ti­ties. The ASU should be applied prospectively.

For more in­for­ma­tion, see De­loitte's related Heads Up newslet­ter as well as the ASU on the FASB’s Web site.

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IASB votes to defer the effective date of IFRS 15

Jul 22, 2015

At today’s meeting, the IASB affirmed its proposal to defer the effective date of IFRS 15, “Revenue From Contracts With Customers,” to January 1, 2018. Earlier application of IFRS 15 would continue to be permitted.

Since some entities may wish to apply the targeted amendments to IFRS 15 at the same time as they first apply IFRS 15, the IASB had proposed the deferralso that the effective date of IFRS 15 can be the same as the effective date of those amendments. The IASB also ac­knowl­edges that IFRS 15 was issued later than had been intended, so im­ple­men­ta­tion time was shorter than expected. In September, the IASB is expected to issue a formal amendment to IFRS 15 specifying the new effective date.

Earlier this month, the FASB affirmed its proposal to defer for one year the effective date of its counterpart revenue standard Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers.

For more information, see the press release on the IASB's Web site.

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Summary of the July 2015 PCC meeting

Jul 22, 2015

At its meeting yesterday, the Private Company Council (PCC) discussed the effective dates of PCC alternatives; feedback from its July 14, 2015, town hall meeting on leases and simplifying the balance sheet classification of debt; the EITF’s project on cash flow statements; and the FASB’s project on business entities’ disclosures about government assistance.

Topics discussed at the meeting included the following:

  • A proposal that would give private companies “an unconditional one-time option to elect a PCC alternative without having to conduct an initial assessment to determine whether an alternative is preferable.”
  • An indefinite extension of the transition guidance for goodwill and interest rate swaps.
  • The PCC’s request that the FASB staff conduct research related to potentially (1) clarifying the application of the guidance on variable interest entities through illustrative examples and (2) reducing the guidance’s applicability to private companies by expanding the business scope exceptions.

The next PCC meeting is sched­uled for September 25, 2015.

For more in­for­ma­tion, see the media recap on the FASB’s Web site.

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TRG discusses implementation of new revenue standard

Jul 16, 2015

At its July 13, 2015, meeting, the FASB’s and IASB’s joint revenue transition resource group (TRG) discussed potential issues related to implementing the boards’ new revenue standard.

Topics discussed at the meeting included:

  • Consideration payable to a customer.
  • Credit cards.
  • The portfolio practical expedient and application of the variable consideration constraint.
  • Completed contracts at transition.
  • Application of the series provision and allocation of variable consideration.
  • The practical expedient for measuring progress toward complete satisfaction of a performance obligation.
  • Measuring progress when multiple goods or services are included in a single performance obligation.
  • Determining when control of a commodity is transferred.
  • Accounting for restocking fees and related costs.

For more information, see Deloitte’s TRG Snapshot.

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Highlights from the FASB’s July 9 meeting

Jul 10, 2015

At its July 9, 2015, meeting, the FASB (1) discussed its projects on the disclosure framework, the definition of a business, and revenue recognition and (2) ratified several EITF consensuses and consensuses-for-exposure:

  • Disclosure framework — The FASB discussed potential changes to the fair value measurement disclosure requirements and made tentative decisions related to the disclosure requirements for private company defined benefit plan sponsors. See De­loitte's related journal entry for more in­for­ma­tion.
  • Clarifying the definition of a business — The FASB instructed its staff to begin drafting a proposed ASU on clarifying the definition of a business. In addition, while the Board did not discuss an effective date, it tentatively decided that the proposal would be applied prospectively upon adoption. See De­loitte's related journal entry for more in­for­ma­tion.
  • Revenue recognition: deferral of the effective date of ASU 2014-09 — The FASB affirmed its proposal to defer for one year the effective date of its new revenue standard (Accounting Standards Update (ASU) No. 2014-09,) Revenue From Contracts With Customers for public and nonpublic entities. The FASB also affirmed that all entities would be permitted to early adopt the standard as of the ASU’s original effective date. See De­loitte's related Heads Up for more in­for­ma­tion.
  • Ratification of EITF consensuses and tentative conclusions — The FASB voted to issue as final ASUs the EITF’s final consensuses related to (1) the application of the normal purchases and normal sales scope exception to certain electricity contracts and (2) employee benefit plan simplifications. In addition, the FASB agreed to issue as proposed ASUs the EITF’s consensuses-for-exposure related to (1) the effect of derivative contract novations on existing hedge accounting relationships and (2) contingent put and call options in debt instruments.

For more in­for­ma­tion, see the ten­ta­tive Board de­ci­sions on the FASB’s Web site.

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FASB votes to defer the effective date of new revenue standard

Jul 09, 2015

At its meeting today, the FASB affirmed its proposal to defer for one year the effective date of its new revenue standard (Accounting Standards Update (ASU) No. 2014-09, "Revenue From Contracts With Customers") for public and nonpublic entities reporting under U.S. GAAP. In addition, the FASB affirmed that all entities would be permitted to early adopt the standard as of the original effective date in ASU 2014-09 (i.e., annual reporting periods beginning after December 15, 2016).

The FASB has directed its staff to prepare a final ASU for vote by written ballot.

For more in­for­ma­tion, see Deloitte's related Heads Up newsletter as well as the ten­ta­tive Board de­ci­sions on the FASB’s Web site.

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SEC posts draft of EDGAR filer manuals for upcoming EDGAR release

Jul 08, 2015

Last week, the SEC posted to its Web site drafts of volumes I and II of its Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual for upcoming EDGAR Release 15.2.2.

The new release, which is sched­uled for im­ple­men­ta­tion on August 3, 2015, will in­tro­duce several changes, in­clud­ing the fol­low­ing:

  • New sub­mis­sion form types for Form NRSRO filers.
  • New applicant types.
  • New ex­hibits on EDGAR­Link Online.
  • Minor, doc­u­men­ta­tion-only cor­rec­tions.
  • Software updates to address previous EDGAR updates.
  • Schema updates.

This draft has not been ap­proved by the Com­mis­sion and is subject to change. The final version of the EDGAR Filer Manual will be posted on the SEC’s Web site once it has been ap­proved.

For more in­for­ma­tion, see the SEC's Web site:

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