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SEC staff updates C&DIs on Securities Act rules

Jun 24, 2016

The staff in the SEC’s Division of Corporation Finance has updated Section 271 of its compliance and disclosure interpretations (C&DIs) on rules related to the Securities Act of 1933.

The updated guid­ance ad­dresses ques­tions about the completion of a merger transaction. For more in­for­ma­tion, see the C&DIs on the SEC’s Web site.

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EU referendum in the United Kingdom

Jun 24, 2016

In the European Union (EU) referendum in the United Kingdom yesterday, which saw a turnout of 71.8 percent, 51.9 percent of the voters made clear that they think the country’s interests would be best served if it leaves the EU.

Deloitte UK has a Web site dedicated to the EU ref­er­en­dum, offering insight papers, per­spec­tives, and access to webinars on the potential meaning of this change.

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FASB proposes changes to consolidation guidance related to common control

Jun 23, 2016

The FASB has issued a proposed ASU, “Interests Held Through Related Parties That Are Under Common Control.”

The pro­posal would “change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a reporting entity that is a single decision maker of a VIE would treat indirect interests in the entity held through related parties that are under common control with the reporting entity."

Com­ments on the pro­posed ASU are due by July 25, 2016. For more in­for­ma­tion, see the pro­posed ASU on the FASB’s Web site.

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Highlights from the June 20 FASB-IASB joint meeting

Jun 22, 2016

At the June 20, 2016, FASB-IASB joint meeting, the two boards gave updates on the current status of their respective business combination projects.

Specifically, the boards discussed:

  • Identifiable intangible assets in a business combination for public business entities and not-for-profit entities.
  • Accounting for goodwill for public business entities and not-for-profit entities.
  • Accounting for goodwill impairment.

No tentative decisions were made during the session.

For more information, see the observer notes on Deloitte’s IASPlus Web site as well as the tentative Board decisions on the FASB’s Web site.

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IASB clarifies the classification and measurement of share-based payment transactions

Jun 20, 2016

The IASB has published amendments to IFRS 2,"Share-based Payment," that clarify the accounting requirements related to classification and measurement of share-based payment transactions.

Specifically, the amendments concern the:

  • Accounting for cash-set­tled share-based payment trans­ac­tions that include a performance condition.
  • Classification of share-based payment transactions with net settlement features.
  • Accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

The amend­ments are effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

For more information, see the press release on the IASB’s Web site. The amendments are available on the eIFRS Web site (subscription required).

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Bank regulatory agencies issue joint statement on new FASB standard on credit losses

Jun 17, 2016

The U.S. bank regulatory agencies have issued a joint statement in response to the FASB’s recently issued Accounting Standards Update No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” The agencies’ joint statement summarizes key elements of the new accounting standard and provides initial supervisory views regarding the standard's implementation.

The joint statement is available on the Web site of the Office of the Comptroller of the Currency.

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Highlights from the FASB’s June 15 meeting

Jun 17, 2016

At its June 15, 2016, meeting, the FASB dis­cussed its pro­jects on (1) intra-entity asset transfers (income taxes), (2) improvements to the accounting for nonemployee share-based payments, and (3) revenue recognition of grants and contracts by not-for-profit entities.

Accounting for income taxes — intra-entity asset transfers

The FASB redeliberated its proposed ASU Intra-Entity Asset Transfers and decided to retain the proposed amendment to remove the exception in ASC 740 that prohibits the immediate recognition of the tax consequences (both current and deferred) of intra-entity asset transfers, except for transfers of inventory. The Board also made tentative decisions related to the proposal’s transition and effective date.

The FASB directed its staff to begin drafting a final ASU for a vote by written ballot. For more information, see Deloitte’s related journal entry as well as the meeting minutes on the FASB’s Web site.

Nonemployee share-based payments

The FASB addressed potential transition methods related to the tentative decisions made at its May 4, 2016, meeting and discussed which disclosures should be required as part of its project on improving the accounting for share-based payment arrangements with nonemployees. For more information, see Deloitte’s related journal entry as well as the meeting minutes on the FASB’s Web site.

Revenue recognition of grants and contracts by not-for-profit entities

The FASB discussed how it could improve and clarify existing guidance on characterizing grants and similar contracts with governmental agencies and others as (1) reciprocal transactions (exchanges) or (2) nonreciprocal transactions (contributions). For more in­for­ma­tion, see Deloitte’s related journal entry as well as the meeting minutes on the FASB’s Web site.

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SEC proposes rule on modernization of property disclosures for mining registrants

Jun 17, 2016

The SEC has issued a proposed rule, "Modernization of Property Disclosures for Mining Registrants."

The proposal revises the property disclosure requirements for mining registrants and related guidance “by aligning them with current industry and global regulatory practices and standards.” The purpose of the revisions is to help investors understand registrants’ mining properties so that they can “make more informed investment decisions.”

Comments on the proposed rule are due 60 days after the date of its publication in the Federal Register. For more information, see the press release and proposed rule on the SEC’s Web site.

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FASB issues new standard on impairment of financial instruments

Jun 16, 2016

The FASB has issued Accounting Standards Update (ASU) No. 2016-13, "Financial Instruments — Credit Losses," which amends the Board's guidance on the impairment of financial instruments.

The ASU adds to U.S. GAAP a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the CECL model, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments.

Until June 2012, the FASB and IASB jointly deliberated an expected-loss impairment model, which was broadly similar to the impairment approach in IFRS 9, Financial Instruments, issued by the IASB in 2014. In response to feedback from U.S. constituents on the joint model, however, the FASB decided to develop an alternative expected credit loss model. Accordingly, the FASB’s new credit impairment approach differs from that under IFRSs. Although both impairment models are based on expected credit losses, the FASB’s impairment model would require entities to recognize current expected credit losses for all assets, not just those for which there has been a significant increase in credit risk since initial recognition.

For more information, see Deloitte's Heads Up newsletter as well as the press release, FASB in Focus newsletter, ASU, cost-benefit analysis, and video discussion by Hal Schroeder, Marc Siegel, and Russ Golden on the FASB’s Web site.

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COSO proposes revisions to its ERM framework

Jun 15, 2016

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has issued a proposal, “Enterprise Risk Management — Aligning Risk With Strategy and Performance,” which addresses the increasing complexity of risk and new risks that have developed since the issuance of its 2004 enterprise risk management (ERM) framework.

The related FAQ document notes that the 2004 ERM framework:

  • Represents the adoption of a structure of components and principles.
  • Simplifies the definition of ERM.
  • Emphasizes the relationship between risk and value.
  • Focuses on the integration of ERM.
  • Examines the role of culture.
  • Elevates the discussion of strategy.
  • Improves the alignment between performance and ERM.
  • More clearly links ERM and decision making.
  • Differentiates between ERM and internal controls.
  • Refines risk appetite and acceptable variation in performance.

Comments on the proposal are due by September 30, 2016. For more information, see the press release and proposal on COSO’s Web site.

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