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News

PCAOB and APOA enter into cooperative agreement

Apr 16, 2015

The PCAOB and the Auditors' Public Oversight Authority of the Ministry for the National Economy of Hungary (APOA) have entered into a cooperative agreement regarding the oversight of audit firms subject to the regulatory jurisdictions of both regulators.

The agreement, which is effective immediately, allows the exchange of confidential information of firms operating in both jurisdictions and is intended to enhance the regulators’ supervisory oversight, inspections, and investigations of the firms.

The two regulators also signed a data protection agreement to ensure that national data protection requirements are performed during any transfer of information.

For more information, see the press release and the agreements on the PCAOB’s Web site.

FASB issues ASU to simplify accounting for cloud computing fees paid by customers

Apr 16, 2015

The FASB has issued Accounting Standards Update (ASU) No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” as part of its simplification initiative. The ASU amends ASC 350-40 to provide customers with guidance on whether a cloud computing arrangement contains a software license to be accounted for as internal-use software.

The ASU requires customers to perform the same assessment that vendors currently perform under ASC 985-605; that is, customers must determine whether an arrangement contains a software license element. If so, the related fees paid are accounted for as an internal-use software intangible under ASC 350-40; if not, the arrangement is accounted for as a service contract.

For public business entities, the ASU is effective for interim and annual periods beginning after December 15, 2015. For all other entities, the ASU is effective for annual periods beginning after December 15, 2015, and interim periods in annual periods beginning after December 15, 2016. Early application is permitted for all entities. An entity adopting the ASU may apply it either prospectively to new cloud computing arrangements or retrospectively.

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

FASB simplifies guidance on measurement date for plan assets

Apr 15, 2015

The FASB has issued Accounting Standards Update (ASU) No. 2015-04, “Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets,” as part of its simplification initiative. The ASU gives an employer whose fiscal year-end does not coincide with a calendar month-end (e.g., an entity that has a 52- or 53-week fiscal year) the ability, as a practical expedient, to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end.

The ASU also provides guidance on accounting for (1) contributions to the plan and (2) significant events that require a remeasurement (e.g., a plan amendment, settlement, or curtailment) that occur during the period between a month-end measurement date and the employer’s fiscal year-end. An entity should reflect the effects of those contributions or significant events in the measurement of the retirement benefit obligations and related plan assets.

The ASU is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early application is permitted, and 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.

SEC updates EDGAR filer manual and technical specifications and posts drafts of upcoming releases

Apr 14, 2015

The SEC has issued a final rule updating its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) System Filer Manual (volumes I and II) and has issued Version 1 of the EDGAR Form SDR — XML Technical Specification.

Updates to the EDGAR Filer Manual include the following:

  • Support for the 2015 U.S. GAAP financial reporting taxonomy and 2015 EXCH taxonomy.
  • New Security-based swap data repository (SDR) submission form types.
  • Revised MA-A form functionalities.

For more information, see the final rule and EDGAR page on the SEC’s Web site.

SEC posts draft of EDGAR filer manuals for upcoming EDGAR release

The SEC has also posted drafts of volumes I and II of the EDGAR Filer Manual for an upcoming EDGAR release on its Web site. The new release, which is scheduled for implementation on or around May 11, 2015, will introduce several changes, including new Regulation A submission form types. The SEC has also posted drafts of related XML technical specification releases “to assist filers, agents, and software developers in their preparation of responses to potential changes the staff anticipates.” These drafts are expected to be approved concurrently with the EDGAR Filer manual updates.

These drafts have not been approved by the Commission and are 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.

More information is available on the SEC's Web site:

FAF, FASB, and GASB release strategic plan

Apr 09, 2015

The FAF board of trustees has approved a final version of the strategic plan for the FAF, FASB, and GASB, which outlines the three organizations’ long-term vision and goals.

The plan describes the agencies’ roles and details the top four priorities related to carrying out their collective mission:

  • “Practicing and promoting continued excellence in standard setting
  • Demonstrating a commitment to leadership in standard setting
  • Building and maintaining trust with stakeholders
  • Contributing to the public discourse on current and future financial reporting issues.”

For more information, see the press release and strategic plan on the FAF’s Web site.

Highlights from the FASB’s April 7 meeting

Apr 09, 2015

At its April 7, 2015, meeting, the FASB discussed its projects on (1) hedging, (2) leases, (3) definition of a business, (4) identifiable tangible assets, (5) goodwill, (6) technical corrections and improvements, and (7) financial statements of not-for-profit entities. The Board also discussed the ratification of EITF consensuses and tentative conclusions.

  • Financial instruments: hedging — The FASB held an educational session to discuss eight issues. No decisions were made.
  • Leases — The FASB decided not to include any alternative guidance for nonpublic business entities in its final leases standard.
  • Clarifying the definition of a business — The Board made tentative decisions on the accounting for partial sales of nonfinancial assets and retained noncontrolling interests. For more information, see Deloitte’s related journal entry.
  • Identifiable intangible assets in a business combination for public business entities and not-for-profit entities — The FASB held an educational session to discuss the progress made on this project.
  • Goodwill for public business entities and not-for-profit entities — The FASB held an educational session to discuss the progress made on this project.  
  • Technical corrections and improvements — The FASB made several decisions related to feedback received on its September 2014 proposed ASU and decided to issue a final ASU.
  • Financial statements of not-for-profit entities — The FASB decided to extend the comment deadline to 120 days for its upcoming ED. The proposed ASU is expected to be issued on April 23, 2015.

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

Ratification of EITF consensuses and tentative conclusions

At its meeting, the FASB also approved several EITF consensuses reached at the March 19, 2015, EITF meeting. The following EITF Issues will be released as final ASUs: 

  • Issue No. 14-A, “Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions.”
  • Issue No. 14-B, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).”

The Board also approved the issuance of proposed ASUs on the following EITF Issues:

  • Issue No. 15-A, “Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts Within Nodal Energy Markets.”
  • Issue No. 15-B, “Recognition of Breakage for Certain Prepaid Stored-Value Cards.”
  • Issue No. 15-C, “Employee Benefit Plan Simplifications.”

For more information, see Deloitte’s EITF Snapshot and the tentative Board decisions on the FASB's Web site.

FASB simplifies guidance on presentation of debt issuance costs

Apr 07, 2015

The FASB has issued Accounting Standards Update (ASU) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” as part of its simplification initiative. The ASU changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense.

The ASU specifies that “issue costs shall be reported in the balance sheet as a direct deduction from the face amount of the note” and that “[a]mortization of debt issue costs shall also be reported as interest expense.” According to the ASU’s Basis for Conclusions, debt issuance costs incurred before the associated funding is received (i.e., the debt liability) should be reported on the balance sheet as deferred charges until that debt liability amount is recorded.

For public business entities, the guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For entities other than public business entities, the guidance is effective for fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption is allowed for all entities for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., the balance sheet for each period is adjusted).

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

Highlights from the FASB’s April 1 meeting

Apr 02, 2015

At its April 1, 2015, meeting, the FASB discussed its projects on (1) revenue recognition and (2) cash flows.

  • Revenue recognition — The FASB tentatively decided to defer for one year the effective date of FASB Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers, for public and nonpublic entities reporting under U.S. GAAP. For more information, see Deloitte’s related Heads Up.
  • Cash flows — The FASB deliberated how to proceed with its project on clarifying certain existing cash flow classification principles in FASB Accounting Standards Codification Topic 230, Statement of Cash Flows. The Board tentatively decided to add the identified cash flow classification practice issues to the EITF’s agenda so that the Task Force can develop illustrative guidance or Q&As to resolve them. The Board also tentatively decided to add a research project to its agenda to improve its cash flow classification guidance (the research would not, however, address whether to mandate use of the direct method in the statement of cash flows). For more information, see Deloitte’s related journal entry.

TRG discusses implementation of new revenue standard

Apr 01, 2015

At its March 30, 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:

  • Allocation of the transaction price for discounts and variable consideration.
  • Material rights.
  • Consideration payable to a customer.
  • Partially satisfying performance obligations before identifying the contract.
  • Warranties.
  • Significant financing components.
  • Whether contributions are within the scope of the new revenue standard.

For more information, see Deloitte’s TRG Snapshot.

At a separate FASB meeting on Wednesday, April 1, 2015, the FASB tentatively decided to defer the new revenue standard for one year. For more information on the FASB’s deferral, see Deloitte’s Heads Up newsletter.

PCAOB approves reorganization of its auditing standards

Apr 01, 2015

Yesterday, the PCAOB issued Release No. 2015-002, "Reorganization of PCAOB Auditing Standards and Related Amendments to PCAOB Standards and Rules," approving the reorganization of its auditing standards. Under the amendments, PCAOB-issued auditing standards will be integrated with PCAOB interim standards by using a topical structure and a uniform four-digit numbering system.

The release notes that the new structure “generally follows the flow of the audit process” and is intended to enhance the usability and navigability of — and thus to facilitate compliance with — the PCAOB’s auditing standards. In addition, the release indicates that future auditing standards “will be issued as new or replacement sections and paragraphs” within the new topical organization and that PCAOB standards will no longer be sequentially numbered.

For more information, see Deloitte's related journal entry and the press release on the PCAOB's Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.