The working drafts address the following topics:

• Scope issues (depository and lending institutions)
• Uninstalled materials (engineering and construction contractors)
• Requirements and similar contracts with variable volumes (power and utilities)

Comments on the working drafts are due by October 2, 2017.

For more information, see the revenue recognition page on the AICPA’s Web site.

The ASU amends ASC 815 to "better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results." The Board believes that such amendments will (1) improve the transparency of information about an entity’s risk management activities and (2) simplify the application of hedge accounting.

In developing the targeted improvements, the FASB also considered opportunities to achieve convergence with IFRS 9, Financial Instruments. The FASB in Focus states:

For public business entities, the ASU’s amendments are effective for fiscal years beginning after December 15, 2018, and interim periods therein. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. All entities are permitted to early adopt the ASU in interim periods after its issuance.

Review the ASU, press release, FASB in Focus, video, and cost-benefit analysis on the FASB’s website.

Also, review a Q&A with Deloitte’s Jon Howard, senior consultation partner, on the impacts of the new hedge accounting standard on the FEI Daily's website.

The report is addressed to practitioners such as financial analysts, finance directors, audit partners and IFRS technical departments in audit firms to alert them to the findings of an investigation into international differences in IFRS practice. Data was collected from over 500 firms in 15 countries.

Of the three areas investigated (pension discount rates, impairment charges and capitalization of development costs), the topic with the largest amount of non-comparable disclosure was pension discount rates: only 67% of financial statements examined were found to be comparable for analysis. The authors note that pension discount rates were often not distinguished by country and were disclosed as a relatively wide range. Additionally, although an IFRS requirement, many companies do not provide comparable disclosure on the duration of the pension obligation. The authors sum up their findings:

This is an issue of non-comparable disclosure under IFRS. The severity of the problem varies by country, but as a data problem it should be of interest to analysts. Some of the thinness in disclosures may be due to immateriality but we suspect some non-compliance with IFRS disclosure requirements, which should concern auditors, the IASB and regulators.

Review the press release and the full report on the ICAEW's website.

The webcast is recorded in two parts and covers optional simplified measurement, presentation and disclosure requirements.

• Simplified Accounting for contracts with short coverage periods - Part 1
• Simplified Accounting for contracts with short coverage periods - Part 2
• Simplified accounting for contracts with short coverage periods: Parts 1 and 2 [slides only]

This webinar is part of a series of webinars that the IASB is providing to support the implementation of IFRS 17.

Review the press release on the IASB's website.

One of the interpretive release addresses accounting for “bill and hold arrangements,” while the other release covers sales of vaccines to the federal government for certain stockpiling programs.

New SAB 116 is intended to bring existing guidance into conformity with ASC Topic 606.

Review the press release on the SEC's website.

The ITCG discussed the following:

• Update on recent activities related to better communication in financial reporting.
• Updates by the ESMA and the SEC on the use of the IFRS Taxonomy.
• Content and structure of a draft of Using the IFRS Taxonomy — a preparer’s guide.
• Proposed IFRS Taxonomy content changes.
• IFRS Taxonomy tables.
• Update by XBRL International on entity-specific disclosures.
• Views on proposals for introducing IFRS Taxonomy implementation notes.
• Development of an IFRS Taxonomy commenting platform.

Review the summary on the IASB's website.

The topics discussed at the meeting included:

1. IASB update;
2. Discussion Paper Principles of Disclosure;
3. Primary financial statements and comparability and flexibility in performance reporting;
4. Post-implementation review of IFRS 13 Fair Value Measurement;
5. Impairment testing of goodwill;
6. Preparers’ views on the proposals in the Exposure Draft Improvements to IFRS 8 'Operating Segments'.

Review the meeting page and the meeting summary on the IASB's website.

In his speech, Mr. Deane talks about two mini-case studies: FASB’s proposals to remove its definition of materiality, and the PCAOB’s final rule that, if approved by the SEC, would significantly enhance the audit reporting model.

Materiality

In its proposed Update on the Conceptual Framework, FASB proposed to remove its own definition of materiality and instead to rely on the courts to provide the definition. FASB did so, it explained, because, “The Board became aware that the current definition of materiality was inconsistent with the legal concept of materiality in the United States.” FASB proposed to replace that definition with new language that essentially said two things: First, materiality is a legal concept; and, second, it is not up to FASB to define it.

Auditor's reporting model

The PCAOB has adopted a new standard that, if approved by the SEC, will expand the report significantly. The standard aims to give readers of the audit report greater insight into the most challenging, subjective and complex aspects of the audit.

The heart of the new standard is a requirement for the audit report to identify all critical audit matters, or CAMs, and disclose information on the auditor’s response to each CAM. The new standard defines a CAM as a matter that was communicated or required to be communicated to the audit committee and that meets two further tests:

1. The matter must relate to accounts or disclosures that are material to the financial statements, and
2. The matter must involve especially challenging, subjective, or complex auditor judgment.

Review the full speech on the SEC's website.

IPO companies usually have short operating histories and so their post-offering performance can be unpredictable and may include unexpected developments. When IPO companies stumble out of the blocks, they can attract a securities suit just a short time after their debut.

One significant practical consequence of all of these considerations is that D&O insurance is particularly important for companies contemplating an IPO. The company’s D&O insurance program could prove to be particularly valuable to IPO companies that stumble out of the blocks or that otherwise acquire a securities suit shortly after their debut.

Review the article on the D&O Diary's website.