June 2017

AICPA issues 12 revenue working drafts

Jun 06, 2017

On June 6, 2017, the AICPA’s revenue recognition task forces have released for public comment 12 working drafts on accounting issues associated with the implementation of the new revenue standard for asset management, engineering and construction, gaming, health care, hospitality, and software entities.

The working drafts address the following topics:

  • Management fee revenue, management fee waivers, incentive or performance fee revenue, and incentive-based capital allocations (asset management)
  • Impact of termination for convenience on contract duration (engineering and construction contractors)
  • Income statement presentation of wide-area progressive operators’ fees, participation and similar arrangements, and accounting for loyalty points redeemed with third parties (gaming)
  • Presentation and disclosure (health care)
  • Consideration to customer (key money) (hospitality)
  • Transfers of control for distinct software licenses and considerations in estimating stand-alone selling prices (software)

Comments on the working drafts are due by August 1, 2017.

Review the revenue recognition page on the AICPA’s website.

Decisions reached during the redeliberations on the Conceptual Framework

Jun 12, 2017

On June 12, 2017, the International Accounting Standards Board (IASB) released a summary of tentative decisions on the Conceptual Framework project.

The IASB completed redeliberations of the May 2015 Exposure Drafts in March 2017 and expects to publish the revised Conceptual Framework in the second half of 2017.

Review the press release and the decision summary on the IASB's website.

EFRAG discussion paper on goodwill impairment testing

Jun 29, 2017

On June 29, 2017, the European Financial Reporting Advisory Group (EFRAG) issued a discussion paper on goodwill impairment testing. In connection with the post-implementation review of IFRS 3, EFRAG has been conducting research into a number of potential amendments to the goodwill impairment test with the view to enhancing its application and effectiveness and reducing complexity.

The scope of the publication, Goodwill Impairment: Can it be improved? is limited to impairment testing and it does not seek to address broader topics such as identification and measurement of acquired intangible assets in a business combination or the extent to which these should be separated from or subsumed into goodwill. Ideas presented in the paper focus on how to allocate goodwill to CGUs, when to determine the recoverable amount, and how to determine the recoverable amount. EFRAG asks European constituents for their views on the advantages and disadvantages of the potential amendments presented in this context.

Re­view the press re­lease on EFRAG's web­site. The deadline for comments to EFRAG is December 31, 2017.

Forthcoming publication: Exposure Draft PPE—Proceeds before Intended Use

Jun 16, 2017

On June 16, 2017, the International Accounting Standards Board (IASB) announce that work is at an advanced stage on the Exposure Draft "Property, Plant and Equipment—Proceeds before Intended Use (Proposed amendments to IAS 16)". They expect to issued the ED on June 20, 2017.

Review the press release on the IASB's website.

Hedging may get easier under new FASB accounting standard

Jun 07, 2017

On June 7, 2017, the Journal of Accountancy published an article where they discuss how a new standard for hedge accounting that FASB expects to approve soon is designed to provide better information to investors and eliminate accounting obstacles that prevented some organizations from using hedge accounting.

Financial statement preparers told FASB that they had difficulties applying hedge accounting and that their risk management techniques are not aligned with the accounting under the current standard.

FASB Chairman Russell Golden said in a news release that the new standard will create better alignment between companies’ risk management activities and the accounting rules. The standard will better reflect the economic results of hedging in the financial statements and will simplify hedge accounting treatment.

After FASB approves the standard on the written ballot, it is expected to be issued in mid-August.

Review the press release on the Journal of Accountancy's website.

IASB abandons PDF viewer approach

Jun 27, 2017

Saved links to PDF documents on the new IASB website now return a "No valid document" comment without indicating why the document is no longer available nor where it can be found now. Deloitte Global has investigated the issue and found that the IASB has abandoned the PDF viewer approach it had adopted when moving to its new website.

PDFs are now directly available again, however, you have to revisit the IASB news item or other place in the site where you orig­i­nally found the document.

IASB announces timing of its website upgrade

Jun 02, 2017

On June 2, 2017, the International Accounting Standards Board (IASB) announced that its major website upgrade will occur on June 10–11, 2017. There is a potential for site slowness and outages during this period.

Regarding older content, it notes:

Because we store thousands of documents on our current server, we are migrating content to the new website in phases. Content yet to be migrated will remain in an archive of the current website, which will be available to access via archive.ifrs.org.

Review the press release on the IASB's website for the changes being made to its website.

IASB chair speaks on financial stability, insurance contracts and better communication in financial reporting

Jun 29, 2017

At the IFRS Foundation's conference in Amsterdam, IASB chair Hans Hoogervorst discussed how accounting standards can help financial stability, the new insurance contracts Standard (IFRS 17) and the IASB's effort to improve financial reports so they are a better communication tool between companies and investors.

Mr Hooger­vorst began by noting that although fostering financial stability is not the primary goal of accounting standards, the trans­parency of financial state­ments resulting from the accounting standards is a "crucial in­gre­di­ent for achieving financial stability". He discussed the work of the IASB in recent years to issue standards that lead to high-qual­ity accounting, which then leads to better insights of a company's per­for­mance, the ability to discover problems more timely and an early warning system to detect changes in a company's risks and per­for­mance, amongst other benefits.

In addition, Mr Hooger­vorst talked about IFRS 17 Insurance Contracts that was issued about one month ago and how it is finally an international standard that will reduce the in­com­pa­ra­bil­ity between national GAAPs for insurance. He also noted that IFRS 17 will improve financial stability in six areas:

First of all, the insurance liability will be properly measured and regularly updated, giving much better in­for­ma­tion. The build-up of un­sus­tain­able equity positions will become visible much more quickly.

Second, the cost of options and guar­an­tees will be regularly updated and fully reflected in the financial state­ments.

Third, companies will also provide updated in­for­ma­tion on the risk margin they hold for their insurance products.

Fourth, the losses embedded in onerous groups of contracts will have to be recog­nized im­me­di­ately. Contracts can be grouped, but in a way that ensures that the losses embedded in onerous groups of contracts will not be averaged with groups of prof­itable contracts.

Fifth, IFRS 17 ends up-front profit taking and revenue will only be recog­nized as the service is provided.

Finally, IFRS 17 will also make it easier for investors to judge the per­for­mance of any insurance company. Currently, many investors base their analysis on Solvency II, which is the pru­den­tial standard for the European Union. But Solvency II is almost entirely focused on the balance sheet. It makes no dis­tinc­tion between profits earned in the past and profits to be earned in the future. It does not convey in­for­ma­tion about prof­itabil­ity over time.

In his remarks about the IASB's role in improving com­mu­ni­ca­tion through financial reporting, Mr Hooger­vorst noted that this will be a central theme in the IASB's work plan. Instead of working on major cross-cut­ting Standards, the Board will focus on improving the primary financial state­ments, making dis­clo­sures more effective and improving the com­pa­ra­bil­ity and use of non-GAAP measures.

A full tran­script of Mr Hooger­vorst's remarks is available on the IASB website.

IASB Exposure Draft – Proposed Amendments to IAS 16

Jun 20, 2017

On June 20, 2017, the International Accounting Standards Board (IASB) issued proposed narrow‑scope amendments to IAS 16 "Property, Plant and Equipment" to reduce the diversity in the application of the Standard.

IAS 16 establishes principles for recognizing and measuring items of property, plant and equipment as assets.

The proposed amendments would prohibit deducting sales proceeds from the cost of an item of property, plant and equipment while that asset is being made available for use. Instead, the company would recognise those sales proceeds and related costs in profit or loss.

The proposed amendments are put forward following discussions of the IFRS Interpretations Committee on accounting for proceeds and costs of testing.

This Exposure Draft ED/2017/4 Property, Plant and Equipment—Proceeds before Intended Use (Proposed amendments to IAS 16) is open for comment until October 19, 2017.

Review the press release and Exposure Draft on the IASB's website.

IASB issues "Investor Update" newsletter

Jun 28, 2017

The IASB has issued the thirteenth edition of its newsletter 'Investor Update', which provides investors with quick access to information about current accounting and financial reporting topics.

This issue features:

  • An overview of the Dis­cus­sion Paper on prin­ci­ples of dis­clo­sure
  • An interview with Geoff Robinson, Executive Director, UBS In­vest­ment Bank
  • A call for views on the post-im­ple­men­ta­tion review of IFRS 13 and the Prin­ci­ples of Dis­clo­sure dis­cus­sion paper
  • In­for­ma­tion on investor materials and current events.

The Investor Update newslet­ter is available on the IASB’s website.

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