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November 2016

AICPA issues revenue working drafts for broker-dealers and depository and lending institutions

Nov 01, 2016

On November 1, 2016, the American Institute of Certified Public Accountants (AICPA) Revenue Recognition Task Force released for public comment two working drafts on accounting issues associated with the implementation of the new revenue standard for broker-dealers and one working draft for depository and lending institutions.

The broker-dealer working drafts provide guidance on commission income and the trade date versus settlement date with respect to commission income, while the working draft for depository and lending institutions discusses the sale of nonoperating assets. Comments on the working drafts are due by January 2, 2017.

Review the broker-dealers and depository and lending institutions Revenue Recognition Task Force pages on the AICPA’s website.

Australian Accounting Standards Board Paper - Country-by-country reporting

Nov 25, 2016

In November 2016, the Australian Accounting Standards Board (AASB) published a paper on "Country-by-country reporting: Update on AASB approach" that will be discussed by members during the upcoming meeting of the Accounting Standards Advisory Forum (ASAF) on December 8 and 9, 2016.

This paper offers an update on the AASB approach to country-by-country reporting and argues that while much of the tax transparency initiative to date has been driven by the tax authorities, in order to remain relevant in an ever-changing regulatory environment, it is time for accounting standard-setters to take a leadership role in improving income tax disclosures for users of financial reports.

Review the paper on the AASB's website.

Australian Accounting Standards Board Paper - Digital currency

Nov 25, 2016

In November 2016, the Australian Accounting Standards Board (AASB) published the paper "Digital currency – A case for standard setting activity" that will be discussed by members during the upcoming meeting of the Accounting Standards Advisory Forum (ASAF) on December 8 and 9, 2016.

Digital currency – A case for standard setting activity recommends that the IASB develop a standard that addresses the accounting for investments in intangible assets or other commodity type assets that are not financial instruments or inventory, since the current alternatives to account for digital currencies (IAS 2 or IAS 38) do not provide relevant information to users of financial statements. This issue also highlights a broader issue with IFRSs in that there is no accounting standard that deals with investments in intangible assets or other commodity type assets that are not financial instruments or inventory.

Review the paper on the AASB's website.

Developments at the FASB and the SEC

Nov 15, 2016

In November 2016, Financial Accounting Standards Board (FASB) Chairman, Russell Golden, has been reappointed for a second term and Securities and Exchange Commission (SEC) Chair, Mary Jo White, will step down.

The Board of Trustees of the Financial Accounting Foundation (FAF) announced the reappointment of Russell G. Golden as Chairman of the Financial Accounting Standards Board (FASB). The Trustees have also announced the appointments of Marsha L. Hunt and Harold L. Monk Jr. as new board members of the FASB. Russell Golden began his term as the seventh chairman of the FASB in 2013. His first term as chairman extends to June 30, 2017, and his second and final term will conclude on June 30, 2020. Review the press release on the FASB's website.

At the US Securities and Exchange Commission (SEC), Chair Mary Jo White announced that she plans to leave the SEC at the end of the Obama Administration. Mary Jo White, who became the 31st Chair of the SEC in April 2013, has been one of the SEC’s longest serving Chairs. Review the press release on the SEC's website.

For the Investor: Footnotes vs Face of Financials

Nov 30, 2016

In November 2016, the Financial Accounting Standards Board (FASB) released a column by Marc Siegel, FASB Member, where he described how his prior research process, as a former investor, led to his conclusion that it definitely matters whether something is presented on the face of financial statements versus only disclosed in the footnotes.

Mr. Siegel stated that the three major factors that influenced his view related to:

  1. The timing of available information
  2. The content of that information, and
  3. Time constraint on analysts and investors to come to decisions.

In a perfect situation, all information would be available at the same time and there would be no time constraint in which to analyze it. However, as that was not the case, presentation became more important to him.

Therefore, as a FASB member, he took very seriously the question of whether presenting information on the face of the financial statement matters. In the future, if more footnote and 10-Q information becomes available earlier in the cycle of quarterly earnings results, it’s possible that the distinction might become less important. But until such a time, it will continue to be his view that presentation matters.

Review the article on the FASB’s website.

How the SEC’s universal proxy proposal affects Canadian companies and investors

Nov 30, 2016

On November 2016, the U.S. Securities and Exchange Commission (SEC) proposed amendments to its proxy rules that are designed to allow shareholders using the proxy system to vote for their choice of a combination of candidates in a contested election for directors, rather than being limited only to the candidates on either a management proxy or dissident proxy.

The proposed changes could make it easier and less costly for dissident candidates to be elected to corporate boards, which could have ripple effects on corporate governance practices and negotiating strategies for activists. Use of a universal proxy would require the dissident to provide advance notice of its nominees and incur the cost of preparing dissident proxy materials and sending those proxy materials to potentially more shareholders than it would otherwise solicit.

Review the update on Osler's website.

IASB decides on IFRS 17 effective date

Nov 16, 2016

On November 16, 2016, the International Accounting Standards Board (IASB) released a Staff Paper on the effective date of the forthcoming IFRS 17 "Insurance Contracts", which will be January 1, 2021.

The IASB followed the reasoning of the staff that assuming IFRS 17 is issued in the first half of 2017, the 2021 effective date would allow 3.5 to 4 years from the issuance of IFRS 17 to the mandatory effective date. The Board also decided that an entity may apply IFRS 17 before January 1, 2021 but cannot do so unless it also applies IFRS 9, Financial Instruments and IFRS 15, Revenue from Contracts with Customers.

The 2021 effective date also means that entities applying the deferral approach, which permits an entity to apply IAS 39 rather than IFRS 9 for annual reporting periods beginning before January 1, 2021, can continue to do so right until the new insurance contract becomes mandatorily effective.

Review the Staff Paper on the IASB's website.

IASB issues 'Investor Update' newsletter

Nov 21, 2016

On November 21, 2016, the International Accounting Standards Board (IASB) issued the eleventh edition of its newsletter “Investor Update,” which provides investors with quick access to information about current accounting and financial reporting topics.

This issue features:

  • Views from Dennis Jullens, Lecturer at Rotterdam School of Management, Erasmus University and a Capital Markets Advisory member.
  • A look at the amendments to IFRS 4 arising from the implementation of IFRS 9.
  • An update on the IASB work plan.
  • In­for­ma­tion on current events and investor feedback.

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

IASB Plans Overhaul of Financial Definitions

Nov 02, 2016

On November 2, 2016, the International Accounting Standards Board (IASB) announced it would look at providing new definitions of common financial terms such as earnings before interest and taxes, or ebit.

The new definitions will be introduced over the next five years, in order to provide sufficient time for suggestions and comment from market participants. The changes will not result in new standards, but will require the board to overhaul existing ones.

Firms that decide against adopting the new IASB definition for ebit, for example, could be required to reconcile their own ebit calculation into one based on the IASB’s definition.

Review a summary on the Wall Street Journal's website and the IASB's five-year work plan on the IASB's website.

IASB podcast on tentative decisions in the insurance project

Nov 24, 2016

On November 24, 2016, the International Accounting Standards Board (IASB) released a podcast of its November 2016 meeting, where they discussed issues that have arisen from the external testing of a draft of IFRS 17, "Insurance Contracts" and in the drafting process thus far.

The Board decided to set the mandatory effective date for IFRS 17 for annual periods beginning on or after January 1, 2021. Darrel Scott, Board member, and Andrea Pryde, project leader of the Insurance Contracts project, discuss the deliberations at that meeting.

Review the podcast (approx. 9 minutes long) on the IASB's website.

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