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FASB issues 2014 Financial Reporting Taxonomy for public comment

Aug 30, 2013

The FASB has released the "proposed 2014 U.S. GAAP Financial Reporting Taxonomy" for public comment. It contains updates for accounting standards and other improvements to the official taxonomy, which is used by public issuers registered with the SEC.

Comments on the proposed 2014 U.S. GAAP Financial Reporting Taxonomy are due by October 31, 2013. The final version is expected to be published in early 2014.

Click for (links to FASB website):

IASB Research Forum and ABR special issue on the Conceptual Framework

Aug 30, 2013

On October 2, 2014, the first IASB Research Forum will be held offering an interdisciplinary platform for academics from around the world to exchange their views with peers and with members of the IASB on topics that address the interaction of international financial reporting requirements, policy, and the functioning of capital markets. The topic of this first research forum will be the Conceptual Framework for Financial Statements.

In July 2013, the IASB published a comprehensive discussion paper containing proposals for topical areas where it considers a revision and amendment of the existing Conceptual Framework necessary. In connection with the consultation, the IASB is interested in academic input on all aspects of the project to help it to develop the revised Framework. It has therefore dedicated its inaugural IASB Research Forum to the topic.

At the same time, the IASB is cooperating with the Accounting and Business Research (ABR), which has issued a call for papers for a special edition of academic papers addressing issues relevant to the development and application of the Conceptual Framework. Authors of selected papers entered into the review process for the special issue will be invited to present their work at the IASB Research Forum, planned to be held at Said Business School, Oxford University, England. IASB members will provide commentary on each paper, and the ABR special issue will be published in the latter half of 2015.

Please click for the following information on the IASB Web site:

Insurance contracts web presentations available

Aug 29, 2013

The IASB staff has made available a web presentation recorded on August 21, 2013, detailing the transition proposals included in the revised insurance contracts exposure draft.

In addition, previous web presentations are also available on the proposals included in the revised exposure draft:

  • July 31, 2013 — Web presentation on the proposals for unlocking the contractual service margin.
  • July 19, 2013 — Web presentation on contracts linked to underlying items proposals.
  • July 15, 2013 — Discussing the revenue proposals of the revised ED Insurance Contracts.
  • June 25, 2013 — Introduction to the revised ED Insurance Contracts.

All of the web presentation recordings are available on the IASB website. The IASB expects to add additional web presentations over the next few weeks.

Conceptual framework web series

Aug 28, 2013

The IASB will be hosting a series of web presentations on its "Conceptual Framework" discussion paper. Seven dates between September and November have been announced.

Following the introductory web presentations on July 26, 2013, the IASB will host seven more live web presentations on the issues raised in the DP. Each presentation will also feature a question-and-answer session.

Date Topic
Tuesday, September 3, at 10:00 am Definitions of assets and liabilities
Friday, September 13, at 2:30 pm Other comprehensive income
Friday, September 27, at 10:00 am Definition of equity and distinction between liability and
equity elements
Wednesday, October 2, at 10:00 am Measurement
Thursday, October 10, at 2:00 pm Additional guidance to support the liability definition
Tuesday, October 22, at 4:00 pm Objective and qualitative characteristics
Friday, November 15, at 3:00 pm Presentation and disclosure

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EDTF progress report on the implementation of disclosure recommendations

Aug 22, 2013

In October 2012 the Enhanced Disclosure Task Force (EDTF) presented a report to the Financial Stability Board (FSB) recommending key enhancements to the risk disclosures made by banks. The report identified seven fundamental principles for enhancing risk disclosure and included 32 specific recommendations. The EDTF has now published a progress report in line with its October 2012 report.

For the progress report the EDTF conducted a survey on the level and quality of the implementation of their report Enhancing the Risk Disclosures of Banks in major banks’ 2012 annual reports.

The survey results demonstrate that the recommendations are beginning to make a positive impact on the reporting practices of global banks. The banks’ self-assessment is that they have implemented 50% of the EDTF recommendations in aggregate in 2012 disclosures. 2011 this number was at 34%; and the banks expect to implement 72% of the recommendations in 2013.

Geographically, banks in the United Kingdom showed the highest implementation rates (80%), while implementation was lowest in the United States and Canada (39% and 41%, respectively). Canadian banks expect to implement an additional 50% of recommendations in 2013, though.

Analyzed by sections, qualitative disclosures related to the EDTF's general recommendations and other risks show the highest implementation rates (exceeeding 71% over all banks) while the lowest implementation rates were observed in relation to market risk and funding disclosures.

The findings of the EDTF are in line with the results of a survey conducted by Deloitte (UK) that reviewed the implementation of the 32 recommendations by banks that were members of the EDTF Working Group.

Please click for the following information on the FSB website:

Michael Piwowar sworn in as SEC commissioner

Aug 16, 2013

Michael Piwowar has been sworn in as a new SEC commissioner following his confirmation by the U.S. Senate.

SEC Los Angeles Regional Office Director Michele Wein Layne swore in Dr. Piwowar on August 16 to replace former commissioner Troy Paredes, who stepped down earlier this month. Further information is available in the SEC's press release (link to SEC website).

IAASB chairman speaks about evolving role of auditors and auditor reporting

Aug 16, 2013

At the 2013 CReCER Conference in Nicaragua, Prof. Arnold Schilder, Chairman of the IAASB, delivered a speech on the evolving role of auditors and auditor reporting. He specifically discussed how he felt the proposals outlined in the recent exposure draft on auditor reporting would provide more value to users of financial statements.

The IAASB recently issued an exposure draft that proposes changes to audit reports, including provisions to include more information on how audits are performed. During his speech, Professor Schilder highlighted certain aspects of the proposal that would create substantial changes in how auditors communicate their opinion to users of their reports, including:

  • Movement of the opinion to the first item in the auditor's report.
  • A new section of the report where the auditor communicates significant matters during the audit.
  • A specific statement in the report about the entity's ability to continue as a going concern.
  • A statement about the auditor's independence from the audited entity.

The transcript of his speech is available on the IFAC website.

SEC, CFTC, and FINRA issue staff advisory on business continuity and disaster recovery planning

Aug 16, 2013

The SEC, the Commodity Futures Trading Commission (CFTC)’s Division of Swap Dealer and Intermediary Oversight, and the Financial Industry Regulatory Authority (FINRA) issued a joint staff advisory on business continuity and disaster recovery planning.

Following the closure of the U.S. equity and options markets for two days after Hurricane Sandy caused widespread damage along the northeast coast, a joint review was undertaken by the SEC, CFTC, and FINRA. The staff advisory issued by the SEC’s Office of Compliance Inspections and Examinations (OCIE), the CFTC’s Division of Swap Dealer and Intermediary Oversight, and FINRA is designed to encourage the review of business continuity plans by firms to "improve responses to and reduce recovery time after significant large-scale events."

The regulators met with firms affected by Hurricane Sandy to discuss their business continuity plans and disaster recover procedures to compile a list of best practices and lessons learned. The regulators are encouraging firms to review this list and their own disaster recovery plans and consider implementing the best practices and lessons learned to better react to similar events in the future. The advisory provides details on the following types of best practices and lessons learned:

  • Widespread disruption considerations.
  • Alternative locations considerations.
  • Vendor relationships.
  • Telecommunications services and technology considerations.
  • Communication plans.
  • Regulatory and compliance considerations.
  • Review and testing.

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CAQ issues resource on audit quality reporting by U.S. audit firms

Aug 14, 2013

The Center for Audit Quality (CAQ) issued a resource on audit quality reporting that highlights some important elements of audit quality that U.S. audit firms could consider in developing or refining their own audit quality reporting. The CAQ issued this resource to share best practices across its member firms.

The resource provides examples of possible firm-specific information on the following topics:

  • Firm Leadership and Tone at the Top
  • Independence, Objectivity and Skepticism
  • Audit Process, Methodology and Performance
  • Professional Development and Competency
  • Monitoring
  • Firm Organization and Structure

However, each firm would have the flexibility to determine what, when, and how information on audit quality is reported. In addition, the CAQ encourages individual firms to tailor this type of reporting to best describe the specifics of its practice and periodically update such reporting to highlight any significant changes in firm policies and practice or recent investments in audit quality. According to the CAQ, the breadth, size, and complexity of a firm’s public company audit practice are relevant factors when considering the nature, timing, and extent of reporting on audit quality.

Click for the CAQ Resource (link to the CAQ website).

PCAOB proposes changes to the auditor’s reporting model

Aug 13, 2013

The PCAOB has issued two proposed auditing standards, "The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion," and "The Auditor's Responsibilities Regarding Other Information in Certain Documents Containing Audited Financial Statements and the Related Auditor's Report." The proposed changes are intended to significantly enhance the auditor’s reporting model, retaining the current “pass/fail” approach but increasing the amount of other information included in auditors’ reports.

One of the most significant proposed changes is a new required section in the auditor’s report describing “Critical Audit Matters.” In this new section, the auditor would communicate the critical audit matters, describe the considerations that led to each matter being considered a critical audit matter, and (if applicable) refer to the related financial statement accounts and disclosures in the financial statements. In its fact sheet about the proposals, the PCAOB noted that critical audit matters are those that:

  • Involved the most difficult, subjective, and complex judgments or conclusions related to the audit.
  • Were the most difficult with respect to obtaining sufficient appropriate audit evidence.
  • Presented the most difficulty to the auditor in terms of forming an opinion on the financial statements. 

The proposed changes also call for the addition of new elements to the auditor’s report on auditor independence, auditor tenure, and the auditor’s responsibilities for, and the results of, the auditor’s evaluation of other information outside the financial statements. The changes would also modify existing language related to the auditor’s responsibilities for fraud and the notes to the financial statements.

Comments on the proposals are due to the PCAOB by December 11, 2013.  

Click to view the proposed auditing standards on the PCAOB website, and see  Deloitte’s Heads Up newsletter for additional analysis of the PCAOB’s proposals.

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