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FASB discusses four topics at its December 18 meeting

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Dec 19, 2013

At its meeting yesterday, the FASB discussed the following four topics: (1) not-for-profit financial reporting, (2) repurchase agreements, (3) classification and measurement, and (4) impairment.


Not-for-profit financial reporting — Financial statements

The Board tentatively decided to improve the reporting of expenses for all not-for-profit entities (NFPs) by:

    1. Requiring NFPs to report expenses by nature. The FASB elected to retain the requirement for NFPs to also report expenses by function.
    2. Continuing to allow NFPs to present expenses on the face of an activity statement by either function or nature with the alternative in notes or by both classifications.
    3. Requiring NFPs to provide an analysis of all expenses by function and by nature in one location, in the statement of activities, a separate statement of expenses (currently called a statement of functional expenses), or a schedule in the notes.

For more information, see the meeting minutes on the FASB's Web site.


Repurchase agreements and similar transactions

This was the FASB's final discussion on the project; a final ASU is expected in the first half of 2014. In this session, the Board discussed the feedback received in limited outreach meetings held with users, preparers, auditors, and regulators. Key issues discussed during this session include:

Accounting for repurchase-to-maturity transactions The Board affirmed its initial decision that a repurchase-to-maturity transaction on a held-to-maturity security would not taint an entity’s held-to-maturity portfolio.
Substantially-the-same criterion for effective control The Board decided to not move forward with implementation guidance on the basis of the presence of trade stipulations. In addition, the Board decided to make no changes to the guidance on the substantially-the-same criterion as part of this project. The Board decided that it would consider whether to pursue any amendments to the substantially-the-same criterion separately from this project.
Disclosures — transfers of financial assets accounted for as a sale (Set 1)
  • The Board affirmed its earlier decision to require certain disclosures.
  • The Board decided to require disclosure of the amount of proceeds received by a transferor in the transaction.
  • The Board agreed to clarify that the disclosures would not be required for dollar-roll transactions that do not meet the substantially-the-same characteristics.
Disclosures — asset quality disclosures (Set 2) The Board decided to require the disclosure of asset quality information as discussed at a previous meeting, limiting the scope of the disclosure to repurchase agreements and securities lending transactions that are accounted for as secured borrowings only. The Board also tentatively decided to require disclosure of the tenor (maturity profile) of the agreement.
Transition method, effective date, and early adoption The Board decided to require a cumulative-effect approach for all changes in accounting.
  • Public entities — The changes would be effective for annual periods (and interim periods within those annual periods) beginning after December 15, 2014. Early adoption would not be permitted.
  • All other entities — The changes would be effective for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. Early adoption for interim periods beginning after December 15, 2014, would be permitted.

For more information, see Deloitte's Accounting Journal Entry and the meeting minutes on the FASB's Web site.


Classification and measurement of financial instruments

See our previous story on the FASB's decision to diverge joint FASB/IASB classification and measurement guidance.



The Board discussed the next steps on the credit impairment project. Board members explored four alternatives and decided to continue to refine the current expected credit loss (CECL) model.

For more information, see Deloitte's Accounting Journal Entry and the meeting minutes on the FASB's Web site.

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