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April

FASB meets to discuss agenda

Apr 30, 2014

At its April 28 meeting, the FASB added projects on the following topics to its agenda:

  • Presentation issues related to the statement of cash flows (e.g., clarification of the principles in ASC 230, additional considerations related to cash flow classification, and disclosure considerations).
  • Fees paid by a customer in a cloud computing arrangement.

The FASB decided not to add projects on (1) developing additional disclosure requirements related to the carbon content in fossil fuel reserves and (2) expanding the scope of ASU 2014-01, which provides guidance on low-income housing tax credit investments, to other tax credit investments.

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

Summary of the April 2014 PCC meeting

Apr 30, 2014

Yesterday, the Private Company Council (PCC) met with the FASB to discuss (1) accounting for identifiable intangible assets in a business combination, (2) the definition of a public business entity, and (3) stock-based compensation.

Specifically, the PCC:

  • Continued redeliberating its project on accounting for identifiable intangible assets recognized in a business combination (a project that could reduce the number of intangibles separately recognized in a business combination) but did not reach any tentative decisions. The PCC directed the FASB staff to research this topic further.
  • Added a project to its agenda to consider the implications of superseding certain definitions in the Accounting Standards Codification with the new definition of a public business entity; this could affect the scope of certain existing U.S. GAAP requirements, such as those related to segment reporting.
  • Directed the FASB staff to conduct preagenda research on stock-based compensation.

Other topics discussed at the meeting included the FASB’s projects on going concern and leases.

The PCC will host a town hall meeting on May 8, 2014, to discuss the above topics and request feedback on future agenda items. The next PCC meeting is scheduled for July 15, 2014.

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

FASB proposes ASU on pushdown accounting

Apr 29, 2014

Yesterday, the FASB issued proposed Accounting Standards Update (ASU) “Pushdown Accounting — a consensus of the FASB Emerging Issues Task Force.” Under the proposed ASU, acquired entities would have the option of applying pushdown accounting (i.e., establishing a new accounting and reporting basis in their stand-alone financial statements) in their separate financial statements upon occurrence of a change-in-control event.

Acquired entities would evaluate and choose to elect the option to apply pushdown accounting “for each individual change-in-control event in which an acquirer obtains control of the acquired entity.” The proposed ASU would also require acquired entities that have elected to apply pushdown accounting to provide disclosures that let financial statement users evaluate the effect of pushdown accounting on the entities’ financial statements.

The proposal was issued in response to consensuses-for-exposure reached at the EITF’s March 13, 2014, meeting and was ratified at the FASB’s March 26, 2014, meeting. Comments are due by July 31, 2014.

For more information, see the related Deloitte Accounting Journal entry and the proposed ASU on the FASB's Web site.

Boards continue leases discussion

Apr 25, 2014

At their joint videoconference on April 23, 2014, the FASB and IASB continued redeliberating their exposure draft on leases. The boards discussed and made tentative decisions related to (1) lease modifications and contract combinations, (2) variable lease payments, (3) in-substance fixed payments, and (4) the determination and reassessment of the discount rate.

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

CAQ publishes approach to audit quality indicators

Apr 25, 2014

The Center for Audit Quality (CAQ) has issued “CAQ Approach to Audit Quality Indicators,” which outlines a suggested approach for identifying and communicating audit quality indicators (AQIs) and describes a set of potential AQIs that the CAQ plans to pilot test in the coming months with several auditing firms and audit committees.

The paper notes that (1) firm leadership and the tone at the top; (2) engagement team knowledge and workload; (3) monitoring; and (4) auditor reporting are “thematic elements of audit quality [that] facilitate the identification of matters that are most relevant to an audit committee’s oversight responsibilities.”

The communication of AQIs would be directed at audit committees. The AQIs would focus primarily on engagement-specific indicators and would supplement other audit-committee communications.

The CAQ intends to pilot test the set of potential AQIs throughout the 2014 audit cycle and will assess its findings after testing phrase.

The paper is available on the CAQ’s Web site.

Highlights from the FASB’s April 23 meeting

Apr 24, 2014

At its April 23, 2014, meeting, the FASB discussed its preagenda research on cash flows and its classification and measurement project.

The FASB also met with the IASB via videoconference to discuss the boards’ joint project on leases (see the article summarizing the joint session).

 

Cash flows

The FASB reviewed preagenda research on cash flows related to the classification of certain types of cash receipts and cash payments. The Board did not make agenda decisions at this educational session.

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

 

Financial instruments — Classification and measurement

The FASB continued redeliberating its proposed Accounting Standards Update, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The Board made new tentative decisions related to changes in fair value attributable to instrument-specific credit risks and reaffirmed an earlier decision.

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

SEC issues new C&DIs of rules related to social media communications

Apr 23, 2014

The staff in the SEC’s Division of Corporation Finance has issued new Compliance and Disclosure Interpretations (C&DIs) of rules under the Securities Act of 1933 related to communications with security holders or investors through social media outlets that limit the amount of text to be used in such communications.

The C&DIs clarify that communications made under Rule 165(c)(1), Rule 134(b), Rule 134(d), or Rule 433(c)(2)(1) must contain a legend or statement as required under the rule(s) and that a hyperlink may be used to satisfy the legend or statement requirement only if all of the following conditions are met:

  • The platform through which the electronic communication is sent has technological limitations on the amount of text or number of characters.
  • The information to be communicated with the required legend or statement would cause the communication to exceed the text or character limitation.
  • The communication (1) includes an active hyperlink to the required legend or statement and (2) prominently conveys that the hyperlink contains important information.

The C&DIs also clarify that a third party’s retransmission of a social media message or posting received from an issuer that complied with Rules 134 or 433 would not be attributable to the issuer as long as (1) the third party is “neither an offering participant nor acting on behalf of the issuer or an offering participant” or (2) the issuer is not involved with the retransmission (other than having prepared and distributed the original communication).  

For more information, see Questions 110.01, 110.02, 164.02, 232.15, and 232.16 of the  Securities Act C&DIs on the SEC's Web site.

SEC proposes security-based swap rule

Apr 17, 2014

The SEC has issued a proposed rule that would establish additional regulations for security-based swap dealers and major security-based swap market participants regarding recordkeeping, reporting, and notification requirements. The proposal also includes additional recordkeeping requirements for broker-dealers to account for their security-based swap activities.

The SEC issued the proposal (Release No. 34-71958, Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based Swap Participants, and Broker-Dealers; Capital Rule for Certain Security-Based Swap Dealers) in response to requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act for the SEC to establish a comprehensive framework for regulating over-the-counter swaps and security-based swap markets.

Comments on the proposal are due by July 1, 2014.

For more information, see the press release and the proposed rule on the SEC’s Web site.

Highlights from the FASB’s April 16 meeting

Apr 17, 2014

At its April 16, 2014, meeting, the FASB discussed its projects on consolidation and insurance contracts.

 

Consolidation

The FASB discussed (1) its proposed consolidation scope exception for money market funds and (2) the circumstances in which a fee arrangement represents a variable interest.

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

 

Insurance contracts

The FASB continued redeliberating its proposed Accounting Standards Update, Insurance Contracts, and tentatively decided on the scope of its potential targeted improvements to the accounting for long-duration insurance contracts and the disclosure requirements for short-duration insurance contracts.

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

Court finds SEC’s conflict minerals rule violates First Amendment

Apr 15, 2014

Yesterday, the U.S. Court of Appeals for the District of Columbia Circuit held that parts of the SEC’s rule on conflict minerals and of Section 1502 of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (the “statute”) violate the First Amendment of the U.S. Constitution to the extent that they require “regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free.” ’ ”

The court stated that the “requirement that an issuer use the particular descriptor ‘not been found to be "DRC conflict free"’ may arise as a result of the Commission’s discretionary choices, and not as a result of the statute itself. We only hold that the statute violates the First Amendment to the extent that it imposes that description requirement. If the description is purely a result of the Commission’s rule, then our First Amendment holding leaves the statute itself unaffected.”

For more information, see the related Deloitte Accounting Journal entry and the court’s opinion.  

Correction list for hyphenation

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