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Highlights from the FASB’s July 16 meeting

  • FASB meeting Image

Jul 21, 2014

At its July 16, 2014, meeting, the FASB discussed its projects related to (1) the principal versus agent analysis, (2) EITF consensuses, and (3) short-duration insurance contracts.

 

Consolidation — Principal versus agent analysis

The FASB tentatively decided:

  • Not to align the definition of participating rights for voting interest entities with the definition of participating rights for variable interest entities.
  • Not to establish separate recognition, measurement, and disclosure consolidation requirements for nonpublic business entities as part of this project.
  • To require modified retrospective application (including a practicability exception) with an option for full retrospective application.
  • To make the final standard effective for public business entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. The guidance would be effective for other entities for annual periods beginning after December 15, 2016, and interim periods beginning after December 15, 2017.

In addition, the FASB directed the staff to prepare an Accounting Standards Update, which will be reviewed by stakeholders.

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

 

FASB ratification of EITF consensuses

The FASB approved the issuance of Accounting Standards Updates for the following consensuses reached at the June 12, 2014, EITF meeting:

  • Issue No. 12-G, "Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity."
  • Issue No. 13-F, "Accounting for the Effect of a Federal Housing Administration Guarantee."

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

 

Insurance — Disclosures about short-duration contracts

The FASB discussed short-duration contracts and potential issues related to reinsurance and tentatively decided:

  • Not to include any reinsurance accounting issues within the scope of its insurance project.
  • To require insurance entities that issue short-duration insurance contracts to provide disaggregated incurred- and paid-loss development tables that disclose, at a minimum, activity from (1) the earliest period for which uncertainty arose about the amount and timing of claims payments through (2) the most recent year presented in the financial statements. However, the period for which the tabular information is disclosed need not exceed 10 years.
  • To require entities to disclose in annual financial statements information about (1) the methods and assumptions used in determining the liability for unpaid claims and claim adjustment expenses and (2) the reasons for any material changes in judgments used in the computation of the liability for unpaid claims and claim adjustment expenses (e.g., a change in assumptions).
  • To require insurance entities (other than health insurance entities) to disclose the percentage payout of claims by accident year.

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

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