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Highlights from the FASB’s November 24 meeting

Nov 25, 2014

At its November 24, 2014, meeting, the FASB discussed presentation matters related to its project on the conceptual framework.

The Board considered factors recommended by its staff to help the Board establish standards for “aggregating individual assets, liabilities, equity, revenue, expenses, gains, and losses into line items in financial statements.” The FASB tentatively decided that the factors were appropriate; however, it directed the staff “to consider how to weigh the factors in various circumstances and how practical considerations (such as space limitation and cost).”

For more in­for­ma­tion, see the ten­ta­tive Board de­ci­sions on the FASB’s Web site.

GASB issues two preliminary views

Nov 21, 2014

The GASB has issued for public comment preliminary views documents on (1) leases and (2) fiduciary responsibilities. The Board is issuing the documents to obtain feedback from stakeholders before drafting more detailed proposals.

Preliminary views on leases

This document contains proposals for “how leases would be presented in the financial statements and essential information related to leases that governments would disclose in the notes.” Specifically, the proposal would require government lessors and lessees to report certain information in their financial statements “for all leases except short-term leases (12 months or less).”

For more information, see the press release, GASB in Focus newsletter, and preliminary views on the GASB’s Web site.

Preliminary views on financial reporting for fiduciary responsibilities

This document would improve financial reporting related to fiduciary responsibilities by:

  • “Defining when a government has a fiduciary responsibility and, therefore, is required to present fiduciary fund financial statements.”
  • “Clarifying financial reporting requirements for fiduciary responsibilities, including a requirement for business-type activities that serve in a fiduciary capacity.”
  • “Introducing the use of a financial statement that reports the inflows and outflows of resources for all fiduciary fund types.”

For more information, see the press release and preliminary views on the GASB’s Web site.

Next Steps

Comments on both preliminary views documents are due by March 6, 2015. In addition, the GASB will hold a public hearing on April 8–10, 2015, to discuss the preliminary views.

FAF appoints new FASAC members

Nov 21, 2014

The FAF board of trustees has appointed seven new members to the Financial Accounting Standards Advisory Council.

The appointees are stakeholders from the investor, corporate, and board of director communities and include:

  • Douglas Oare, managing director at BlackRock.
  • Lee Sotos, senior analyst at Fidelity International.
  • Maya McReynolds, vice president and chief accounting officer of Dell Inc.
  • Sean Miller, vice president of technical accounting at Sony Pictures Entertainment.
  • Gregg Nelson, vice president of accounting policy and financial reporting at IBM. Sharon Virag, vice president and chief accounting officer of AES Corporation.
  • Sherry Smith, member of the board of directors at Deere & Company, Tuesday Morning Corporation, and the St. Cloud State University Foundation.

The new members will begin their one-year terms on January 1, 2015, and are eligible to be reappointed for three additional one-year terms.

For more information, see the press release on the FAF’s Web site.

Highlights from the FASB’s November 19 meeting

Nov 20, 2014

At its November 19, 2014, meeting, the FASB discussed its projects on (1) insurance, (2) the conceptual framework, and (3) the disclosure framework.

Insurance — targeted improvements to the accounting for long-duration contracts

The FASB debated what discount rate an insurer should use when measuring a contract that, under existing GAAP, is discounted by using an expected investment yield. The Board tentatively decided that the discount rate used should be “based on a portfolio of high-quality, fixed-income investments.”

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

Conceptual framework — measurement

The FASB reviewed its process for creating standards on determining changes in carrying amounts. The Board did not make any technical decisions but directed the staff to continue researching the concepts related to this process.

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

Disclosure framework — Board’s decision process

The FASB tentatively decided to modify its description of “materiality” in FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, by:

  • Explaining that “materiality is a legal concept that varies by jurisdiction.” However, the concepts statement “will include the U.S. Supreme Court’s description.”
  • Retaining “the notion that materiality is an entity-specific judgment and that it is different from relevance, which is assessed by the Board.”

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

FAF launches GAAP education portal

Nov 19, 2014

The FAF has launched a new educational portal to highlight the benefits of GAAP for public, private, not-for-profit, and state and local governmental entities in the United States.

The GAAP portal provides information on financial statement presentation and preparation as well as on actions the FASB and GASB have taken to simplify and improve GAAP. The portal is part of a larger FAF initiative to educate stakeholders on the importance of GAAP to a strong economy and the efficiency of the capital markets.

For more information, see the GAAP portal on the FAF’s Web site.

FASB issues ASU and SEC rescinds SAB Topic on pushdown accounting

Nov 18, 2014

Today, the FASB issued ASU 2014-17, which gives an acquired entity the option of applying pushdown accounting in its stand-alone financial statements upon a change-in-control event. The guidance is effective immediately. ASU 2014-17 codifies the final consensus reached by the EITF on Issue 12-F at its September 2014 meeting.

Also, in connection with the FASB’s issuance of ASU 2014-17, the SEC today rescinded SAB Topic 5.J, which historically has contained the SEC staff’s views on the application of pushdown accounting for SEC registrants. As a result of the SEC’s actions, all entities — regardless of whether they are SEC registrants — will now apply ASU 2014-17 for guidance on the use of pushdown accounting.

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

Highlights from the FASB’s November 12 meeting

Nov 13, 2014

At its November 12, 2014, meeting, the FASB discussed its projects on (1) classification and measurement and (2) consolidation.


Financial instruments — classification and measurement

The FASB redeliberated its prior decisions on the cost and complexity of its proposed ASU on recognizing and measuring financial assets and financial liabilities, including the transitional guidance that an entity would apply to the related U.S. GAAP amendments. The FASB requested its staff to conduct additional research on (1) core deposit liability disclosures and (2) the effect of the proposal’s guidance on accounting for equity securities with readily determinable fair values.

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


Consolidation — principal-versus-agent analysis

The FASB received an update from its staff about the status of its consolidation project. The staff indicated that the FASB received a significant number of comments on its draft amendments to the consolidation guidance. On the basis of the staff’s recommendation and the feedback received from external reviewers, the FASB has decided to hold a meeting on December 10, 2014, to further discuss certain significant items raised during the external review process.

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

New issue of “GASB Outlook” published

Nov 12, 2014

The GASB has published the latest issue of its quarterly e-newsletter, "GASB Outlook," which provides high-level information about the GASB’s projects and key activities.

This issue features:

  • Chairman David Vaudt’s discussion of implementation of the GASB’s pension standards and what the GASB is doing to assist both users and preparers of governmental financial statements.
  • Information about new GASB projects on asset retirement obligations and blending requirements for certain business-type activities.
  • A survey to help the GASB understand what forms of communication stakeholders find useful and what needs to be improved.
  • Upcoming developments related to the GASB’s projects on leases, fiduciary responsibilities, other postemployment benefits, and external investment pools.

 The "GASB Outlook" e-newsletter is available on the FASB's Web site.

Highlights from the FASB’s November 5 meeting

Nov 07, 2014

At its November 5, 2014, meeting, the FASB (1) endorsed the PCC consensus on identifiable intangible assets, (2) updated its technical agenda, and (3) discussed its project on goodwill for public business entities and not-for-profit entities.

FASB endorsement of PCC consensus

The FASB has endorsed the PCC’s final proposal on PCC Issue No. 13-01A, which would give private companies the option of recognizing fewer intangible assets in a business combination.

The FASB staff will prepare a draft of an ASU for vote by written ballot. For more information, see the meeting minutes on the FASB’s Web site.


Technical agenda update

The FASB tentatively agreed to add the following projects to its technical agenda:

  • Accounting for financial instruments — hedging.
  • Liabilities and equity — short-term improvements.
  • Accounting for identifiable intangible assets in a business combination for public business entities and not-for-profit entities.

The FASB also tentatively agreed to add the following projects to the EITF’s agenda:

  • Application of the normal purchases and normal sales scope exception to certain electricity contracts in nodal energy markets.
    • Recognition of breakage for no-cash prepaid cards.
    • Employee benefit plans.

For more information, see the related Deloitte Accounting Journal entry and the meeting minutes (agenda, hedging, liabilities and equity, and goodwill for PBEs/NFPs) on the FASB’s Web site.


Goodwill for public business entities and not-for-profit entities

The FASB held an educational session to discuss the subsequent measurement of goodwill, the results of the IASB’s post-implementation review of IFRS 3, and the results of a study on the use of qualitative assessment.

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

FASB issues guidance on hybrid financial instruments

Nov 04, 2014

The FASB has issued Accounting Standards Update (ASU) No. 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity,” in response to the EITF’s final consensus on Issue 13-G. The ASU requires an entity to “determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of the relevant facts and circumstances” (commonly referred to as the whole-instrument approach).

In addition, when assessing the substance of the relevant terms and features, an entity should consider:

  • “The characteristics of the terms and features themselves.”
  • “The circumstances under which the hybrid financial instrument was issued or acquired.”
  • “The potential outcomes of the hybrid financial instrument.”

The ASU applies to all entities and is effective for annual periods beginning after December 15, 2015, and interim periods thereafter. Early adoption is permitted.

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

GASB issues proposal on tax abatement disclosures

Nov 03, 2014

The GASB has issued “Tax Abatement Disclosures,” an exposure draft of a proposed Statement under which state and local governments would be required to disclose “information about property and other tax abatement agreements.” The proposal is intended to “provide financial statement users with essential information” about tax abatement programs.

Specifically, the exposure draft would require state and local governments that currently have tax abatement programs in place to provide the following disclosures:

  • “General descriptive information, such as:
    • The tax being abated
    • Criteria that must be met for the taxpayer to be eligible for the abatement
    • Provisions for recapturing abated taxes
    • The types of commitments made by tax abatement recipients
  • Number of tax abatement agreements
  • Dollar amount of taxes abated
  • Other commitments made by a government, such as to build infrastructure assets.”

Comments on the proposal are due by January 30, 2015.

For more information, see the news release, exposure draft, tax abatement disclosures project page, GASB in Focus article, and related video by GASB Chair David A. Vaudt on the GASB’s Web site.

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