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SEC commissioner discusses global accounting standards

Mar 27, 2015

SEC Commissioner Kara Stein gave her opinion on the future of IFRSs in the United States during a speech at the Brooklyn Law School in New York City. Ms. Stein discussed international cooperation in the wake of the global financial crisis and called for worldwide collaboration on data aggregation and disclosure. She then discussed IFRS adoption in the United States, noting:

I am not convinced of a need to abandon U.S. GAAP in favor of IFRS. That is not to say that U.S. GAAP is perfect. Nor is IFRS perfect. I’m also not convinced that providing financial statements in two different sets of accounting standards would be beneficial for either investors or issuers. With complexity in both businesses and products on the rise, it seems that presenting information in a dueling set of financial reporting standards does not really aid in understanding.

To be frank, this debate between dueling standards needs to move on. Neither regime worked ideally in the financial crisis, and neither may serve investors well in today’s post-financial crisis, technologically disrupted, and data-driven world. In practice and in reality, accounting standards may vary between jurisdictions due to legal and cultural factors, as well as differences in perspective. Remember, IFRS is not consistently implemented around the world.

Ms. Stein acknowledged that convergence “makes sense” but suggested “reimagining” accounting regimes to use technology and globalization to “minimize differences and maximize global investment and access to capital.”

The full transcript of Ms. Stein’s speech is available on the SEC's Web site.

SASB issues provisional standards for resource transformation industries

Mar 25, 2015

The SASB has issued provisional standards for the resource transformation industries. The standards are the seventh set in a planned series of industry-related SASB standards on accounting for environmental, social, and governance issues that could be material to a corporation’s performance. The standards focus on material sustainability matters that corporations are already required to disclose in their Form 10-K or 20-F filings with the SEC.

The stan­dards apply to the fol­low­ing in­dus­tries:

  • Aerospace and defense.
  • Chemicals.
  • Containers and packaging.
  • Electrical and electronic equipment.
  • Industrial machinery and goods.
The Board’s first six sets of provisional standards focus on communications, financials, health care, nonrenewable resources, provisional services, and transportation.

The new pro­vi­sional stan­dards and cor­re­spond­ing in­dus­try briefs are avail­able on the SASB’s Web site.

Revenue transition resource group releases meeting agenda

Mar 23, 2015

The FASB and IASB released the agenda for the upcoming meeting of their joint revenue transition resource group (TRG), which will be held on March 30, 2015.

The purpose of the TRG is to seek feedback on potential issues related to implementation of the boards’ new revenue standard. By analyzing and discussing potential implementation issues, the TRG will help the boards determine whether they need to take additional action, such as providing clarification or issuing other guidance.

The agenda for the meeting is as follows:

Monday, March 30, 2015

  • Introductory remarks
  • Project updates
  • Variable discounts
  • Material rights
  • Consideration payable to a customer
  • Partial satisfaction of performance obligations prior to identifying the contract
  • Warranties
  • Significant financing component
  • Whether contributions are included or excluded from the scope
  • Series of distinct goods and services

Agenda papers for this meeting are available on the IASB's Web site.

EITF discusses five issues at March meeting

Mar 20, 2015

At its meeting yesterday, the EITF discussed issues related to (1) the calculation of historical earnings per unit for dropdown master limited partnership transactions, (2) disclosures about investments in certain entities that calculate net asset value per share, (3) application of the normal purchases and normal sales scope exception to certain electricity contracts, (4) the recognition of breakage for prepaid stored-value cards, and (5) employee benefit plan simplifications.

For a de­tailed summary of the meeting, see De­loitte’s March EITF Snap­shot.

Highlights from the FASB’s March 18 meeting

Mar 20, 2015

At its March 18, 2015, meeting, the FASB discussed its conceptual framework project and reviewed potential projects that may be added to its technical agenda. In addition, the FASB (jointly with the IASB) continued to discuss issues related to implementing the revenue standard.

  • Revenue recognition research projects — The FASB and IASB both voted to propose practical expedients upon transition. In addition, the FASB made tentative decisions related to (1) sales tax presentation, (2) noncash consideration, and (3) collectibility. For more information, see Deloitte’s related Heads Up.
  • Agenda prioritization— The FASB voted to do the following:
    • Add these projects to its agenda:
      • Accounting for interest income on callable debt securities.
      • Simplifying the equity method of accounting.
      • Accounting for measurement-period adjustment in a business combination.
    • Add these issues to the EITF’s agenda:
      • Effect of derivative contract novations on existing hedge accounting relationships.
      • Accounting for embedded put and call options in debt instruments.
    • Not to address these issues:
      • Income statement presentation of credit card and other payment processing costs.
      • Accounting for reacquired rights in a business combination.
      • Balance sheet offsetting of payables and receivables arising from securities lending transactions that are cleared through a regulated central counterparty and subject to a master netting arrangement.
  • Conceptual framework: measurement — The FASB discussed a concept for use in determining the initial carrying amounts of assets and liabilities. No tentative decisions were made.

In addition, the FASB has provided its tentative decisions notes regarding this meeting on its Web site.

Insurance project page updated for recent developments

Mar 17, 2015

Deloitte has updated the information on its US GAAP Plus page about the FASB’s project on disclosures about short-duration insurance contracts.

See the project page for more information.

IASB issues document on forthcoming leases standard

Mar 16, 2015

The IASB has published a document that provides an overview of (1) the likely practical effects of the new standard on leases and (2) the similarities and differences between the IASB’s and FASB’s requirements.

Although the boards have reached the same decisions about many aspects of the leases project, their final conclusions are not converged. Both boards will be ending their redelib­er­a­tions soon and will be deciding on an effective date within the next few months.

For more in­for­ma­tion, see the document and the press release on the IASB’s Web site.

Highlights from the FASB’s March 11 meeting

Mar 13, 2015

At its March 11, 2015, meeting, the FASB discussed its projects on (1) impairment and (2) short-duration insurance contracts.

  • Financial instruments: impairment — The FASB made tentative decisions related to transition requirements for debt securities, purchased credit-impaired assets and all other assets, and disclosures. This meeting represents the substantial completion of the project. The Board directed the staff to draft a final ASU to obtain stakeholder feedback on the revised guidance. For an overview of the tentative decisions reached in the impairment project, see Deloitte’s related Heads Up newsletter. For more information, see the meeting minutes on the FASB’s Web site.
  • Insurance: disclosures about short-duration contracts — The FASB made tentative decisions about whether (1) disclosures about claims development should be presented as required supplementary information, (2) tentative disclosure requirements for claim count information should be amended, (3) incurred but not reported amounts presented in the claims development tables should also include amounts for expected development related to reported claims, and (4) effective dates. In addition, the Board directed the staff to draft a final ASU for a vote by written ballot. For more information, see Deloitte’s related journal entry and the meeting minutes on the FASB's Web site.

Highlights from the FASB’s March 4 meeting

Mar 06, 2015

At its March 4, 2015, meeting, the FASB discussed its projects on (1) fair value measurement disclosures and (2) financial statements of not-for-profit entities.

  • Fair value measurement disclosure requirements — The FASB made tentative decisions related to (1) modifying or eliminating certain disclosure requirements, (2) adding a new disclosure requirement for gains and losses, and (3) whether to move disclosure requirements to industry-specific Codification topics. For more information, see Deloitte’s related journal entry and the meeting minutes on the FASB's Web site.
  • Financial statements of not-for-profit entities — The FASB tentatively decided that the expected benefits justify the expected costs and complexities of implementing a proposed ASU and directed the staff to draft a proposal for public comment. For more information, see the meeting minutes on the FASB’s Web site.

FASB issues proposed taxonomy implementation guide on repurchase-to-maturity transactions and repurchase financings

Mar 03, 2015

The FASB has issued a proposed U.S. GAAP financial reporting taxonomy (UGT) implementation guide to help entities apply the taxonomy’s modeling structure to XBRL disclosures about repurchase-to-maturity transactions and repurchase financings.

The im­ple­men­ta­tion guide con­tains ex­am­ples il­lus­trat­ing four dis­clo­sure scenarios:

    1. Certain transfers of financial assets accounted for as sales with agreements that cause the transferor to retain substantially all of the exposure to the economic return on the transferred financial asset.
    2. Repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings.
    3. Repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings, alternative.
    4. Repurchase agreements accounted for as secured borrowings.

Com­ments on the UGT im­ple­men­ta­tion guide are due by May 1, 2015. The guide is avail­able on the FASB’s Web site.

GASB issues guidance on fair value measurements

Mar 02, 2015

The GASB has issued Statement No. 72, “Fair Value Measurement and Application,” to enhance the transparency and comparability of fair value measurements and disclosures in state and local governments’ financial statements.

Statement 72 clarifies the definition of fair value and provides guidance on fair value valuation techniques, the fair value measurement hierarchy, and disclosures. The Statement is effective for periods beginning after June 15, 2015.

For more information, see Deloitte's State Government Spotlight and the press release, Statement, and GASB in Focus article on the GASB’s Web site.

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