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February

FASB discusses long-duration insurance contracts at February 24 meeting

Feb 26, 2016

At its February 24, 2016, meeting, the FASB discussed presentation and disclosure requirements for its project on targeted improvements to the accounting for long-duration insurance contracts.

The FASB tentatively decided to require insurers to separately present (1) the carrying amount of the liability for market risk benefits in the statement of financial position and (2) changes in the fair value of that liability (excluding changes in an entity’s own credit) in the statement of operations. In a series of unanimous votes, the FASB also tentatively approved proposed disclosure requirements related to (1) liabilities for future policy benefits, (2) policyholder account balances, (3) market risk benefits and separate account liabilities, and (4) deferred acquisition costs.

For more in­for­ma­tion, see Deloitte’s related journal entry as well as the meeting minutes on the FASB’s Web site.

FASB issues ASU on leases

Feb 25, 2016

The FASB has issued its new leases standard, ASU 2016-02.

The ASU introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the new revenue recognition standard, ASC 606, Revenue From Contracts With Customers. The new leases standard represents a wholesale change to lease accounting and will most likely result in significant implementation challenges during the transition period and beyond.

The new guidance will be effective for public business entities for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods therein. For all other entities, the ASU will be effective for annual periods beginning after December 15, 2019 (i.e., calendar periods beginning on January 1, 2020), and interim periods thereafter. Early adoption will be permitted for all entities.

The leases project was part of a convergence effort between the IASB and FASB; however, the IASB’s counterpart standard, IFRS 16, contains notable differences from ASU 2016-02. For instance, the IASB’s standard has a single lessee accounting model while the FASB’s has a dual lessee accounting model. However, both standards require that assets and liabilities be recognized (with limited exceptions).

For more information, see Deloitte's related Heads Up newsletter as well as the press release, FASB in Focus newsletter, ASU, cost-benefit analysis, and video discussion by FASB Vice-Chairman Jim Kroeker and Board members Tom Linsmeier and Hal Schroeder on the FASB’s Web site.

FAF completes post-implementation review of FASB Statement 128

Feb 24, 2016

The FAF has completed its post-implementation review (PIR) of FASB Statement No. 128, “Earnings per Share.”

The PIR report concludes that Statement 128 has achieved its goals of simplifying the guidance on calculating earnings per share and increasing comparability with IFRSs. Further, the FAF believes that the Statement provides financial statement users with helpful information. The PIR team did not make any recommendations on the basis of its review.

For more in­for­ma­tion, see the press release and PIR report on the FAF’s Web site as well as the FASB’s response letter to the FAF on the FASB’s Web site.

FAF appoints new FASB member

Feb 23, 2016

The trustees of the Financial Accounting Foundation (FAF) have appointed Christine Ann Botosan to the FASB for a five-year term beginning on July 1, 2016.

Ms. Botosan replaces Thomas J. Linsmeier, who will conclude his final term on June 30, 2016.

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

IASB membership update

Feb 23, 2016

The trustees of the IFRS Foundation have reappointed Takatsugu Ochi to the IASB for a second three-year term starting on June 30, 2016. In addition, the trustees announced that current IASB member Pat Finnegan will be retiring from his position on this same day.

For more in­for­ma­tion, see the press release on the IASB's Web site.

SEC extends comment period for concept release on transfer agent regulations

Feb 19, 2016

The SEC has issued a proposed rule extending the comment period for its concept release, “Transfer Agent Regulations,” from February 29, 2016, to April 14, 2016 (45-day extension).

The concept release “includes a history of transfer agent services and applicable regulations as well as an overview of current transfer agent services and activities, and requests comment on all topics.”

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

FASB discusses the definition of a business at February 17 meeting

Feb 18, 2016

At its February 17, 2016, meeting, the FASB discussed phase 2 of its project on the definition of a business.

The Board made tentative decisions related to (1) undivided interests, (2) the unit of account in partial sales transactions, and (3) tran­si­tion.

For more in­for­ma­tion, see Deloitte's related journal entry as well as the meeting minutes on the FASB’s Web site.

SEC proposes covered broker-dealer provisions

Feb 17, 2016

The SEC, along with the FDIC, has issued a proposed rule, “Covered Broker-Dealer Provisions Under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act,” which establishes certain “provisions applicable to the orderly liquidation of covered brokers and dealers.”

Comments on the proposed rule are due on May 2, 2016. For more in­for­ma­tion, see the pro­posed rule on the SEC’s Web site.

FASB announces issuance date of leases ASU

Feb 17, 2016

At its meeting today, the FASB announced that it expects to issue its standard on accounting for leases, ASU 2016-02, on Thursday, February 25, 2016.

The new guidance will be effective for public business entities for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods therein. For all other entities, the ASU will be effective for annual periods beginning after December 15, 2019 (i.e., calendar periods beginning on January 1, 2020), and interim periods thereafter. Early adoption will be permitted for all entities. Further, an entity’s ability to early adopt the leases standard will not be linked to its adoption of ASC 606.

A Heads Up publication on ASU 2016-02 will be published shortly after the FASB issues the ASU. 

Editor’s Note: As companies prepare to issue their annual financial statements, they should consider the guidance in SAB Topic 11.M,1 which requires SEC registrants to disclose the effect of new pronouncements that have been issued but are not yet effective. Although SAB Topic 11.M applies to SEC registrants, it is considered best practice for nonregistrants to also provide these disclosures.

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1  SEC Staff Accounting Bulletin Topic 11.M, “Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period.”

SEC issues investor bulletin on crowdfunding

Feb 17, 2016

The SEC’s Office of Investor Education and Advocacy has issued an investor bulletin on the Commission’s recently adopted rules on crowdfunding, which will become effective on May 16, 2016.

The bulletin educates investors on how to participate in crowdfunding investments and addresses:

  • Criteria for investing in crowdfunding (total amount of investment is limited on the basis of the investor’s net worth and annual income).
  • How to calculate net worth.
  • Where an investor can invest in crowdfunding offerings (only available through broker-dealer or funding portals).
  • Risks involved in crowdfunding investments and the importance of understanding these risks.
  • Difference between a crowdfunding investor and an investor in a publicly listed company.

For more information, see the investor bulletin on the SEC’s Web site.

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