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Highlights from the FASB’s March 30 meeting

Mar 31, 2016

At its March 30, 2016, meeting, the FASB discussed not-for-profit entities (NFPs), including the first phase of its project on NFPs’ financial statements and its project on clarifying when an NFP general partner should consolidate a for-profit limited partnership (or similar entity).

The FASB’s discussion of NFPs’ financial statements focused on the effective date and transition related to its proposed Accounting Standards Update (ASU) Presentation of Financial Statements of Not-for-Profit Entities. The Board tentatively decided that the proposed guidance should be applied retrospectively to all years presented; however, NFPs would be permitted to “omit the following information for any years presented before the year of adoption”: (1) an “analysis of expenses by both functional and natural classification” and (2) disclosures about liquidity and resource availability. The proposal would be effective for financial statements beginning after December 15, 2017, and interim financial statements for periods after that date. For more information, see Deloitte's related journal entry as well as the meeting minutes on the FASB's Web site.

In discussing when an NFP that is a general partner should consolidate a for-profit limited partnership or similar entity, the Board tentatively decided to reinstate the consolidation guidance from ASC 810-20 that was removed by ASU 2015-02, Amendments to the Consolidation Analysis. This guidance would now be housed in ASC 958-810. In addition, the FASB directed its staff to begin drafting a proposed ASU for a vote by written ballot. For more information, see Deloitte’s related journal entry as well as the meeting minutes on the FASB's Web site.

SASB issues provisional standards for infrastructure industries

Mar 30, 2016

The SASB has issued provisional standards for the infrastructure industries. The standards are part of 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:

  • Electric utilities.
  • Engineering and construction services.
  • Gas utilities.
  • Home building.
  • Real estate ownership, development, and investment trusts.
  • Real estate services.
  • Waste management.
  • Water utilities.

Other provisional standards are available for the following sectors: com­mu­ni­ca­tions, consumption I, consumption II, fi­nan­cials, health care, non­re­new­able re­sources, pro­vi­sional ser­vices, re­source trans­for­ma­tion, and trans­porta­tion.

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

FASB issues ASU on share-based payments

Mar 30, 2016

The FASB has issued Accounting Standards Update (ASU) No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” as part of its simplification initiative.

The ASU simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the following:

  • Accounting for income taxes.
  • Classification of excess tax benefits on the statement of cash flows.
  • Forfeitures.
  • Statutory tax withholding requirements.
  • Classification of awards as either equity or liabilities.
  • Classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes.

The ASU also contains guidance under which nonpublic entities can use the simplified method to estimate the expected term of an award and make a one-time election to switch from fair value measurement to intrinsic value measurement for liability-classified awards.

For more in­for­ma­tion, see Deloitte's related Heads Up newsletter as well as the press release and ASU on the FASB’s Web site.

SEC performs analysis of custom axis tags

Mar 29, 2016

The staff of the SEC’s Division of Economic and Risk Analysis has released observations related to its analysis of the use of custom axis tags in XBRL exhibits.

In the analysis, the staff noted that use of custom axis tags increased as the size of the filer became larger. In addition, certain filers were creating “custom axis tags unnecessarily when an appropriate standard axis tag existed in the U.S. GAAP taxonomy.” The staff believes that filers should limit the use of custom tags when possible to improve data quality and suggests that filers annually reevaluate their axis tags.

For more information, see the staff’s observations on the SEC’s Web site.

GASB issues guidance on irrevocable split-interest agreements

Mar 29, 2016

The GASB has issued Statement No. 81, “Irrevocable Split-Interest Agreements.”

The primary goals of State­ment 81 are “to improve accounting and financial reporting by establishing recognition and measurement requirements for irrevocable split-interest agreements created through trusts [and] to enhance the transparency and decision-usefulness of general purpose external financial reports, and their value for assessing accountability, by more clearly identifying resources that are available to a government.”

State­ment 81 applies to all state and local gov­ern­ments and is ef­fec­tive for re­port­ing periods be­gin­ning after December 15, 2016. Early ap­pli­ca­tion is en­cour­aged.

For more in­for­ma­tion, see the press release and State­ment 81 on the GASB’s Web site.

SEC chief accountant comments on transition to new revenue standard

Mar 25, 2016

At the 12th Annual Life Sciences Accounting and Reporting Congress in Philadelphia, SEC Chief Accountant James Schnurr discussed transition activities related to the new revenue standard.

Mr. Schnurr spoke about developments of the revenue tran­si­tion resource group (TRG) which was formed jointly by the IASB and FASB to apprise the stan­dard set­ters of issues related to the im­ple­men­ta­tion of the converged revenue recog­ni­tion standard and diversity in practice.

In January of this year, the IASB announced that it will no longer attend TRG meetings, stating, “The Board is now of the view that stake­hold­ers need to know that they can continue their im­ple­men­ta­tion process with the con­fi­dence that IFRS 15 will not be subject to further changes.” The FASB declared in February that it will continue to address im­ple­men­ta­tion issues and has scheduled three TRG meetings for 2016.

Mr. Schnurr commented on the IASB’s decision as follows:

While I am op­ti­mistic that the key practice issues that require standard setting have been iden­ti­fied through the im­ple­men­ta­tion ac­tiv­i­ties of preparers, auditors and standard setters, I am concerned that there are still a number of questions that would benefit from the TRG process. . . . Without joint par­tic­i­pa­tion of the IASB’s TRG in the coming scheduled FASB TRG meetings, there is a concern that IFRS 15 may be in­ter­preted through a U.S. GAAP lens without the per­spec­tive of IFRS preparers.

However, he suggested that IFRS preparers could “provide input to the FASB staff and the FASB TRG par­tic­i­pants to the extent they believe they have important factors that should be con­sid­ered for dis­cus­sion by the FASB TRG.” He noted also that he expected SEC reg­is­trants to “monitor the TRG dis­cus­sions and meeting minutes to inform their selection and im­ple­men­ta­tion of rea­son­able policies.”

The full text of Mr Schnurr's speech is available on the SEC's Web site.

Highlights from the FASB’s March 23 meeting

Mar 25, 2016

At its March 23, 2016, meeting, the FASB discussed (1) long-duration insurance contracts, (2) financial statements of not-for-profit entities (NFPs), (3) hedging, and (4) income tax disclosures.

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

The FASB made tentative decisions on (1) transition methods for measuring the liability for future policy benefits and market risk benefits and (2) transition-related disclosures. In addition, the FASB directed its staff to begin drafting a proposed ASU for a vote by written ballot. For more in­for­ma­tion, see Deloitte's related journal entry as well as the meeting minutes on the FASB’s Web site.

Fi­nan­cial state­ments of not-for-profit en­ti­ties

The FASB ten­ta­tively de­cided to (1) keep the current requirement for NFPs under which expenses “must be reported by their functional classification either on the statement of activities or in the notes to the financial statements.” Further, NFPs would be required to “report all expenses (other than netted investment expenses) by function and nature in one location.” For more in­for­ma­tion, see Deloitte's related journal entry as well as the meeting minutes on the FASB’s Web site.

Financial instruments — hedging

The FASB made a number of tentative decisions related to transition. Specifically, entities would:

  • “[A]pply either a modified retrospective approach or a retrospective approach as of the adoption date to hedging relationships existing at that date.”
  • Be required, upon adoption, to provide certain disclosures in accordance with ASC 250.
  • Be allowed to make certain “one-time elections upon adoption.”
  • Need to take into account transition considerations related to (1) measurement methods for “hedged items in fair value hedges of interest rate risk,” (2) “hedges of a tax-exempt security where the hedged risk was the total price of the security before adoption,” and (3) “partial-term fair value hedges.”

The FASB has directed its staff to begin drafting a proposed ASU for a vote by written ballot. For more in­for­ma­tion, see Deloitte's related journal entry as well as the meeting minutes on the FASB’s Web site.

Dis­clo­sure frame­work: disclosure review — income taxes

The FASB continued to deliberate the income tax disclosure requirements, reaffirming and clarifying certain tentative decisions and reversing others. The Board decided that all of its income tax disclosure requirements would be applied prospectively. In addition, the FASB directed its staff to perform additional outreach related to investments associated with undistributed earnings. For more in­for­ma­tion, see Deloitte's related journal entry as well as the meeting minutes on the FASB’s Web site.

GASB issues implementation guide

Mar 24, 2016

The GASB has issued Implementation Guide No. 2016-1, “Implementation Guidance Update — 2016.”

The im­ple­men­ta­tion guide in­cludes Q&As that address the GASB’s standards on fair value and tax abatement disclosures. In addition, the guide “addresses a wide array of practice issues on other topics that have been brought to the GASB’s attention and reinstates certain previously superseded questions and answers that have been updated for the effects of newly issued standards on pensions and other postemployment benefits.”

The guide is ef­fec­tive for re­port­ing periods be­gin­ning after June 15, 2016. For more in­for­ma­tion, see the press release and im­ple­men­ta­tion guide on the GASB’s Web site.

FASB announces membership of TRG for credit losses

Mar 24, 2016

The FASB has announced the membership of a transition resource group (TRG) that will discuss implementation issues associated with the Board’s upcoming credit losses standard, which is expected to be issued in mid-2016.

The new TRG members will include users, preparers, auditors, and regulators. The first TRG meeting is scheduled for April 1, 2016.

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

SEC staff publishes C&DI clarifying shareholder proposals on proxy cards

Mar 23, 2016

The staff in the SEC’s Division of Corporation Finance has issued a compliance and disclosure interpretation (C&DI) that clarifies how a registrant should “describe a Rule 14a-8 shareholder proposal on its proxy card.”

The guidance states that for both management and shareholder proposals, a proxy card should “clearly identify and describe the specific action on which shareholders will be asked to vote.” The guidance also provides examples of proposals that do not meet the requirements in Rule 14a-4(a)(3).

For more in­for­ma­tion, see the C&DI on the SEC’s Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.