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FASB amends certain topics on the basis of SEC staff announcements

Jan 24, 2017

The FASB has issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update).”

The guidance in this ASU is based on the following SEC staff announcements made at the September 2016 and November 2016 EITF meetings:

  • “Disclosure of the impact that recently issued accounting standards will have on the financial statements of a registrant when such standards are adopted in a future period (in accordance with Staff Accounting Bulletin [SAB] Topic 11.M).”
  • “Amendment of SEC Staff Observer comment: accounting for tax benefits resulting from investments in qualified affordable housing projects due to issuance of ASU No. 2014-01, Investments — Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects.”

For more in­for­ma­tion, see De­loitte’s Sep­tem­ber 2016 and November 2016 EITF Snap­shot as well as the final ASU on the FASB’s Web site.

FASB and ASBJ hold biannual meeting

Jan 19, 2017

On January 18–19, 2017, the FASB met with the Accounting Standards Board of Japan (ASBJ) in Tokyo, Japan. The meeting is the 21st in a series of biannual meetings the two standard setters hold to further their “cooperative efforts to develop high-quality global accounting standards.”

In addition to giving updates on their respective standard-setting activities at the meeting, the two boards exchanged views on technical topics in which they both have an interest, including performance reporting, goodwill and intangible assets, and negative interest rates.

The next meeting between the FASB and ASBJ is expected to be held in the second half of 2017 in Norwalk, Connecticut. For more information about the January meeting, see the press release on the FASB’s Web site.

FASB amends consolidation guidance for not-for-profit entities

Jan 12, 2017

The FASB has issued ASU 2017-02, “Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity,” which amends the consolidation guidance for not-for-profit entities in ASC 958-810.

The amendments in the ASU:

  • “[R]etain the consolidation guidance that was in [ASC] 810-20 for NFPs by including it within Subtopic 958-810.”
  • Add guidance on when an “NFP limited partner should consolidate a for-profit limited partnership.”
  • Add “kick-out rights,” “participating rights,” and “protective rights” to the ASC 958-810 glossary.
  • Clarify the application of fair value elections.

The ASU is effective for NFPs for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. For more information, see the ASU on the FASB’s Web site.

SEC publishes examination priorities for 2017

Jan 12, 2017

The SEC’s Office of Compliance Inspections and Examinations has published its examination priorities for 2017.

The priorities focus on electronic investment advice, money market funds, and financial exploitation of senior investors. In addition, the priorities “reflect a continuing focus on protecting retail investors, including individuals investing for their retirement, and assessing market-wide risks.”

The document is not necessarily comprehensive and “may be adjusted in light of market conditions, industry developments, and ongoing risk assessment activities.”

For more information, see the press release and 2017 examination priorities on the SEC’s Web site.

IASB proposes changes to IFRSs as part of annual improvements process

Jan 12, 2017

The IASB has published an exposure draft (ED), “Annual Improvements to IFRS Standards 2015–2017 Cycle.”

The ED proposes amendments to three IFRSs:

  • IAS 12, Income Taxes — These amendments would “clarify that the requirements in paragraph 52B of IAS 12 apply not just in the circumstances described in paragraph 52A of IAS 12, but to all income tax consequences of dividends.”
  • IAS 23, Borrowing Costs — Paragraph 14 would be amended “to clarify that when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset as part of the funds that it has borrowed generally.”
  • IAS 28, Investments in Associates and Joint Ventures — These amendments would “clarify that an entity is required to apply IFRS 9 Financial Instruments, including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied.”

Comments on the ED are due by April 12, 2017. For more information, see the press release and ED on the IASB’s Web site.

FASB issues proposed ASUs on balance sheet debt and inventory disclosure requirements

Jan 11, 2017

The FASB has issued two proposed ASUs: (1) “Simplifying the Classification of Debt in a Classified Balance Sheet (Current Versus Noncurrent)” and (2) “Disclosure Framework — Changes to the Disclosure Requirements for Inventory.”

Balance sheet classification of debt

This proposed ASU “is intended to improve financial reporting by simplifying guidance used to determine whether debt should be classified as current or noncurrent in a classified balance sheet.” Specifically, the proposal “would replace the existing, fact-specific guidance with an overarching, cohesive principle for debt classification that focuses on a borrower’s contractual rights and obligations that exist as of the reporting date.”

Comments on this proposal are due by May 5, 2017. For more information, see Deloitte's Heads Up newsletter as well as the press release on the FASB’s Web site.

Disclosure framework — inventory

This proposal “would increase inventory disclosure requirements for all reporting organizations, including:

  • Changes in inventory that are not related to the ordinary course of manufacturing, purchasing, or selling inventory.
  • Inventory disaggregated by major components.
  • Inventory disaggregated by measurement basis.
  • Qualitative description of costs capitalized.”

The FASB will host a public roundtable meeting on March 17, 2017, at the FASB’s offices in Norwalk, Connecticut, to discuss this proposal. Roundtable participants must submit a comment letter on the proposed ASU to the FASB by February 27, 2017, to be able to register. All other comments are due by March 13, 2017.

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

SEC chair discusses global accounting

Jan 06, 2017

SEC Chair Mary Jo White has issued a public statement, “A U.S. Imperative: High-Quality, Globally Accepted Accounting Standards,” urging the next SEC chair to continue to pursue global accounting standards to protect investors and the strength of the U.S. market.

While Ms. White acknowledged that the Commission has not taken “formal action” related to such standards since 2010, she described the past years as a success:

Although the FASB and IASB have completed their agreed-upon, priority convergence projects, this milestone must not mark the end of the intense collaboration that has occurred between the two Boards over the last few years. These efforts have greatly enhanced the quality of accounting standards in a number of important areas, including recently narrowing many differences in the accounting standards for revenue recognition, leases, credit losses on financial instruments, and recognition and measurement of financial assets and liabilities.

Ms. White also noted that such progress needs to continue, since it is greatly beneficial to boards and investors. She concluded:

The United States cannot afford to be myopic about this issue in light of the benefits of these efforts for all stakeholders. Strong support of both the FASB and the IASB by U.S. investors, companies, auditors, and others, including the Commission, is essential. Indeed, it should be self-evident that the pursuit of high-quality globally accepted accounting standards is part of the SEC’s continuing re-sponsibility to encourage, facilitate and direct efforts to enhance the quality of all financial reporting that directly impacts the protection of investors and the strength of our markets.

Ms. White’s full statement is available on the SEC’s Web site.

AICPA issues additional revenue working drafts

Jan 06, 2017

The AICPA’s Revenue Recognition Task Force has released for public comment four working drafts on accounting issues associated with the implementation of the new revenue standard for the following industries: aerospace and defense, telecommunications, and time shares.

The aerospace and defense working draft provides guidance on contract modifications, the working draft for time-share entities discusses performance obligations, and the two working drafts for the telecommunications industry address (1) separate performance obligations and (2) stand-alone selling prices.

Comments on the working drafts are due by March 1, 2017. For more information, see the aerospace and defense, telecommunications, and time-share Revenue Recognition Task Force pages on the AICPA’s Web site.

FASB clarifies the definition of a business

Jan 05, 2017

The FASB has issued ASU 2017-01, “Clarifying the Definition of a Business,” which provides guidance on evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

The ASU amends ASC 805 to “provide a more robust framework to use in determining when a set of assets and activities is a business.” In addition, the amendments “provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable.”

For more information, see the press release, ASU, and FASB in Focus newsletter on the FASB’s Web site.

President-elect Trump selects new SEC chairman

Jan 04, 2017

President-elect Donald Trump has announced that he intends to nominate Jay Clayton as chairman of the SEC.

Mr. Clayton would replace Mary Jo White, who announced in November 2016 that she will leave the SEC at the end of the Obama Administration. Mr. Clayton’s appointment is contingent on a Senate confirmation vote.

For more information, see the press release on the president-elect’s transition Web site.

GASB requests feedback on financial reporting model

Jan 04, 2017

The GASB has issued an invitation to comment (ITC), “Financial Reporting Model Improvements — Governmental Funds.”

The ITC “is intended to obtain feedback from stakeholders at an early stage of the Board’s financial reporting model reexamination project.”

Comments are due by March 31, 2017. For more information, see the press release and ITC on the GASB’s Web site.

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