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June

SEC to expand confidential review process of draft initial registration statements

Jun 30, 2017

The SEC’s Division of Corporation Finance has announced that the SEC is expanding to all companies certain benefits related to the confidential review process for draft initial registration statements under the Jumpstart Our Business Startups (JOBS) Act.

According to the announcement, effective July 10, 2017:

  • Any company will be able to provide a confidential draft initial public offering registration statement to the SEC staff for review before the company’s public filing. The company will be required to publicly file such draft and any related amendments with the SEC no later than 15 days before its roadshow or requested effective date.
  • An issuer may voluntarily submit a draft registration statement within one year of the effective date of its initial Securities Act registration statement or its Exchange Act Section 12(b) registration statement, for review on a nonpublic basis.
  • The SEC will not delay processing a draft registration statement if an issuer reasonably believes that omitted financial information will not be required at the time the registration statement is publicly filed.
  • The SEC will continue to consider any waiver requests made under Regulation S-X, Rule 3-13.  
  • Foreign private issuers can elect to avail themselves of these benefits.

For more information, see the press release, announcement, and FAQs on the SEC’s Web site.

GASB issues new leases standard

Jun 28, 2017

The GASB has issued Statement No. 87, “Leases.”

The Statement "establishes a single approach to accounting for and reporting leases by state and local governments." The new standard’s objective is to enhance "the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract."

For more information, see Statement 87 and the press release on the GASB’s Web site.

FASB proposes technical corrections to Codification

Jun 27, 2017

The FASB has issued two proposed Accounting Standards Updates (ASUs) as part of its ongoing technical corrections project (i.e., the Board’s continuing efforts to clarify the Codification in ways that are not expected to significantly affect current practice or to result in burdensome administrative costs).

One of the proposed ASUs would supersede the guidance for steamship entities in ASC 995 with respect to “unrecognized deferred taxes related to certain statutory reserve deposits.” Specifically, the proposal would require “entities with unrecognized deferred income taxes related to statutory deposits made on or before December 15, 1992, . . . to recognize the unrecognized income taxes in accordance with [ASC] 740.”

The other proposal would eliminate “deferred tax guidance on bad debt reserves of savings and loans that arose after December 31, 1987.” Outdated guidance related to the OCC’s Banking Circular 202 on accounting for net deferred tax charges would also be superseded.

Comments on both proposals are due by August 28, 2017. For more information, see the proposed ASUs related to steamship entities and bad debt reserves on the FASB’s Web site.

Highlights from the FASB’s June 21 meeting

Jun 23, 2017

At its June 21, 2017, meeting, the FASB discussed its projects on (1) leases, (2) revenue recognition, (3) recognition and measurement of financial instruments, (4) consolidation, and (5) disclosure review — inventory.

Leases

The Board discussed 16 proposed technical corrections and improvements to its new leases standard as well as a lessor-specific transition issue associated with the relationship between the adoption of the new leases standard and the adoption of the new revenue standard.

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

Revenue recognition

The Board answered an implementation question related to the allocation of contract consideration to revenue and lease components, noting that it did not intend for an entity to revisit the allocation of contract consideration to lease components (within the scope of ASC 840, Leases) when it adopts ASU 2014-09, Revenue From Contracts With Customers. No decisions were made.

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

Financial instruments — recognition and measurement

The Board discussed technical corrections and improvements to the amendments in ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, and directed its staff to draft a proposed ASU for a vote by written ballot that includes the technical corrections to (1) ASU 2016-02, Leases, and (2) ASU 2016-01.

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

Consolidation

The Board discussed comments received from external reviewers on a draft of its proposed ASU on the reorganization of the guidance in ASC 810, Consolidation. In addition to discussing remaining issues, including costs and benefits, the FASB affirmed the decision it made on transition requirements at its March 8, 2017, meeting. The Board directed its staff to begin drafting a proposed ASU for a vote by written ballot.

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

Disclosure review — inventory

The Board discussed comments received on its January 2017 proposed ASU, Disclosure Framework — Changes to the Disclosure Requirements for Inventory. No decisions were made. The Board directed its staff to perform additional outreach and research on the proposed disclosure requirements related to changes in the inventory balance.

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

FASB proposes improvements to consolidation guidance

Jun 23, 2017

The FASB has issued a proposed Accounting Standards Update (ASU), “Targeted Improvements to Related Party Guidance for Variable Interest Entities,” which is based on recommendations made by the Private Company Council.

The proposed ASU is “intended to reduce the cost and complexity of financial reporting associated with consolidation of variable interest entities.” Specifically, under the proposal:

  • Private companies “would not have to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities.”
  • “Indirect interests held through related parties in common control arrangements would be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.”
  • Consolidation would no longer be mandatory when “power is shared among related parties or when commonly controlled related parties, as a group, have the characteristics of a controlling financial interest but no reporting entity individually has a controlling financial interest.”

Comments on the proposed ASU are due by September 5, 2017. For more information, see the press release, FASB in Focus newsletter, and proposed ASU on the FASB’s Web site.

IASB proposes amendments to IAS 16

Jun 20, 2017

The IASB has published an exposure draft (ED), “Property, Plant and Equipment — Proceeds Before Intended Use,” which proposes narrow-scope amendments intended to reduce the diversity in the application of IAS 16.

The amendments “would prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity would recognise those sales proceeds in profit or loss.”

Comments on the ED are due by October 19, 2017.

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

SEC posts drafts of EDGAR Filer Manual for upcoming EDGAR release

Jun 19, 2017

The SEC has issued drafts of Volumes I, II, and certain technical specifications of its Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual for upcoming EDGAR Release 17.2.

The new release, which is sched­uled for im­ple­men­ta­tion on July 17, 2017, will in­tro­duce several changes, in­clud­ing the fol­low­ing:

  • Requirement for large accelerated and accelerated filers to issue certain forms in HTML.
  • Updated submission forms.
  • Revisions to certain EDGAR­Link Online submission forms.
  • Minor, doc­u­men­ta­tion-only cor­rec­tions.
  • Schema updates.
  • Discontinued support for 2015 U.S. GAAP taxonomy.

The drafts have not been ap­proved by the Com­mis­sion and are subject to change. The final version of the EDGAR Filer Manual will be posted on the SEC’s Web site once it has been ap­proved.

For more in­for­ma­tion, see the following on the SEC’s Web site:

FASB discusses distinguishing liabilities from equity

Jun 15, 2017

At its June 14, 2017, meeting, the FASB discussed staff outreach related to a potential new project on distinguishing liabilities from equity (including convertible debt).

The Board directed its staff to perform more research to present at a future meeting. No decisions were made.

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

PCAOB calls for nominations for Standing Advisory Group

Jun 15, 2017

The PCAOB is soliciting nominations for its Standing Advisory Group (SAG) for the 2018–2020 three-year term.

The PCAOB established the SAG in 2003 to advise on the development of auditing and related professional practice standards. The SAG includes auditors, investors, public-company executives, and others.

The SAG currently has 35 members, with 14 members’ terms expiring in 2017. Nominations, including self-nominations, are sought annually and may be submitted by any person or organization.

The deadline for submissions is August 12, 2017, and the PCAOB expects to announce the appointments in December 2017.

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

Highlights from the FASB’s June 7 meeting

Jun 09, 2017

At its June 7, 2017, meeting, the FASB discussed its projects on (1) hedging and (2) revenue recognition of grants and contracts by not-for-profit entities.

Financial instruments — hedging

The Board discussed issues related to its September 2016 proposed ASU, including sweep issues, substantive drafting topics, transition, effective date, and early adoption. The Board directed its staff to begin drafting a final ASU for a vote by written ballot. The final ASU is expected to be published in August 2017.

For public entities, the ASU would be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the ASU would be effective for fiscal years beginning after December 15, 2019, and in interim periods within fiscal years, beginning after December 15, 2020. Entities may early adopt the ASU in any interim period or fiscal year after its issuance.

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

Revenue recognition of grants and contracts by not-for-profit entities

The Board (1) discussed feedback from external reviewers on a draft of its proposed ASU on clarifying the scope and guidance in ASC 958 (on not-for-profit entities) with respect to contributions received and contributions made and (2) addressed other outstanding issues, including cost-benefit considerations. The Board directed its staff to begin drafting a proposed ASU for a vote by written ballot.

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