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February

FASB makes technical corrections to guidance on financial instruments

Feb 28, 2018

The FASB has issued Accounting Standards Update (ASU) No. 2018-03, “Technical Corrections and Improvements to Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which makes minor changes to the Board’s January 2016 ASU, “Recognition and Measurement of Financial Assets and Financial Liabilities.”

The technical corrections affect the following aspects of the ASU:

  • Equity securities without a readily determinable fair value — discontinuation.
  • Equity securities without a readily determinable fair value — adjustments.
  • Forward contracts and purchased options.
  • Presentation requirements for certain fair value option liabilities.
  • Fair value option liabilities denominated in a foreign currency.
  • Transition guidance for equity securities without a readily determinable fair value.

The ASU notes that “[t]he amendments in this Update are of a similar nature to the items typically addressed in the Codification improvements project” and that these technical corrections are being issued separately to “increase stakeholders’ awareness of the amendments and to expedite the improvements.”

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

On March 20, 2018, the FASB issued GAAP Taxonomy improvements and implementation guidance related to this ASU. For more information, see the taxonomy improvements page on the FASB's Web site.

FASB issues taxonomy improvements and implementation guidance related to Tax Cuts and Jobs Act

Feb 26, 2018

The FASB has issued changes to the U.S. GAAP taxonomy that will be required by Accounting Standards Update 2018-02, "Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income," and SEC Staff Accounting Bulletin 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act."

For more information, see the release notes on the taxonomy improvements page on the FASB’s Web site.

FASB proposes taxonomy improvements for proposed ASUs

Feb 23, 2018

The FASB has issued for comment proposed taxonomy improvement documents related to (1) leases and (2) benchmark interest rates for hedge accounting.

The proposed taxonomy improvements related to the proposed ASU, Leases (Topic 842) — Targeted Improvements, would introduce four new elements and eight reference additions. Comments on these taxonomy improvements are due by April 7, 2018.

The proposed taxonomy improvements related to the proposed ASU, Derivatives and Hedging (Topic 815): Inclusion of the Overnight Index Swap (OIS) Rate Based on the Secured Overnight Financing Rate (SOFR) as a Benchmark Interest Rate for Hedge Accounting Purposes, would introduce two new elements and modify two labels. Comments on these taxonomy improvements are due by April 22, 2018.

In its related action alert, the FASB noted a change in how taxonomy improvements will be issued:

Effective January 1, 2018, proposed Taxonomy improvements for proposed Accounting Standards Updates (ASUs) will have a formal comment period concurrent with the issuance of the proposed ASU. The past practice of an annual 60-day comment period on the entire Taxonomy in the September-October timeframe is hereafter replaced by comment periods for the individual proposed Taxonomy improvements; however, the FASB Taxonomy Online Review and Comment System (TORCS) is operational throughout the year.

SEC extends compliance date for open-end fund liquidity classification

Feb 23, 2018

The SEC has voted to extend by six months the deadline for open-end funds to comply with certain elements of the SEC’s liquidity management program rule.

The SEC issued Final Rule 33-10233, Investment Company Liquidity Risk Management Programs, in October 2016. The SEC decided to extend the compliance date to give open-end funds more time to implement the rule’s classification requirement. The new compliance dates are as follows:

[T]he compliance date for implementation of the classification and classification-related elements of the liquidity rule is June 1, 2019, for larger fund groups, and Dec. 1, 2019, for smaller fund groups. The other requirements will go into effect as originally scheduled: Dec. 1, 2018, for larger fund groups, and June 1, 2019, for smaller fund groups.

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

SEC issues interpretive guidance on cybersecurity

Feb 21, 2018

The SEC has issued an interpretation, “Commission Statement and Guidance on Public Company Cybersecurity Disclosures.”

The interpretation assists “public companies in preparing disclosures about cybersecurity risks and incidents” and outlines the SEC’s views on “cybersecurity disclosure requirements under the federal securities laws as they apply to public operating companies.” This Commission guidance reinforces and further builds on the Division of Corporation Finance (CF) principles-based guidance on cybersecurity issued in 2011 (CF Disclosure Guidance: Topic No. 2). In addition, it addresses the importance of cybersecurity disclosure controls and procedures and the application of insider trading prohibitions, and Regulation FD and selective disclosure prohibitions in the cybersecurity context.

The interpretation will become effective on the date of its publication in the Federal Register.

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

FASB proposes to expand the list of benchmark interest rates for hedge accounting

Feb 20, 2018

The FASB has issued a proposed Accounting Standards Update (ASU), “Inclusion of the Overnight Index Swap (OIS) Rate Based on the Secured Overnight Financing Rate (SOFR) as a Benchmark Interest Rate for Hedge Accounting Purposes.”

The proposed ASU would amend ASC 815, Derivatives and Hedging, to “add the OIS rate based on SOFR as a fifth U.S. benchmark interest rate to help companies and other organizations avoid the potential cost and complexity associated with using different cash flows and discount rates to measure the hedged item and the hedging instrument.” Currently, the four eligible benchmark interest rates under ASC 815 are:

  • Interest rates on direct Treasury obligations of the U.S. government.
  • The London Interbank Offered Rate swap rate.
  • The Overnight Index Swap Rate based on the Fed Funds Effective Rate.
  • The Securities Industry and Financial Markets Association municipal swap rate.

Comments on the proposed ASU are due by March 30, 2018. For more information, see the press release and proposed ASU on the FASB’s Web site.

Highlights of the FASB’s February 14 meeting

Feb 16, 2018

At its February 14, 2018, meeting, the FASB discussed its projects on (1) hedging implementation, (2) revenue recognition of grants and contracts by not-for-profit entities, and (3) defined benefit plans.

Financial instruments — hedging implementation

The Board discussed implementation issues related to ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, including questions it has received about the definition of the term “prepayable instruments” and net investment hedges. The Board directed its staff to research a potential technical correction related to the use of the term “prepayable.”

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

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

The Board redeliberated its August 2017 proposed ASU, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, and made decisions related to:

  • Conditional contributions — indicators to describe a barrier.
  • Contributions made by a resource provider.
  • Recurring disclosures by recipients about conditional promises to give.
  • Simultaneous release of a condition and a restriction.
  • Transition.
  • Effective date and early adoption.

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

Disclosure framework — disclosure review: defined benefit plans

The Board discussed feedback received on its January 2016 proposed ASU, Changes to the Disclosure Requirements for Defined Benefit Plans. The Board made decisions related to adding, removing, amending, and retaining certain disclosures.

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

SEC names new chief accountant in the Division of Corporation Finance

Feb 16, 2018

The SEC has announced that Kyle Moffatt has been named as chief accountant in the Division of Corporation Finance to replace Mark Kronforst.

Mr. Moffatt has served as acting chief accountant since January 2018 and has worked in the Division since 2000.

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

FASB issues ASU on income tax accounting related to new tax reform law

Feb 15, 2018

The FASB has issued Accounting Standards Update (ASU) No. 2018-02, “Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income.”

The ASU amends ASC 220, Income Statement — Reporting Comprehensive Income, to “allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.” In addition, under the ASU, an entity will be required to provide certain disclosures regarding stranded tax effects.

The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. For more information, see the ASU and press release on the FASB’s Web site.

SEC announces share class selection disclosure initiative

Feb 13, 2018

The SEC’s Division of Enforcement has announced its share class selection disclosure initiative.

The purpose of the initiative is “to protect advisory clients from undisclosed conflicts of interest and return money to investors.” Specifically, under the initiative, “the Division will agree not to recommend financial penalties against investment advisers who self-report violations of the federal securities laws relating to certain mutual fund share class selection issues and promptly return money to harmed clients.”

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.