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March

Highlights of the FASB’s March 28 meeting

Mar 30, 2018

At its March 28, 2018, meeting, the FASB discussed its agenda prioritization as well as its projects on (1) hedging implementation, (2) targeted improvements to leases, and (3) financial performance reporting.

Agenda prioritization

The Board made decisions about whether to add the following potential projects to its agenda:

  • Determination of a highly inflationary economy — The Board decided not to add this project to its agenda.
  • Interest rate lock commitments — The Board decided not to add this project to its agenda.
  • Misalignment of “collections” definition — The Board decided to add this project to its agenda. Further, the definition of “collections” should include the concept of direct care, and the change to this definition should be applied prospectively. The Board directed its staff to draft a proposed Accounting Standards Update (ASU) for a vote by written ballot.
  • Cost capitalization for episodic television series — The Board decided to add to the EITF’s agenda a narrow-scope project on this topic.
  • Recognition under ASC 805 for an assumed liability in a revenue contract — The Board decided to add to the EITF’s agenda a project on this topic.

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

Financial instruments — Hedging implementation

The Board discussed implementation activities associated with ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. The Board decided to add a narrow-scope project to its agenda to address certain aspects of the last-of-layer approach and to pursue potential technical improvements to clarify the guidance in ASC 815 on changes in the hedged risk of a cash flow hedge.

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

Targeted improvements to leases (ASC 842)

The Board discussed feedback received on its proposed ASU Leases (Topic 842): Targeted Improvements related to a practical expedient for lessors to elect not to separate lease and nonlease components when certain conditions are met. The Board directed its staff to draft a final ASU, subject to certain adjustments explained in Deloitte’s journal entry.

The Board also discussed other implementation requests received from stakeholders related to the presentation of sales taxes and property taxes and insurance included in lease contracts under ASU, Leases (Topic 842).

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

Financial performance reporting — Disaggregation of performance information

The Board discussed “the staff’s suggested terminology to describe the lines from the income statement to be the focus of the disaggregation, in particular lines that represent the cost of revenue and selling, general, and administrative expenses” as well “different approaches for describing the basis for disaggregating those lines.” The Board directed its staff to perform additional outreach with public business entities to get feedback on “(1) if, and how, an entity reviews the components of these lines for internal reporting purposes, (2) on what level the accounting information systems track the components, and (3) how the components are rolled up into consolidated lines.”

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

IASB publishes revised Conceptual Framework

Mar 29, 2018

The IASB has published its revised "Conceptual Framework for Financial Reporting." The purpose of the Conceptual Framework is to "(a) assist the [IASB] to develop IFRS Standards (Standards) that are based on consistent concepts; (b) assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of accounting policy; and (c) assist all parties to understand and interpret the Standards."

The revised framework includes a new chapter on measurement, guidance on reporting financial performance, improved definitions and guidance, and clarifications on important topics (e.g., the roles of stewardship, prudence, and measurement uncertainty in financial reporting).

The IASB has also issued amendments that update references to the framework in certain standards. The amendments are effective for annual periods beginning on January 1, 2020.

The revised Conceputal Framework is available on the IASB's eIFRS Web site (subscription required). Also see the following:

Highlights of the March 2018 FASAC meeting

Mar 27, 2018

At its March 20, 2018, meeting, the FASB’s Financial Accounting Standards Advisory Council (FASAC) discussed (1) tax reform and income tax accounting and (2) implementation of the new revenue recognition standard.

Tax reform and income tax accounting

The FASAC discussed financial reporting issues associated with the Tax Cuts and Jobs Act. Council members “expressed mixed views” on the FASB’s research project on income taxes — backwards tracing. However, FASAC members support the FASB’s efforts to “refresh” its income taxes disclosure review project and to conduct more research on simplifying the accounting for income taxes.

Implementation of new revenue recognition standard

The FASAC discussed initial and recurring costs related to transitioning to the new revenue standard. Some council members noted that “the initial level of effort to apply the revenue recognition standard was somewhat higher than originally anticipated.” Most members expect that the recurring cost of applying the revenue standard would be “substantially lower” and could generate savings in the future. The FASAC also discussed (1) use of estimates, (2) the accounting change process, and (3) auditor independence and training.

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

Highlights of the March 2018 Not-for-Profit Advisory Committee meeting

Mar 23, 2018

At its March 12–13, 2018, meeting, the FASB’s Not-for-Profit Advisory Committee (NAC) discussed (1) revenue recognition of grants and contracts by not-for-profits (NFPs), (2) the Tax Cuts and Jobs Act, and (3) implementation issues related to certain FASB ASUs.

Revenue recognition of grants and contracts by NFPs

The NAC discussed feedback on the FASB’s proposed ASU Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.

Tax Cuts and Jobs Act

The NAC discussed financial reporting issues associated with the Tax Cuts and Jobs Act and the related FASB agenda decisions. A focus of the discussion was the recently issued FASB staff Q&A indicating that the Board would not object if private companies and NFPs elect to apply the SEC’s SAB 118.

Implementation issues

The NAC discussed implementation issues related to the following ASUs:

  • No. 2014-09, Revenue From Contracts With Customers.
  • No. 2016-02, Leases.
  • No. 2016-14, Presentation of Financial Statements of Not-for Profit Entities.
  • No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.

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

FASB discusses decision processes related to disclosure framework

Mar 23, 2018

At its March 21, 2018, meeting, the FASB discussed the Board’s decision process and entity’s decision process components of its disclosure framework project.

The Board made several decisions and completed its redeliberations of (1) proposed FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 8, Notes to Financial Statements, and (2) proposed amendments to FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 3, Qualitative Characteristics of Useful Financial Information. The Board directed its staff to draft final versions of both for a vote by written ballot.

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

SEC accepts the 2018 U.S. GAAP Financial Reporting Taxonomy

Mar 19, 2018

The FASB has announced that the SEC has accepted the 2018 U.S. GAAP Financial Reporting Taxonomy and SEC Reporting Taxonomy. The 2018 taxonomy reflects accounting standards issued during the past year as well as other corrections and improvements to the 2017 taxonomy.

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

CAQ issues publication for audit committees on non-GAAP measures

Mar 16, 2018

The Center for Audit Quality (CAQ) has issued “Non-GAAP Measures: A Roadmap for Audit Committees,” a publication that summarizes common themes from its series of roundtable discussions on non-GAAP measures held last year.

The publication “provides a set of key considerations for audit committees, including leading practices to assess whether a company’s non-GAAP metrics present a balanced representation of the company’s performance.”

For more information, see the press release, publication, and companion video on the CAQ’s Web site.

Highlights of the FASB’s March 14 meeting

Mar 15, 2018

At its March 14, 2018, meeting, the FASB discussed its projects on (1) disclosures by business entities about government assistance and (2) defined benefit plans.

Disclosures by business entities about government assistance

The Board discussed its proposed ASU, Disclosures by Business Entities About Government Assistance. No decisions were made.

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

Disclosure framework — disclosure review: defined benefit plans

The Board discussed its proposed ASU, Changes to the Disclosure Requirements for Defined Benefit Plans, and made decisions related to:

  • Removal of the disclosure of the effect of a one-percentage-point change in the assumed health care cost trend rates.
  • Clarification of the disclosure about aggregate information for underfunded pension plans.
  • Effective date and early adoption.
  • Costs and benefits.

The Board directed its staff to draft a final ASU for a vote by written ballot. For more information, see the meeting minutes on the FASB’s Web site.

SEC proposes amendments to liquidity disclosure requirements for investment companies

Mar 15, 2018

The SEC has issued a proposed rule, “Investment Company Liquidity Disclosure.”

The proposed rule would “improve the reporting and disclosure of liquidity information by registered open-end investment companies.” Specifically, the proposal would:

  • Require funds to “disclose information about the operation and effectiveness of their liquidity risk management program in their annual reports to shareholders.”
  • Remove the requirement in Form N-PORT related to the disclosure of “aggregate liquidity classification information about [a fund’s] portfolios.”
  • Amend Form N-PORT to “allow funds classifying the liquidity of their investments pursuant to their liquidity risk management programs required by rule 22e-4 under the Investment Company Act of 1940 to report on Form N-PORT multiple liquidity classification categories for a single position under certain specified circumstances.”
  • Require “funds and other registrants [to] report their holdings of cash and cash equivalents” in Form N-PORT.

Comments on the proposed rule are due 60 days after the date of its publication in the Federal Register. For more information, see the press release and proposed rule on the SEC’s Web site.

SEC proposes transaction fee pilot for National Market System stocks

Mar 15, 2018

The SEC has issued a proposed rule, “Transaction Fee Pilot for NMS Stocks.”

The proposal would establish a transaction fee pilot to “study the effects that transaction-based fees and rebates may have on, and the effects that changes to those fees and rebates may have on, order routing behavior, execution quality, and market quality more generally.”

Comments on the proposed rule are due 60 days after the date of its publication in the Federal Register. For more information, see the press release and proposed rule 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.