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June

FASB ratifies EITF consensus-for-exposure

Jun 28, 2019

At its June 26, 2019, meeting, the FASB ratified the Emerging Issues Task Force (EITF) consensus-for-exposure on Issue 19-A, “Financial Instruments — Clarifying the Interactions Between Topic 321 and Topic 323,” and directed its staff to draft a proposed ASU for public comment.

In ad­di­tion, the Board added a project on the presentation, disclosure, and valuation of gift-in-kind contributions to its research agenda.

For more in­for­ma­tion, see De­loitte’s EITF Snap­shot as well as the meeting minutes on the FASB's Web site.

GASB proposes guidance on deferred compensation plans

Jun 28, 2019

The GASB has issued an exposure draft (ED), “Internal Revenue Code Section 457 Deferred Compensation Plans That Meet the Definition of a Pension Plan and Supersession of GASB Statement 32.”

The pro­posed guid­ance would “require that all accounting and financial reporting requirements relevant to pension plans be applied to Section 457 plans that meet the definition of a pension plan.”

Com­ments on the ED are due by Sep­tem­ber 27, 2019. For more in­for­ma­tion, see the press release and ED on the GASB’s Web site.

FASB proposes improvements to credit losses standard

Jun 27, 2019

The FASB has issued a proposed Accounting Standards Update (ASU), “Codification Improvements to Topic 326, Financial Instruments — Credit Losses.”

The proposed ASU would amend the following aspects of the FASB’s guidance on credit losses: (1) negative allowances for purchased financial assets with credit deterioration, (2) transition relief for troubled debt restructurings, (3) disclosures related to accrued interest receivables, (4) financial assets secured by collateral maintenance provisions, and (5) a conforming amendment to ASC 805-20.

Comments on the proposed ASU are due by July 29, 2019. For more information, see the press release and proposed ASU on the FASB’s Web site.

Highlights of the June 2019 FASAC meeting

Jun 26, 2019

At its June 20, 2019, meeting, the FASB’s Financial Accounting Standards Advisory Council (FASAC) discussed (1) effective date considerations for private companies, not-for-profit organizations, and small public companies; (2) implementation of the leasing standard; and (3) segment reporting.

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

FASB begins second study on segment reporting

Jun 26, 2019

The FASB has announced that it will be conducting its second study on potential improvements to the segment disclosure and reconciliation requirements.

Specifically, the FASB is requesting feedback from public companies on “the issues preparers may face in applying different potential improvements for the existing segment disclosure requirements.”

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

IASB publishes proposed amendments to IFRS 17

Jun 26, 2019

The IASB has published an exposure draft (ED), “Amendments to IFRS 17,” to address concerns and implementation challenges with IFRS 17, “Insurance Contracts,” which was published in 2017.

Revisions made by the proposed amendments would include:

  • Deferral of the date of initial ap­pli­ca­tion of IFRS 17 by one year to annual periods beginning on or after January 1, 2022, and change in the fixed expiry date for the temporary exemption in IFRS 4, Insurance Contracts, from applying IFRS 9, Financial In­stru­ments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after January 1, 2022.
  • Optional scope exclusion for loan contracts that transfer sig­nif­i­cant insurance risk and related tran­si­tion re­quire­ments to enable entities issuing such contracts to account for those contracts by applying either IFRS 17 or IFRS 9.
  • Scope exclusion for credit card contracts that provide insurance coverage.
  • Amend­ments related to al­lo­ca­tion, recog­ni­tion, re­cov­er­abil­ity assessment, and dis­clo­sure of insurance ac­qui­si­tion cash flows associated with expected contract renewals.
  • Amend­ments related to the con­trac­tual service margin al­lo­ca­tion.
  • Extension of the risk mit­i­ga­tion option to rein­sur­ance contracts held.
  • Requirement for entities to recognize a gain on rein­sur­ance contracts held when, at initial recog­ni­tion, such entities also recog­nized losses on onerous insurance contracts issued.
  • Sim­pli­fied pre­sen­ta­tion of insurance contracts in the statement of financial position.
  • Tran­si­tion relief related to business com­bi­na­tions.
  • Tran­si­tion relief related to the date of ap­pli­ca­tion of the risk mit­i­ga­tion option and the use of the fair value tran­si­tion approach.

The proposed effective date for the amend­ments would be the same as the proposed new effective date for IFRS 17 (January 1, 2022). Early ap­pli­ca­tion would be permitted. The amend­ments would be applied ret­ro­spec­tively.

Comments on the proposed amendments are due by September 25, 2019. For more information, see Deloitte's IFRS in Focus newsletter as well as the press release, snapshot, and ED on the IASB’s Web site.

AICPA issues proposed SAS on audit evidence

Jun 21, 2019

The AICPA has issued a proposed Statement on Auditing Standards (SAS), “Audit Evidence.”

The proposed SAS is intended to address “the evolving nature of business and audit services and issues that have arisen during the standard-setting activities of the [Auditing Standards Board, including] use of emerging technologies by both preparers and auditors, audit data analytics (ADA), the application of professional skepticism, the expanding use of external information sources as audit evidence, and more broadly, the accuracy, completeness, and reliability of audit evidence.”

If finalized, the proposed SAS would supersede Section 500, Audit Evidence, of SAS 122, Statements on Auditing Standards: Clarification and Recodification, as amended.

Comments on the proposed SAS are due by September 18, 2019. For more information, see the proposed SAS on the AICPA’s Web site.

SEC issues new and amended requirements for security-based swap dealers and broker-dealers

Jun 21, 2019

The SEC has issued a final rule, “Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital and Segregation Requirements for Broker-Dealers.”

According to the SEC’s press release, the final rule:

  • Establishes “minimum capital requirements for security-based swap dealers [SBSDs] and major security-based swap participants [MSBSPs] for which there is not a prudential regulator (nonbank SBSDs and MSBSPs). They also increase the minimum net capital requirements for broker-dealers that use internal models to compute net capital (ANC broker-dealers).  In addition, they establish capital requirements tailored to security-based swaps and swaps for broker-dealers that are not registered as an SBSD or MSBSP to the extent they trade these instruments.” 
  • Establishes “margin requirements for nonbank SBSDs and MSBSPs with respect to non-cleared security-based swaps.”
  • Establishes “segregation requirements for SBSDs and stand-alone broker-dealers for cleared and non-cleared security-based swaps.”
  • Amends “the Commission’s existing cross-border rule to provide a means to request substituted compliance with respect to the capital and margin requirements for foreign SBSDs and MSBSPs, and provide guidance discussing how the Commission will evaluate requests for substituted compliance.” 

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

Highlights of the FASB’s June 19 meeting

Jun 20, 2019

At its June 19, 2019, meeting, the FASB discussed (1) reference rate reform, (2) distinguishing liabilities from equity, and (3) the conceptual framework (elements and measurement).

Reference rate reform

The FASB discussed accounting relief for companies required to modify contracts as a result of new global reference rates. The Board tentatively decided that “for a contract that meets certain criteria, a change in that contract’s reference interest rate would be accounted for as a continuation of that contract rather than the creation of a new contract.” 

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

Distinguishing liabilities from equity (including convertible debt)

The Board made tentative decisions related to the scope of the guidance in ASC 815-40-50, disclosure frequency, calculation of the diluted earnings per share denominator, classification of a detachable stock purchase warrant, the remote threshold, and penalty payments. The FASB 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.

Conceptual framework — elements

The Board made tentative decisions related to the definition of an asset.

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

Conceptual framework — measurement

The Board dis­cussed an approach to its project on developing a chapter on measurement in FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting.

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

AICPA proposes amendments to converge concepts in SSARS with global standards

Jun 20, 2019

The AICPA’s Accounting and Review Services Committee has issued a proposed Statement on Standards for Accounting and Review Services (SSARS), “Materiality in a Review of Financial Statements, Adverse Conclusions, and Special Purpose Frameworks.”

The proposed amendments are intended to more closely align SSARS with International Standard on Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements, and thereby “facilitate the accountant’s ability to perform and report on engagements in accordance with both sets of standards.”

Comments on the proposed SSARS are due by September 20, 2019. For more information, see the proposed SSARS on the AICPA’s Web site.

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