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IASB document Image

IASB proposes minor amendments to IFRS 9

Apr 21, 2017

The IASB has published an exposure draft (ED), “Prepayment Features With Negative Compensation — proposed amendments to IFRS 9,” which addresses concerns about how certain prepayable financial assets are classified under IFRS 9, “Financial Instruments.”

Under the ED, certain prepayable financial assets with so-called negative compensation could be measured at amortized cost or at fair value through other comprehensive income (depending on a company's business model) if two conditions are met:

  • The assessment that the prepayment amount is not solely a payment of principal and interest on the principal amount outstanding only hinges on the fact that “the party that chooses to terminate the contract early . . . may receive reasonable additional compensation for doing so.”
  • “[W]hen the entity initially recognises the financial asset, the fair value of the pre-payment feature is insignificant.”

The ED also contains proposed amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, and IFRS 7, Financial Instruments: Disclosures.

These amendments concern situations in which it is impracticable to assess whether the fair value of a prepayment feature was insignificant at initial recognition.

The amendments would become effective on January 1, 2018, to coincide with the effective date of IFRS 9. Comments on the ED are due by May 24, 2017.

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

FASB meeting Image

Highlights from the FASB’s April 19 meeting

Apr 21, 2017

At its April 19, 2017, meeting, the FASB discussed its projects on (1) liabilities and equity and (2) revenue recognition of grants and contracts by not-for-profit entities.

Liabilities and equity — targeted improvements

The Board tentatively decided that (1) a “down-round” feature should not preclude equity classification for an instrument that contains the feature and (2) public business entities should recognize the effect of the trigger of a down-round feature as an adjustment to earnings per share. The Board asked the staff to perform additional research.

For more information, see the tentative Board decisions on the FASB’s Web site.

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

The Board discussed issues related to its forthcoming proposed ASU, including (1) right of return or a release of the promisor from its obligation to transfer assets, (2) accounting from the resource provider’s perspective, (3) disclosures, (4) transition, and (5) effective date and early adoption.

For more information, see the tentative Board decisions on the FASB’s Web site.

AICPA document Image

AICPA issues proposed SAS on employee benefit plans

Apr 21, 2017

The AICPA’s Auditing Standards Board has issued a proposed Statement on Auditing Standards (SAS) that addresses audits of financial statements of employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA).

The proposed SAS is being issued in response to a 2015 Department of Labor report that criticized the quality of employee benefit plan audits.

The proposed SAS would be effective for audits of financial statements for periods ending on or after December 15, 2018.

Comments on the proposed SAS are due by August 21, 2017. For more information, see the proposal on the AICPA’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC staff publishes C&DI on offers and sales

Apr 20, 2017

The staff in the SEC’s Division of Corporation Finance has released a compliance and disclosure interpretation (C&DI) related to offers and sales under Rule 147A.

For more information, see Question 141.06 of the Securities Act rules C&DIs on the SEC’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC extends comment deadline for changes to Industry Guide 3

Apr 19, 2017

The SEC has extended by two months the comment deadline for its March 1, 2017, “Request for Comment on Possible Changes to Industry Guide 3.”

Comments were originally due by May 8, 2017; the new deadline is July 7, 2017.

For more information, see our original article as well as the request for comments on the SEC’s Web site.

CAQ document Image

CAQ issues publication on assessing external auditors

Apr 18, 2017

The Center for Audit Quality (CAQ) has released an updated version of its publication, “External Auditor Assessment Tool.”

The purpose of the publication is “to assist audit committees in carrying out their responsibilities of appointing, overseeing, and determining compensation for the external auditor.” The update takes into account “upcoming changes in accounting rules and standards and other potential risk areas.”

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

SEC (US Securities and Exchange Commission) Image

Federal court remands conflict minerals case to SEC

Apr 11, 2017

The U.S. District Court for the District of Columbia has issued a final judgment in the litigation related to the SEC’s conflict minerals rule and has remanded the case to the Commission.

Editor’s Note: In April 2014, the U.S. Court of Appeals for the District of Columbia Circuit (the “Appellate Court”) held that parts of the SEC’s final rule on conflict minerals and of Section 1502 of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act violate the First Amendment of the U.S. Constitution to the extent that they require “regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free.” ’ ” In August 2015, the Appellate Court upheld the ruling.

After the April 3, 2017, ruling by the district court, the SEC announced that it is suspending enforcement of some requirements in the conflict minerals rule. According to the press release:

The court’s remand has now presented significant issues for the Commission to address. At the direction of the Acting Chairman, we have considered those issues. In light of the uncertainty regarding how the Commission will resolve those issues and related issues raised by commenters, the Division of Corporation Finance has determined that it will not recommend enforcement action to the Commission if companies, including those that are subject to paragraph (c) of Item 1.01 of Form SD, only file disclosure under the provisions of paragraphs (a) and (b) of Item 1.01 of Form SD. This statement is subject to any further action that may be taken by the Commission, expresses the Division’s position on enforcement action only, and does not express any legal conclusion on the rule. [Emphasis added]

For more information, see the press release and Michael Piwowar’s public statement on the SEC’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC staff publishes C&DIs on crowdfunding

Apr 06, 2017

The staff in the SEC’s Division of Corporation Finance has updated its compliance and disclosure interpretations (C&DIs) related to crowdfunding.

For more information, see Questions 201.02 and 202.01 of the Regulation Crowdfunding C&DIs on the SEC’s Web site.

AICPA document Image

AICPA issues eleven revenue working drafts

Apr 05, 2017

The AICPA’s revenue recognition task forces have released for public comment eleven working drafts on accounting issues associated with the implementation of the new revenue standard for airlines, gaming, hospitality, and time-share entities.

The working drafts address the following topics:

  • Passenger ticket breakage, ancillary fees, interline transactions, brand name and customer lists, interline loyalty transactions, and change fees (airlines).
  • Loyalty tier status (gaming).
  • Franchise fees, hotel service arrangements, and accounting for owned and leased property (hospitality).
  • Collectibility (time shares).

Comments on the working drafts are due by June 1, 2017. For more information, see the revenue recognition page on the AICPA’s Web site.

PCC meeting Image

PCC holds April 2017 meeting

Apr 05, 2017

At yesterday’s meeting, the Private Company Council (PCC) addressed the FASB’s projects on (1) the disclosure framework, (2) financial instruments — hedge accounting, (3) targeted improvements to the guidance on financial instruments with characteristics of liabilities and equity, and (4) targeted improvements to the related-party guidance for variable interest entities. In addition, the PCC discussed examples and situations related to cloud computing for private companies.

The next PCC meeting is scheduled for July 11, 2017. For more information, see the meeting recap on the FASB’s Web site.

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