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Accounting Roundup — August 2015

Published on: Sep 01, 2015

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Welcome to Accounting Roundup. In August 2015, the FASB made further progress on resolving issues related to its new revenue standard (ASU 2014-09) by releasing (1) an ASU that defers the standard’s effective date by one year for all entities and permits early adoption on a limited basis and (2) a proposed ASU on clarifying principal-versus-agent considerations. The Board also issued an ASU and two proposed ASUs in response to a final consensus and consensuses-for-exposure, respectively, reached by the EITF.

In other news, the U.S. Court of Appeals for the District of Columbia Circuit (the “Appellate Court”) upheld its April 2014 ruling that parts of the SEC’s conflict minerals rule and of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act violate the First Amendment to the extent that they require issuers to disclose that their products have “not been found to be ’DRC conflict free.’” The Appellate Court agreed to review its April 2014 ruling in light of a separate case involving country-of-origin labeling of meat products.

Be sure to monitor upcoming issues of Accounting Roundup for new developments. We value your feedback and would appreciate any comments you may have on this publication. Take a moment to tell us what you think by sending us an e-mail at .

Accounting — New Standards and Exposure Drafts

Debt Issuance Costs

FASB Issues ASU Clarifying SEC’s Position on Presentation of Debt Issuance Costs

Affects: All entities.

Summary: On August 16, 2015, the FASB issued ASU 2015-15 to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements given the lack of guidance on this topic in ASU 2015-03. The SEC staff has announced that it would “not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement.”

Editor’s Note: Under ASU 2015-03, an entity presents debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. However, ASU 2015-03 does not address the balance sheet presentation of debt issuance costs that are either (1) incurred before a debt liability is recognized (e.g., before the debt proceeds are received) or (2) associated with revolving-debt arrangements. Given implementation questions associated with application of the ASU’s presentation approach to revolving-debt arrangements, as well as questions about the acceptability of such application, we expect that many, if not most, entities will elect to apply the accounting policy outlined by the SEC staff in ASU 2015-15 to such arrangements.

Other Resources: For more information about the FASB’s guidance in ASU 2015-03 on simplifying the presentation of debt issuance costs as well as on the SEC staff’s views on this topic, see Deloitte’s June 18, 2015, Heads Up.

EITF-Related Activity

FASB Issues ASU on Applying the NPNS Scope Exception to Certain Electricity Contracts Within Nodal Energy Markets

Affects: Entities with electricity contracts that meet certain criteria.

Summary: On August 10, 2015, the FASB issued ASU 2015-13 in response to an EITF final consensus. The ASU amends ASC 815 to clarify the application of the normal purchases and normal sales (NPNS) scope exception to purchases or sales of electricity on a forward basis that are transmitted through, or delivered to a location within, a nodal energy market. For a derivative contract to be classified as NPNS, the contract cannot settle net and must result in physical delivery. Under ASU 2015-13, a forward contract to purchase or sell — at a specified location — electricity that must be transmitted through or delivered to a grid operated by an independent system operator may qualify for the NPNS scope exception.

Next Steps: ASU 2015-13 is effective upon issuance and must be applied prospectively.

Other Resources: Deloitte’s June 2015 EITF Snapshot.

FASB Issues Two Proposed ASUs in Response to EITF Consensuses-for-Exposure

Affects: All entities.

Summary: The FASB has released the following two proposed ASUs in response to consensuses-for-exposure reached on two EITF Issues:

  • Contingent Put and Call Options in Debt Instruments — Clarifies “what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative.” The proposal further states that “when a call (put) option is contingently exercisable, an entity would not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks.“
  • Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships — Explains that “a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedge accounting relationship provided that all other hedge accounting criteria (including those in paragraphs 815-20-35-14 through 35-18) continue to be met.”

Next Steps: Comments on both proposed ASUs are due by October 5, 2015.

Other Resources: Deloitte’s June 2015 EITF Snapshot.

Revenue Recognition

FASB Issues Proposed ASU to Clarify Principal-Versus-Agent Considerations in New Revenue Standard

Affects: All entities.

Summary: On August 31, 2015, the FASB issued a proposed ASU that would amend the Board’s May 2014 revenue standard, ASU 2014-09, to address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The proposed ASU would clarify that an entity should evaluate whether it is the principal or the agent for each specified good or service (i.e., each good or service or bundle of distinct goods or services that is distinct) promised in a contract with a customer. In addition, the proposal would add guidance to help entities determine the nature of promises in a contract. Specifically, the proposed guidance would require an entity to (1) identify the specified goods or services (or bundles of goods or services), including rights to goods or services from a third party, and (2) determine whether it controls each specified good or service before each good or service (or right to a third-party good or service) is transferred to the customer.

Editor’s Note: The proposed amendments do not change the core principle of the principal-versus-agent considerations.

The proposed ASU would also clarify the types of goods or services that a principal may control. Further, the proposed ASU would reframe the indicators in the new revenue standard to illustrate when an entity may be acting as a principal instead of when an entity acts as an agent. The proposed ASU would not give any indicator more weight than others in the assessment of whether the entity is the principal or the agent. However, it states that the control indicators may be more or less relevant to the assessment of control depending on the nature of the specified good or service in a particular contract.

In addition to clarifying the new revenue standard’s guidance on principal-versus-agent considerations, the proposed ASU would amend certain illustrative examples in the standard (and add new ones) to clarify how an entity would assess whether it is the principal or the agent in a revenue transaction.

Editor’s Note: In July 2015, the IASB issued an exposure draft on principal-versus-agent considerations under IFRS 15, the IASB’s counterpart to the FASB’s new revenue standard. The proposed amendments in the IASB’s exposure draft, including the illustrative examples, are identical to those in the proposed ASU. Comments on the IASB’s exposure draft are due by October 28, 2015.

Next Steps: Comments on the proposed ASU are due by October 15, 2015.

Other Resources: For more information, see Deloitte’s September 1, 2015, Heads Up as well as the press release on the FASB’s Web site.

FASB Issues ASU to Defer the Effective Date of the New Revenue Standard

Affects: All entities.

Summary: On August 12, 2015, the FASB issued ASU 2015-14, which defers the effective date of the Board’s revenue standard, ASU 2014-09, by one year for all entities and permits early adoption on a limited basis. Specifically:

  • For public business entities, the standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within those annual periods.
  • For nonpublic entities, the standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Nonpublic entities can also elect to early adopt the standard as of the following:
    • Annual reporting periods beginning after December 15, 2016, including interim periods.
    • Annual reporting periods beginning after December 15, 2016, and interim periods within annual reporting periods beginning one year after the annual reporting period in which the new standard is initially applied.

Editor’s Note: On July 22, 2015, the IASB approved a one-year deferral of the effective date of its revenue standard, IFRS 15, to January 1, 2018.

Other Resources: For more information, see the press release on the FASB’s Web site. Also see Deloitte’s July 10, 2015, Heads Up for details on the FASB’s deliberations related to the deferral of ASU 2014-09.

International

IASB Proposes to Defer Effective Date of Amendments to IFRS 10 and IAS 28

Affects: Entities reporting under IFRSs.

Summary: On August 10, 2015, the IASB issued an ED that would defer the effective date of its September 2014 amendments to the guidance in IFRS 10 and IAS 28 on accounting for “transactions between investors and associates or joint ventures.” The amendments would be deferred indefinitely until the conclusion of the IASB’s research project on the equity method. Early adoption would continue to be permitted.

Next Steps: Comments on the ED are due by October 9, 2015.

Other Resources: For more information, see Deloitte’s IFRS in Focus newsletter as well as the press release on the IASB’s Web site.

Accounting — Other Key Developments

Environmental, Social, and Governance Issues

CFA Institute Publishes Study on How Environmental, Social, and Governance Disclosures Affect Investment Decisions

Affects: Investment professionals.

Summary: On August 17, 2015, the CFA Institute published a study reporting the results of a survey of investment professionals regarding the effect of environmental, social, and governance (ESG) disclosures on investment decisions. Key survey findings include the following :

  • Sixty-three percent of those surveyed indicated that they “consider ESG in the investment decision making process to help manage investment risks”; further, 44 percent evaluate ESG because their clients and investors demand it and 38 percent see ESG performance as a “proxy for management quality.”
  • Board accountability, human capital, and executive compensation were cited as the issues most important to investment analysis and decision-making.
  • ESG issues are considered by 78 percent of respondents in the Asia-Pacific region; 74 percent of those in Europe, Middle East, and Africa; and 59 percent of those in the Americas.
  • Fifty-seven percent of those surveyed “integrate ESG into the whole investment analysis and decision-making process,” while 38 percent employ best-in-class positive alignment and 36 percent “use ESG analysis for exclusionary screening.”
  • Sixty-one percent of survey respondents say that “public companies should be required to report at least annually” on ESG factors, and 69 percent of these respondents believe that these disclosures “should be subject to independent verification.”

Other Resources: For more information, see the press release on the CFA Institute’s Web site.

Sustainability

IFAC Issues Publication on How Accountants Can Respond to Sustainability Challenges

Affects: Professional accountants.

Summary: On July 29, 2015, IFAC issued a publication to help accountants become more aware of “how they can help their organizations address issues of sustainability and more fully incorporate these issues into business strategy.” Specifically, the publication “clarifies the important role accountants can, and must, play in embracing sustainability to ensure that the organizations they serve are resilient by linking sustainability to a broader business agenda and strategy.”

Other Resources: For more information, see the press release on IFAC’s Web site.

International

IASB Requests Input as Part of 2015 Agenda Consultation

Affects: Entities reporting under IFRSs.

Summary: On August 11, 2015, the IASB released — as part of its second agenda consultation — a request-for-views document to seek feedback on the strategic direction and overall balance of its future work program. In the foreword to the publication, IASB Chairman Hans Hoogervorst notes that the agenda consultation is conducted in conjunction with the review of the IFRS Foundation’s structure and effectiveness that the foundation’s trustees launched in July 2015.

Next Steps: Comments on the request-for-views document are due by December 31, 2015.

Other Resources: For more information, see the press release on the IASB’s Web site.

Auditing Developments

AICPA

AICPA Issues TPA on Required Supplementary Information

Affects: Auditors.

Summary: On August 26, 2015, the AICPA issued a TPA that provides auditors with nonauthoritative guidance regarding situations in which they are required to be independent with respect to required supplementary information (RSI). Specifically, the TPA explains that under GAAS, an auditor must be independent “for any period being audited and covered by the auditor’s opinion” and that, “[i]n the absence of any separate requirement in the particular circumstances of the engagement, the auditor’s opinion on the basic financial statements does not cover RSI.”

AICPA Proposes Amendments to Guidance on Auditor’s Report

Affects: Auditors.

Summary: On August 14, 2015, the ASB of the AICPA issued a proposed SAS that would amend the guidance in AU-C Section 700 related to the auditor’s report. The proposed amendments would include the following:

  • Clarification that auditors who conduct audits under PCAOB standards, when those audits are not within the PCAOB’s jurisdiction, must also comply with GAAS.
  • A requirement stipulating that “when the auditor plans to refer to the standards of the PCAOB in addition to GAAS in the auditor’s report, the auditor should use the report layout and wording specified by the auditing standards of the PCAOB, amended to indicate that the audit was also conducted in accordance with GAAS.”

In addition, the proposal would (1) include application material containing examples of entities outside the PCAOB’s jurisdiction and (2) add a new illustration to the exhibit “Illustrations of Auditor’s Reports on Financial Statements.”

Next Steps: Comments on the proposed SAS are due by September 30, 2015.

AICPA Releases Two Audit Data Standards

Affects: Auditors.

Summary: The AICPA has released two audit data standards related to subledgers. The standards, whose adoption is voluntary, are designed to reduce the amount of time companies need to comply with auditors’ file requests.

CAQ

CAQ SEC Regulations Committee Releases Highlights of June 18, 2015, Meeting With SEC Staff

Affects: All entities.

Summary: On August 5, 2015, the CAQ posted to its Web site highlights of the June 18, 2015, CAQ SEC Regulations Committee joint meeting with the SEC staff. Topics discussed at the meeting included:

  • An upcoming change in the Division of Corporation Finance’s (the “Division’s”) office of the chief accountant to make associate chief accountants responsible for accounting topics rather than specific industries. The process for reviewing filings will not otherwise change.
  • Current financial reporting matters:
    • The Division’s views regarding delinquent filings.
    • The impact of adopting new accounting standards on previous significance tests under Regulation S-X, Rule 3-09.
    • Segment reporting.
    • An update on SAB Topic 5.Z.7 regarding accounting for the spin-off of a subsidiary.
    • Requests for the Division staff to review incomplete filings.
  • Current practice issues:
    • Pro forma reserves and standardized measures of oil and gas data in connection with acquisitions and sales of oil and gas businesses.
    • The date for assessing whether an acquiree meets the definition of a foreign business under Regulation S-X, Rule 1-02(l).

IIA

IIA Publishes Paper on Use of Technology

Affects: Internal auditors.

Summary: On August 18, 2015, the IIA published a paper on how internal auditors are adapting to the rapid technological advances that are affecting the profession. Specifically, the paper discusses the results of a worldwide survey of 14,000 internal audit professionals, which revealed that “internal audit’s use and understanding of technology continues to grow, but that there remains room for improvement.”

Other Resources: For more information, see the press release on the IIA’s Web site.

PCAOB

PCAOB Issues Annual Report on Interim Inspection Program for Broker-Dealers

Affects: Broker-dealers and their auditors.

Summary: On August 18, 2015, the PCAOB issued an annual report on its interim inspection program for broker-dealers, which addresses audit deficiencies and independence findings the PCAOB discovered in audit firm inspections it conducted during 2014. The deficiencies noted by the PCAOB primarily concerned revenue recognition, reliance on records and reports, fair value accounting estimates, financial statement presentation disclosures, and the customer protection rule.

Other Resources: For more information, see the press release and fact sheet on the PCAOB’s Web site.

International

IAASB Issues Staff Audit Practice Alert on Engagement Partner’s Responsibilities

Affects: Auditors.

Summary: On August 14, 2015, the IAASB issued a staff audit practice alert that provides auditors with nonauthoritative guidance on an engagement partner’s responsibilities in situations in which the partner is not located where the majority of the audit work is performed. The alert is being issued in response to certain regulators’ concerns that entities have been applying ISAs inconsistently in such situations.

IAASB Proposes Amendments to Guidance Related to Reporting on Summary Financial Statements

Affects: Auditors.

Summary: On August 3, 2015, the IAASB issued an ED that would revise the guidance in ISA 810 on reporting on summary financial statements in light of the issuance of its January 2015 revised auditor reporting standards. Speaking about the ED’s purpose, IAASB Chairman Arnold Schilder noted that “[t]he IAASB believes it is . . . in the public interest to provide users of summary financial statements with greater transparency in circumstances when additional information, such as key audit matters, are communicated in the related auditor’s report on the audited financial statements.”

Next Steps: Comments on the ED are due by November 2, 2015.

Other Resources: For more information, see the press release on IFAC’s Web site.

Governmental Accounting and Auditing Developments

GASB

GASB Issues Implementation Guide Related to GAAP Hierarchy

Affects: Entities reporting under financial accounting and reporting standards for state and local governments.

Summary: On August 27, 2015, the GASB announced that it has issued an implementation guide that “clarifies, explains, or elaborates on GASB Statements and Interpretations.” The guide includes changes made as a result of “feedback received during the year-long public exposure of previously issued implementation guidance,” which culminated in the issuance of Statement 76 on the GAAP hierarchy.

Next Steps: The implementation guide is effective for reporting periods beginning after June 15, 2015.

Other Resources: For more information, see the press release on the GASB’s Web site.

GASB Issues Statement on Tax Abatement Disclosures

Affects: Entities reporting under financial accounting and reporting standards for state and local governments.

Summary: On August 14, 2015, the GASB issued Statement 77, which requires state and local governments to disclose information about property and other tax abatement agreements. Specifically, state and local governments that currently have tax abatement programs in place must disclose the following:

  • “The purpose of the tax abatement program
  • The tax being abated
  • Dollar amount of taxes abated
  • Provisions for recapturing abated taxes
  • The types of commitments made by tax abatement recipients
  • Other commitments made by a government in tax abatement agreements, such as to build infrastructure assets.”

Next Steps: Statement 77 is effective for reporting periods beginning after December 15, 2015.

Other Resources: For more information, see the press release and GASB in Focus article on the GASB’s Web site.

Regulatory and Compliance Developments

SEC

SEC Updates Financial Reporting Manual

Affects: SEC registrants.

Summary: On August 25, 2015, the staff in the SEC’s Division of Corporation Finance (the “Division”) updated Sections 1320.3 and 1320.4 of its Financial Reporting Manual (FRM) to clarify that “[g]enerally, the Division of Corporation Finance will not issue comments asking a delinquent registrant to file separately all of its delinquent filings if the registrant files a comprehensive annual report on Form 10-K that includes all material information that would have been included in those filings.” Previously, registrants would have sought such an accommodation in writing from the Division’s office of the chief accountant.

The updates also reiterated that a registrant’s filing of a comprehensive annual report on Form 10-K in those circumstances does not (1) absolve it of any Exchange Act liability arising from its failure to file all required reports or shield it from any related enforcement actions; (2) make it “current” for Regulation S, Rule 144, or Form S-8 filings; or (3) affect its inability to use Form S-3 until it satisfies the timely-filer requirements.

Other Resources: For more information, see the FRM page on the SEC’s Web site.

SEC Conflict Minerals Rule: Federal Appellate Court Upholds Partial Stay; GAO Releases Report

Affects: SEC registrants.

Summary: On August 18, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (the “Appellate Court”) upheld its April 2014 ruling that parts of the SEC’s conflict minerals rule and of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act violate the First Amendment to the extent that they require issuers to disclose that their products have “not been found to be ’DRC conflict free.’” The Appellate Court had agreed to review its April 2014 ruling in light of a separate case involving country-of-origin labeling of meat products.

Editor’s Note: On April 14, 2014, the Appellate Court held that parts of the SEC’s conflict minerals rule and of Section 1502 of the Dodd-Frank Act violate the First Amendment and remanded the case to the district court. Later that month, the SEC staff issued guidance indicating that registrants would not be required to identify any products as having “not been found to be ’DRC conflict free’” or as being “DRC conflict undeterminable.” Registrants could still elect to identify products as “DRC conflict free,” but those doing so would be required to obtain an independent private-sector audit (IPSA). On May 2, 2014, the SEC issued a stay of the effective date of portions of its conflict minerals rule that the Appellate Court deemed unconstitutional. The SEC is currently reviewing the Appellate Court’s decision, and final resolution of the legal action remains uncertain. Accordingly, registrants should consult with their SEC counsel to determine whether and, if so, when an IPSA is required in light of (1) the SEC staff’s April 2014 guidance; (2) the expiration, for many registrants, of the conflict mineral rule’s temporary transition period after the 2014 calendar-year filings; and (3) the Appellate Court’s ruling.

In addition, the GAO has released a report that analyzes the disclosures that companies provided to the SEC under the Commission’s conflict minerals rule for the first time in 2014. The GAO concluded that “most companies were unable to determine the source of their conflict minerals” (i.e., whether they came from the DRC or an adjoining country). Other report findings included the following:

  • Most of the companies (87 percent) that provided such disclosures were U.S.-based.
  • Nearly all of them (99 percent) performed country-of-origin inquiries.
  • Most companies (94 percent) indicated that they had performed due-diligence procedures related to the “source and chain of custody of conflict minerals used.”

Other Resources: For more information about developments related to the SEC’s conflict minerals rule, see Deloitte’s March 27, 2014; July 21, 2014; and August 25, 2015, Heads Up newsletters.

SEC Issues Final Rule on Pay Ratio Disclosure

Affects: SEC registrants.

Summary: On August 5, 2015, the SEC issued a final rule that requires a registrant to calculate and disclose (1) the median of the annual total compensation of all of its employees (excluding its principal executive officer (PEO)), (2) the PEO’s annual total compensation, and (3) the ratio of (1) to (2). Starting with its first full fiscal year beginning on or after January 1, 2017, the registrant will include the disclosures in filings in which executive compensation information is required, such as proxy and information statements, registration statements, and annual reports. Emerging growth companies, smaller reporting companies, foreign private issuers, registered investment companies, and filers under the U.S.-Canadian Multijurisdictional Disclosure System are exempt from the rule’s requirements.

Editor’s Note: The rulemaking associated with the new requirements has been controversial, as demonstrated by the SEC’s receipt of over 287,400 comment letters on the original rule proposal and the SEC’s 3–2 vote on the final rule. To address concerns expressed by commenters about the costs of complying with the requirements, the rule provides certain accommodations.

Next Steps: The final rule will become effective on October 19, 2015.

Other Resources: For more information, see the press release on the SEC’s Web site and Deloitte’s August 6, 2015, journal entry.

SEC Issues Final and Proposed Rules Related to Registration for Security-Based Swap Participants

Affects: SEC registrants.

Summary: On August 5, 2015, the SEC issued a final rule and a proposed rule related to security-based swaps. The final rule addresses “all aspects of the registration regime for security-based swap dealers and major security-based swap participants, setting forth the extensive set of information required to be provided and kept up to date by a registrant.” The proposed rule aims to “create a process for security-based swap dealers and major security-based swap participants to apply to the Commission for permission to continue to have certain persons subject to statutory disqualifications involved in effecting their security-based swap transactions if such continuation is consistent with the public interest.”

Next Steps: The final rule will become effective on October 13, 2015. Comments on the proposed rule are due by October 26, 2015.

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

SEC Issues New Compliance and Disclosure Interpretations

Affects: SEC registrants.

Summary: In August 2015, the SEC’s Division of Corporation Finance issued the following C&DIs related to forms (Question 130.15) and rules (Questions 256.23–.33) under the Securities Act of 1933:

  • Question 130.15 — How issuers should address Item 12, “Sales Compensation,” of Regulation D in situations in which the information that the item requests does not apply to the issuer’s sales offerings.
  • Question 256.23 — Explains that “the use of an unrestricted, publicly available website constitutes a general solicitation and is not consistent with the prohibition on general solicitation and advertising in Rule 502(c) if the website contains an offer of securities.”
  • Question 256.24 — Clarifies that an issuer can disseminate information widely about itself as long as such information does not constitute an offer of securities under Rule 502(c).
  • Question 256.25 — Points out that the determination of what constitutes factual business information depends on the facts and circumstances. However, such information “typically is limited to information about the issuer, its business, financial condition, products, services, or advertisement of such products or services, provided the information is not presented in such a manner as to constitute an offer of the issuer’s securities.”
  • Question 256.26 — Indicates that “an offer of securities in a Regulation D offering to a prospective investor with whom the issuer, or a person acting on the issuer’s behalf, has a [preexisting], substantive relationship” is not the only way to demonstrate “the absence of a general solicitation in a Regulation D offering.”
  • Question 256.27 — Outlines situations in which “an issuer, or a person acting on the issuer’s behalf, can communicate information about an offering to persons with whom it does not have a [preexisting], substantive relationship without having that information deemed a general solicitation.”
  • Question 256.28 — Discusses the circumstances in which SEC-registered investment advisers can form preexisting relationships “with prospective offerees that are clients of the adviser.”
  • Question 256.29 — Defines the term “preexisting relationship” in the context of “demonstrating the absence of a general solicitation under Rule 502(c).”
  • Question 256.30 — Confirms that no minimum waiting period is required for an issuer’s establishment of ”a [preexisting], substantive relationship with a prospective offeree in order to demonstrate that a general solicitation is not involved.”
  • Question 256.31 — Defines the term “substantive relationship” with respect to “demonstrating the absence of a general solicitation under Rule 502(c).”
  • Question 256.32 — Explains that, depending on the facts and circumstances, parties other than registered broker-dealers or investment advisers can “form a [preexisting], substantive relationship with a prospective offeree as a means of establishing that a general solicitation is not involved in a Regulation D offering.”
  • Question 256.33 — Points out that “a demo day or venture fair [does not] necessarily constitute a general solicitation for purposes of Rule 502(c).”

International

GSSB Releases Interpretation on Reporting in Accordance With G4 Guidelines

Affects: Entities that report under the G4 sustainability reporting guidelines.

Summary: On August 5, 2015, the GSSB issued an interpretation indicating that entities that provide disclosures in accordance with the G4 guidelines are “no longer required to complete the external assurance column in the G4 Content Index.” The interpretation is being issued in response to stakeholder feedback suggesting that such information was causing confusion.

Other Resources: For more information, see the press release on the GRI’s Web site.

IOSCO Publishes Report on Timeliness and Frequency of Disclosures Provided to Investors

Affects: Issuers and collective investment schemes (CISs).

Summary: On July 30, 2015, IOSCO released a report that discusses the results of its thematic review of the timeliness and frequency of disclosures that issuers and CISs in 37 jurisdictions provide in accordance with Principles 16 and 26 of IOSCO’s Objectives and Principles of Securities Regulation. Regarding disclosures under Principle 16, the report indicates that there were jurisdictional differences related to whether and when the disclosures were required. With respect to the Principle 26 disclosures, the report “found that timely disclosure requirements on value, risk reward profile and costs of CIS were in place for all jurisdictions.”

Editor’s Note: Principle 16 concerns issuers and indicates that “there should be full, accurate and timely disclosure of financial results, risk and other information that is material to investors’ decisions.” Principle 26 is related to CISs and states that “regulation should require disclosure, which is necessary to evaluate the suitability of a CIS for a particular investor and the value of the investor’s interest in the scheme.”

Other Resources: For more information, see the press release on IOSCO’s Web site.

IIRC Releases “Competence Matrix”

Affects: Entities that produce an integrated report.

Summary: In July 2015, the IIRC published for public comment a draft of its “Competence Matrix,” which is “intended to provide clear guidance in the market as to the skills and experience necessary to be an effective practitioner in [integrated reporting].” The matrix has been designed “to enable organizations to put value creation at the heart of their purpose and strategy.”

Next Steps: Comments on the draft of the matrix are due by September 16, 2015.

Other Resources: For more information, see the content area on the IIRC’s Web site.

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Deloitte Publications

Publication Title Affects
September 1, 2015, Heads Up FASB Proposes Amendments to New Revenue Standard’s Guidance on Principal-Versus-Agent Considerations All entities.
August 25, 2015, Heads Up Anticipating the Independent Private Sector Audit After the Year 2 Conflict Minerals Reporting Cycle SEC registrants.
August 14, 2015, Heads Up FASB Issues ASU on Employee Benefit Plan Accounting All entities.
August 5, 2015, Heads Up SEC Proposes Rule on “Clawback” Policies SEC registrants.

Leadership Changes

PCC: On August 18, 2015, the FAF announced that it has appointed Candace E. Wright as chairman of the PCC to replace Billy M. Atkinson, whose term ends on December 31, 2015. In addition, the FAF announced the appointment of three new members to the council as well as the reappointment of six members. SEC: On August 19, 2015, the SEC announced that it has appointed Shelly Luisi as associate director in the Commission’s Division of Corporation Finance. Ms. Luisi’s position begins in September.

Appendix A: Current Status of FASB Projects

Please see Appendix A in the attached PDF.

Appendix B: Significant Adoption Dates and Deadlines

Please see Appendix B in the attached PDF

Appendix C: Glossary of Standards and Other Literature

Please see Appendix C in the attached PDF

Appendix D: Abbreviations

Please see Appendix D in the attached PDF.

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