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Accounting Roundup — January 2016

Published on: Feb 02, 2016

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Welcome to the January 2016 edition of Accounting Roundup. Highlights of this issue include the following:

  • The FASB’s release of (1) a final ASU on classification and measurement of financial instruments, (2) a proposed ASU on certain cash flow classification issues, and (3) two proposals related to employee benefit plans.
  • The IASB’s publication of (1) its new leasing standard, IFRS 16; (2) amendments to the guidance on income taxes in IAS 12; and (3) amendments to the guidance on cash flow disclosures in IAS 7.
  • Adoption and transition observations related to the FASB’s and IASB’s new revenue standard.
  • The SEC’s release of guidance related to the FAST Act.

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 accountingstandards@deloitte.com.

Accounting — New Standards and Exposure Drafts

Cash Flows

FASB Proposes Guidance on Certain Cash Flow Classification Issues

Affects: All entities.

Summary: On January 29, 2016, the FASB issued a proposed ASU on certain cash flow classification issues in response to an EITF consensus-for-exposure. Specifically, the proposal addresses eight cash flow classification issues that have been creating diversity in practice:

  1. Debt prepayment or debt extinguishment costs.
  2. Settlement of zero-coupon bonds.
  3. Contingent consideration payments made after a business combination.
  4. Proceeds from the settlement of insurance claims.
  5. Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies.
  6. Distributions received from equity method investees.
  7. Beneficial interests in securitization transactions.
  8. Separately identifiable cash flows and application of the predominance principle.

Next Steps: Comments on the proposed ASU are due by March 29, 2016.

Other Resources: Deloitte’s November 2015 EITF Snapshot.

Employee Benefit Plans

FASB Proposes Guidance on Presentation of Net Periodic Benefit Cost and Disclosures Related to Defined Benefit Plans

Affects: All entities.

Summary: On January 26, 2016, the FASB issued the following two proposed ASUs related to employee benefit plans:

  • Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost — This proposal would require an entity to (1) disaggregate the current service cost component from the other components of net benefit cost and present it with other current compensation costs for the related employees in the income statement and (2) present the remaining components of net benefit cost elsewhere in the income statement and outside of income from operations, if such a subtotal is presented. In addition, the proposal would limit the portion of net benefit cost eligible for capitalization (e.g., as part of inventory or PP&E) to the service cost component.
  • Changes to the Disclosure Requirements for Defined Benefit Plans — This proposal contains an overall objective for an employer’s defined benefit plan disclosures and guidance on how an entity would consider materiality in determining the extent of these disclosures. The proposal would also add to or remove from ASC 715 a number of disclosure requirements related to an entity’s defined benefit pension and other postretirement plans.

Editor’s Note: The proposal on improving the presentation of net benefit costs is being issued in response to stakeholders’ concerns that net presentation of net benefit costs combines different elements that users would evaluate differently in analyzing an entity’s current and future financial performance. The Board believes that additional costs entities incur in implementing the proposed new disclosure requirements would be offset by cost reductions associated with the elimination of other disclosure requirements as well as the omission of immaterial disclosures.

Next Steps: Comments on both proposals are due by April 25, 2016.

Other Resources: Deloitte’s January 28, 2016, Heads Up. Also see the press release on the FASB’s
Web site.

Financial Instruments

FASB Amends Guidance on Classification and Measurement of Financial Instruments

Affects: All entities.

Summary: On January 5, 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments.

Editor’s Note: Although the FASB and IASB had been working to converge their respective classification and measurement models (see the FASB’s February 2013 ED), the FASB ultimately decided to make only limited changes to existing U.S. GAAP after performing stakeholder outreach and a cost-benefit analysis. Consequently, the ASU’s amendments are not converged with IFRSs. The IASB issued final guidance on this topic in July 2014 in the form of amendments to IFRS 9 (see Deloitte’s August 8, 2014, Heads Up for more information about these amendments).

Next Steps: For PBEs, the new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting, the effective date is in line with the recommendation of the private-company decision-making framework; that is, the guidance is effective for fiscal years beginning one year after the effective date for PBEs (i.e., December 15, 2018) and interim reporting periods within fiscal years beginning two years after the PBE effective date (i.e., December 15, 2019).

Other Resources: Deloitte’s January 12, 2016, Heads Up. Also see the press release on the FASB’s
Web site.

International

IASB Publishes Amendments to IAS 7

Affects: Entities reporting under IFRSs.

Summary: On January 29, 2016, the IASB published amendments to IAS 7 as part of its disclosure initiative (i.e., projects to improve the effectiveness of financial reporting disclosures). The objective of the amendments is to clarify IAS 7 to improve information provided to financial statement users about an entity’s financing activities.

The amendments require that an entity disclose, to the extent necessary to meet the disclosure objective, the following changes in liabilities arising from financing activities:

(a) changes from financing cash flows;

(b) changes arising from obtaining or losing control of subsidiaries or other businesses;

(c) the effect of changes in foreign exchange rates;

(d) changes in fair values; and

(e) other changes.

The IASB defines liabilities arising from financing activities as liabilities “for which cash flows were, or future cash flows will be, classified in the statement of cash flows as cash flows from financing activities.” The amendments indicate that the new disclosure requirements also apply to changes in financial assets that meet this definition. The amendments state that one way to meet the new disclosure requirements is to provide “a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.”

Next Steps: The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. Because the amendments are being issued less than one year before the effective date, entities need not provide comparative information when they first apply the amendments.

Other Resources: Deloitte’s February 1, 2016, IFRS in Focus. Also see the press release on the IASB’s Web site.

IASB Publishes Amendments Related to the Recognition of Deferred Tax Assets for Unrealized Losses

Affects: Entities reporting under IFRSs.

Summary: On January 19, 2016, the IASB published final amendments to IAS 12. The amendments clarify the following:

  • Unrealized losses on debt instruments measured at fair value and measured at cost for tax purposes “give rise to a deductible temporary difference [regardless] of whether the debt instrument’s holder expects to recover the carrying amount of the debt instrument by sale or by use.”
  • “The carrying amount of an asset does not limit the estimation of probable future taxable profit.”
  • Estimates of future taxable profit exclude “tax deductions resulting from the reversal of deductible temporary differences.”
  • An entity assesses a deferred tax asset in combination with other deferred tax assets. When tax law restricts the utilization of tax losses, an entity assesses a deferred tax asset in combination with other deferred tax assets of the same type.

Editor’s Note: Under the FASB’s recently amended guidance on classification and measurement of financial instruments in ASU 2016-01, an entity will be required “to evaluate the need for a valuation allowance for a deferred tax asset related to the change in fair value (unrealized losses) of debt instruments recognized in other comprehensive income in combination with the entity’s other deferred tax assets.”

Next Steps: The amendments are effective for annual periods beginning on or after January 1, 2017; earlier application is permitted. As transition relief, an entity may recognize the change in the opening equity for the earliest comparative period in opening retained earnings on initial application without allocating the change between opening retained earnings and other components of equity.

Other Resources: Deloitte’s January 20, 2016, IFRS in Focus. Also see the press release on the IASB’s Web site.

IASB Issues New Leasing Standard

Affects: Entities reporting under IFRSs.

Summary: On January 13, 2016, the IASB issued IFRS 16, which brings most leases on the balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. For lessors, however, the accounting remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17 and related interpretations.

Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other nonfinancial assets and depreciated accordingly, and the liability accrues interest. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if this rate can be readily determined. If the rate cannot be readily determined, the lessee’s incremental borrowing rate should be used.

Like IAS 17, IFRS 16 requires lessors to classify leases as operating or finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership of an underlying asset. Otherwise, the lease is classified as an operating lease. For finance leases, a lessor recognizes finance income over the lease term on the basis of a pattern reflecting a constant periodic rate of return on the net investment. For operating leases, a lessor recognizes lease payments as income on a straight-line basis or, if more representative of the pattern in which benefit from use of the underlying asset is diminished, another systematic basis.

Editor’s Note: The FASB is currently finalizing its new leases standard and is expected to issue it in February 2016. We expect that the FASB’s new standard on lease accounting will be effective for PBEs for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods therein. For all other entities, the standard would be effective for annual periods beginning after December 15, 2019 (i.e., calendar periods beginning on January 1, 2020), and interim periods thereafter. Early adoption would be permitted for all entities.

Next Steps: IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted if an entity has also applied IFRS 15 (on revenue from contracts with customers).

Other Resources: Deloitte’s January 13, 2016, IFRS in Focus. Also see the press release on the IASB’s Web site.

Accounting — Other Key Developments

Revenue Recognition

The New Revenue Standard — Adoption and Transition Observations

Affects: All entities.

Summary: The FASB’s and IASB’s new revenue standard (released in May 2014 and issued as ASU 2014-09 by the FASB and IFRS 15 by the IASB) replaces almost all current revenue guidance (including industry-specific guidance), greatly enhances the related disclosure requirements, and requires entities to use significant judgment (e.g., in determining variable consideration in a contract with a customer or whether collectibility from a customer is probable). Therefore, entities will need to establish appropriate processes, systems, and internal controls to account for contracts with their customers under the new standard. These activities are expected to require significant time and effort.

Since the release of the new standard, the boards have been working to identify issues related to the standard’s implementation. The boards’ joint revenue TRG, which was formed to provide feedback on the standard’s implementation, has held six meetings thus far. These meetings have resulted in a one-year deferral of the standard’s effective date and certain other proposed clarifications to the new guidance.

While the deferral gives entities more time to implement the new standard, for many entities — particularly public entities that will adopt the standard on a full retrospective basis — the first annual period to which they will need to apply the standard is fiscal years beginning on or after January 1, 2016.

The following are some key takeaways related to implementing the new revenue standard that we have identified:

  • We understand that many companies have decided to implement (or continue to consider implementing) the new standard by using the full retrospective transition method.
  • Many investment analysts have expressed their belief that the new standard should be adopted on a full retrospective basis, contributing to companies’ thinking about whether to use that basis to adopt the new standard.
  • Most companies are in the early phases of assessing the effects of the new standard on revenue contracts with their customers, and many companies have not begun a formal assessment process — in part because of recent clarifications to the new standard that have not been finalized.
  • Regardless of whether additional clarifications are made to the new revenue standard, companies will most likely be expected to provide information to investors, analysts, regulators, and other stakeholders about expected impacts related to their implementation efforts. Therefore, entities will need to track such information.
  • It will take time for companies to develop and test appropriate changes to their systems, processes, and internal controls related to accounting for contracts with customers and tracking information. Complexities due to an entity’s size, the number of geographical regions in which it operates, and the nature of its revenue streams could add considerable time to these efforts.
  • For public entities (or nonpublic entities that may elect early adoption) that elect to implement the new revenue standard on a full retrospective basis, the annual period beginning on January 1, 2016, is the first reporting period for which revenue will need to be reported under the new standard.
  • We believe that implementation of the new revenue standard should be a priority for companies in 2016.

Other Resources: Deloitte’s January 14, 2016, Heads Up.

Auditing Developments

AICPA

AICPA Issues SAS Clarifying Format of Auditor’s Report

Affects: Auditors.

Summary: In January 2016, the AICPA issued SAS 131, which clarifies how the auditor’s report should be formatted when an audit is conducted under PCAOB standards but not within the PCAOB’s jurisdiction. Under SAS 131, “[w]hen the auditor refers to the standards of the PCAOB in addition to GAAS in the auditor’s report, . . . the auditor [is required] to use the form of report required by the standards of the PCAOB, amended to state that the audit was also conducted in accordance with GAAS.”

Next Steps: SAS 131 is effective for financial statement audits for periods ending on or after June 15, 2016. Earlier application is permitted.

Other Resources: For more information, see the executive summary of SAS 131 on the AICPA’s Web site.

AICPA Releases Document Comparing Engagement Letter Requirements in SSARS 19 and SSARS 21

Affects: Entities that perform compilation and review engagements.

Summary: In January 2016, the AICPA released a document containing a table comparing the engagement letter requirements in SSARS 19 with those in SSARS 21. The table is divided into requirements pertaining to compilation engagements and those pertaining to review engagements.

CAQ

CAQ SEC Regulations Committee Releases Highlights of October 21, 2015, Meeting With SEC Staff

Affects: All entities.

Summary: On January 19, 2016, the CAQ posted to its Web site highlights of the October 21, 2015, CAQ SEC Regulations Committee joint meeting with the SEC staff. Topics discussed at the meeting included:

  • Update on personnel and organizational developments in the SEC’s Division of Corporation Finance.
  • Update on Regulation A.
  • Issues associated with the implementation of the FASB’s and IASB’s new revenue standard.
  • The interaction between the guidance in ASU 2014-17 on pushdown accounting and the presentation and computation guidance in SEC Regulation S-X, Rule 3-10(i); SAB Topic 6.K; and SAB Topic 1.J.
  • Discussion of the guidance in Section 3420 of the SEC Financial Reporting Manual.
  • Shelf takedowns and business acquisitions that are probable and more than 50 percent completed.

Other Resources: Deloitte’s January 22, 2016, journal entry.

CAQ Publishes Report on Audit Quality Indicators

Affects: Auditors.

Summary: On January 12, 2016, the CAQ issued a report in which it shares insights on the potential use of a set of indicators to assess audit quality. The information in the report is based on outreach to audit committees in a series of roundtables as well as pilot testing of the CAQ’s publication CAQ Approach to Audit Quality Indicators.

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

International

IAASB Publishes Standards Related to Special-Purpose Financial Statements

Affects: Auditors.

Summary: On January 7, 2016, the IAASB released the following two ISAs on auditor reporting on special-purpose financial statements.

  • ISA 800 (Revised) — Addresses “special considerations in the application of the ISAs to an audit of financial statements that are prepared in accordance with a special purpose framework.”
  • ISA 805 (Revised) — “[D]eals with special considerations in the application of the ISAs to an audit of a financial statement or a specific element, account, or item of a financial statement.”

Next Steps: Both ISAs are effective for financial statement audits for periods ending on or after December 15, 2016.

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

IAASB Requests Comments on Enhancing Audit Quality

Affects: Auditors.

Summary: On December 17, 2015, the IAASB released an invitation to comment that requests feedback on its audit-related standard-setting activities, including steps it should consider taking to enhance those activities. The invitation to comment particularly focuses on three topics: professional skepticism, quality control, and group audits.

Next Steps: Comments are due by May 16, 2016.

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

IESBA Releases Staff Publication on Ethical Considerations Related to Audit Fee Setting

Affects: Auditors.

Summary: On January 6, 2016, the IESBA released a staff publication that addresses “auditors’ ethical considerations under the [Code of Ethics for Professional Accountants] as one of the important considerations when setting audit fees, specifically in circumstances of downward pressure on fees.” The publication notes that it “will be relevant to auditors when considering tendering for a new audit engagement, or when proposing or agreeing fees for recurring audit engagements [as well as] to those charged with governance, preparers, regulators and audit oversight bodies, investors, and others with an interest or role in auditors’ work and their independence.”

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

IESBA Proposes Changes to Code of Ethics for Professional Accountants

Affects: Professional accountants.

Summary: On December 21, 2015, the IESBA issued the following two EDs that would enhance its Code of Ethics for Professional Accountants:

Next Steps: Comments on the ED on safeguards are due by March 21, 2016; comments on the ED on improving the code’s structure are due by April 18, 2016.

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

IAESB Issues Guidance on Implementing Learning-Outcomes Approach

Affects: Professional accountants.

Summary: On January 14, 2016, the IAESB released a set of support materials related to the implementation of a learning-outcomes approach to professional accounting education. The support materials consist of a value statement, guiding principles, illustrative examples, and staff Q&As.

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

IAESB Issues Implementation Guidance Related to Standard on Audit Engagement Partners’ Professional Competence

Affects: Auditors.

Summary: On December 16, 2016, the IAESB published a series of staff Q&As that provide guidance on implementing IES 8, its education standard on audit engagement partners’ professional competence.

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

Governmental Accounting and Auditing Developments

FASAB

FASAB Issues Statement on Opening Balances for Inventory, Operating Materials and Supplies, and Stockpile Materials

Affects: Entities applying federal financial accounting standards.

Summary: On January 27, 2015, the FASAB issued Statement 48, which “permits a reporting entity to apply an alternative valuation method in establishing opening balances for inventory, operating materials and supplies, and stockpile materials.” The purpose of the Statement is to “provide an alternative valuation method to adoption of GAAP when historical records and systems do not provide a basis for valuation of opening balances in accordance with [FASAB Statement 3].”

Next Steps: Statement 48 is effective for periods beginning after September 30, 2016; early implementation is encouraged.

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

FASAB Issues Technical Release on Implementing Guidance on Internal-Use Software

Affects: Entities applying federal financial accounting standards.

Summary: On January 19, 2015, the FASAB issued a technical release to help entities implement the guidance in FASAB Statement 10, which addresses the accounting for internal-use software. The release is being issued in light of the rapid developments in software development practices since the Statement’s issuance in 1998.

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

FASAB Issues Proposed Standard Related to Insurance Programs

Affects: Entities applying federal financial accounting standards.

Summary: On December 30, 2015, the FASAB issued an ED that would provide recognition, measurement, and disclosure guidance related to insurance programs. The proposal indicates that insurance programs can be defined as “insurance and non-loan guarantee programs that are authorized by law to financially compensate a designated population of beneficiaries by accepting all or part of the risk for losses incurred as a result of an adverse event.”

Next Steps: Comments on the ED are due by March 29, 2016.

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

FASAB Issues Proposal on Establishing Opening Balances for General PP&E

Affects: Entities applying federal financial accounting standards.

Summary: On December 22, 2015, the FASAB issued an ED that would amend certain of its Statements by providing “implementation guidance to allow a reporting entity to apply alternative methods in establishing opening balances for general [PP&E].” The proposal notes that “[t]he alternative methods include (1) using deemed cost to establish opening balances of general PP&E, (2) selecting between deemed cost and prospective capitalization of internal use software, and (3) excluding land from opening balances with disclosure of acreage information.”

Next Steps: Comments on the ED are due by February 4, 2016.

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

GASB

GASB Issues Guidance on Investment Pools

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

Summary: On December 23, 2015, the GASB issued Statement 79, which permits certain external investment pools to use amortized cost to measure pool investments. The GASB is releasing Statement 79 in response to changes in the SEC’s Rule 2(a)-7 of the Investment Company Act of 1940, which will become effective in April 2016.

Next Steps: Statement 79 is effective for reporting periods beginning after June 15, 2015, except for certain provisions related to portfolio quality, custodial credit risk, and shadow pricing, which are effective for reporting periods beginning after December 15, 2015. Early application is encouraged.

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

GASB Issues Proposals on Fiduciary Activities, Asset Retirement Obligations, and Pensions

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

Summary: On December 22, 2015, the GASB released the following three EDs for public comment:

  • Fiduciary Activities — This ED “would establish guidance regarding what constitutes fiduciary activities for financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported. The proposed Statement would apply to all state and local governments.”
  • Certain Asset Retirement Obligations — This ED “would establish guidance for determining the timing and pattern of recognition for liabilities related to asset retirement obligations and corresponding deferred outflows of resources. An asset retirement obligation is a legally enforceable liability associated with the retirement of a tangible capital asset, such as the decommissioning of a nuclear reactor.”
  • Pension Issues — This ED “addresses practice issues raised by stakeholders during the implementation of [GASB Statements 67 and 68].”

Next Steps: Comments on the ED on pension issues are due by February 12, 2016; comments on the EDs on fiduciary activities and certain asset retirement obligations are due by March 31, 2016.

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

International

IPSASB Publishes Proposed Guidance on Public-Sector Combinations

Affects: Public-sector entities.

Summary: On January 28, 2016, the IPSASB published an ED on public-sector combinations for public comment. Under the ED, an entity classifies public-sector combinations “as either amalgamations or acquisitions taking into account control and other factors.”

Next Steps: Comments on the ED are due by June 30, 2016.

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

IPSASB Proposes Amendments to Guidance on Employee Benefits

Affects: Public-sector entities.

Summary: On January 13, 2016, the IPSASB published an ED that would amend the guidance on employee benefits in IPSAS 25. The proposed amendments primarily concern the presentation, recognition, and disclosure of defined benefit plans.

Next Steps: Comments on the ED are due by April 30, 2016.

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

Regulatory and Compliance Developments

Banking

Federal Reserve, FDIC, and OCC Release Interagency Statement on External Audits of Internationally Active U.S. Financial Institutions

Affects: Internationally active financial institutions.

Summary: On January 15, 2016, the Federal Reserve, FDIC, and OCC released an interagency statement to express their support for the Basel Committee’s March 2014 guidance on external bank audits. The statement notes that although “the existing standards and practices in the United States are broadly consistent with the BCBS external audit guidance . . . certain differences exist between the standards and practices followed in the United States and the principles and expectations in the BCBS external audit guidance.”

Federal Reserve, FDIC, and OCC Release Joint Statement on Prudent Risk Management for Commercial Real Estate Lending

Affects: Real estate entities.

Summary: On December 18, 2015, the Federal Reserve, FDIC, and OCC released a statement “to remind financial institutions of existing regulatory guidance on prudent risk management practices for commercial real estate (CRE) lending activity through economic cycles.” The agencies are releasing the statement in response to observations related to “substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.”

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

GAO

GAO Releases Report on Representation of Women on Boards of Directors

Affects: All entities.

Summary: On January 4, 2016, the GAO announced that it has released a report on the representation of women on boards of directors at U.S. publicly traded companies. The report found that although such representation has been steadily increasing, “it could take more than four decades for women’s representation on boards to be on par with that of men’s.”

SEC

SEC Staff Updates Interactive Data Interpretations (XBRL) and FAQs

Affects: SEC registrants.

Summary: On January 26, 2016, the SEC staff updated the “Staff Interpretations and FAQs Related to Interactive Data Disclosure” page on its Web site to add Question E.27, which describes the conditions for determining when a calculation relationship is required. In XBRL, calculation relationships “provide key information that shows the relationships among elements and their corresponding numeric facts, and how they add and subtract to each other.“ The guidance indicates that the SEC’s EDGAR Filer Manual (Volume 2) sets out the specific calculation relationship requirements and provides examples and exceptions.

SEC Extends Comment Period for Proposed Rule on Disclosures by Resource Extraction Issuers

Affects: SEC registrants.

Summary: On January 21, 2016, the SEC issued a release that extends the comment period for its proposed rule on disclosures provided by resource extraction issuers. Specifically, the date by which initial comments must be received has been changed from January 25, 2016, to February 16, 2016, and the date by which reply comments (i.e., comments on issues raised during the initial comment period) must be received is now March 8, 2016, instead of February 16, 2016.

SEC Releases Guidance Related to FAST Act

Affects: SEC registrants.

Summary: On January 13, 2016, the SEC issued interim final rules and form amendments to implement certain provisions of the FAST Act, which was signed into law in December 2015. Among other provisions, the rules revise Forms S-1 and F-1 to permit an EGC to omit financial information from registration statements filed before an IPO (or confidentially submitted to the SEC for review) for historical periods required by Regulation S-X if the EGC reasonably believes that it will not be required to include these historical periods at the time of the contemplated offering. The rules and amendments became effective on January 19, 2016.

In addition, in December 2015, the SEC issued a number of C&DIs related to the FAST Act. Topics addressed in the C&DIs include (1) whether, and in what circumstances, an EGC can omit interim financial statements or financial statements of other entities from its registration statement and (2) FAST Act requirements that affect savings and loan companies.

Next Steps: The SEC is requesting comments on any aspects of the interim final rules, including whether those rules should be extended to other registrants or forms. Comments are due by February 18, 2016.

Other Resources: See Deloitte’s December 8, 2015, journal entry for more information about the FAST Act’s effects on securities laws and regulations. Also see Deloitte’s January 15, 2016, journal entry for further details on the interim final rules and January 12, 2016, and December 18, 2015, journal entries for more information about the C&DIs.

SEC Publishes Examination Priorities for 2016

Affects: SEC registrants.

Summary: On January 11, 2016, the SEC’s Office of Compliance Inspections and Examinations published its examination priorities for 2016. New priorities include liquidity controls, public pension advisers, product promotion, exchange-traded funds, and variable annuities. Further, the priorities “reflect a continuing focus on protecting investors in ongoing risk areas such as cybersecurity, microcap fraud, fee selection, and reverse churning.”

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

SEC Publishes Annual Staff Reports Related to NRSROs

Affects: SEC registrants.

Summary: On December 28, 2015, the SEC published two annual staff reports related to credit rating agencies registered as NRSROs: (1) an annual examination report and (2) an annual report to Congress. The reports show that NRSROs have increased their compliance with federal securities laws and improved their accountability, controls, and governance over the past year.

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

SEC Requests Feedback on Transfer Agent Rules

Affects: SEC registrants.

Summary: On December 22, 2015, the SEC issued a concept release that requests comments on its transfer agent rules. The release “includes a history of transfer agent services and applicable regulations as well as an overview of current transfer agent services and activities.”

Next Steps: Comments on the concept release are due by February 29, 2016.

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

SEC Publishes Staff Report on the Definition of an Accredited Investor

Affects: SEC registrants.

Summary: On December 18, 2015, the SEC released a staff report on the definition of an accredited investor, as that term is used in Regulation D. The report is being issued in response to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, under which the Commission must review the definition every four years to determine whether it should be modified. In addition to examining the history of the definition, the report “considers alternative approaches to defining ’accredited investor,’ provides staff recommendations for potential updates and modifications to the existing definition and analyzes the impact potential approaches may have on the pool of accredited investors.”

Next Steps: Interested parties can submit comments on the report via an electronic form on the SEC’s Web site.

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

International

Basel Committee’s Governing Body Endorses Committee’s Market Risk Framework and Work Program

Affects: Banking entities.

Summary: On January 11, 2016, the Basel Committee announced that its oversight body, the Group of Central Bank Governors and Heads of Supervision, has endorsed its new market risk framework. The framework is “a core component of the Basel III reform package.”

Next Steps: The new market risk framework will become effective in 2019.

Other Resources: For more information, see the January 11 and January 14 press releases on the BIS’s Web site.

Basel Committee Proposes Guidance Related to Core Principles for Banking Supervision

Affects: Banking entities.

Summary: On December 21, 2015, the Basel Committee issued a consultative document that requests feedback on applying the committee’s core principles for effective banking supervision to “the supervision of financial institutions engaged in serving the financially unserved and underserved.” The proposal “identifies 19 of the total 29 Core Principles where additional guidance is needed, and both Essential Criteria and Additional Criteria which have specific relevance to the financial inclusion context.”

Next Steps: Comments on the consultative document are due by March 31, 2016.

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

Basel Committee Issues Guidance on Credit Risk and Accounting for Expected Credit Losses

Affects: Banking entities.

Summary: On December 18, 2015, the Basel Committee issued final guidance on credit risk and accounting for expected credit losses. The guidance, which is structured on the basis of 11 key principles, provides banks with “supervisory guidance on sound credit risk practices associated with the implementation and ongoing application of expected credit loss . . . accounting frameworks.”

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

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Deloitte Publications

Publication

Title

Affects

January 28, 2016, Heads Up

FASB Proposes Guidance on Presentation of Net Periodic Benefit Cost and Disclosures Related to Defined Benefit Plans

All entities.

January 14, 2016, Heads Up

The New Revenue Standard — Adoption and Transition Observations

All entities.

January 12, 2016, Heads Up

FASB Amends Guidance on Classification and Measurement of Financial Instruments

All entities.

January 2016 Real Estate —Accounting and Financial Reporting Update

Real estate entities.

January 2016 Power & Utilities —Accounting, Financial Reporting, and Tax Update

Power and utilities entities.

A Roadmap to Accounting for Income Taxes (2015 Edition)

All entities.

Leadership Changes

FASB: On January 29, 2016, the FAF trustees announced that FASB board member Daryl E. Buck will be retiring as of December 31, 2016.

IFRS Interpretations Committee: On January 5, 2016, the IFRS Foundation trustees announced that three members of the IFRS Interpretations Committee — Tony de Bell, Reinhard Dotzlaw, and Martin Schloemer — have been reappointed to the committee for a second three-year term that begins on July 1, 2016.

SASB: On January 13, 2016, the SASB announced that it has appointed three new members — Audrey Choi, Arnie Pinkston, and Laura Tyson — to its board of directors for a three-year term that is effective as of January 2016.

 

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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