First Quarter in Review — 2017

Summary: On January 5, 2017, the FASB issued ASU 2017-01 to clarify the definition of a business in ASC 805, which was among the primary issues raised in connection with the FAF’s post-implementation review report on FASB Statement 141(R) (codified in ASC 805). The amendments in the ASU are intended to make application of the guidance more consistent and cost-efficient.

The ASU’s Basis for Conclusions indicates that the amendments “narrow the definition of a business and provide a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business.” Specifically, the ASU:

• Provides a “screen” for determining when a set is not a business. The screen requires a determination that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The screen will reduce the number of transactions that an entity must further evaluate to determine whether they are business combinations or asset acquisitions.
• Specifies that if the screen’s threshold is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create outputs. The ASU provides a framework to help entities evaluate whether both an input and a substantive process are present, and it removes the evaluation of whether a market participant could replace the missing elements.
• Narrows the definition of the term “output” to be consistent with the description of outputs in ASC 606.

The standard also provides examples that illustrate how an entity should apply the amendments in determining whether a set is a business.

Next Steps: The ASU is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods therein. For all other entities, the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The ASU must be applied prospectively on or after the effective date, and no disclosures for a change in accounting principle are required at transition.

Early adoption is permitted for transactions (i.e., acquisitions or dispositions) that occurred before the issuance date or effective date of the standard if the transactions were not reported in financial statements that have been issued or made available for issuance.

Other Resources: Deloitte’s January 13, 2017, Heads Up. Also see the press release and FASB in Focus newsletter on the FASB’s Web site.

Summary: On January 12, 2017, the FASB issued ASU 2017-02, which amends the consolidation guidance for NFPs in ASC 958-810. The amendments:

• Incorporate into ASC 958-810 the superseded consolidation guidance in ASC 810-20.
• Address when an “NFP limited partner should consolidate a for-profit limited partnership.”

Next Steps: The ASU is effective for NFPs for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017.

Other Resources: Deloitte’s January 30, 2017, Heads Up.

Summary: On March 30, 2017, the FASB issued ASU 2017-08, which is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” Specifically, the ASU shortens the amortization period for certain investments in callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. The ASU is being issued in response to concerns from stakeholders that “current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised.”

Next Steps: The ASU’s amendments are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. For other entities, the amendments are effective for annual periods beginning after December 15, 2019, and interim periods thereafter. Early adoption is permitted.

Other Resources: Deloitte’s April 4, 2017, Heads Up.

Summary: On January 10, 2017, the FASB issued a proposed ASU aimed at reducing the cost and complexity of determining whether debt should be classified as current or noncurrent in a classified balance sheet. The ASU is being issued in response to feedback from stakeholders that the existing guidance on the balance sheet classification of debt is unnecessarily complex. The FASB’s proposed approach would replace the current, fact-specific guidance in ASC 470-10 with a uniform principle under which a debt arrangement would be classified as noncurrent if either (1) the “liability is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date” or (2) the “entity has a contractual right to defer settlement of the liability for at least one year (or operating cycle, if longer) after the balance sheet date.” In addition, the proposed ASU includes application guidance that would clarify how covenant violations, covenant waivers, post-balance-sheet refinancing transactions, and subjective acceleration clauses affect debt classification.

Next Steps: Comments on the proposed ASU are due by May 5, 2017.

Other Resources: Deloitte’s January 12, 2017, Heads Up. Also see the press release on the FASB’s Web site.

Summary: On March 10, 2017, the FASB issued ASU 2017-07, which requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines.

Next Steps: The ASU’s amendments are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. For other entities, the amendments are effective for annual periods beginning after December 15, 2018, and interim periods thereafter.

Other Resources: Deloitte’s March 14, 2017, Heads Up.

Summary: On February 27, 2017, the FASB issued ASU 2017-06 on employee benefit plan master trust reporting in response to an EITF consensus. The ASU’s provisions include the following:

• Presentation within the plan’s financial statements of its interest in a master trust as a single line item.
• Disclosure of the master trust’s investments by general type as well as by the dollar amount of the plan’s interest in each type.
• Disclosure of the master trust’s other assets and liabilities and the balances related to the plan.
• Elimination of required disclosures for Section 401(h) accounts that are already provided by the associated defined benefit plan.

Next Steps: The ASU’s amendments are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted.

Other Resources: Deloitte’s November 2016 EITF Snapshot.

Summary: On January 26, 2017, the FASB issued ASU 2017-04, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under the ASU, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount [and] should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.”

In addition, the ASU:

• Clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment.
• Clarifies that “an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.”
• Makes minor changes to the overview and background sections of certain ASC subtopics and topics as part of the Board’s initiative to unify and improve those sections throughout the Codification.

Next Steps: The ASU is effective prospectively for fiscal years beginning after the following dates:

• For public business entities that are SEC filers, December 15, 2019.
• For public business entities that are not SEC filers, December 15, 2020.
• For all other entities, including not-for-profit entities, December 15, 2021.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

Other Resources: Deloitte’s February 1, 2017, Heads Up.

Summary: On January 10, 2017, the FASB issued a proposed ASU that would modify or eliminate certain disclosure requirements related to inventory and establish new requirements. The proposal is part of the FASB’s disclosure framework project, which is intended to help reporting entities improve the effectiveness of financial statement disclosures by “clearly communicating the information that is most important to users of each entity’s financial statements.”

The proposed disclosures would include the following:

• Significant changes in inventory resulting from transactions or events other than the purchase, manufacture, or sale of inventory in the normal course of business.
• The major components of inventory (e.g., raw materials, work in process, finished goods, and supplies).
• Entities that apply the LIFO method would be required to disclose (1) the excess of replacement cost or current cost over the reported inventory amount and (2) the effect on net income of the liquidation of a portion of an entity’s LIFO inventory.
• For each annual period presented, “qualitative and quantitative information about the critical assumptions” used in the portions of inventory measured under the retail inventory method calculation.
• Public business entities would be required to disclose, by reportable segment, (1) total inventory and (2) a disaggregation of inventory by major component (such as raw materials, work in process, finished goods, and supplies).

Comments on the proposed ASU were due by March 13, 2017.

Other Resources: Deloitte’s January 12, 2017, Heads Up. Also see the press release on the FASB’s Web site.

Summary: On February 22, 2017, the FASB issued ASU 2017-05, which clarifies the scope of the Board’s guidance on nonfinancial asset derecognition (ASC 610-20) as well as the accounting for partial sales of nonfinancial assets. The ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard (ASC 606, as amended).

The ASU clarifies that ASC 610-20 applies to the derecognition of all nonfinancial assets and in-substance nonfinancial assets. While the guidance in ASC 360-20 contained references to in-substance assets (e.g., in-substance real estate), it would not have applied to transactions outside of real estate. The FASB therefore added the definition of an in-substance nonfinancial asset to the ASC master glossary.

Further, the ASU amends the industry-specific guidance in ASC 970-323 to align it with the requirements in ASC 606 and ASC 610-20. It also eliminates ASC 360-20 as well as the initial-measurement guidance on nonmonetary transactions in ASC 845-10-30 to simplify the accounting for partial sales (i.e., entities would use the same guidance to account for similar transactions) and to remove inconsistencies between ASC 610-20 and the noncash consideration guidance in the new revenue standard. As a result of these changes, any transfer of a nonfinancial asset in exchange for the noncontrolling ownership interest in another entity (including a noncontrolling ownership interest in a joint venture or other equity method investment) should be accounted for in accordance with ASC 610-20.

Next Steps: The effective date of the new guidance is aligned with the requirements in the new revenue standard, which is effective for public entities for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017, and for nonpublic entities for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. If the entity decides to early adopt the ASU’s guidance, it must also early adopt ASC 606 (and vice versa).

Other Resources: Deloitte’s February 28, 2017, Heads Up.

Summary: On December 21, 2016, the FASB issued ASU 2016-20, which makes certain technical corrections (i.e., minor changes and enhancements) to the Board’s new revenue standard, ASU 2014-09. The amendments were issued in response to feedback received from several sources, including the TRG for revenue recognition. The amendments clarify, rather than change, the new revenue standard’s core revenue recognition principles. The technical corrections affect the following aspects of the new revenue standard:

• Loan guarantee fees.
• Contract costs — impairment testing.
• Contract costs — interaction of impairment testing with guidance in other topics.
• Provisions for losses related to construction-type and production-type contracts.
• Scope of the new revenue standard.
• Disclosure of remaining performance obligations.
• Disclosure of prior-period performance obligations.
• A contract modification example.
• Contract assets versus receivables.
• Refund liabilities.
• Advertising costs.
• Fixed-odds wagering contracts in the casino industry.
• Cost capitalization for advisers to private and public funds.

Next Steps: The effective date and transition requirements in ASU 2016-20 are the same as those in the new revenue standard.

Summary: On January 23, 2017, the FASB issued ASU 2017-03, which amends certain SEC guidance in the FASB Accounting Standards Codification in response to SEC staff announcements made at the September 22, 2016, and November 17, 2016, EITF meetings. The announcements addressed the following topics:

• The “additional qualitative disclosures” that a registrant is expected to provide when it “cannot reasonably estimate the impact” that ASUs 2014-09, 2016-02, and 2016-13 will have in applying the guidance in SAB Topic 11.M (announcement made at the September 22, 2016, EITF meeting).
• Guidance in ASC 323 related to the amendments made by ASU 2014-01 regarding use of the proportional amortization method in accounting for investments in qualified affordable housing projects (announcement made at the November 17, 2016, EITF meeting).

Other Resources: Deloitte’s September 22, 2016, Financial Reporting Alert and September 2016 and November 2016 EITF Snapshot newsletters.

Summary: On March 7, 2017, the FASB issued a proposed ASU that would simplify the accounting for share-based payments granted to nonemployees for goods and services. Under the proposal, most of the guidance on such payments would be aligned with the requirements for share-based payments granted to employees. Currently, share-based payment arrangements with employees are accounted for under ASC 718 and nonemployee share-based payments for goods and services are accounted for under ASC 505-50. ASC 505-50 differs significantly from ASC 718. Differences include (but are not limited to) the guidance on (1) determining the measurement date (which generally is the date on which the measurement of equity-classified share-based payments becomes fixed), (2) accounting for performance conditions, (3) the ability of a nonpublic entity to use certain practical expedients for measurement, and (4) accounting for (including measuring and classifying) share-based payments after vesting. The proposed ASU would eliminate most of these differences. Specifically, the proposed ASU would supersede ASC 505-50 and expand the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. As a result, most of the guidance in ASC 718, including its requirements related to classification and measurement, would apply to nonemployee share-based payment arrangements.

Next Steps: Comments on the proposed ASU are due by June 5, 2017.

Other Resources: Deloitte’s March 10, 2017, Heads Up. Also see the press release and FASB in Focus newsletter on the FASB’s Web site.

Summary: On March 29, 2017, the IASB published for public comment an ED that would amend the guidance in IFRS 8 on operating segments. The amendments would:

• “[C]larify and emphasise the criteria that must be met before two operating segments may be aggregated.”
• “[R]equire companies to disclose the title and role of the person or group that performs the function of the chief operating decision maker.”
• “[R]equire companies to provide information in the notes to the financial statements if segments in the financial statements differ from segments reported elsewhere in the annual report and in accompanying materials.”

The ED would also amend the guidance in IAS 34 on interim financial reporting to “require companies that change their segments to provide restated segment information for prior interim periods earlier than they currently do.”

Next Steps: Comments on the ED are due by July 31, 2017.

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

Summary: On January 12, 2017, the IASB published an ED that would make minor amendments to the following three IFRSs as part of its annual improvements process:

• IAS 12 — These amendments would “clarify that an entity should account for all income tax consequences of dividends in the same way, regardless of how the tax arises.”
• IAS 23 — This standard would be amended “to clarify that when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset as part of the funds that it has borrowed generally.”
• IAS 28 — These amendments would “clarify that an entity is required to apply [IFRS 9], including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied.”

Next Steps: Comments on the ED are due by April 12, 2017.

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

Summary: On March 29, 2017, United Kingdom (UK) Prime Minister Theresa May provided written notification to the European Council of the UK’s intention to withdraw from the European Union (EU) under Article 50 of the Lisbon Treaty. Written notification marks the opening of withdrawal negotiations between the UK and the EU, with withdrawal itself scheduled to take effect either on the date a withdrawal agreement enters into force or two years after the UK’s notification under Article 50 (unless the negotiations are extended), whichever is earlier. However, because there is no precedent for the departure of an EU-member state from the EU, other significant aspects of the Article 50 process are less clear, including:

• Whether and, if so, how a notification of intention to withdraw from the EU could be revoked.
• The precise steps (at both the EU and the individual-member-state level) to be followed before withdrawal of the UK from the EU would take effect.
• What the outcome of the negotiations will be in terms of the prospective agreements and relationship between the UK and EU.
• What transitional provisions or transitional periods might be agreed to.

In the meantime, EU laws will continue to apply to UK entities exactly as they do today. Along with the many other aspects of European law that would presumably cease to apply to the UK upon its withdrawal from the EU, unless other agreements are reached, various tax exemptions and reliefs related to intra-Europe undertakings would presumably also no longer apply to dealings between UK entities and entities domiciled in EU-member states.

Other Resources: Deloitte’s March 31, 2017, and June 24, 2016 (updated March 31, 2017), Financial Reporting Alert newsletters.

Summary: On March 16, 2017, the CAQ issued a report that addresses the challenges associated with deterring fraud and enhancing financial reporting. Specifically, the report summarizes discussions held during two 2016 workshops that explored “issues that were identified in an analysis of enforcement actions in which the SEC (1) took an action against an issuer or individual because of a securities violation and (2) asserted that there were issues with the company’s ICFR.” In addition, the report contains key recommendations related to accounting policies, internal controls, and staffing challenges.

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

Summary: The CME and LCH have amended their respective rulebooks to legally characterize variation margin payments — for derivative contracts that are referred to as settled-tomarket — as settlements of the derivative’s mark-to-market exposure and not collateral. As a result, accounting questions have arisen regarding the determination of the appropriate unit of account, hedge accounting upon transition and going forward, and other issues.

In May 2016, the ISDA’s accounting committee submitted a whitepaper on the accounting impact of the rulebook changes to the SEC’s Office of the Chief Accountant. On January 4, 2017, the ISDA issued a confirmation letter indicating that the SEC staff does not object to the conclusions reached in the whitepaper.

Next Steps: Entities should consider the impact that the changes may have in anticipation of financial statement filings for reporting periods ending after January 3, 2017.

Other Resources: Deloitte’s January 24, 2017, Financial Reporting Alert.

Summary: Historically, the IMF has had concerns about the reliability of the consumer price index (CPI) inflation data produced by the government of Argentina. Because of these concerns, some stakeholders have looked to qualitative factors to help them determine whether Argentina’s economy is highly inflationary. Others have looked to the wholesale price index (WPI) produced by the Argentina government as a proxy for inflation data to be used in the three-year cumulative inflation calculation. The WPI has consistently provided national coverage (unlike most of the published CPI data) and has been viewed by some local practitioners as providing the most relevant and reliable inflation measures for the country as a whole, even though it is not a CPI. Further, recent information has shown that inflation has started to decelerate under the new government, and the expectation is that inflation could continue to decelerate given the new government’s anti-inflationary policies. Accordingly, entities will face practical challenges and will need to use significant judgment in assessing whether Argentina’s economy is considered highly inflationary.

Other Resources: Deloitte’s March 7, 2017, Financial Reporting Alert.

Summary: In January 2017, three AICPA revenue recognition task forces released for public comment working drafts on accounting issues associated with the implementation of the new revenue standard for the following industries: aerospace and defense, telecommunications, and time shares. The aerospace and defense working draft provides guidance on contract modifications, the working draft for time-share entities discusses performance obligations, and the two working drafts for the telecommunications industry address (1) separate performance obligations and (2) stand-alone selling prices.

Comments on these working drafts were due by March 2, 2017.

Further, in February and March 2017, the AICPA’s revenue recognition task forces released for public comment working drafts for software, insurance, time-share, power and utilities, aerospace and defense, and broker-dealer entities. The working drafts address the following issues:

• Significant financing components in software arrangements (software).
• Considerations related to applying the exception in ASC 606-10-15-2 and ASC 606-10- 15-4 to contracts within the scope of ASC 944 (insurance).
• Revenue recognition related to management fees (time shares).
• Accounting for tariff sales to regulated customers (power and utilities).
• Unit of account in design, development, and production contracts (aerospace and defense).
• Costs associated with underwriting (broker-dealers).
• Costs associated with investment banking advisory services (broker-dealers).

Comments on the insurance and software working drafts were due by April 3, 2017.

Next Steps: Comments on the time-share, power and utilities, aerospace and defense, and broker-dealer working drafts are due by May 1, 2017.

Other Resources: For more information, see the software, time-share, power and utilities, insurance, aerospace and defense, and broker-dealer revenue recognition task force pages on the AICPA’s Web site.

Summary: On March 9, 2017, the FASB announced that the SEC has approved the 2017 U.S. GAAP Financial Reporting Taxonomy and has updated its EDGAR system to support the new version. The 2017 taxonomy reflects accounting standards issued during the past year as well as other corrections and improvements to the 2016 taxonomy.

In addition, the FASB’s taxonomy staff has issued 2016 XBRL implementation guides on the following topics:

• Disposal groups and discontinued operations.
• Insurance: concentration of credit risk disclosures.
• Liquidation basis of accounting.
• Leases under ASC 842.
• Measurement-date practical expedient for defined benefit plans.
• Notional amount disclosures.
• Other comprehensive income.
• Repurchase-to-maturity transactions and repurchase financings.
• Retirement benefits — phase 1.
• Revenue from contracts with customers.
• Segment reporting.
• Short-duration insurance contracts.
• Subsequent events.

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

Summary: On March 30, 2017, the IASB published a DP that explores principles for streamlining financial statement disclosures. The DP is being issued in response to stakeholder feedback indicating that current disclosures are often ineffective and contain too much irrelevant, and too little relevant, information.

Next Steps: Comments on the DP are due by October 2, 2017.

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

Summary: On March 9, 2017, the IFRS Foundation released its 2017 IFRS taxonomy, which is a classification system for tagging IFRS financial statement data in electronic filings. The 2017 IFRS taxonomy reflects IFRSs issued by the IASB as of January 1, 2017.

In addition, on March 1, 2017, the SEC announced the availability of the XBRL taxonomy for use by foreign private issuers that submit their financial statements in accordance with IFRSs.

Other Resources: For more information, see the press release and IFRS taxonomy page on the IASB’s Web site as well as the press release and notice on the SEC’s Web site.

Summary: In February 2017, the ASB of the AICPA published SAS 132, which supersedes the guidance in SAS 126 on “the auditor’s responsibilities in the audit of financial statements relating to the entity’s ability to continue as a going concern and the implications for the auditor’s report.” Aspects of the guidance that the new SAS revises include:

• The auditor’s objectives and related conclusions.
• Financial support by third parties or the entity’s owner-manager.
• Interim financial information.
• Financial statements prepared in accordance with a special-purpose framework.

Next Steps: The new guidance will be effective for audits of financial statements for periods ending on or after December 15, 2017.

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

Summary: On February 16, 2017, the PCAOB issued updated staff guidance to help auditors provide disclosures on the new Form AP, as required by the Board’s December 2015 final rule. (The SEC approved the rule on May 9, 2016.) On Form AP, auditors must disclose (1) “the name of the engagement partner”; (2) “the name, location, and extent of participation of each other accounting firm participating in the audit [if their] work constituted at least 5% of total audit hours”; and (3) the “number and aggregate extent of participation of all other accounting firms participating in the audit whose individual participation was less than 5% of total audit hours.” The updated guidance clarifies the treatment of professional staff in secondment arrangements.

Next Steps: The requirement to disclose the engagement partner is effective for audit reports issued on or after January 31, 2017. The disclosure requirements related to other accounting firms are effective for audit reports issued on or after June 30, 2017.

Summary: On January 18, 2017, the FASAB issued Statement 51, which “establishes accounting and financial reporting standards for insurance programs.” Specifically, the new Statement “provides standards to ensure that insurance programs are adequately defined and report consistent information about the liabilities for losses incurred and claimed as well as expected losses during remaining coverage.”

Next Steps: Statement 51 is effective for reporting periods beginning after September 30, 2018.

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

Summary: On December 21, 2016, the FASAB issued an ED that would amend the requirements in FASAB Statement 7 on “a reconciliation between budgetary and financial accounting information.” Specifically, the proposal “would replace the current reconciliation with a new budget and accrual reconciliation . . . and explain the relationship between the entity’s net outlays on a budgetary basis and the net cost of operations during the reporting period.”

Comments on the ED were due by March 14, 2017.

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

Summary: On March 20, 2017, the GASB issued Statement 85, which addresses “practice issues that have been identified during implementation and application of certain GASB Statements.” Topics covered in the Statement include “issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits . . . ).”

Next Steps: Statement 85 is effective for reporting periods beginning after June 15, 2017. Early application is encouraged.

Summary: On January 31, 2017, the GASB issued Statement 84, which “establishes criteria for identifying fiduciary activities of all state and local governments.” The primary purpose of the Statement is to “improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported.”

Next Steps: Statement 84 is effective for reporting periods beginning after December 15, 2018. Early application is encouraged.

Summary: On January 4, 2017, the GASB issued an invitation to comment (ITC) that requests feedback on “the Board’s financial reporting model reexamination project.” Specifically, the ITC “addresses potential improvements to fundamental issues of the GASB’s financial reporting model reexamination project: (1) the measurement focus and basis of accounting for governmental funds and (2) the presentation of governmental fund financial statements.”

Comments were due by March 31, 2017.

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

Summary: On January 31, 2017, the IPSASB released IPSAS 40, which provides guidance on accounting for public-sector combinations. The new guidance contains requirements related to the following two types of combinations:

• Amalgamations — The “modified pooling of interests” accounting approach is used to recognize the amalgamation “on the date it takes place.”
• Acquisitions — Entities apply the acquisition method of accounting and, in doing so, use “the same approach as in IFRS 3 . . . supplemented with additional guidance for public sector specific situations.”

Next Steps: IPSAS 40 will become effective on January 1, 2019. Early adoption is encouraged.

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

Summary: On March 31, 2017, the SEC issued a final rule that updates the definition of “emerging growth company” to include an “inflation-adjusted threshold” and amends the dollar amounts in the SEC’s Regulation Crowdfunding. In addition, the final rule contains technical amendments that “conform several rules and forms to amendments made to the Securities Act of 1933 and the Securities Exchange Act of 1934 by Title I of the Jumpstart Our Business Startups Act.”

Next Steps: The final rule will become effective on the date of its publication in the Federal Register.

Summary: On March 22, 2017, the SEC issued a final rule that shortens — from three to two business days — “the standard settlement cycle for most broker-dealer securities transactions.” The objective of the final rule is to “enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle.”

Next Steps: The final rule will become effective on May 30, 2017. The compliance date for the final rule is September 5, 2017.

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

Summary: On March 8, 2017, the SEC issued a notice related to a phishing campaign in which fraudulent e-mails have been sent to certain EDGAR filers. The e-mails falsely indicate that the SEC has recently made changes to Form 10-K and may contain malicious attachments that are designed to gain access to the user’s computer or network. The SEC has confirmed that it has sent no such e-mails to EDGAR filers and that recipients should delete the e-mails.

Summary: On March 1, 2017, the SEC issued a proposed rule that is intended “to improve investor protection and enhance transparency in the municipal securities market.” The proposal would amend “the list of event notices that a broker, dealer, or municipal securities dealer acting as an underwriter in a primary offering of municipal securities subject to the Rule must reasonably determine that an issuer or obligated person has undertaken, in a written agreement for the benefit of holders of municipal securities, to provide to the Municipal Securities Rulemaking Board within ten business days of the event’s occurrence.”

Next Steps: Comments on the proposed rule are due by May 15, 2017.

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

Summary: On March 1, 2017, the SEC issued a final rule that requires “registrants that file registration statements or reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings, and to submit such registration statements and reports on EDGAR in [HTML] format.”

Next Steps: The final rule will become effective on September 1, 2017.

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

Summary: On March 1, 2017, the SEC issued a proposed rule that would “require the use of Inline XBRL format for the submission of operating company financial statement information and mutual fund risk/return summaries.” In addition, “the requirement for filers to post XBRL data on their websites” would be eliminated.

Next Steps: Comments on the proposed rule are due by May 16, 2017.

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

Summary: On March 1, 2017, the SEC issued a request for comment on potential changes to Industry Guide 3, which applies to statistical disclosures by bank holding companies. The request for comments asks for feedback on the following topics:

• “Existing disclosure guidance for bank holding companies called for by Guide 3, as well as other sources of disclosure for bank holding companies and other registrants in the financial services industry.”
• “Potential improvements to the disclosure regime, which could include new disclosures, the elimination of duplicative or overlapping disclosures, or revisions to current disclosures.”
• “The scope and applicability of Guide 3.”
• “The effects of regulation on bank holding companies, including with regard to their operations, capital structures, dividend policies and treatment in bankruptcy.”

Next Steps: Comments are due by May 8, 2017.

Other Resources: Deloitte’s March 2017 Financial Services Spotlight. Also see the press release on the SEC’s Web site.

Summary: On February 24, 2017, the CAQ released the highlights of the November 17, 2016, joint meeting between the IPTF and the SEC staff. Topics discussed at the meeting included:

• Monitoring inflation in certain countries.
• Transition questions related to the new leasing standard, IFRS 16.
• Use of pre-acquisition and post-acquisition periods to satisfy SEC Regulation S-X, Rule 3-05, requirements for other than initial registration statements.
• Significant equity investee financial statements under SEC Regulation S-X, Rule 3-09.
• Use of IFRS XBRL taxonomy by foreign private issuers.

Summary: On February 14, 2017, President Trump signed H.J. Resolution 41, which eliminates the SEC’s rule under which issuers engaged in the commercial development of oil, natural gas, or minerals must disclose certain payments made to U.S. federal and foreign governments. H.J. Resolution 41 repeals the Commission’s June 2016 final rule on disclosures of payments by resource extraction issuers, which was implemented as part of the Dodd- Frank Wall Street Reform and Consumer Protection Act.

Summary: On February 6, 2017, Michael Piwowar, the SEC’s acting chairman, released a public statement in which he requested public input on implementation issues associated with the SEC’s final rule on pay ratio disclosure. The final rule requires registrants — except foreign private issuers, registered investment companies, and emerging growth companies — to clearly disclose the relationship between executive compensation actually paid and the financial performance of the registrant in proxy or information statements in which executive compensation disclosures are required. Mr. Piwowar noted that since compliance with the rule became effective for fiscal years beginning on or after January 1, 2017, some issuers have “begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline.”

Next Steps: Interested parties are encouraged to submit comments on the SEC’s Web site.

Summary: On January 31, 2017, Michael Piwowar, the SEC’s acting chairman, made public statements related to the Commission’s 2014 guidance on its August 2012 final rule on conflict minerals. The SEC partially stayed compliance with the conflict minerals rule after an April 2014 appellate court ruling found that the rule violated the First Amendment of the U.S. Constitution. Mr. Piwowar indicated that the “partial stay has done little to stem the tide of unintended consequences washing over the Democratic Republic of the Congo and surrounding areas.” He further noted:

Next Steps: Mr. Piwowar is requesting feedback “from interested persons on all aspects of the rule and guidance.” A comment letter page has been set up on the SEC’s Web site.

Other Resources: Mr. Piwowar’s statements on the conflict minerals rule and on the reconsideration of the rule’s implementation are available on the SEC’s Web site.

Summary: On January 12, 2017, the SEC’s Office of Compliance Inspections and Examinations published its examination priorities for 2017. The priorities focus on electronic investment advice, money market funds, and financial exploitation of senior investors. In addition, the priorities “reflect a continuing focus on protecting retail investors, including individuals investing for their retirement, and assessing market-wide risks.” The document is not necessarily comprehensive and “may be adjusted in light of market conditions, industry developments, and ongoing risk assessment activities.”

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

Summary: On January 5, 2017, former SEC Chairman Mary Jo White issued a public statement in which she urged the next SEC chairman to continue to pursue global accounting standards to protect investors and the strength of the U.S. market. While Ms. White acknowledged that the Commission has not taken “formal action” related to such standards since 2010, she described the past years as a success:

Ms. White also suggested that such progress needs to continue. She concluded: