Accounting Roundup
Welcome to the quarterfvly edition of Accounting Roundup. In the second quarter of 2017, the FASB
issued ASUs that (1) address diversity in practice related to service concession arrangements
and (2) amend the scope of modification accounting for share-based payment arrangements.
The Board also released proposed ASUs that would (1) make targeted improvements to its
consolidation guidance for VIEs and (2) eliminate certain outdated guidance as part of its ongoing
technical corrections project.
Other notable developments this quarter include the PCAOB’s issuance of:
- A final standard that significantly modifies the auditor’s reporting model.
- A proposed standard on auditing accounting estimates.
- A proposal on using the work of specialists.
Further, the SEC announced that it is expanding to all companies certain benefits related to the confidential review process for draft initial registration statements under the JOBS Act.
In addition, the U.S. District Court for the District of Columbia released its final judgment in the litigation related to the SEC’s final rule on conflict minerals and remanded the case to the Commission. After the April 3, 2017, ruling by the district court, the SEC announced that it is suspending enforcement of some requirements in the conflict minerals rule.
The biggest news on the international front was the IASB’s issuance of IFRS 17, which supersedes IFRS 4 and establishes principles for the recognition, measurement, presentation, and disclosure of insurance contracts. The IASB also released an IFRIC interpretation on uncertainty regarding income tax treatments as well as EDs that would make (1) narrow-scope amendments intended to reduce the diversity in the application of the guidance in IAS 16 on PP&E and (2) minor amendments to the guidance on certain prepayable assets in IFRS 9.
Note that in this quarterly edition, an asterisk in the article title denotes events that occurred in June or that were not addressed in the April or May issue of Accounting Roundup, including updates to previously reported topics. Events without asterisks were covered in those monthly issues.
For the latest news and publications, visit the Deloitte Accounting Research Tool (DART) and Deloitte’s US GAAP Plus Web site or subscribe to Weekly Roundup. Also see our Twitter feed for up-to-date information on the latest news, research, events, and more.
Leadership Changes
FASAB: On May 17, 2017, the FASAB announced that Graylin Smith has been reappointed to the FASAB for a second five-year term beginning on July 1, 2017, and ending on June 30, 2022.
GASB: On May 17, 2017, the FAF board of trustees named Jeffrey J. Previdi as vice-chairman of the GASB to replace Jan I. Sylvis, whose term ends on June 30, 2017. Mr. Previdi’s term will begin on July 1, 2017.
IAASB: On April 6, 2017, IFAC announced that it has extended the term of Prof. Arnold Schilder as IAASB chairman. The extension “is due to the current review of potential enhancements to international standard-setting arrangements being undertaken by key stakeholders.”
IASB: On May 11, 2017, the IFRS Foundation trustees announced that Dr. Jianqiao Lu has been appointed as a member of the IASB for a five-year term beginning in August 2017. Further, on June 13, 2017, the trustees announced the appointment of Ann Tarca and Nick Anderson as IASB members. Professor Tarca will join the IASB in July 2017 and Mr. Anderson in September 2017, both for an initial five-year term. The foundation also announced on June 1, 2017, that Alan Beller, Werner Brandt, Takafumi Sato, and Kurt Schacht have been reappointed as trustees for a second three-year term beginning on January 1, 2018.
SEC: On May 4, 2017, the Senate confirmed Walter J. (“Jay”) Clayton III as chairman of the SEC. Mr. Clayton was nominated by then-President-elect Donald Trump on January 4, 2017, and replaced acting chairman Michael Piwowar, who led the SEC after Mary Jo White’s resignation in January 2017. Mr. Clayton’s term will end on June 5, 2021.
In addition, on May 12, 2017, the SEC appointed William H. Hinman as the director of the Commission’s Division of Corporation Finance. Mr. Hinman replaced acting director Shelley Parratt, who led the Division after Keith Higgins’s resignation in January 2017.
Further, on June 8, 2017, the SEC named Division of Enforcement Acting Director Stephanie Avakian and former federal prosecutor Steven Peikin as codirectors of the Division of Enforcement. They replaced Andrew J. Ceresney, who resigned at the end of 2016.
Dbriefs for Financial Executives
We invite you to participate in Dbriefs, Deloitte’s webcast series that provides valuable insights on important developments affecting your business. Gain access to innovative ideas and critical information during these webcasts.
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For more information, please see our complete Dbriefs program guide or click a link below for more information about any of these upcoming Dbriefs webcasts (all webcasts begin at 2:00 p.m. (EDT) unless otherwise noted):
- Thursday, July 13, 12:00 p.m. (EDT): Implementation of the New FASB Revenue Standard: The Final Countdown.
- Wednesday, July 19, 3:00 p.m. (EDT): The CFO as a Strategist-Catalyst Partner to the CEO.
- Wednesday, July 26, 1:00 p.m. (EDT): Revenue Recognition: Year-End Considerations for Technology Companies.
- Wednesday, August 9: Emerging Technologies: Is Your Tax Department Keeping Pace?
- Wednesday, August 16: Fostering Talent With the Changing Role of Controllership.
- Wednesday, August 23: The Cyber Talent Gap: New Considerations and Strategies.
- Wednesday, August 30: Exponential Change: Guiding Transformation by Challenging Basic Assumptions.
- Thursday, August 31, 3:00 p.m. (EDT): Advanced Forecasting in FP&A: Automation Is Here and Expanding.
- Thursday, September 7: FASB’s Targeted Improvements to Hedge Accounting: Smoother Sailing Ahead?
- Tuesday, September 12: US Government Contracting Hot Topics: Navigating an Evolving Regulatory Environment.
- Tuesday, September 19: Quarterly Accounting Roundup: An Update on Q3 2017 Important Developments.
- Wednesday, September 27, 3:00 p.m. (EDT): Thriving in Uncertainty: The CFO’s Margin Improvement Playbook in a Digital World.
Don’t miss out — register for these webcasts today.
Featured Publication
On May 11, 2017, Deloitte issued the 2017 edition of A Roadmap to the Preparation of the Statement of Cash Flows. Changes to this year’s publication include updates related to the amendments in FASB ASUs 2016-15 (on classification of certain cash receipts and cash payments) and 2016-18 (on restricted cash). Specifically, this year’s edition highlights guidance (including pending guidance) and interpretations that entities apply before and after adopting these two ASUs.
Other Deloitte Publications
Publication | Title | Affects |
|---|---|---|
June 22, 2017, Audit & Assurance Update | A Summary of the May 24–25 Meeting of the PCAOB’s Standing Advisory Group | All entities. |
June 20, 2017, Heads Up | PCAOB Adopts Changes to the Auditor’s Report | Auditors. |
June 5, 2017, Heads Up | Implementing the New Revenue Standard — How Do Your Disclosures Stack Up? | All entities. |
June 2017 TRG Snapshot | June 2017 TRG Meeting on Credit Losses | All entities. |
May 11, 2017, Heads Up | FASB Amends the Scope of Modification Accounting for Share-Based Payment Arrangements | All entities. |
May 9, 2017, Heads Up | Internal Control Considerations Related to Adoption of the New Revenue Recognition Standard | All entities. |
May 2017 Power & Utilities Spotlight | Making Power and Utilities Companies Resilient in a Changing Risk Landscape | Power and utilities entities. |
April 25, 2017, Heads Up | Frequently Asked Questions About the FASB’s New Leases Standard | All entities. |
April 4, 2017, Heads Up | FASB Amends the Amortization Period for Certain Callable Debt Securities Purchased at a Premium | All entities. |
April 4, 2017, Heads Up | Adopting the New Revenue Standard — Where Do Companies Stand? | All entities. |
April 4, 2017, Financial Reporting Alert | SEC Reemphasizes Its Continued Focus on the New Revenue Standard, Including Advancing ICFR | SEC registrants. |
Accounting — New Standards and Exposure Drafts
Consolidation
FASB Proposes Improvements to Consolidation Guidance*
Affects: All entities.
Summary: On June 22, 2017, the FASB issued a proposed ASU that would make targeted improvements that are “intended to reduce the cost and complexity of financial reporting associated with consolidation of variable interest entities.” Under the proposal:
- Private companies would be offered an alternative under which they “would not have to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities.”
- “Indirect interests held through related parties in common control arrangements would be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.”
- Consolidation would no longer be mandatory when “power is shared among related parties or when commonly controlled related parties, as a group, have the characteristics of a controlling financial interest but no reporting entity individually has a controlling financial interest.”
Next Steps: Comments on the proposed ASU are due by September 5, 2017. For more information, see the press release and FASB in Focus newsletter on the FASB’s Web site.
Service Concession Arrangements
FASB Issues Guidance on Service Concession Arrangements
Affects: All entities.
Summary: On May 16, 2017, the FASB issued ASU 2017-10 in response to a consensus reached by the EITF at its March 2017 meeting. The ASU addresses “diversity in practice in how an operating entity determines the customer of the operation services for transactions within the scope of [ASC] 853” by “clarifying that the grantor is the customer of the operation services in all cases for those arrangements.” The amendments also allow for a “more consistent application of other aspects of the revenue guidance, which are affected by this customer determination.”
Next Steps: For entities that have not yet adopted ASC 606, the effective date is aligned with that for ASC 606. For public business entities that have adopted ASC 606, the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For most other entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted.
Share-Based Payment
FASB Amends the Scope of Modification Accounting for Share-Based Payment Arrangements
Affects: All entities.
Summary: On May 10, 2017, the FASB issued ASU 2017-09, which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification.
Next Steps: For all entities, the ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period.
Other Resources: Deloitte’s May 11, 2017, Heads Up.
Technical Corrections
FASB Proposes Technical Corrections to the Codification*
Affects: All entities.
Summary: On June 27, 2017, the FASB issued two proposed ASUs as part of its ongoing technical corrections project (i.e., the Board’s continuing efforts to clarify the Codification in ways that are not expected to significantly affect current practice or to result in burdensome administrative costs).
One proposal would supersede the guidance for steamship entities in ASC 995 with respect to “unrecognized deferred taxes related to certain statutory reserve deposits.” Specifically, it would require entities with “unrecognized deferred income taxes related to statutory deposits made on or before December 15, 1992, . . . to recognize the unrecognized income taxes in accordance with [ASC] 740.”
The other proposal would eliminate “deferred tax guidance on bad debt reserves of savings and loans that arose after December 31, 1987.” Outdated guidance related to the OCC’s Banking Circular 202 on accounting for net deferred tax charges would also be superseded.
Next Steps: Comments on both proposals are due by August 28, 2017.
International
IASB Proposes Amendments to IAS 16*
Affects: Entities reporting under IFRSs.
Summary: On June 20, 2017, the IASB published an ED that proposes narrow-scope amendments intended to reduce the diversity in the application of the guidance in IAS 16 on PP&E. The amendments “would prohibit deducting from the cost of an item of [PP&E] any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity would recognise those sales proceeds in profit or loss.”
Next Steps: Comments on the ED are due by October 19, 2017.
Other Resources: For more information, see the press release on the IASB’s Web site.
IASB Publishes Interpretation on Uncertain Tax Treatments*
Affects: Entities reporting under IFRSs.
Summary: On June 7, 2017, the IASB published IFRIC Interpretation 23, which clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty regarding income tax treatments.
Topics addressed in the new interpretation include:
- “[W]hether an entity considers uncertain tax treatments separately.”
- “[T]he assumptions an entity makes about the examination of tax treatments by taxation authorities.”
- “[H]ow an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.”
- “[H]ow an entity considers changes in facts and circumstances.”
Next Steps: IFRIC 23 is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.
Other Resources: For more information, see Deloitte’s June 7, 2017, IFRS in Focus as well as the press release on the IASB’s Web site.
IASB Issues New Insurance Contracts Standard
Affects: Entities reporting under IFRSs.
Summary: On May 18, 2017, the IASB released IFRS 17, which supersedes IFRS 4 and establishes principles for the recognition, measurement, presentation, and disclosure of insurance contracts. The main objective of IFRS 17 is to reduce the diversity in practice that arose under IFRS 4, which allowed companies “to carry on accounting for insurance contracts using national accounting standards, resulting in a multitude of different approaches.” The new standard increases comparability “by requiring all insurance contracts to be accounted for in a consistent manner.”
Next Steps: IFRS 17 is effective for annual reporting periods beginning on or after January 1, 2021. Earlier application is permitted if both IFRS 15 (on revenue recognition) and IFRS 9 (on financial instruments) have also been applied. The standard should be applied retrospectively unless it is impracticable to do so; entities then have the option to use a modified retrospective approach or the fair value approach.
Other Resources: Deloitte’s May 18, 2017, IFRS in Focus. Also see the following resources on the IASB’s Web site:
IASB Proposes Minor Amendments to IFRS 9
Affects: Entities reporting under IFRSs.
Summary: On April 21, 2017, the IASB published an ED that addresses concerns about how certain prepayable financial assets are classified under IFRS 9 (on financial instruments). Under the ED, certain financial assets containing prepayment features that might result in so-called negative compensation could be measured at amortized cost or at fair value through other comprehensive income (depending on a company’s business model) if two conditions are met:
- The assessment that the prepayment amount is not solely a payment of principal and interest on the principal amount outstanding only hinges on the fact that “the party that chooses to terminate the contract early . . . may receive reasonable additional compensation for doing so.”
- “[W]hen the entity initially recognises the financial asset, the fair value of the prepayment feature is insignificant.”
Comments on the ED were due by May 24, 2017.
Other Resources: Deloitte’s April 24, 2017, IFRS in Focus. Also see the press release on the IASB’s Web site.
Accounting — Other Key Developments
Credit Losses
FASB’s TRG for Credit Losses Holds June 2017 Meeting*
Affects: All entities.
Summary: At its June 2017 meeting, the FASB’s transition resource group (TRG) for credit losses discussed the current expected credit losses (CECL) model, which was added to U.S. GAAP by ASU 2016-13. Specifically, the TRG addressed the following topics:
- Determining the effective interest rate under the CECL model.
- Scope of guidance related to purchased financial assets with credit deterioration with respect to beneficial interests accounted for under ASC 325-40.
- Applying the transition guidance to pools of purchased credit-impaired assets under ASC 310-30.
- Accounting for troubled debt restructurings under the CECL model.
- Estimating the life of a credit card receivable under the CECL model.
Other Resources: Deloitte’s June 2017 TRG Snapshot.
Revenue Recognition
AICPA Issues Revenue Working Drafts*
Affects: Entities in industries within the scope of the working drafts.
Summary: In April 2017, the AICPA’s revenue recognition task forces released for public comment 11 working drafts on accounting issues associated with the implementation of the new revenue standard for airlines, gaming, hospitality, and time-share entities. The working drafts address the following topics:
- Passenger ticket breakage, ancillary fees, interline transactions, brand name andcustomer lists, interline loyalty transactions, and change fees (airlines).
- Loyalty tier status (gaming).
- Franchise fees, hotel service arrangements, and accounting for owned and leasedproperty (hospitality).
- Collectibility (time shares).
Further, in June and early July 2017, the AICPA issued 12 additional working drafts on accounting issues associated with the implementation of the new revenue standard for airlines, asset management, engineering and construction, gaming, health care, hospitality, software, and telecommunications entities. These working drafts address the following topics:
- Regional contracts (airlines).
- Management fee revenue, management fee waivers, incentive or performance feerevenue, and incentive-based capital allocations (asset management).
- Impact of termination for convenience on contract duration (engineering and construction contractors).
- Income statement presentation of wide-area progressive (WAP) operators’ fees,participation and similar arrangements, accounting for loyalty points redeemed with third parties, and timing for recognition of a WAP operator’s liability for base progressive and incremental progressive jackpot amounts (gaming).
- Presentation and disclosure, and consideration of ASC 606 in connection with third-party settlement estimates (health care).
- Consideration to customer (key money) (hospitality).
- Transfers of control for distinct software licenses and considerations related to estimating stand-alone selling prices (software).
- Miscellaneous fees (telecommunications).
Next Steps: Comments on the April 2017 working drafts were due by June 1, 2017; comments on the June 2017 working drafts are due by August 1, 2017; and comments on the early July working drafts are due by September 1, 2017.
Other Resources: For more information, see the revenue recognition page on the AICPA’s Web site.
XBRL
FASB Seeks Comments on Its Review of the Financial Reporting Taxonomy
Affects: All entities.
Summary: On May 10, 2017, the FASB released an invitation to comment that is intended to allow the Board “to assess the efficiency and effectiveness of the U.S. GAAP Financial Reporting Taxonomy (GAAP Taxonomy).” The invitation to comment discusses potential enhancements to (1) “the usability of the GAAP Taxonomy” and (2) “the processes that support taxonomy-related activities.” The FASB is performing the taxonomy review in response to a request made by the SEC in January 2017.
Comments were due by June 15, 2017.
Next Steps: The FASB will hold a public roundtable on July 18, 2017, to discuss the feedback received.
Other Resources: For more information, see the press release on the FASB’s Web site.
Auditing Developments
AICPA
AICPA Issues New Technical Practice Aids
Affects: Auditors.
Summary: On April 26, 2017, the AICPA issued five new Q&As related to its Technical Practice Aids on internal controls. Specifically, the following Q&As have been added to TIS Section 8200:
- .17, “Obtaining an Understanding of Business Processes Relevant to Financial Reporting and Communication.”
- .18, “Obtaining an Understanding of Internal Control Relevant to the Audit.”
- .19, “Obtaining an Understanding of the Controls Relevant to the Audit.”
- .20, “Control Activities That Are Always Relevant to the Audit.”
- .21, “Control Activities That May Be Relevant to the Audit.”
Other Resources: For more information, see the recently issued technical questions and answers page on the AICPA’s Web site.
AICPA Issues Framework Related to Cybersecurity Risk Management
Affects: Entities and CPAs providing advisory or attestation services.
Summary: On April 26, 2017, the AICPA issued a framework related to cybersecurity risk management. The purpose of the framework is to “enable all organizations — in industries worldwide — to take a proactive and agile approach to cybersecurity risk management and to communicate on those activities with stakeholders.”
Other Resources: For more information, see the press release and system and organization controls for cybersecurity page on the AICPA’s Web site. In addition, see Deloitte’s cybersecurity risk management examination discussion on Deloitte.com.
AICPA Issues Proposed SAS on Employee Benefit Plans
Affects: Auditors of employee benefit plans.
Summary: On April 20, 2017, the ASB of the AICPA issued a proposed SAS that addresses audits of financial statements of employee benefit plans subject to the Employee Retirement Income Security Act of 1974. The proposed SAS is being issued in response to a 2015 Department of Labor report that criticized the quality of employee benefit plan audits.
Next Steps: Comments on the proposed SAS are due by August 21, 2017.
CAQ
CAQ Issues Alert on Disclosures Related to New Accounting Standards*
Affects: SEC registrants and their auditors.
Summary: On June 28, 2017, the CAQ issued an alert to encourage its members to “focus on evaluating the adequacy of management’s disclosure of impending changes in accounting principles.” The alert is being released to provide auditors with information about the disclosure requirements in the SEC’s SAB 74 in light of the upcoming effective dates of the FASB’s standards on leases, credit losses, and revenue. SAB 74 “requires that when a recently issued accounting standard has not yet been adopted, a registrant discuss the potential effects of the future adoption in its interim and annual SEC filings.”
CAQ Updates Publication on Assessing External Auditors
Affects: Audit committees.
Summary: On April 18, 2017, the CAQ released an updated version of its publication on assessing external auditors. The purpose of the publication is “to assist audit committees in carrying out their responsibilities of appointing, overseeing, and determining compensation for the external auditor.” The update takes into account “upcoming changes in accounting rules and standards and other potential risk areas.”
PCAOB
PCAOB Proposes New Requirements Related to Auditing Accounting Estimates and the Use of Specialists*
Affects: Registered public accounting firms.
Summary: On June 1, 2017, the PCAOB issued two new proposals on auditing accounting estimates, including fair value measurements, and the use of the work of specialists. The proposals are intended to strengthen and enhance the existing standards and to address the difference between the auditor’s use of a company’s specialists and those employed or engaged by the auditors. Specifically, the proposed changes are intended to:
- Establish a single standard for, and build on the existing approaches to, auditing estimates (testing the company’s process, developing an independent expectation, and evaluating evidence from the subsequent transactions and events) by expanding the guidance for auditors.
- Better align the auditing of accounting estimates with the PCAOB’s risk assessment standards.
- Update the standards to address the use of pricing services by both management and auditors.
- Establish a uniform risk-based approach to testing and evaluating the work of a company’s specialists and amend the standards on audit evidence.
- Establish a common supervisory approach for auditor specialists, whether employed or engaged by the auditors, specifically ensuring appropriate oversight and supervision in both situations.
Next Steps: Comments on the proposals are due by August 30, 2017.
Other Resources: For more information, see the press releases on auditing accounting estimates and using the work of specialists on the PCAOB’s Web site and Deloitte’s June 22, 2017, Audit & Assurance Update.
PCAOB Issues Standard on Auditor’s Reporting Model
Affects: Registered public accounting firms.
Summary: On June 1, 2017, the PCAOB released an auditor reporting standard that significantly modifies the auditor’s reporting model. While the standard retains the current “pass/fail” approach, it also significantly increases the information included in auditors’ reports. The key changes to the auditor’s report under the standard are:
- A new required section describing critical audit matters (CAMs) arising from the audit of the current period’s financial statements. In this new section, the auditor will identify the CAMs, describe the principal considerations that led to the particular CAMs, describe how the auditor addressed the CAMs in the audit, and refer to the related financial statement accounts and disclosures. In addition:
- CAMs are defined as any “matter that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment.”
- The standard includes a nonexclusive list of factors for the auditor to take into account when determining whether a matter involved especially challenging, subjective, or complex auditor judgment.
- The determination of a CAM should be made in the context of a particular audit with the aim of providing audit-specific information rather than a discussion of generic risks.
- The standardization of the order and form of the auditor’s report, with the opinion section appearing first and section titles included to guide the reader.
- The addition of a new statement indicating that the auditor is required to be independent with respect to the company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB.
- Enhanced descriptions of the auditor’s roles and responsibilities in the audit.
- Inclusion of the year the auditor began serving consecutively as the company’s auditor.
Next Steps: The effective date will be phased in as follows:
- Communication of CAMs will be effective:
- For fiscal years ending on or after June 30, 2019, for auditor reports issued in connection with audits of large accelerated filers (as defined by the SEC).
- For fiscal years ending on or after December 15, 2020, for auditor reports issued for all other audits to which the requirements apply.
- Remaining changes to the auditor’s report, including auditor tenure, will apply to auditor reports issued for fiscal years ending on or after December 15, 2017.
The PCAOB will submit the new auditor reporting standard and related amendments to the SEC for its approval. The SEC’s approval process typically includes an additional public comment period. Auditors may elect to comply with the standard before its effective date at any point after the SEC approves it.
Other Resources: Deloitte’s June 20, 2017, Heads Up. Also see the press release on the PCAOB’s Web site.
Governmental Accounting and Auditing Developments
FASAB
FASAB Proposes Implementation Guidance on Establishing Opening Balances for General PP&E*
Affects: Entities reporting under federal financial accounting standards.
Summary: On June 21, 2017, the FASAB released an ED of a proposed technical release that would provide guidance on implementing the requirements in FASAB Statement 50, which permits reporting entities to “apply alternative methods in establishing opening balances for general property, plant, and equipment (PP&E)” in certain circumstances.
Next Steps: Comments on the ED are due by July 21, 2017.
Other Resources: For more information, see the press release on the FASAB’s Web site.
FASAB Issues Statement on Tax Expenditures
Affects: Entities reporting under federal financial accounting standards.
Summary: On May 31, 2017, the FASAB issued Statement 52, which requires that the U.S. government’s consolidated financial report contain “narrative disclosures and information regarding tax expenditures.” FASAB Chairman D. Scott Showalter states that the new requirements “will help users understand tax expenditures, their general purposes, impact on tax collections, and contribution to program costs.”
Next Steps: Statement 52 is effective for reporting periods beginning after September 30, 2017. Early application is encouraged.
Other Resources: For more information, see the press release on the FASAB’s Web site.
FASAB Issues Technical Release on PP&E
Affects: Entities applying federal financial accounting standards.
Summary: On April 10, 2017, the FASAB issued Technical Release 17, which amends certain previously published technical releases to conform them with FASAB Statement 50, which provides guidance on establishing opening balances for general PP&E. Specifically, the technical release reiterates that Statement 50 rescinded Statement 35 (on estimating the historical cost of general PP&E) and clarifies that Statement 6 (on accounting for PP&E), which was amended by Statement 50, now contains “all standards-level implementation guidance for general [PP&E] (with the exception of certain provisions applicable to internal use software).”
Technical Release 17 became effective upon issuance.
GASB
GASB Issues New Leases Standard*
Affects: Entities reporting under financial accounting and reporting standards for state and local governments.
Summary: On June 28, 2017, the GASB issued Statement 87, which “establishes a single approach to accounting for and reporting leases by state and local governments.” The new standard’s objective is to enhance “the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract.”
Next Steps: Statement 87 is effective for reporting periods beginning after December 15, 2019. Early application is encouraged.
Other Resources: For more information, see the press release on the GASB’s Web site.
GASB Issues Guidance on Certain Debt Extinguishment Issues
Affects: Entities reporting under financial accounting and reporting standards for state and local governments.
Summary: On May 16, 2017, the GASB issued Statement 86, which improves “consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources — resources other than the proceeds of refunding debt — are placed in an irrevocable trust for the sole purpose of extinguishing debt.”
Next Steps: Statement 86 is effective for reporting periods beginning after June 15, 2017. Early application is encouraged.
GASB Issues Implementation Guide Related to OPEB Standard
Affects: Entities reporting under financial accounting and reporting standards for state and local governments.
Summary: On May 10, 2017, the GASB issued an implementation guide consisting of Q&As that are intended to help state and local government financial statement preparers and auditors apply GASB Statement 74, which provides guidance on financial reporting for postemployment benefit plans other than pension plans. Topics discussed in the guide include the following:
- Scope and applicability of Statement 74.
- Types of other postemployment benefits (OPEB) and OPEB plans.
- Defined benefit OPEB plans that are administered through trusts.
- Assets accumulated to provide OPEB through defined benefit OPEB plans that are not administered through trusts that meet the criteria in paragraph 3 of Statement 74.
- Defined contribution OPEB plans that are administered through trusts that meet the criteria in paragraph 3 of Statement 74.
- Effective date and transition of Statement 74.
Next Steps: Most of the requirements in the guide are effective for reporting periods beginning after December 15, 2016. Early application is encouraged if Statement 74 has been implemented.
GAO
GAO Proposes Updates to “Yellow Book”
Affects: Auditors of federal, state, and local governments.
Summary: On April 5, 2017, the GAO issued an ED that proposes changes to its “Yellow Book,” which contains generally accepted government auditing standards (GAGAS). The updates include:
- Revisions to the chapter format.
- Clarification of the independence requirements to which the auditor is subject “when the engaging party differs from the responsible party.”
- Inclusion of guidance stating that “any services performed by auditors related to preparing accounting records and financial statements, other than those defined as impairments to independence, create significant threats to auditors’ independence and that auditors should document the threats and safeguards applied to eliminate and reduce the threats to an acceptable level or decline to perform the services.”
- Revisions to the CPE requirements in an attempt to increase GAGAS proficiency.
- Expansion of peer review standards.
- New definition of waste and additional “requirements for reporting or communicating waste that auditors become aware of during audits.”
- Incorporation of SSAE 18 and SSARS 21 into GAGAS “for auditors conducting attestation engagements and reviews of financial statements, respectively.”
- Updates to guidance related to internal controls.
Next Steps: Comments on the ED are due by July 6, 2017.
Other Resources: For more information, see the press release on the GAO’s Web site.
Regulatory and Compliance Developments
SEC
SEC to Expand Confidential Review Process for Draft Initial Registration Statements*
Affects: SEC registrants.
Summary: On June 29, 2017, the SEC’s Division of Corporation Finance announced that the SEC is expanding to all companies certain benefits related to the confidential review process for draft initial registration statements under the JOBS Act. According to the announcement, effective July 10, 2017:
- Any company will be able to provide a confidential draft initial public offering registration statement to the SEC staff for review before the company’s public filing. The company will be required to publicly file this draft and any related amendments with the SEC no later than 15 days before its roadshow or requested effective date.
- An issuer may voluntarily submit a draft registration statement, for review on a nonpublic basis, within one year of the effective date of its initial Securities Act registration statement or its Exchange Act Section 12(b) registration statement.
- The SEC will not delay processing a draft registration statement if an issuer reasonably believes that omitted financial information will not be required at the time the registration statement is publicly filed.
- The SEC will continue to consider any waiver requests made under Regulation S-X, Rule 3-13.
- Foreign private issuers can elect to avail themselves of these benefits.
Other Resources: For more information, see the press release on the SEC’s Web site and Deloitte’s June 30, 2017, news article.
CAQ SEC Regulations Committee Releases Highlights of March 23, 2017, Joint Meeting With SEC Staff*
Affects: SEC registrants.
Summary: On June 23, 2017, the CAQ posted to its Web site the highlights of the March 23, 2017, CAQ SEC Regulations Committee joint meeting with the SEC staff. Topics discussed at the meeting include:
- SAB 74 disclosures.
- Non-GAAP measures.
- Relationship between the new GAAP definition of a business and the definition under Regulation S-X, Rule 3-11.
- The effects of accounting changes by a successor entity on the predecessor-period financial statements.
- Adoption of ASC 606 when an emerging growth company (EGC) that elected private-company adoption dates ceases to qualify as an EGC.
- Electronic submission of prefiling correspondence.
Other Resources: Deloitte’s June 27, 2017, journal entry.
SEC Issues Small-Entity Compliance Guide on Intrastate Offering Exemptions
Affects: SEC registrants.
Summary: On April 19, 2017, the SEC issued a small-entity compliance guide that provides guidance on the SEC’s October 2016 final rules that “modernize how issuers can raise money to fund their businesses through intrastate offerings while maintaining investor protections.” Topics covered in the guide include requirements of Rules 147 and 147A, restrictions on resales, filing requirements and relationship with state securities laws, and integration.
Federal Court Remands Conflict Minerals Case to SEC
Affects: SEC registrants.
Summary: On April 3, 2017, the U.S. District Court for the District of Columbia released its final judgment in the litigation related to the SEC’s final rule on conflict minerals and remanded the case to the Commission. After the April 3, 2017, ruling by the district court, the SEC announced that it is suspending enforcement of some requirements in the conflict minerals rule. Specifically, the public statement released by the Division of Corporation Finance notes:
The court’s remand has now presented significant issues for the Commission to address. At the direction of the Acting Chairman, we have considered those issues. In light of the uncertainty regarding how the Commission will resolve those issues and related issues raised by commenters, the Division of Corporation Finance has determined that it will not recommend enforcement action to the Commission if companies, including those that are subject to paragraph (c) of Item 1.01 of Form SD, only file disclosure under the provisions of paragraphs (a) and (b) of Item 1.01 of Form SD. This statement is subject to any further action that may be taken by the Commission, expresses the Division’s position on enforcement action only, and does not express any legal conclusion on the rule. [Emphasis added]
Connecting the Dots
In April 2014, the U.S. Court of Appeals for the District of Columbia Circuit (the “Appellate Court”) held that parts of the SEC’s conflict minerals rule and of Section 1502 of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act violate the First Amendment of the U.S. Constitution to the extent that they require “regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free.” ’ ” In August 2015, the Appellate Court upheld the ruling.
Other Resources: For more information, see Michael Piwowar’s public statement on ruling on the SEC’s Web site. Also see the GAO’s letter to congressional committees about its review of disclosures provided in connection with the conflict minerals rule.
SEC Staff Releases FAQs on IFRS Taxonomy and Updates FAQs on Inline XBRL
Affects: SEC registrants.
Summary: On April 27, 2017, the SEC staff issued FAQs on the IFRS taxonomy, which became available on March 1, 2017, for use by foreign private issuers that submit their financial statements in accordance with IFRSs. In addition, the SEC staff updated its FAQs on inline XBRL, which enables entities to embed XBRL data directly into HTML.
SEC Staff Updates C&DIs
Affects: SEC registrants.
Summary: In April 2017, the staff in the SEC’s Division of Corporation Finance issued the following C&DIs:
- Question 141.06 of the Securities Act Rules C&DIs — Discusses whether “an issuer making ongoing offers and sales pursuant to Rule 147 [is] able to transition to offers and sales in reliance on Rule 147A.”
- Questions 201.02 and 202.01 of the Regulation Crowdfunding C&DIs — Question 201.02 addresses the dollar amount an issuer should use “to determine the threshold at which disclosure of related party transactions is required under Rule 201(r),” and Question 202.01 covers how an issuer determines “the number of holders of record for purposes of determining eligibility to terminate its duty to file ongoing reports pursuant to Rule 202(b)(2) of Regulation Crowdfunding.”
Appendix A: Current Status of FASB Projects
This appendix summarizes the objectives,1 current status, and next steps for the FASB’s active standard-setting projects (excluding research initiatives).
Project | Description | Status and Next Steps |
|---|---|---|
Recognition and Measurement Projects | ||
Accounting for financial instruments: hedging | The purpose of this project is to “make targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders.” | On September 8, 2016, the FASB issued a proposed ASU that would make targeted improvements to the accounting for hedging activities. The proposed amendments “would expand and refine hedge accounting for both nonfinancial and financial risk components and would align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.” Comments on the proposal were due by November 22, 2016. For more information, see Deloitte’s September 14, 2016, Heads Up. During the first quarter of 2017, the FASB has affirmed a number of the proposed amendments and revised others. For more information, see Deloitte’s February 1, 2017; February 16, 2017; March 10, 2017; March 23, 2017; and June 12, 2017, journal entries. On June 7, 2017, the Board voted to proceed with issuing a final ASU, which is expected to be released in August 2017. For public business entities, the final ASU will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For other entities, it will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption will be permitted. |
Collaborative arrangements: targeted improvements | The purpose of this project is “to clarify when transactions between partners in a collaborative arrangement (that is within the scope of [ASC 808]) should be accounted for as revenue transactions in [ASC 606].” | The Board added this project to its technical agenda on November 16, 2016. |
Conceptual framework | The objective of the conceptual framework project is “to develop an improved conceptual framework that provides a sound foundation for developing future accounting standards.” | The FASB is undertaking three conceptual framework projects: (1) presentation, (2) measurement, and (3) elements. On August 11, 2016, the FASB issued a proposed concepts statement that would add a new chapter on presentation of financial statement information to the conceptual framework. Comments were due by November 9, 2016. On May 3, 2017, the Board discussed feedback received and decided to add a separate conceptual framework project on elements of financial statements. |
Consolidation reorganization and targeted improvements | The purpose of this project is to clarify and make targeted improvements to the consolidation guidance in ASC 810. | On November 2, 2016, the Board added this project to its technical agenda. Further, it tentatively decided to (1) “clarify the consolidation guidance in [ASC 810]” by dividing it into separate Codification subtopics for voting interest entities and variable interest entities (VIEs); (2) develop a new Codification topic, ASC 812, that would include those reorganized subtopics and would completely supersede ASC 810; (3) rescind the subsections on consolidation of entities controlled by contract in ASC 810-10-15 and in ASC 810-30 on research and development arrangements; (4) “further clarify that power over a VIE is obtained through a variable interest”; and (5) “provide further clarification of the application of the concept of ‘expected,’ which is used throughout the VIE consolidation guidance.” At its March 8, 2017, meeting, the FASB discussed the feedback received at its December 16, 2016, public roundtable and voted to move forward with a proposed ASU that reorganizes the consolidation guidance. The FASB expects to issue a proposed ASU in the third quarter of 2017. For more information, see Deloitte’s November 8, 2016, and March 14, 2017, journal entries. |
Consolidation: targeted improvements to related-party guidance for VIEs | The objective of this project is to make targeted improvements to the related-party guidance for VIEs. | On June 22, 2017, the FASB published a proposed ASU under which (1) private companies “would not have to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities”; (2) “Indirect interests held through related parties in common control arrangements would be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests”; and (3) consolidation would no longer be mandatory when “power is shared among related parties or when commonly controlled related parties, as a group, have the characteristics of a controlling financial interest but no reporting entity individually has a controlling financial interest.” Comments are due by September 5, 2017. For more information, see Deloitte’s March 14, 2017, journal entry. |
Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract (EITF Issue 17-A) | The purpose of this project is to address the customer’s accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract. | On May 10, 2017, the Board decided to add this project to the EITF’s agenda. For more information, see Deloitte’s May 15, 2017, journal entry. |
Improving the accounting for asset acquisitions and business combinations (phase 3 of the definition of a business project) | The purpose of this phase of the project is to consider whether there are differences in the acquisition and derecognition guidance for assets and businesses that could be aligned. | The Board has not yet begun deliberating this phase of the project. |
Insurance: targeted improvements to the accounting for long-duration contracts | The purpose of this project is to “develop targeted improvements to insurance accounting. Those improvements may address recognition, measurement, presentation, and disclosure requirements for long-duration insurance contracts.“ | On September 29, 2016, the FASB issued a proposed ASU that would make targeted improvements to the recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by insurance entities. The proposed approach would affect the assumptions used to measure the liability for future policy benefits, the measurement of market risk benefits, and the amortization of deferred acquisition costs. Comments on the proposal were due by December 15, 2016. On February 8, 2017, the Board discussed feedback received. No technical decisions were made. For more information, see Deloitte’s October 2016 Insurance Spotlight. |
Liabilities and equity: targeted improvements | The purpose of this project is to “simplify the accounting guidance related to financial instruments with characteristics of liabilities and equity.“ | On December 7, 2016, the FASB issued a proposed ASU that would replace (1) the existing guidance on “down-round“ features in ASC 815-40 with a new accounting model and (2) the indefinite deferrals in ASC 480-10 with a scope exception that has the same applicability. Comments on the proposal were due by February 6, 2017. On March 22, 2017, the Board affirmed its decision to replace the indefinite deferral in ASC 480 with a scope exception. On April 19, 2017, the Board decided that (1) the existence of a down-round feature should not preclude equity classification for an instrument that contains it and (2) a public business entity should reflect the effect of the trigger of a down-round feature as an adjustment to EPS. On May 10, 2017, the FASB decided that the final guidance will be effective for public business entities for fiscal years, including interim periods within those years, beginning after December 18, 2018. Early adoption will be permitted for all entities. The FASB expects to issue a final ASU in the third quarter of 2017. |
Nonemployee share-based payment accounting improvements | The purpose of this project is “to reduce cost and complexity and improve the accounting for nonemployee share-based payment awards issued by public and private companies.“ | 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. Comments on the proposed ASU were due by June 5, 2017. For more information, see Deloitte’s March 10, 2017, Heads Up. |
Revenue recognition: grants and contracts by not-for-profit entities | The purpose of this project is to “improve and clarify existing guidance on revenue recognition of grants and contracts by not-for-profit entities.” | At its April 20, 2016, meeting, the FASB decided to add this project to its technical agenda. Stakeholders have raised two main issues: (1) characterizing grants and contracts with governmental agencies and others as (a) reciprocal transactions (exchanges) or (b) nonreciprocal transactions (contributions) and (2) differentiating between conditions and restrictions for nonreciprocal transactions. The Board deliberated these issues on June 15, 2016; August 31, 2016; December 14, 2016; February 22, 2017; April 19, 2017; and June 7, 2017. On June 7, 2017, the Board directed the staff to draft a proposed ASU for a vote by written ballot. The FASB expects to issue the proposed ASU in the third quarter of 2017. For more information, see Deloitte’s June 16, 2016, journal entry. |
Share-based payments: scope of modification accounting in ASC 718 | This project is intended to reduce the cost and complexity of applying modification accounting in ASC 718. | On May 10, 2017, the FASB issued ASU 2017-09, which clarifies the scope of modification accounting under ASC 718 with respect to changes to the terms or conditions of a share-based payment award. Modification accounting would not apply if a change to an award does not affect the total current fair value (or other applicable measurement), vesting conditions, or the classification of the award. For all entities, the ASU is effective prospectively for awards modified in fiscal years beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. For more information, see Deloitte’s May 11, 2017, Heads Up. |
Technical corrections and improvements | The purpose of this project is to “provide regular updates and improvements to the [Codification] based on feedback received from constituents.“ | On June 27, 2017, the FASB issued two separate proposed ASUs that would eliminate (1) outdated guidance in ASC 942-740 related to bad debt reserves of savings and loans entities and (2) ASC 995, which provides guidance on U.S. steamship entities. Comments on both proposals are due by August 28, 2017. On June 21, 2017, the FASB decided to propose various technical corrections and improvements related to ASU 2016-01 (on recognition and measurement of financial assets and financial liabilities) and ASU 2016-02 (on leases). The FASB expects to issue this proposed ASU in the third quarter of 2017. For more information, see Deloitte’s June 22, 2017, journal entry. |
Presentation and Disclosure Projects | ||
Presentation and Disclosure Projects | The disclosure framework project consists of two phases: (1) the FASB’s decision process and (2) the entity’s decision process. The overall objective of the project is to “improve the effectiveness of disclosures in notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. (Although reducing the volume of the notes to financial statements is not the primary focus, the Board hopes that a sharper focus on important information will result in reduced volume in most cases.)“ | FASB’s Decision Process On March 4, 2014, the FASB issued an ED of a proposed concepts statement that would add a new chapter to the Board’s conceptual framework for financial reporting that contains a decision process for the Board and its staff to use in determining what disclosures should be required in notes to financial statements. Comments on the ED were due by July 14, 2014. For more information, see Deloitte’s March 6, 2014, Heads Up. On September 24, 2015, the FASB issued an ED of proposed amendments to chapter 3 of Concepts Statement 8 that would add a statement that materiality is a legal concept and include a brief summary of the U.S. Supreme Court’s definition of materiality. Comments on the ED were due by December 8, 2015. Entity’s Decision Process On September 24, 2015, the FASB issued a proposed ASU that would amend the Codification to indicate that the omission of disclosures about immaterial information is not an accounting error. The proposal notes that materiality is a legal concept that should be applied to assess quantitative and qualitative disclosures individually and in the aggregate in the context of the financial statements taken as a whole. Comments on the proposal were due by December 8, 2015. For more information, see Deloitte’s September 28, 2015, Heads Up. The Board began its discussion of comments received on December 14, 2016. |
Disclosure framework: disclosure review — defined benefit plans | The purpose of this project is to improve the effectiveness of disclosure requirements that apply to defined benefit plans. | On January 26, 2016, the FASB issued a proposed ASU that would modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Comments on the proposal were due by April 25, 2016. For more information, see Deloitte’s January 28, 2016, Heads Up. At its July 13, 2016, meeting, the FASB discussed feedback on its proposed ASU and directed its staff to conduct additional research. |
Disclosure framework: disclosure review — fair value measurement | The purpose of this project is to improve the effectiveness of fair value measurement disclosures. | On December 3, 2015, the FASB issued a proposed ASU that would modify the disclosure requirements related to fair value measurement. Comments on the proposal were due by February 29, 2016. For more information, see Deloitte’s December 8, 2015, Heads Up. At its June 1, 2016, meeting, the FASB discussed comments received on its proposed ASU and directed its staff to reach out to investors and other financial statement users regarding the proposal. |
Disclosure framework: disclosure review — income taxes | The purpose of this project is to improve the effectiveness of income tax disclosures. | On June 26, 2016, the FASB issued a proposed ASU that would modify existing and add new income tax disclosure requirements. The proposed requirements include describing an enacted change in tax law; disaggregating certain income tax information between foreign and domestic; explaining the circumstances that caused a change in assertion about the indefinite reinvestment of undistributed foreign earnings; and disclosing the aggregate of cash, cash equivalents, and marketable securities held by foreign subsidiaries. Comments on the proposed ASU were due by September 30, 2016. For more information, see Deloitte’s July 29, 2016, Heads Up. On January 25, 2017, the Board discussed the feedback received on the proposed ASU. No technical decisions were made. |
Disclosure framework: disclosures — interim reporting | The purpose of this project is to improve the effectiveness of interim disclosures. | At its May 28, 2014, meeting, the FASB decided to amend ASC 270 “to reflect that disclosures about matters required to be set forth in annual financial statements should be provided on an updated basis in the interim report if there is a substantial likelihood that the updated information would be viewed by a reasonable investor as significantly altering the ’total mix’ of information available to the investor.” |
Disclosure framework: disclosure review — inventory | The purpose of this project is to improve the effectiveness of inventory disclosures. | 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. Comments on the proposed ASU were due by March 13, 2017. For more information, see Deloitte’s January 12, 2017, Heads Up. On June 21, 2017, the Board discussed a summary of comments received. No technical decisions were made. |
Disclosures by business entities about government assistance | The purpose of this project is to “develop disclosure requirements about government assistance that improves the content, quality and comparability of financial information and financial statements and that is responsive to the emerging issues in the changing financial and economic environment in which reporting entities operate.“ | On November 12, 2015, the FASB issued a proposed ASU that would increase financial reporting transparency by requiring specific disclosures about government assistance received by businesses. The objective of the proposed disclosure requirements is to enable financial statement users to better assess (1) the nature of the government assistance, (2) the accounting policies for the government assistance, (3) the impact of the government assistance on the financial statements, and (4) the significant terms and conditions of the government assistance arrangements. Comments on the proposed ASU were due by February 10, 2016. At its June 8, 2016, meeting, the FASB made tentative decisions about the project’s scope, whether to require disclosures about government assistance received but not recognized directly in the financial statements, and omission of information when restrictions preclude an entity from disclosing the information required. For more information, see Deloitte’s November 20, 2015, Heads Up and June 14, 2016, journal entry. |
Simplifying the balance sheet classification of debt | The purpose of this project is to “reduce cost and complexity by replacing the fact-pattern specific guidance in GAAP with a principle to classify debt as current or noncurrent based on the contractual terms of a debt arrangement and an entity’s current compliance with debt covenants.“ | On January 10, 2017, the FASB issued a proposed ASU on determining whether debt should be classified as current or noncurrent in a classified balance sheet. In place of the current, fact-specific guidance in ASC 470-10, the proposed ASU would introduce a classification 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.” Under an exception to the classification principle, an entity would not classify debt as current solely because of the occurrence of a debt covenant violation that gives the lender the right to demand repayment of the debt, as long as the lender waives its right before the financial statements are issued (or are available to be issued). Comments on the proposal were due by May 5, 2017. For more information, see Deloitte’s January 12, 2017, Heads Up. On June 28, 2017, the Board discussed a summary of comments received. No technical decisions were made. |
Appendix B: Significant Adoption Dates and Deadlines
See the Key Dates page on DART for a description of significant adoption dates and deadline dates for FASB/EITF, AICPA, SEC, PCAOB, GASB, FASAB, and IASB/IFRIC standards and proposals.
Appendix C: Glossary of Standards and Other Literature
FASB Accounting Standards Update No. 2017-10, Determining the Customer of the Operation Services — a consensus of the FASB Emerging Issues Task Force
FASB Accounting Standards Update No. 2017-09, Scope of Modification Accounting
FASB Accounting Standards Update No. 2016-18, Restricted Cash — a consensus of the FASB Emerging Issues Task Force
FASB Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments — a consensus of the FASB Emerging Issues Task Force
FASB Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments
FASB Proposed Accounting Standards Update, Targeted Improvements to Related Party Guidance for Variable Interest Entities
FASB Proposed Accounting Standards Update, Technical Corrections and Improvements to Topic 995, U.S. Steamship Entities — Elimination of Topic 995
FASB Proposed Accounting Standards Update, Technical Corrections and Improvements to Topic 942 Financial Services — Depository and Lending — Elimination of Certain Guidance for Bad Debt Reserves of Savings and Loans
FASB Accounting Standards Codification Topic 995, U.S. Steamship Entities
FASB Accounting Standards Codification Topic 853, Service Concession Arrangements
FASB Accounting Standards Codification Topic 740, Income Taxes
FASB Accounting Standards Codification Topic 718, Compensation — Stock Compensation
FASB Accounting Standards Codification Topic 606, Revenue From Contracts With Customers
FASB Accounting Standards Codification Subtopic 325-40, Investments — Other: Beneficial Interests in Securitized Financial Assets
FASB Accounting Standards Codification Subtopic 310-30, Receivables: Loans and Debt Securities Acquired With Deteriorated Credit Quality
FASB Invitation to Comment, U.S. GAAP Financial Reporting Taxonomy — Efficiency and Effectiveness Review
AICPA Statement on Standards for Accounting and Review Services No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification
AICPA Statement on Standards for Attestation Engagements No. 18, Attestation Standards: Clarification and Recodification
AICPA Technical Practice Aids, TIS Section 8200.21, “Control Activities That May Be Relevant to the Audit”
AICPA Technical Practice Aids, TIS Section 8200.20, “Control Activities That Are Always Relevant to the Audit”
AICPA Technical Practice Aids, TIS Section 8200.19, “Obtaining an Understanding of the Controls Relevant to the Audit”
AICPA Technical Practice Aids, TIS Section 8200.18, “Obtaining an Understanding of Internal Control Relevant to the Audit.”
AICPA Technical Practice Aids, TIS Section 8200.17, “Obtaining an Understanding of Business Processes Relevant to Financial Reporting and Communication”
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-1, Regional Contracts
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-11: Change Fees
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-6(i): Interline Transactions — Loyalty Payments
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-6(a, d): Brand Name and Customer List — Timing of Revenue Recognition
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-5: Interline Transactions — Identifying Performance Obligations for Air Travel (Including at the Segment Versus the Ticket Level) and Principal vs. Agent Considerations
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-4: Ancillary Fees and Services
AICPA Revenue Recognition Task Force Working Draft, Airlines Revenue Recognition Implementation Issue #2-3: Passenger Ticket Breakage and Accounting for Travel Vouchers
AICPA Revenue Recognition Task Force Working Draft, Asset Management Revenue Recognition Implementation Issue #10-5A: Incentive-Based Capital Allocations
AICPA Revenue Recognition Task Force Working Draft, Asset Management Revenue Recognition Implementation Issue #10-5: Incentive or Performance Fee Revenue, Excluding Incentive-Based Capital Allocations (Such as Carried Interest)
AICPA Revenue Recognition Task Force Working Draft, Asset Management Revenue Recognition Implementation Issue #10-3: Management Fee Waivers and Customer Expense Reimbursements
AICPA Revenue Recognition Task Force Working Draft, Asset Management Revenue Recognition Implementation Issue #10-2: Management Fee Revenue, Excluding Performance Fee Revenue
AICPA Revenue Recognition Task Force Working Draft, Engineering & Construction Contractors Revenue Recognition Implementation Issue #4-5: Impact of Termination for Convenience on Contract Duration
AICPA Revenue Recognition Task Force Working Draft, Gaming Revenue Recognition Implementation Issue #6-8d: Accounting for Loyalty Points Redeemed With Third Parties
AICPA Revenue Recognition Task Force Working Draft, Gaming Revenue Recognition Implementation Issue #6-8a: Loyalty Credits and Other Discretionary Incentives (Excluding Status Benefits)
AICPA Revenue Recognition Task Force Working Draft, Gaming Revenue Recognition Implementation Issue #6-7: Participation and Similar Arrangements
AICPA Revenue Recognition Task Force Working Draft, Gaming Revenue Recognition Implementation Issue #6-6: Income Statement Presentation of Wide Area Progressive Operators’ Fees Received From Gaming Entities
AICPA Revenue Recognition Task Force Working Draft, Gaming Revenue Recognition Implementation Issue #6-5: The Timing for Recognition of the WAP Operator’s Liability for Base Progressive and Incremental Progressive Jackpot Amounts
AICPA Revenue Recognition Task Force Working Draft, Health Care Entities Revenue Recognition Implementation Issue #8-8: Consideration of FASB ASC 606, Revenue From Contracts With Customers, for Third-Party Settlement Estimates
AICPA Revenue Recognition Task Force Working Draft, Health Care Entities Revenue Recognition Implementation Issue #8-6: Presentation and Disclosure
AICPA Revenue Recognition Task Force Working Draft, Hospitality Revenue Recognition Implementation Issue #7-5: Consideration to Customer (Key Money)
AICPA Revenue Recognition Task Force Working Draft, Hospitality Revenue Recognition Implementation Issue #7-3: Accounting for Owned and Leased Property Revenues
AICPA Revenue Recognition Task Force Working Draft, Hospitality Revenue Recognition Implementation Issue #7-2: Accounting for Revenues in a Hotel Management Service Arrangement
AICPA Revenue Recognition Task Force Working Draft, Hospitality Revenue Recognition Implementation Issue #7-1: Franchise Fees
AICPA Revenue Recognition Task Force Working Draft, Software Revenue Recognition Implementation Issue #14-11: Considerations in Estimating Standalone Selling Prices
AICPA Revenue Recognition Task Force Working Draft, Software Revenue Recognition Implementation Issue #14-8: Transfer of Control for Distinct Software Licenses
AICPA Revenue Recognition Task Force Working Draft, Telecommunications Revenue Recognition Implementation Issue #15-10, Miscellaneous Fees
AICPA Revenue Recognition Task Force Working Draft, Time-Share Revenue Recognition Implementation Issue #16-2: Collectibility of Sales of Time-Sharing Interests
AICPA Proposed Statement on Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA
PCAOB Release No. 2017-003, Proposed Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists
PCAOB Release No. 2017-002, Proposed Auditing Standard — Auditing Accounting Estimates, Including Fair Value Measurements and Proposed Amendments to PCAOB Auditing Standards
PCAOB Release No. 2017-001, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards
CAQ Alert No. 2017-03, SAB Topic 11.M — A Focus on Disclosures for New Accounting Standards
CAQ Publication, External Auditor Assessment Tool
SEC Staff Accounting Bulletin No. 74 (SAB Topic 11.M), Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period
SEC Regulation S-X, Article 11, “Pro Forma Financial Information
”SEC Regulation S-X, Rule 3-13, “Filing of Other Financial Statements in Certain Cases”
SEC Regulation S-X, Rule 3-11, “Financial Statements of an Inactive Registrant”
SEC Final Rule Release No. 34-67716, Conflict Minerals
SEC Guide, Intrastate Offering Exemptions: A Small Entity Compliance Guide for Issuers
GASB Statement No. 87, Leases
GASB Statement No. 86, Certain Debt Extinguishment Issues
GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
GASB Implementation Guide No. 2017-2, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
FASAB Statement No. 52, Tax Expenditures
FASAB Statement No. 50, Establishing Opening Balances for General Property, Plant, and Equipment
FASAB Statement No. 35, Estimating the Historical Cost of General Property, Plant, and Equipment: Amending Statements of Federal Financial Accounting Standards 6 and 23
FASAB Statement No. 6, Accounting for Property, Plant, and Equipment
FASAB Technical Release No. 17, Conforming Amendments to Technical Releases for SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment
FASAB Exposure Draft, Implementation Guidance for Establishing Opening Balances
GAO Exposure Draft, Government Auditing Standards
IFRS 17, Insurance Contracts
IFRS 15, Revenue From Contracts With Customers
IFRS 9, Financial Instruments
IFRS 4, Insurance Contracts
IAS 16, Property, Plant and Equipment
IAS 12, Income Taxes
IFRIC Interpretation 23, Uncertainty Over Income Tax Treatments
IASB Exposure Draft ED/2017/4, Property, Plant and Equipment — Proceeds Before Intended Use
IASB Exposure Draft ED/2017/3, Prepayment Features With Negative Compensation — proposed amendments to IFRS 9
Appendix D: Abbreviations
Abbreviation | Definition |
|---|---|
AICPA | American Institute of Certified Public Accountants |
ASB | AICPA Auditing Standards Board |
ASC | FASB Accounting Standards Codification |
ASU | FASB Accounting Standards Update |
C&DI | compliance and disclosure interpretation |
CAM | critical audit matter |
CAQ | Center for Audit Quality |
CECL | current expected credit losses |
CFO | chief financial officer |
CPA | certified public accountant |
CPE | continuing professional education |
DRC | Democratic Republic of the Congo |
ED | exposure draft |
EDGAR | Electronic Data Gathering, Analysis, and Retrieval |
EGC | Eastern Daylight Time |
EDT | emerging growth company |
EITF | Emerging Issues Task Force |
Exchange Act | Securities Exchange Act of 1934 |
FAF | Financial Accounting Foundation |
FAQs | frequently asked questions |
FASAB | Federal Accounting Standards Advisory Board |
FASB | Financial Accounting Standards Board |
GAAP | generally accepted accounting principles |
GAGAS | generally accepted government auditing standards |
GAO | Government Accountability Office |
GASB | Governmental Accounting Standards Board |
HTML | HyperText Markup Language |
IAASB | International Auditing and Assurance Standards Board |
IAS | International Accounting Standard |
IASB | International Accounting Standards Board |
ICFR | internal control over financial reporting |
IFRIC | IFRS Interpretations Committee |
IFRS | International Financial Reporting Standard |
ITC | invitation to comment |
JOBS Act | Jumpstart Our Business Startups Act |
OCC | Office of the Comptroller of the Currency |
OPEB | other postemployment benefits |
PCAOB | Public Company Accounting Oversight Board |
PP&E | property, plant, and equipment |
Q&As | questions and answers |
SAB | SEC Staff Accounting Bulletin |
SAS | AICPA Statement on Auditing Standards |
SEC | Securities and Exchange Commission |
Securities Act | Securities Act of 1933 |
SSAE | Statement on Standards for Attestation Engagements |
SSARS | Statement on Standards for Accounting and Review Services |
TIS | AICPA Technical Inquiry Service |
TRG | transition resource group |
VIE | variable interest entity |
WAP | wide-area progressive |
XBRL | eXtensible Business Reporting Language |
Footnotes
1
The quoted material related to the projects’ objectives is from the respective project pages on the FASB’s Web site.