US Week in Review - Week ending 1 August 2013
The US Week in Review highlights this week’s developments and emerging issues in the financial reporting world and gives you direct access to relevant technical accounting guidance and thought leadership produced by EY.
What’s new from EY
Our comment letter to the FASB highlights proposed changes to glossary terms that we believe could have significant effects on existing practice, may have unintended consequences and/or may be unclear to stakeholders.
We have updated our Financial reporting developments publication on the accounting for investments in certain debt and equity securities to further clarify and enhance our guidance, including our guidance on the SEC staff's views about beneficial interests that should be considered of "high credit quality".
Standard Setter updates
Financial Accounting Standards Board (FASB)
Joint transition resource group for revenue recognition
The FASB and the IASB said they plan to create a joint transition resource group to focus on the revenue recognition standard they expect to issue later this year. The group will solicit and discuss implementation issues and provide information that the Boards can use to determine what action, if any, is needed. The group will not issue guidance. For details, see the FASB's news release.
Upcoming meetings and webcasts
7 August 2013 FASB meeting
The FASB is scheduled to discuss its project, Disclosure framework - Board's decision process. The Board also will decide whether to endorse an alternative proposed by the Private Company Council at its 16 July 2013 meeting.
For additional details, see the FASB's calendar.
See the FASB's calendar for upcoming education sessions. No decisions are made at these sessions.
American Institute of CPAs (AICPA)
Proposal on trust services principles and criteria
The AICPA is seeking comment on revised trust services principles and criteria for security, availability, processing integrity, confidentiality and privacy. The revisions are intended to make the criteria clearer, eliminate redundancies and update the criteria to reflect changes in technology and the business environment. Comments are due by 30 September 2013.
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
Transition clarification: COSO 2013 Internal Control - Integrated Framework
When the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released the Internal Control - Integrated Framework: 2013 (2013 Framework), COSO said that it will continue to make the original framework available until 15 December 2014, when it will consider the 1992 framework superseded. As a result, questions have arisen about whether issuers can continue to use the 1992 framework to assess internal control over financial reporting (ICFR) after COSO's transition date.
Our understanding is that the SEC staff intends to allow issuers to use the 1992 framework for ICFR assessments for a period of time after COSO's transition date. However, the longer issuers continue to use the 1992 framework, the more likely they are to face questions from the SEC staff.
In a recent speech, Paul Beswick, Chief Accountant at the SEC, said the SEC staff plans to monitor the transition to evaluate whether any staff or Commission action is necessary. It is therefore unclear whether the SEC will set a specific transition period.
Mr. Beswick also cited COSO's statements that "users should transition their applications and related documentation to the updated Framework as soon as is feasible under their particular circumstances" and that "the key concepts and principles embedded in the original framework are fundamentally sound and broadly accepted in the marketplace, and accordingly, continued use of the 1992 framework during the transition period (until 15 December 2014) is acceptable."
International Accounting Standards Board (IASB)
July IFRIC Update issued
The July 2013 IFRIC Update summarizes the recent IFRS Interpretations Committee meeting. At this meeting, the following issues were discussed:
- IAS 19 Employee Benefits - Employee benefit plans with a guaranteed return on contributions or notional contributions
- Agenda decisions and comments on narrow-scope amendments
- Annual Improvements project
International Federation of Accountants/International Auditing and Assurance Standards Board (IFAC/IAASB)
IAASB proposes changes to auditor reporting model
The IAASB proposed new and revised International Standards on Auditing that would significantly change the auditor reporting model. One would require auditors of listed entities to communicate in their auditor's report matters that, in their professional judgment, were of most significance in the audit. The IAASB also proposed requiring auditors to include specific statements about going concern in their reports, make an explicit statement about their independence from the audited entity and, for listed entities, disclose the engagement partner's name in the auditor's report. Comments are due by 22 November 2013.
Upcoming Thought Center webcasts and podcasts
CFOs reveal hidden trends from earnings season
30 September 2013, 12:00 p.m. Eastern time