US Week in Review - Week ending 1 November 2012
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 Ernst & Young.
Ernst & Young publications
We support the use of a framework to help the Private Company Council (PCC) and the FASB make decisions about whether and when to modify the requirements of accounting standards for private companies. In our comment letter, we explain why we believe recognition and measurement generally should be the same for private and public companies, and why the Board should focus on disclosure and transition relief for private companies. Due to Hurricane Sandy, the FASB extended the deadline for providing comments on the private company decision-making framework to 9 November 2012.
We have updated our Financial Reporting Developments publication on noncontrolling interests, which includes changing the title to, Consolidated and other financial statements: noncontrolling interests, combined financial statements, and parent company financial statements. We reorganized certain content and removed the discussion of the transition guidance in FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (primarily codified in ASC 810). We also enhanced the interpretive guidance in Chapter 2 related to the presentation of noncontrolling interests when derivatives are issued with or as part of those interests. We also added certain other interpretive guidance (for example, to reflect the issuance of new guidance for deconsolidating in-substance real estate).
Dodd-Frank's Title VII - OTC derivatives reform
Our Dodd-Frank's Title VII - OTC derivatives reform publication explains the potential effects of the new regulation on nonfinancial companies that use over-the-counter (OTC) derivatives. It complements our brochure, The road to reform - Helping commercial end users of OTC derivatives comply with Dodd-Frank's Title VII. The links in this article last week were incorrect.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FASB proposes to limit the scope of new balance sheet offsetting disclosure requirements
The FASB decided to propose clarifying the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities (the ASU), and limit it to the items identified in the implementation guidance, namely derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and lending arrangements subject to an enforceable master netting agreement. Like the ASU, this clarification would be effective for annual periods beginning on or after 1 January 2013, and interim periods within them. The FASB is expected to issue the clarification as proposed amendments this month, with a 25-day comment period. The FASB staff will perform additional targeted outreach to better understand the circumstances under which US GAAP balance sheet offsetting practices (i.e., beyond those arrangements included in the revised scope of the ASU) are different from IFRS and may consider expanding the scope of the ASU at a later date.
The FASB decided to propose clarifying the guidance because the ASU, as written, applies to all financial instruments that are subject to an enforceable master netting arrangement or similar agreement, regardless of whether management has made an accounting policy election to offset or the arrangement meets all of the criteria for offsetting on the balance sheet. Constituents raised concerns about the cost and limited benefits of preparing disclosures for short-term trade receivables and payables due from customers or suppliers in the normal course of business as well as specialized industry-specific offsetting guidance (e.g., receivables and payables arising from unsettled regular-way trades by brokers and dealers of securities).
31 October 2012 FASB meeting
The FASB discussed its projects on:
- Accounting for financial instruments: impairment
- Accounting for financial instruments: classification and measurement
- Balance sheet offsetting (see above)
For details, see the FASB Action Alert.
Upcoming meetings and webcasts
6 and 7 November 2012 FASB meetings
The Board is scheduled to discuss the following projects:
- Liquidation basis of accounting
- Consolidation: policy and procedures
- Going concern
- Accounting for financial instruments: liquidity and interest rate disclosures
- Transfers and servicing: repurchase agreements and similar transactions
For additional details, see the FASB calendar.
9 November 2012 FASB webcast
The FASB will host its webcast, In Focus: Accounting for Credit Losses on Financial Instruments, at 1 p.m. EST.
For details and registration, see the FASB site.
See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.
Securities and Exchange Commission (SEC)
SEC filing deadlines after Hurricane Sandy
Given the impact of Hurricane Sandy on the East Coast of the US, the Securities and Exchange Commission (SEC) has acknowledged that certain registrants may be unable to submit their filings by the required deadlines.
As a reminder, a registrant may file a Form 12b-25 via EDGAR to notify the SEC that it cannot file all or a required portion of Form 10-Q within the prescribed time period. If Form 12b-25 is filed under the appropriate conditions, a registrant's filing will be deemed timely even if it is filed up to five calendar days late. However, in circumstances where a registrant is unable to file timely, the SEC staff has indicated that it will consider requests for adjustments of filing dates on a case-by-case basis.
Registrants may contact the Division of Corporation Finance Filer Support team at firstname.lastname@example.org or 202 551 8900.
Public Company Accounting Oversight Board (PCAOB)
FAQs on the broker-dealer accounting support fee
The PCAOB issued Frequently Asked Questions (FAQs) on the broker-dealer accounting support fee. The FAQs provide general information on the funding process, including which broker-dealers are subject to the accounting support fee and how it is calculated, as well as the independent auditor's role with respect to the broker-dealer's share of the fee.
Upcoming Thought center webcasts and podcasts
US election results: effect on state and local business taxes
Tax legislative update: state edition
8 November 2012, 1:00 p.m. Eastern time
US election results: making sense of the 'fiscal cliff' and related tax issues
Tax legislative update: federal edition
9 November 2012, 1:00 p.m. Eastern time
IFRS 9 Financial instruments: what to expect from changes to hedge accounting
27 November 2012, 11:00 a.m. Eastern time