US Week in Review - Week ending 10 November 2011
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.
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Ernst & Young publications
The Financial Accounting Standards Board (FASB) issued an exposure draft that proposes deferring the requirement in ASU 2011-05 that companies present reclassification adjustments for each component of accumulated other comprehensive income (AOCI) in both net income and other comprehensive income on the face of the financial statements. If finalized, the proposal would have the same effective dates as ASU 2011-05. Our To the Point publication summarizes what you need to know about the proposal.
The American Institute of Certified Public Accountants (AICPA) issued a comprehensive revision of its Audit and Accounting Guide, Health Care Entities, for the first time in 15 years. The new Guide, issued last month, contains incremental health care accounting guidance from the Codification, addresses health care industry implementation practices and provides illustrative interpretations of auditing considerations. It also includes recommendations from the Financial Reporting Executive Committee (FinREC) on accounting, reporting and disclosure treatment of some transactions or events that are not included in the Codification and FinREC's preferences for certain practices when authoritative guidance is subject to interpretation. Our Technical Line publication highlights the major changes and recommendations.
The Financial Accounting Standards Board (FASB) issued an exposure draft that would affect how all reporting entities evaluate whether they should consolidate another entity. For VIEs and voting partnerships, a reporting entity's decision-maker would evaluate three qualitative factors to determine whether it is using its power as a principal or an agent. Principals would be required to consolidate. The proposal also would align the consideration of participating rights in the Voting Model with the Variable Interest Model. Our To the Point publication summarizes what you need to know about the proposal.
The Emerging Issues Task Force (EITF) reached a final consensus on a derecognition issue involving "in-substance" real estate and a consensus-for-exposure on a cumulative translation adjustment issue involving the sale or transfer of a group of assets within a consolidated foreign entity that meets the definition of a business. Our EITF Update publication explains what you need to know about these issues.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FASB adds not-for-profit projects to its agenda
The FASB added to its agenda a standard-setting project and a research project to improve financial reporting of not-for-profit organizations. The standard-setting project will address financial statement presentation, with a focus on improving the net asset classification requirements and information provided in the financial statements and notes about liquidity, financial performance and cash flows. The research project will study how not-for-profit organizations communicate their financial health and performance outside of the financial statements.
For additional details, see the FASB's news release.
Upcoming meetings and webcasts
16 November 2011 joint FASB-IASB videoconference meeting
The Boards will discuss the measurement and presentation of explicit account balances within insurance contracts. They will also discuss transition and consequential amendment issues related to the leases project.
See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.
Securities and Exchange Commission (SEC)
Inaugural SEC roundtable on financial reporting discusses measurement uncertainty
The first Financial Reporting Series roundtable, aimed at improving information provided to investors, discussed measurement uncertainty (i.e., financial statement measurements and disclosures for which the outcome depends on future events).
Roundtable participants (e.g., investors, preparers, academics, auditors) discussed the need for more transparent, objective and comparable disclosure. They said the current financial reporting framework (i.e., the financial statements and Management's Discussion and Analysis) allows companies to provide greater insight into the quality and variability of uncertainties affecting financial condition and operating results. But they said communicating uncertainties to investors in a clear and meaningful way is challenging. Panelists also debated the reliability of measurements with uncertainty (e.g., Level 3 pricing) and whether a point estimate provides relevant information for investors.
The SEC staff issued a briefing paper highlighting the issues discussed. The archived webcast of the roundtable is available on the SEC's website.
Upcoming Thought center webcasts and podcasts
Double-exposure: the revised revenue recognition proposal (US GAAP perspective)
15 November 2011, 2:30 p.m. Eastern time
IFRS 10 consolidated financial statements
15 November 2011, 10:00 a.m. Eastern time
A revised proposal for revenue recognition (IFRS perspective)
29 November 2011, 4:00 a.m. Eastern time
A revised proposal for revenue recognition (IFRS perspective) REPLAY
29 November 2011, 3:00 p.m. Eastern time
Don't just spin it: financial and operational lessons learned in spin-offs
30 November 2011, 12:00 p.m. Eastern time
IFRS 2011: Implications for real estate
6 December 2011, 11:00 a.m. Eastern time<.p />
IFRS 2011: Implications for real estate REPLAY
6 December 2011, 7:00 p.m. Eastern time
Ernst & Young Q4 2011 financial reporting update
15 December 2011, 1:00 p.m. Eastern time