US Week in Review - Week ending 12 September 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
In our comment letter, we agree with the SEC that investments in money market funds should continue to meet the definition of cash equivalents under US GAAP if, as proposed, the SEC (1) requires a floating net asset value for certain funds and/or (2) permits redemption fees of up to 2% and suspensions of redemptions for up to 30 days if a fund fails to meet specified liquidity levels. We concur that under any of the proposed alternatives, entities should regularly evaluate changes in circumstances and whether an investment in a money market fund continues to meet the requirements of a cash equivalent.
The National Association of Insurance Commissioners (NAIC) Summer National Meeting was held recently in Indianapolis. Our NAIC Bulletin highlights issues addressed by various NAIC committees, working groups and task forces since the Spring National Meeting in April 2013, including the progress made on the controversial topic of accounting for the annual health insurer fee.
Standard Setter updates
Financial Accounting Standards Board (FASB)
11 September 2013 FASB meeting
The Board discussed a plan to complete redeliberations of the 2011 proposed Accounting Standards Update, Consolidation (Topic 810): Principal versus Agent Analysis, in the first half of 2014 and to issue a final Update in the second half of 2014.
The FASB also discussed its projects on:
- EITF Issue No. 12-G, Measuring the Financial Liabilities of a Consolidated Collateralized Financing Entity
- Development stage entities (see the FASB's news release)
For details of this week's FASB meeting, see the FASB's Summary of Board Decisions.
Upcoming meetings and webcasts
13 September 2013 Emerging Issues Task Force meeting
The Task Force is scheduled to discuss:
- Issue No. 13-B, Accounting for Investments in Tax Credits
- Issue No. 13-D, Determining Whether a Performance Target That Can Be Met after the Requisite Service Period Is a Performance Condition or a Condition That Affects the Grant-Date Fair Value of the Awards
- Issue No. 13-G, Determining Whether the Host Contract in a Hybrid Financial Instrument Is More Akin to Debt or to Equity
- Issue No. 12-F, Recognition of New Accounting Basis (Pushdown) in Certain Circumstances
17-18 September 2013 joint FASB-IASB meeting
The Boards are scheduled to discuss their projects on:
- Accounting for financial instruments: impairment
- Revenue recognition
- Accounting for financial instruments: classification and measurement
For additional details, see the FASB's calendar.
See the FASB's calendar for upcoming education sessions. No decisions are made at these sessions.
Center for Audit Quality (CAQ)
Highly inflationary economies
At the May 2013 meeting of the Center for Audit Quality SEC Regulations Committee's International Practices Task Force (Task Force), the SEC staff indicated that Venezuela and Belarus should continue to be considered highly inflationary economies, as defined under US GAAP, according to the Highlights of the meeting recently published on the CAQ website. Additionally, as discussed in the November 2012 Task Force Highlights, the SEC staff expects highly inflationary accounting to cease for the Democratic Republic of Congo and begin for South Sudan no later than the first reporting period beginning on or after 1 January 2013.
At the May meeting, the Task Force also highlighted several countries that have (1) projected three-year cumulative inflation rates between 70% and 100%, (2) previously reported three-year cumulative inflation rates that exceeded 100% and current actual inflation data has not been obtained or (3) experienced a significant increase in inflation during the current period. These countries are Ethiopia, Iran and Sudan.
The Task Force also discussed Argentina and noted that the International Monetary Fund (IMF) has requested that the country improve the quality of its consumer price index data. However, given the apparent lack of any other objectively verifiable data, and the relatively low level of reported three-year cumulative inflation (34% projected for 2013), the SEC staff noted it has not seen any economic data that would support that Argentina should be considered highly inflationary in 2013.
Additionally, the staff noted that an official exchange rate exists in Argentina that is significantly more favorable than an unofficial market rate referred to as the Blue Chip rate. The staff reminds registrants that have significant operations in Argentina that, when the exchange rate used for re-measurement purposes or translation of financial statements may not reflect economic reality, additional disclosure in MD&A may be necessary. These might include summarized financial information of the operations, disclosure of exchange rate used, disclosure of the net monetary assets and liabilities by currency and discussion of the potential impact of a change in exchange rates.
As always, the Task Force noted that it doesn't collect inflation data for all countries and that other countries may have cumulative inflation rates of 100% or more. Accordingly, companies should monitor the inflation rates in economies in which they operate, along with the IMF's efforts to address the quality of Argentina's economic data.
Government Accounting Standards Board (GASB)
The GASB Report - August 2013
The August 2013 GASB Report is available on AccountingLink.
Final reminder: Q3 2013 financial reporting update webcast
Registration is still open for our Q3 2013 financial reporting update webcast, scheduled for 19 September from 1 p.m. to 2:30 p.m. Eastern time. This 90-minute webcast will feature EY panelists discussing recently issued exposure drafts, Private Company Council and SEC updates and other current financial reporting matters. Webcast participants will receive 1.5 CPE credits. To register, go to Q3 2013 financial reporting update.
Amendments to SEC rules for broker-dealers webcast to air 20 September
EY's Thought Center will host an Amendments to SEC rules for broker-dealers webcast on 20 September from noon to 1:30 p.m. Eastern time. The SEC recently finalized amendments to its reporting and financial responsibility rules applicable to registered broker-dealers. These are the most significant changes to broker-dealer reporting since the mid-1970s. This webcast will cover a summary of the rules, filing deadlines and effective dates and other considerations. Webcast participants are eligible for 1.5 CPE credits. To register, go to Amendments to SEC rules for broker-dealers.
SEC Comments and Trends webcast on 2 October
Our SEC Comments and Trends webcast on 2 October 2013 from 1 p.m. to 2 p.m. Eastern time will provide you with insights into the SEC comment letter process, including common areas of focus and recent trends.
The webcast, which coincides with EY's annual SEC Comments and Trends publication, will feature Carol Stacey, vice president at the SEC Institute and former chief accountant of the SEC's Division of Corporation Finance; Martin Dunn, a partner at O'Melveny & Meyers LLP and former deputy director of the SEC's Division of Corporation Finance; and a panel of EY professional practice partners who are also former SEC staffers. They will share their experiences, observations and lessons learned from the SEC comment letter process to help you as you head into the year-end reporting season. Topics will include:
- A "behind-the-scenes" look at the SEC staff's filing review process
- SEC comment letter hot topics, recent trends and emerging areas of focus
- Best practices and tips for working with the SEC staff
To register, go to SEC Comments and Trends.
Upcoming Thought Center webcasts and podcasts
EY Q3 2013 financial reporting update
In co-operation with Financial Executives International (FEI)
19 September 2013, 1:00 p.m. Eastern time
Are you ready for conflict minerals reporting?
26 September 2013, 7:00 a.m. Eastern time
CFOs reveal hidden trends from earnings season
30 September 2013, 12:00 p.m. Eastern time
SEC comments and trends: current reporting issues
2 October 2013, 1:00 p.m. Eastern time