US Week in Review - Week ending 14 February 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 Ernst & Young.
Ernst & Young publications
The FASB proposed today a sweeping new classification and measurement model for financial instruments that would better converge some areas of US GAAP with IFRS 9. The proposal would apply to all entities across industries, with certain exceptions. Comments are due by 15 May 2013. Our To the Point publication tells you what you need to know about the proposal.
At the second meeting of the Private Company Council (PCC), the PCC and the FASB changed the staff's proposed private company decision-making framework and voted to expose the framework for public comment. The PCC also put on its agenda three areas for potential exceptions or modifications to US GAAP for private companies. Our To the Point publication summarizes those issues and other matters discussed at the meeting.
Venezuela devalues its currency
Venezuela devalued its currency to an official rate of 6.3 bolivars fuerte (BsF) to the US dollar from 4.3, and said it is shutting down the SITME foreign exchange system. For reports on periods ended before 9 February 2013, the devaluation of Venezuela's currency is a "nonrecognized subsequent event," as discussed in ASC 855. ASC 830, Foreign Currency Matters, states that a reporting entity's financial statements should not be adjusted for a rate change that occurs after the date of the reporting entity's financial statements. Instead, companies should consider whether they need to disclose any effects on unsettled foreign currency transactions. The SEC staff has said that the following disclosures should be considered for inclusion in Management's Discussion and Analysis:
- The timing and implications of the devaluation, from both an accounting and operational standpoint
- An estimate of the financial effect of the devaluation, including gains/losses on monetary items
- Discussion of changes in profitability related to the increase in the cost of imports and in-country sales prices of imported goods due to the devaluation
- Discussion of government pressures on vendors not to change sales prices and the expected effect on profitability after the devaluation
- Business practices or policies that have changed or are expected to change as a result of the devaluation
- The effect of the devaluation on compliance with debt covenants
Standard Setter updates
Financial Accounting Standards Board (FASB)
12 February 2013 FASB meeting
The FASB discussed its project on Leases.
For details, see the FASB Action Alert.
13 February 2013 FASB meeting
The FASB discussed its projects on:
- Insurance contracts
- Liquidation basis of accounting
- Disclosure framework
For details, see the FASB Action Alert.
Upcoming meetings and webcasts
20 February 2013 joint FASB-IASB videoconference meeting
The Boards are scheduled to discuss their projects on:
- Revenue recognition
20 February 2013 FASB meeting
The Board is scheduled to discuss its project on Insurance contracts.
For additional details, see the FASB calendar.
See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.
International Accounting Standards Board (IASB)
Items not added to the IFRS Interpretations Committee agenda
At its January 2013 meeting, the IFRS Interpretations Committee decided not to add the following items to its agenda:
- IFRS 3 - Continuing employment
- IAS 27, IFRS 10 - Non-cash acquisition of a non-controlling interest by a controlling shareholder in the consolidated financial statements
- IAS 28 - Impairment of investments in associates in separate financial statements
IFRS Foundation updates educational material to accompany IFRS 13
The IFRS Foundation has published an updated version of the first chapter of the educational material to accompany IFRS 13 Fair Value Measurement. The chapter covers the application of the principles in IFRS 13 when measuring the fair value of unquoted equity instruments within the scope of IFRS 9 Financial Instruments. The updated version includes formatting improvements and minor editorial corrections, but the technical content of the chapter has not been modified.
International Federation of Accountants/International Auditing and Assurance Standards Board (IFAC/IAASB)
IAESB issues revised International Education Standard (IES) 1
The International Accounting Education Standards Board (IAESB) has issued revised IES 1, Entry Requirements to Professional Accounting Education Programs. IES 1 is intended to protect the public interest by both establishing fair and proportionate entry requirements - which help those individuals considering professional accounting education make appropriate career decisions - and ensuring that requirements for entry to professional accounting education are not misrepresented.
Originally approved in 2004, IES 1 prescribes the principles to be used when setting and communicating educational requirements for entry to professional accounting education programs. IES 1 is effective 1 July 2014.
Upcoming Thought center webcasts and podcasts
Domestic tax quarterly webcast series: a focus on state tax matters
26 February 2013, 1:00 p.m. Eastern time
The Ernst & Young Q1 2013 financial reporting update
Co-sponsored by Financial Executives International (FEI)
20 March 2013, 1:00 p.m. Eastern time