US Week in Review - Week ending 21 March 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 and the IASB have substantially completed their redeliberations on a comprehensive new revenue recognition standard, which will be effective for annual periods beginning on or after 15 December 2016 for public entities with a one-year deferral for nonpublic entities.
Our Technical Line publication summarizes the Boards' decisions to date and discusses the remaining topics the Boards must address.
We have issued the general and industry-specific March 2013 editions of Financial reporting briefs. These publications provide you with a snapshot of the major accounting and regulatory developments that have occurred during the quarter. The reference library at the end of each document lists the publications issued during the quarter, along with links to the publications on our AccountingLink website.
The general Financial reporting briefs and the industry-specific editions are available on AccountingLink.
The Emerging Issues Task Force (EITF) reached final consensuses on the following issues:
- Recognition and measurement of services received by a not-for-profit entity from personnel of an affiliated entity for which the affiliate does not charge the recipient not-for-profit
- Accounting for the difference between the fair value of the assets and the fair value of the liabilities of a consolidated collateralized financing entity
The EITF also reached a consensus-for-exposure on the accounting for investments in qualified affordable housing projects and discussed pushdown accounting but did not reach any conclusions.
Our EITF Update publication explains what you need to know about these issues.
AICPA AU-C 600, "Special Considerations - Audits of Group Financial Statements (Including the Work of Component Auditors)" is effective for fiscal years ending on or after 15 December 2012. Our To the Point publication summarizes how this standard may enhance the focus on identifying subsequent events.
Companies are under increasing pressure to develop effective shareholder communication practices, and being aware of investor priorities and expectations can help organizations to make these efforts successful. In our new report, Proxy season 2013 preview: insights on topics of investor focus and expectations of engagement, Ernst & Young's Corporate Governance Center provides data-rich observations on investor priorities for 2013 and insights into investor views and expectations on company engagement practices. Based on Ernst & Young's proprietary corporate governance database and the Center's conversations with approximately 30 institutional investors, the preview discusses the top governance topics that investors are raising with boards of directors this year and offers observations on what directors need to know to make investor engagement efforts effective.
Practical matters for the c-suite: Proposed new path for the classification and measurement of financial instruments
This Practical matters for the c-suite publication explores the effect of the FASB proposal on the classification and measurement of financial instruments on an organization's finance, tax, IT systems and business processes. It is written for all organizations and complements our 6 March 2013 Technical Line publication on the FASB proposal. The Practical matters for the c-suite series is produced by our Financial Accounting Advisory Services group and is intended to help companies assess the potential effects of accounting proposals on their organizations.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FASB will join new IASB advisory group
The FASB will join the Accounting Standards Advisory Forum (ASAF), a new advisory group the IFRS Foundation created to improve cooperation among worldwide standard setters and advise the International Accounting Standards Board (IASB).
For additional details, see the FASB’s news release dated 19 March 2013.
20 March 2013 FASB meeting
The FASB discussed its project on Revenue recognition (see Technical Line above).
For additional details, see the FASB’s Action Alert.
Upcoming meetings and webcasts
28 and 29 March 2013 FASB meetings
The FASB is scheduled to discuss its project on Financial instruments: impairment.
The FASB also is scheduled to discuss the following agenda decisions:
- Fair value measurement disclosures of private company employer securities held by employee benefit plans
- Application of asset- or entity-based guidance to nonfinancial assets in an entity
In addition, the FASB is scheduled to decide whether to approve two consensuses and the consensus-for-exposure reached at the 14 March 2013 EITF 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.
Securities and Exchange Commission (SEC)
NASDAQ proposes that listed companies have internal audit function
NASDAQ has proposed a new rule that would require companies listed on its exchange to establish and maintain an internal audit function, as the NYSE does. The purpose of the internal audit function would be to provide a company's management and audit committee with ongoing assessments about its risk management processes and system of internal control.
The proposed listing standard would allow companies to outsource the internal audit function to a third party other than their independent auditor. However, the audit committee would have the sole responsibility for oversight of the internal audit function and must meet periodically with internal audit. The audit committee also would be required to discuss with the outside auditor the responsibilities, budget and staffing of the internal audit function.
If the SEC approves the rule, companies listed after 30 June 2013 would be required to have an internal audit function before listing. Companies listed on or before that date would have until 31 December 2013 to comply. The SEC has requested comments by 29 March 2013.
Upcoming Thought center webcasts and podcasts
Accounting for income taxes: a quarterly perspective
26 March 2013, 11:00 a.m. Eastern time