US Week in Review - Week ending 21 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
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) continue to redeliberate their joint proposal on revenue recognition. At a meeting this week, they made progress on how to address collectibility and the proposed constraint on variable consideration. However, they acknowledged that more work is needed on how to recognize revenue from licenses of intellectual property and directed their staffs to conduct additional outreach on whether an approach they are exploring is operational. Our To the Point publication summarizes the decisions and provides an update on the Boards' redeliberation plan.
An excise tax of 2.3% on the sale, lease, rental or use of certain medical devices was mandated by the 2010 health care reform legislation and goes into effect 1 January 2013. The tax applies to manufacturers, producers and importers of taxable medical devices. In some situations, a health care organization such as a hospital or other provider may also be liable for the tax. This Technical Line addresses who is affected by the tax and how it should be calculated. The Technical Line publication also addresses accounting considerations under US GAAP and IFRS.
ViewPoints on proxy advisory firms and cybersecurity
Tapestry Networks released two new documents highlighting last month's meeting of the North American Audit Committee Leadership Network. During the meeting, the president of Institutional Shareholder Services (ISS) told members about the role proxy advisory firms play with companies, boards and shareholders. Members also discussed the leadership role that boards and audit committees must play in addressing cybersecurity risks.
Standard Setter updates
Financial Accounting Standards Board (FASB)
19 November 2012 joint FASB-IASB videoconference meeting
The Boards discussed the following project:
- Revenue recognition (see our To the Point above)
For details, see the FASB Action Alert.
20 November 2012 joint FASB-IASB videoconference meeting
The Boards discussed the following projects:
- Accounting for financial instruments: impairment
- Insurance contracts
For details, see the FASB Action Alert.
20 November 2012 FASB meeting
The FASB discussed the insurance contracts project. For details, see the FASB Action Alert.
Upcoming meetings and webcasts
The FASB is scheduled to meet on 28 November 2012. For additional details, see the FASB calendar.
See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.
Public Company Accounting Oversight Board (PCAOB)
PCAOB SAG discusses auditor's reporting model and auditor's approach to detecting fraud
At a meeting last week, the PCAOB Standing Advisory Group (SAG) discussed the auditor's reporting model and the auditor's approach to detecting fraud. The PCAOB staff also discussed the Board's standard-setting agenda for 2013.
SAG members said they generally support required use of emphasis of matter (EOM) paragraphs, but views were mixed on whether the paragraphs should focus solely on matters in the financial statements or whether they should also include matters of importance to the audit. Members agreed that the auditor should decide which topics to cover in EOM paragraphs, but said there should be guidance for how to select the topics. The PCAOB is expected to propose a standard in the first half of 2013.
SAG members expressed support for PCAOB outreach on the auditor's approach to detecting material misstatements of financial statements due to fraud, but encouraged the PCAOB to conduct research on audit quality as a whole and not to limit any research to fraud detection. Several participants said the Board should analyze the effects of its risk assessment standards, conduct additional research and consider issuing additional Practice Alerts (on topics such as professional skepticism and segregation of duties considerations) before changing the auditing standards.
In the first half of 2013, the Board also expects to adopt or re-propose standards on related party and significant/unusual transactions, auditor transparency, the auditor's responsibility with respect to other accounting firms, individual accountants and specialists, audits of broker-dealers and going concern.
Government Accounting Standards Board (GASB)
October 2012 GASB Report
The October 2012 GASB Report summarizes key GASB projects and events.
Upcoming Thought center webcasts and podcasts
IFRS 9 Financial instruments: what to expect from changes to hedge accounting
27 November 2012, 11:00 a.m. Eastern time
Conflict minerals: new rules and next steps
27 November 2012, 2:00 p.m. Eastern time
The Ernst & Young Q4 2012 financial reporting update
Co-sponsored by Financial Executives International (FEI)
13 December 2012, 1:00 p.m. Eastern time