US Week in Review - Week ending 23 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.
Certain materials referenced below are available exclusively in AccountingLink. The site is available free of charge, but requires a one-time registration.
Ernst & Young publications
Updated publications on SEC financial reporting now available
We have updated our SEC Financial Reporting Series (the Series) to reflect all final SEC rules and interpretive guidance issued through 31 October 2011. The Series is now available on AccountingLink and includes the following publications:
- 2011 SEC annual reports - Form 10-K
- 2012 proxy statements - An overview of the requirements
- 2012 SEC quarterly reports - Form 10-Q
These publications are intended as reference tools for preparing annual reports on Form 10-K, annual proxy statements and quarterly reports on Form 10-Q.
The 2011 SEC annual reports and 2012 SEC quarterly reports publications include updated considerations for XBRL reporting, as well as the SEC staff’s recent views on cybersecurity disclosures and combined reporting by parent and subsidiary registrants and multiple series registrants.
The 2012 proxy statements publication covers the new requirement for proxy materials to include shareholder proposals that would amend a company’s governing documents on shareholder director nominations.
The AICPA has proposed updates to its in-process research and development (IPR&D) practice aid to reflect significant changes to US GAAP that have affected the accounting for the acquisition of assets to be used in research and development activities. While not authoritative, the aid provides best practices for preparers, auditors, valuation specialists and others to consider when accounting and valuing acquired IPR&D assets. Our To the Point publication highlights some of the important changes to the practice aid.
As part of its Work Plan to consider whether, and if so, when and how IFRS should be incorporated into the US financial reporting system, the SEC staff released two papers: A Comparison of US GAAP and IFRS and An Analysis of IFRS in Practice. The Staff Papers help address whether IFRS is sufficiently developed and consistently applied for use in the US financial reporting system. These Staff Papers are only two components of this evaluation and of the extensive output of the overall Work Plan to help the Commission make a decision. Our To the Point publication summarizes what you need to know about the Staff Papers.
Our comment letter supports the FASB’s proposal to defer the effective dates of the requirement in Accounting Standards Update 2011-05 to present on the face of the financial statements the effects of reclassification adjustments out of accumulated other comprehensive income on the components of net income and other comprehensive income. We believe the deferral should be permanent. We also note that we do not believe the presentation of reclassification adjustments into net income whether on the face of the financial statements or through footnote disclosure should be required.
Ernst & Young comments on PCAOB concept release on auditor independence and audit firm rotation
On Friday 18 November 2011, we responded to the Public Company Accounting Oversight Board’s (PCAOB) request for comment on its concept release on auditor independence and audit firm rotation and other possible ways to enhance independence, objectivity and professional skepticism.
In our letter, we affirm our view that auditor independence, objectivity and professional skepticism are of paramount importance, but state that we do not believe mandatory audit firm rotation would improve audit quality or auditor skepticism. In fact, we believe it would harm corporate governance, investor interests and the objective of maintaining a robust, highly skilled independent accounting profession performing high-quality audits. In addition, we outline our ideas on measures that should be considered by the PCAOB to achieve its objectives and our views on other ideas presented in the concept release.
We hope you have an opportunity to review our letter. To help facilitate your review, we have prepared a key messages document. You also can read our To the Point and Technical Line publications on the concept release.
The National Association of Insurance Commissioners (NAIC) recently held its Fall National Meeting. Our NAIC Bulletin highlights important issues addressed by various NAIC committees, working groups and task forces during the meeting.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FAF appoints new members to the FASAC
The FAF Board of Trustees appointed 13 new members to the Financial Accounting Standards Advisory Council (FASAC), effective 1 January 2012 and announced those members that will complete their terms at the end of 2011. The FAF also reappointed 21 members. For additional details, see the FAF’s news release.
22 November 2011 FASB meeting
A project was added to the FASB agenda to evaluate whether there is a basis to further reduce disclosure requirements related to Level 3 fair value measurements for nonpublic entities. Outreach on this project is expected to begin in December or January and will focus on costs/benefits and the relevance of disclosures such as quantitative information about significant unobservable inputs and the Level 3 rollforward, to users of these financial statements.
For additional detail, see the FASB’s Action Alert.
Upcoming meetings and webcasts
30 November 2011 FASB meeting
See the FASB calendar for upcoming meetings and webcasts.
See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.
FEI 14th annual survey on technology issues
The Financial Executives International (FEI) is launching the 14th Annual Technology Issues for Financial Executives Survey. The FEI does this survey each year to get information on how the finance function uses IT. The survey should take about 20 minutes to complete and all responses are confidential. The results will be compiled by Gartner and an executive report will be prepared. John Van Decker, VP, Research for Gartner, will present the survey results at the FEI Summit in May 2012. To take the survey, please click here.
Upcoming Thought center webcasts and podcasts
Global IFRS 2011: A revised proposal for revenue recognition (IFRS perspective)
29 November 2011, 4:00 a.m. Eastern time
Global IFRS 2011: A revised proposal for revenue recognition (IFRS perspective) REPLAY
29 November 2011, 3:00 p.m. Eastern time
Proposed changes - consolidation, investment companies and investment property entities
1 December 2011, 1:00 p.m. Eastern time
Global IFRS 2011: IFRS 2011: Implications for real estate (IFRS perspective)
6 December 2011, 11:00 a.m. Eastern time
Global IFRS 2011: IFRS 2011: Implications for real estate (IFRS perspective) REPLAY
6 December 2011, 7:00 p.m. Eastern time
Global IFRS 2011: IFRS 9 Financial Instruments - status and what lies ahead? (IFRS perspective)
13 December 2011, 4:00 a.m. Eastern time
Global IFRS 2011: IFRS 9 Financial Instruments - status and what lies ahead? (IFRS perspective) REPLAY
13 December 2011, 3:00 p.m. Eastern time
Ernst & Young Q4 2011 financial reporting update
15 December 2011, 1:00 p.m. Eastern time