US Week in Review - Week ending 25 April 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

    To the Point: FASB issues new liquidation basis accounting guidance

    The FASB issued final guidance requiring entities to begin preparing financial statements on a liquidation basis when liquidation is imminent, as defined in the standard. The guidance doesn't apply to investment companies regulated under the Investment Company Act of 1940 or limited-life entities that follow a liquidation plan established at their inception. The guidance is effective prospectively for reporting periods beginning after 15 December 2013. Early adoption is permitted. Our To the Point publication summarizes the new guidance on liquidation basis accounting.

    Technical Line: Using the 2013 XBRL US GAAP Taxonomy

    The 2013 version of the XBRL US GAAP taxonomy includes new tags to reflect accounting standards updates, changes to address common reporting practices and other updates. The SEC staff delayed its EDGAR update and now expects to update the system to support the 2013 taxonomy on 20 May 2013, assuming the Commission approves the new taxonomy by then. The staff had previously said it expected to make the update on 29 April 2013.

    The staff plans to make the 2011 taxonomy unavailable for use when it updates EDGAR on 20 May 2013. Therefore, registrants that are still using the 2011 taxonomy will need to use a newer version for periodic reports filed after that date. Registrants may continue to use the 2012 taxonomy after the SEC approves the 2013 version, but the SEC staff strongly encourages companies to adopt the latest version. Our Technical Line publication is designed to help companies make the transition to the 2013 taxonomy.

    Technical Line: Changes proposed to federal grant policies

    The US Office of Management and Budget has proposed streamlining its grant guidance and making other changes aimed at increasing the effectiveness and efficiency of federal programs. The proposal would allow new grantees to use a minimum flat indirect cost rate for a few years and provide opportunities for certain grantees to simplify the reporting needed to support salary charges. It also may lead to more robust subrecipient monitoring. Other proposed changes include streamlining the compliance requirements tested in the Circular A-133 audit, making changes to the major program determination process and raising the audit threshold to $750,000. Our Technical Line publication tells you what you need to know about the proposed changes.

    NAIC Bulletin

    The National Association of Insurance Commissioners (NAIC) Spring National Meeting was held recently in Houston. Our NAIC Bulletin highlights issues addressed by various NAIC committees, working groups and task forces since the Fall National Meeting in December 2012.

    Standard Setter updates

    Financial Accounting Standards Board (FASB)

    FAF names Russell G. Golden chairman of the FASB

    The Board of Trustees of the Financial Accounting Foundation (FAF) has named Russell G. Golden the next chairman of the FASB, succeeding Leslie Seidman, whose term ends on 30 June 2013. Mr. Golden has been a member of the FASB since September 2010. He previously was a member of the FASB staff and a partner at Deloitte & Touche LLP.

    FASB issues two ASUs

    The FASB issued the following accounting standard updates (ASUs);

    • ASU 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting (see our To the Point above)
    • ASU 2013-06, Not-for-Profit Entities (Topic 958): Services Received from Personnel of an Affiliate (a consensus of the FASB Emerging Issues Task Force)


    Upcoming meetings and webcasts

    1 May 2013 FASB meeting

    The FASB is scheduled to discuss whether to add certain issues to the agenda of the EITF, how it will add Private Company Council projects to its agenda for possible endorsement and next steps on the research project on financial communications in the not-for-profit sector.

    For additional details, see the FASB's calendar.

    Education sessions

    See the FASB's calendar for upcoming education sessions. No decisions are made at these sessions.

    Securities and Exchange Commission (SEC)

    CAQ SEC Regulations Committee publishes March highlights

    The Center for Audit Quality SEC Regulations Committee issued highlights from its 19 March 2013 meeting with the SEC staff. The highlights include:

    • The SEC staff's views about how changes in guarantor structure (including transfers of businesses, transfers of assets that do not meet the definition of a business and changes in guarantor composition) should be reflected in condensed consolidating financial information presented to comply with Rule 3-10 of Regulation S-X
    • The staff's views on complying with Rule 3-09 of Regulation S-X when the fiscal year-end of the registrant and its equity method investee differ by exactly six months and applicability of Rule 3-09's annual report "grace period" when filing a registration statement
    • The staff's interpretation of how significance should be measured under Rule 3-10(g) of Regulation S-X when multiple classes of securities are being registered in a single registration statement
    • The staff's views on financial statement updating requirements when a registrant has provided audited financial statements of a significant acquired business covering a period of nine to 12 months, as allowed by Rule 3-06 of Regulation S-X to satisfy a required audited year under Rule 3-05 of Regulation S-X


    Canellos and Ceresney named co-directors of Division of Enforcement

    Acting Director George Canellos and Andrew Ceresney were named co-directors of the SEC's Division of Enforcement. Both men worked as federal prosecutors under new SEC chair Mary Jo White when she was the US Attorney for the Southern District of New York. Mr. Ceresney also worked with Ms. White as a partner at the law firm Debevoise & Plimpton LLP. Before being named acting director in January, Mr. Canellos served as the Division's deputy director and director of the SEC's New York Regional Office.

    American Institute of CPAs (AICPA)

    AICPA proposals issued

    The AICPA recently released the following proposals for public comment:

    • Revised AICPA Code of Professional Conduct

      The revisions to the Code of Professional Conduct (Code) would restructure the Code so that members and other users can more easily find and apply the rules. Comments on the proposal are due by 15 August 2013.

    • Proposed Statement on Auditing Standards, Using the Work of Internal Auditors

      The AICPA Auditing Standards Board has completed the clarity redrafting of its last unclarified AU section in AICPA Professional Standards and has issued a Proposed Statement on Auditing Standards (SAS), Using the Work of Internal Auditors. This proposed SAS, along with other amendments, would significantly amend AU-C section 315 and supersedes other AU sections. Comments are due 15 July 2013. The proposed SAS will be effective for audits of financial statements for periods ending on or after 15 December 2014.


    International Accounting Standards Board (IASB)

    New standard on nonexchange financial guarantees

    The GASB approved for issuance a new standard that provides accounting and financial reporting guidance to state and local governments that offer nonexchange financial guarantees and for governments that receive guarantees on their obligations. GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, requires a state or local government guarantor that makes a nonexchange financial guarantee to recognize a liability on its financial statements when it is more likely than not that the guarantor will be required to make a payment. The requirements are effective for periods beginning after 15 June 2013. The standard will be posted on the GASB website in May.

    Upcoming Thought center webcasts and podcasts

    Corporate end users and Title VII of Dodd-Frank 
    26 April 2013, 12:00 p.m. Eastern time

    The IASB proposes a new expected credit loss model 
    30 April 2013, 11:00 a.m. Eastern time

    Domestic tax federal hot topics 
    1 May 2013, 10:30 a.m. Eastern time

    2013 trends in corporate sustainability and reporting 
    8 May 2013, 1:00 p.m. Eastern time


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