US Week in Review - Week ending 25 October 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.
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
Our Third Quarter 2012 Standard Setter Update - Financial reporting and accounting developments publication highlights significant developments in financial accounting and reporting between 1 July 2012 and 30 September 2012 and summarizes certain proposals presently under consideration by the Financial Accounting Standards Board, the Emerging Issues Task Force, the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Auditing Standards Board and the Governmental Accounting Standards Board.
Dodd-Frank's Title VII - OTC derivatives reform
Our Dodd-Frank's Title VII - OTC derivatives reform publication explains the potential effects of the new regulation on nonfinancial companies that use over-the-counter (OTC) derivatives. It complements our brochure, The road to reform - Helping commercial end users of OTC derivatives comply with Dodd-Frank's Title VII. Both pieces were produced by our Financial Accounting Advisory Services (FAAS) group and are intended to offer practical insights on what nonfinancial companies need to do to comply with the requirements, which take effect as early as the beginning of 2013.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FASB issues three ASUs
The FASB issued three Accounting Standards Updates (ASUs) on EITF consensuses it ratified at its 27 September 2012 meeting.
- ASU 2012-07, Entertainment - Films (Topic 926): Accounting for Fair Value Information That Arises after the Measurement Date and Its Inclusion in the Impairment Analysis of Unamortized Film Costs
- ASU 2012-06, Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution
- ASU 2012-05, Statement of Cash Flows (Topic 230): Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows
19 October 2012 FASB meeting
The FASB discussed its project on accounting for financial instruments: classification and measurement.For details, see the FASB Action Alert.
Upcoming meetings and webcasts
30 and 31 October 2012 FASB meetings
The Board is scheduled to discuss the following projects:
- Accounting for financial instruments: impairment
- Accounting for financial instruments: classification and measurement
- Consolidation: policy and procedures
- Liquidation basis of accounting
1 November 2012 EITF meeting
The Task Force is scheduled to discuss:
- Issue No. 12-B, Not-for-Profit Entities: Services Received from Personnel of an Affiliate for Which the Affiliate Does Not Seek Compensation
- Issue No. 12-D, Accounting for Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date
- Issue No. 12-H, Accounting for Service Concession Arrangements
- Issue No. 12-F, Recognition of New Accounting Basis (Pushdown) in Certain Circumstances
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)
IFRS Foundation staff analysis of SEC final staff report on IFRS
The Trustees of the IFRS Foundation have published a staff analysis of the SEC Final Staff Report on IFRS. The SEC Staff Report, issued on 13 July 2012, represented SEC staff's analysis of the issues related to the possible incorporation of IFRS into the US financial reporting regime. The Trustees asked the IFRS Foundation staff to conduct an analysis of the SEC Staff Report.
October IASB Update
The October 2012 issue of IASB Update contains the staff summary of the IASB meeting held 15-19 October 2012. The FASB joined the IASB for some of the sessions.
Public Company Accounting Oversight Board (PCAOB)
PCAOB hosts third public meeting on mandatory audit firm rotation
At the PCAOB's third public meeting on how to enhance auditor independence, objectivity and professional skepticism, more than 20 participants in Houston expressed views that were generally consistent with those expressed at meetings in Washington, DC, and San Francisco. The PCAOB, which has not proposed a rule, reopened the comment period on its concept release until 19 November 2012.
The panelists, including academics, preparers, audit committee members, investors and auditors primarily from Texas and Colorado, expressed support for efforts to improve audit quality and enhance auditor independence. But views continued to be mixed on the costs and benefits of mandatory audit firm rotation. The European Commission's (EC) Head of Unit for Audit, Nathalie Berger, presented the EC's proposals to reform the audit market (including mandatory firm rotation, joint audits and "pure" audit firms).
Most panelists supported improving audit quality and enhancing auditor independence, objectivity and professional skepticism; strengthening audit committees; and improving communications among auditors, audit committees, the PCAOB and financial statement users.
Opponents of mandatory firm rotation cited the lack of evidence linking firm tenure to weaknesses in auditor independence, objectivity and professional skepticism; the diminishment of the audit committee's role in appointing and overseeing audit firms; and significant costs and disruption (especially for multinational corporations). Supporters said mandatory firm rotation would provide a fresh set of eyes and counterbalance perceived weaknesses in the current issuer-pay model. Participants agreed that audit firms and the PCAOB need to analyze the root causes of inspection findings.
The webcast, PCAOB member statements and panelists' written testimonies are available on the PCAOB website.
Upcoming Thought center webcasts and podcasts
US election results: effect on state and local business taxes
Tax legislative update: state edition
8 November 2012, 1:00 p.m. Eastern time
US election results: making sense of the 'fiscal cliff' and related tax issues
Tax legislative update: federal edition
9 November 2012, 1:00 p.m. Eastern time
IFRS 9 Financial instruments: what to expect from changes to hedge accounting
27 November 2012, 11:00 a.m. Eastern time