US Week in Review - Week ending 29 May 2014
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 EY.
What’s new from EY
The FASB and the IASB released new converged standards for recognizing revenue. Our To the Point publication tells you what you need to know about the final standards.
To the Point: Is it a lease? Boards defer decision on definition, make progress on other topics in leases project
The FASB and the IASB continued to seek ways to clarify and simplify their 2013 joint proposal on leases but deferred a decision on the fundamental issue of how to define a lease. Instead, they directed their staffs to provide them with more language and examples that demonstrate how the proposed definition would be applied. The Boards reached converged decisions on how to separate lease and non-lease components, how to allocate contract consideration, and the accounting for initial direct costs. Our To the Point publication tells what you need to know about these developments.
We have updated our Financial reporting developments (FRD) publication on fair value measurement to provide clarifications and enhancements to our interpretative guidance. The updates include new interpretive guidance regarding centrally cleared derivatives, clarified fair value considerations for the oil and gas industry, and a summary of SEC staff comments in the area of fair value measurements. Refer to Appendix F of the publication for a detailed listing of these updates.
We are issuing our FRD publication on accounting changes and error corrections. This publication is designed to assist professionals in understanding the financial reporting issues associated with accounting changes (including changes in accounting principle, changes in estimates and changes in reporting entity) and error corrections.
We have updated our FRD publication, Earnings per share, to clarify our guidance regarding, among other things, the average market price of a company's common stock when applying the treasury stock method to pre-IPO periods, allocating undistributed losses under the two-class method in certain situations and considerations for evaluating a registrant's stated policy of settling certain contracts in cash.
EY is hosting a 90-minute webcast on 2 June 2014 at 1:00 p.m. EST to discuss the new revenue recognition standard and the impact on companies preparing financial statements in accordance with US GAAP. To register for this event, go to The new revenue recognition standard.
Standard Setter updates
Financial Accounting Standards Board (FASB)
28 May 2014 FASB meeting
Simplification initiative topics - The Board added two projects to its agenda as part of its simplification initiative and decided to issue proposed ASUs that would: (1) simplify income statement presentation by eliminating extraordinary items from US GAAP and (2) simplify the subsequent measurement of inventory. On the latter, inventory would be measured at the lower of cost or net realizable value (i.e., estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation) rather than the lower of cost or market under today's US GAAP (which requires consideration of a calculated "floor" and "ceiling"). The FASB expects to issue final guidance on each topic that would require prospective transition with an effective date of 1 January 2016 for calendar year-end companies, with early adoption permitted.
The Board also discussed its projects on Financial statements of not-for-profit entities and Disclosure framework: entity's decision process. For more details, see the FASB's Tentative Board Decisions.
Upcoming meetings and webcasts
4 June 2014 FASB meeting
The Board is scheduled to discuss its projects on Insurance: disclosures about short-duration contracts and Accounting for financial instruments: classification and measurement. For more details, see the FASB's calendar.
5 June 2014 joint FASB/IASB webcast
The Boards will host a one-hour webcast on their new revenue recognition guidance, starting at 10 a.m. Eastern time. For more details, see the FASB's News Release.
See the FASB's calendar for upcoming education sessions. No decisions are made at these sessions.
Securities and Exchange Commission (SEC)
Chair White signals that IFRS is on the SEC's active agenda
SEC Chair Mary Jo White said in a recent speech that she hopes the SEC will address "in the relatively near future" the question of whether and, if so, how and when to further incorporate IFRS into the US financial reporting system. She also reiterated the views of prior SEC chairmen that the FASB would remain the ultimate standard setter for US companies, that the Commission would be focused on the interests of US investors and that the role of the US in the development of global standards would be an important consideration.
International Accounting Standards Board (IASB)
May 2014 IFRIC Update
The May 2014 IFRIC Update summarizes the IFRS Interpretations Committee meeting held in London on 13-14 May 2014, when it discussed:
- Items on the current agenda
- Issues considered for Annual Improvements
- Annual Improvements to IFRSs 2012-2014 Cycle
IFRS Foundation Annual Report
In May 2014, the IFRS Foundation published its Annual Report for the year ended 31 December 2013. The Annual Report summarizes the use of IFRS around the world and provides an overview of the IFRS Foundation's activities.
Center for Audit Quality (CAQ)
CAQ webcast on how to improve whistleblower programs
The CAQ will host a webcast on how to improve whistleblower programs on 1 July 2014 from 2 p.m. to 3:30 p.m. Eastern time. Panelists will discuss (1) how organizations have successfully integrated whistleblower hotlines into their corporate cultures, (2) actions companies can take to improve their programs and (3) how to address reluctance by employees to use programs.
Participants will be eligible to receive 1.5 CPE credits and 2 NACD skills-specific credits. Register at the following link.
Upcoming Thought Center webcasts and podcasts
The new revenue recognition standard
A webcast for US GAAP reporters and practitioners
2 June 2014, 1 p.m. Eastern time
IFRS 15: the new revenue recognition standard
10 June 2014, 11 a.m. Eastern time
EY Q2 2014 financial reporting update
In co-operation with Financial Executives International (FEI)
12 June 2014, 1 p.m. Eastern time
CFO: need to know quarterly webcast series
25 June 2014, 12 p.m. Eastern time