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US Week in Review - Week ending 3 May 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


Ernst & Young comments on PCAOB proposal on rules and form amendments

In our letter to the PCAOB, we generally support the proposed changes to the Board's rules and forms to conform to the Dodd-Frank Act. The proposed amendments include references to audits and auditors of brokers and dealers in relevant Board rules and forms and other technical changes.


Standard Setter updates


Financial Accounting Standards Board (FASB)

2 May 2012 FASB meeting

Disclosures about risks and uncertainties and the liquidation basis of accounting - The Board decided that a limited-life entity (for example, a joint venture with a specified contractual life) should not prepare financial statements using the liquidation basis of accounting if management activities, including the liquidation of the entity, are consistent with those contemplated in the entity's governing documents. The Board also decided that it will revisit the question of whether management should be required to assess whether there is doubt about an entity's ability to continue as a going concern in light of its recent decision not to pursue going-concern-type disclosures in the project about liquidity and interest rate risk disclosures. The Board will consider this question in the context of a separate project. An exposure draft on the liquidation basis of accounting is expected to be issued shortly with a 90-day comment period.

Definition of a nonpublic entity - The Board decided that a for-profit entity that is a conduit bond obligor for conduit debt securities that are traded in a public market would not be included in the definition of a private company for standard-setting purposes even if the entity otherwise meets the characteristics of a private company as defined in this project.

For additional detail of the Board's discussion, see the FASB's Action Alert.

Upcoming meetings and webcasts

9 May 2012 FASB meeting

The Board is scheduled to discuss its projects on accounting for the impairment of financial instruments and liquidity and interest rate risk disclosures.

Education sessions

See the FASB 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 (the Committee) published highlights from its 27 March 2012 meeting with the SEC staff.

The highlights confirm our report of the SEC staff's view that, upon the adoption of ASU 2011-12, condensed consolidating financial information provided under Rule 3-10 of Regulation S-X and parent-only financial information presented under Rule 5-04 of Regulation S-X must present total comprehensive income in one of the two prescribed statement forms for all periods presented. The SEC staff also provided views on, among other things, disclosure requirements in a registration statement filed after a registrant no longer meets the definition of a smaller reporting company and certain pro forma presentation issues related to discontinued operations. The SEC staff also gave an update on current areas of focus in its filing reviews including management's use of third-party pricing services, goodwill impairment and loss contingencies.

SEC staff answers more questions about emerging growth companies under JOBS Act

The staff of the SEC's Division of Corporation Finance issued a fourth set of Frequently Asked Questions (FAQs) to provide implementation guidance about the Jumpstart Our Business Startups Act (JOBS Act). These FAQs continue to focus on Title I of the JOBS Act, including emerging growth company (EGC) eligibility, application of EGC status to foreign private issuers and relief from Item 503(d) of Regulation S-X to present a ratio of earnings to fixed charges for the same periods as an EGC's selected financial data.

In addition, the FAQs identify certain requirements from which EGCs are not exempt, including XBRL. EGCs also must provide three years of audited financial statements in post-IPO annual reports, unless they are eligible for relief as a smaller reporting company. The FAQs also address the JOBS Act provision that allows an EGC to adopt new or revised accounting standards using the effective dates for private companies, clarifying that such provision only applies to new or revised accounting standards issued after 5 April 2012, when the JOBS Act was enacted.

Government Accounting Standards Board (GASB)

March 2012 GASB Report

The March 2012 GASB Report summarizes key GASB projects and events.

International Accounting Standards Board (IASB)

IFRS for SMEs Update

The April 2012 IFRS for SMEs Update is a staff update on the latest news surrounding IFRS for Small and Medium-sized Entities (SMEs).

SME Implementation Group (SMEIG) publishes Q&As

The SMEIG has published the following Q&As:

  • Q&A 2012/03 - Fallback to IFRS 9 Financial Instruments
  • Q&A 2012/04 - Recycling of cumulative exchange differences on disposal of a subsidiary

The Q&As are intended to provide non-mandatory and timely guidance on specific accounting questions that are being raised with the SMEIG by users implementing the IFRS for SMEs.

International Federation of Accountants/International Auditing and Assurance Standards Board (IFAC/IAASB)

IAASB 2011 annual report

The International Auditing and Assurance Board (IAASB) has released its 2011 annual report. The report highlights the IAASB’s work to strengthen audits globally and build robust standards for audit, assurance and related services, and its commitment to enhance the communicative value and relevance of auditor reporting.

Upcoming Thought center webcasts and podcasts


Global PE watch: Striving for growth - a return to entrepreneurship 2012 
10 May 2012, 11:00 a.m. Eastern time

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