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US Week in Review - Week ending 30 August 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


To the Points: SEC issues final rules on conflict minerals and disclosures of payments to governments by oil, gas and mineral extraction issuers

The Securities and Exchange Commission approved rules requiring issuers to disclose their use of "conflict minerals" and requiring oil, gas and mineral extraction issuers to disclose payments they make to the US or foreign governments.

One rule requires companies to disclose their use of conflict minerals that are necessary to the functionality or production of a wide variety of products. Companies have until 31 May 2014 to provide their initial disclosures of whether the minerals they used during calendar year 2013 benefited armed groups in the Democratic Republic of the Congo or neighboring countries.

The other rule requires oil, gas and mineral extraction companies to disclose payments they or entities they control make to the US or foreign governments.

Our To the Point publications summarize what you need to know about the final rules.

NAIC Bulletin

Our NAIC Bulletin highlights issues addressed at the recent National Association of Insurance Commissioners Summer National Meeting as well as issues addressed by NAIC committees, working groups and task forces since the Spring National Meeting.

Updated FRD on goodwill and intangible assets

We have updated our Financial reporting developments publication, Intangibles - Goodwill and other. This edition includes further enhancements to our interpretive guidance.


Standard Setter updates


Financial Accounting Standards Board (FASB)

ASU 2012-03 issued

The FASB issued Accounting Standards Update No. 2012-03 - Technical Amendments and Corrections to SEC Sections, which is available on the FASB site.

29 August 2012 FASB meeting

Investment companies - The FASB reversed an earlier decision and said an investment company would not be required to measure a controlling financial interest in other investment companies at fair value. Instead, investment companies would continue their current practice, which is mixed. Investment companies often consolidate wholly owned investment companies and record their investments in less than wholly owned investment companies at fair value. The Board also agreed to require additional disclosures about investments in other investment companies if the fair value of the investee fund is significant to the investment company's net assets. To satisfy these requirements, an investment company could attach the investee fund's financial statements. However, a feeder fund would still be required to attach its master fund's financial statements. Finally, all investment companies would be required to disclose investments owned by individual investee funds that are significant to the reporting investment company's net assets.

In a future meeting, the FASB will decide whether and how to define a master-feeder fund and whether the additional disclosure requirements require re-exposure.

Consolidation - The FASB reaffirmed its previous decision to align the definition of participating rights in the Voting Model with the Variable Interest Model. Therefore, a noncontrolling shareholder or limited partner would have to participate in each of the activities that "most significantly impact the entity's economic performance" to preclude a majority shareholder or general partner, respectively, from consolidating.

Other - The Board also discussed its project on accounting for financial instruments: classification and measurement.

For additional details, see the FASB Action Alert.

Upcoming meetings and webcasts

The Board is scheduled to meet on 5 and 7 September 2012. For additional details of the planned discussions, see the FASB calendar.

Education sessions

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

Securities and Exchange Commission (SEC)

SEC proposes rules to allow general solicitation and advertising in exempt offerings

The SEC proposed rules that would allow general solicitation and advertising for certain exempt securities offerings as required by the Jumpstart Our Business Startups Act. The proposed rule would apply to exempt offerings conducted under Rule 506 of Regulation D and resales of restricted securities under Rule 144A of the Securities Act.

Companies issuing securities under Rule 506 would be permitted to solicit investors and advertise offerings if they take reasonable steps to verify that the actual purchasers are accredited investors, as defined in Rule 501(a) of Regulation D.

Sellers of securities offered under Rule 144A, which governs the resale of securities to large investors known as qualified institutional buyers (QIBs), could make offers to any investor provided that sellers, and anyone acting on their behalf, reasonably believe the actual purchasers are QIBs.

Comments are due 30 days after publication of the proposed rule in the Federal Register.

SEC Advisory Committee on Small and Emerging Companies to meet

The SEC Advisory Committee on Small and Emerging Companies (the Committee) will meet on 7 September 2012 in San Francisco to discuss disclosure rules for smaller public companies, as well as market structure issues and their effect on initial public offerings. Information on how to attend the meeting, or listen to an audio-only broadcast, is available on the SEC website.

The Committee focuses on the priorities and interests of small privately held businesses and publicly traded companies with capitalization of $250 million or less.

American Institute of CPAs (AICPA)

Proposed SSARSs comment period extended

The AICPA previously issued for public comment an exposure draft of three proposed Statements on Standards for Accounting and Review Services (SSARSs). The proposed SSARSs presented in the exposure draft are:

  • Association With Unaudited Financial Statements
  • Compilation of Financial Statements
  • Compilation of Financial Statements - Special Considerations

The original comment period, ending 31 August 2012, has now been extended to 30 November 2012.

Comment period extended on proposed AICPA ethics rules

The AICPA previously issued for public comment an exposure draft of its Professional Ethics Division Omnibus Proposal, "Proposed Revised and New Interpretations and Proposed Deletion of Ethics Rulings."

The exposure draft relates to the following proposed changes:

  • Revised Interpretation No. 101-3, "Nonattest Services," under Rule 101, Independence
  • New Interpretations under Rule 501, Acts Discreditable, and Rule 502, Advertising and Other Forms of Solicitation
  • Deletion of Ethics Ruling No. 65, "Use of the CPA Designation by Member Not in Public Practice," under Rule 102, Integrity and Objectivity
  • Deletion of Ethics Ruling No. 38, "CPA Title, Controller of a Bank," under Rule 501
  • Deletion of Ethics Ruling No. 78, "Letterhead: Lawyer-CPA," under Rule 502

The original comment period, ending 31 August 2012, has now been extended to 30 November 2012.

Upcoming Thought center webcasts and podcasts


The Ernst & Young Q3 2012 financial reporting update
Co-sponsored by Financial Executives International (FEI)
6 September 2012, 1:00 p.m. Eastern time

SEC comments and trends: an analysis of current reporting issues 
2 October 2012, 1:00 p.m. Eastern time

Evolving role of today's CFO
Featured in FEI's CFO Community of Interest
Hosted by Ernst & Young LLP
16 October 2012, 2:00 p.m. Eastern time

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