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US Week in Review - Week ending 5 December 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 EY.

What’s new from EY


To the Point: It's time to start preparing for the new revenue standard

With the new revenue standard expected early in 2014, companies should begin preparing now. The new standard will likely affect their financial statements, business processes and personnel, and internal control over financial reporting, and implementing it could be a significant undertaking. Our To the Point publication discusses what you can do now to prepare for a successful implementation.

SEC Comments and Trends - media and entertainment supplement

Our media and entertainment (M&E) supplement to our SEC Comments and Trends publication is intended to give you insights into the Securities and Exchange Commission (SEC) staff's concerns and areas of focus involving M&E companies.

This publication is based on our review of 101 public comment letters issued to more than 50 M&E registrants between February 2012 and September 2013. It should be read in conjunction with our SEC Comments and Trends - 2013 Supplement, which discusses matters that relate to all registrants.

EY comment letter on SEC pay ratio proposal

In our comment letter, we focus on certain aspects of the proposal, including sampling methods and pay ratio computation. We also make recommendations that we believe would reduce the cost and burden on issuers, promote disclosure and enhance comparability. The proposal would require most issuers to disclose the median annual compensation of all of their employees (excluding the principal executive officer) and the ratio of that amount to the annual compensation of their principal executive officer.


Standard Setter updates


Financial Accounting Standards Board (FASB)

FASB to perform more outreach on PIR report on FAS 109

The FASB said it plans to perform outreach with preparers, practitioners and users as it continues evaluating the findings in the Financial Accounting Foundation's Post-Implementation Review (PIR) on FASB Statement (FAS) 109, Accounting for Income Taxes. The PIR report said some preparers and practitioners find aspects of FAS 109 operationally challenging, and the reporting of income taxes may not provide enough detailed information to users. The FASB will seek input on intraperiod tax allocation, intercompany transfer of assets, earnings indefinitely reinvested in foreign subsidiaries and cash flows from income taxes. See the FASB's response for more information.

Upcoming meetings and webcasts

11 December 2013 FASB meeting

The FASB is scheduled to discuss its project Consolidation: principal versus agent analysis.

The Board will also decide whether to ratify the following consensuses:

  • EITF Issue No. 12-G, Measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity
  • EITF Issue No. 12-H, Accounting for service concession arrangements
  • EITF Issue No. 13-B, Accounting for investments in qualified affordable housing projects
  • EITF Issue No. 13-E, Reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure

The FASB will also decide whether to ratify a consensus-for-exposure on EITF Issue No. 13-F, Classification of certain government insured residential mortgage loans upon foreclosure. In addition, the Board will decide whether to add to the EITF's agenda an issue to evaluate whether Issue No. 13-B should be extended to other types of tax credit investments.

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)

SEC staff issues interpretations of new 'bad actor' rule

The Division of Corporation Finance issued compliance and disclosure interpretations on the SEC's new "bad actor" disqualification and disclosure requirements in offerings under Rule 506 of Regulation D. The rule disqualifies issuers from using any exemption under Rule 506 if certain felons or other bad actors are involved in the offering. The rules were effective 23 September 2013.

International Accounting Standards Board (IASB)

IASB proposes narrow-scope amendments to IAS 27

The IASB has published for public comment Exposure Draft: Equity Method in Separate Financial Statements (Proposed amendments to IAS 27). The proposed amendments to IAS 27 would allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate (parent only) financial statements.

IFRS for SMEs Update

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

Public Company Accounting Oversight Board (PCAOB)

PCAOB reproposes requiring auditors to identify the engagement partner and certain other participants who participated in the audit in the auditor's report

The PCAOB voted unanimously to repropose a requirement that auditors identify the engagement partner and certain other participants in the auditor's report. The reproposal would require the auditor's report to include:

  • The name of the engagement partner who led the audit for the most recent period
  • The names, locations and extent of participation (as a percentage of total audit hours) of other public accounting firms that participated in the audit
  • The locations and extent of participation by other individuals or companies that are not employed by the auditor

Key changes from the PCAOB's 2011 proposal include (1) eliminating the requirement to disclose the engagement partner's name in the Form 2 that audit firms file annually with the PCAOB, (2) raising the disclosure threshold for other participants in the audit to 5% of total audit hours from 3%, (3) giving the auditor the option to state participation as a range of percentages rather than a single percentage and (4) letting auditors refer to "persons not employed by our firm" rather than name them, when referring to persons or entities other than public accounting firms who participated in the audit.

The PCAOB published a fact sheet on the proposal. Comments are due by 3 February 2014.

The PCAOB also voted unanimously to adopt Dodd-Frank conforming amendments for broker-dealer audits and certain other updates and clarifications.

Upcoming Thought Center webcasts and podcasts


EY Q4 2013 financial reporting update
In co-operation with Financial Executives International (FEI)
19 December 2013, 1:00 p.m. Eastern time

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