US Week in Review - Week ending 6 December 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's 2012 audit quality publication, Our commitment to executing quality audits: Information for audit committees, is now available. It discusses our unwavering commitment to quality, outlines elements of our system of quality control, discusses the significant investments we are making in our audit practice and explains other actions we are taking to improve audit quality.
Our comment letter supports the FASB's decision to address disclosure effectiveness and to develop a framework to promote consistent decisions about disclosure requirements. However, we believe disclosure overload exists and therefore urge the FASB to make reducing disclosure requirements a priority of the project and to limit new disclosure requirements until the project is completed. We also address the discussion paper's approach to flexible disclosures, its reliance on prospects for net cash inflows, its lack of clear boundaries for financial statement disclosure, the need for a full discussion of note disclosure materiality and interim disclosures.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FAF appoints new FASAC members
The Financial Accounting Foundation (FAF) appointed four new members to the Financial Accounting Standards Advisory Council (FASAC) and renewed the terms of 30 current members for an additional year. For details, see the FAF site.
Upcoming meetings and webcasts
12 December 2012 FASB meeting
The FASB is scheduled to discuss the following projects:
- Accounting for financial instruments: classification and measurement
- Investment companies
- Liquidation basis of accounting
- Reporting discontinued operations
For additional details, see the FASB calendar.
13 December 2012 FASB webcast
The FASB will host its webcast, IN FOCUS: FASB Update for Nonpublic Entities, at 1:00 p.m. Eastern time. For details and registration, see the FASB site.
See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.
Securities and Exchange Commission (SEC)
Meredith Cross and others are leaving the SEC
Meredith Cross, Director of the SEC's Division of Corporation Finance, announced that she will leave the SEC at the end of 2012 and return to the private sector.
Ms. Cross joined the Division as its Director in June 2009. She oversaw the Division's review program and led rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Jumpstart Our Business Startups Act. Mark D. Cahn, General Counsel, and Robert W. Cook, Director of Trading and Markets, also announced plans to leave the SEC.
SEC staff guidance on complying with the Iran Threat Reduction and Syria Human Rights Act
The SEC staff issued guidance on complying with the Iran Threat Reduction and Syria Human Rights Act of 2012 (Act), which was effective 10 August 2012. The SEC staff's Compliance and Disclosure Interpretations clarify that disclosure is required in periodic reports with filing due dates after 6 February 2013, even if the issuer files before that date, for any activities specified in the Act during the period covered by the report (e.g., 1 January 2012 through 31 December 2012 for a calendar-year Form 10-K).
The disclosure requirement covers specified activities by the issuer or its affiliates. The SEC staff clarified that the term affiliate refers to any person who directly or indirectly controls, is controlled by or is under common control with, the issuer. If neither the issuer nor its affiliates have engaged in any of the specified activities, no disclosure is required.
International Accounting Standards Board (IASB)
IASB ED on acceptable methods of depreciation and amortization
The IASB has issued proposed amendments to IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets. IAS 16 and IAS 38 both establish the principle for the basis of depreciation and amortization as being the expected pattern of consumption of the future economic benefits of an asset. The proposed amendments clarify that preparers should not use revenue-based methods to calculate charges for the depreciation or amortization of items of property, plant and equipment or intangible assets. This is because a revenue-based method reflects a pattern of economic benefits being generated from the asset, rather than the expected pattern of consumption of the future economic benefits embodied in the asset. Comments on the proposal are due by 2 April 2013.
IFRS for SMEs Update
The November 2012 edition of IFRS for SMEs has been issued and contains the latest news for small and medium-sized entities.
Government Accounting Standards Board (GASB)
GASB encourages preparers to prepare for implementation of new pension standards
The GASB recently issued an article encouraging state and local public officials and pension administrators to begin planning, preparing and collaborating to implement its new pension standards, Statement Nos. 67 and 68.
Upcoming Thought center webcasts and podcasts
The Ernst & Young Q4 2012 financial reporting update
Co-sponsored by Financial Executives International (FEI)
13 December 2012, 1:00 p.m. Eastern time