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US Week in Review - Week ending 8 November 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 Point: Proposed non-GAAP framework could make reporting easier for SMEs

The AICPA is requesting comments on a proposed financial reporting framework for small- and medium-sized privately held entities that are not required to use US GAAP. The proposed framework is intended to be less complicated and less costly to apply than US GAAP. Our To the Point publication provides a brief overview of the framework.

Technical Line: Implementing the JOBS Act - Revised

The Jumpstart Our Business Startups Act (JOBS Act) gives private companies greater access to capital and makes it easier for certain companies to go public. This Technical Line publication discusses key matters to consider about the JOBS Act and is updated through 1 November 2012 to include new SEC implementation guidance and the SEC's proposed rulemaking to eliminate the ban on general solicitation and advertising in certain exempt offerings. The law created a new category of issuer called an emerging growth company that can phase in certain SEC regulatory requirements during a five-year period. The law also modified triggers for public registration and reporting and encourages capital formation by requiring the SEC to conduct rulemaking to create a new category of exempt offerings of up to $50 million raised over a 12-month period and to allow the use of crowdfunding.

Updated Financial Reporting Developments on earnings per share

We have updated our Financial Reporting Developments publication, Earnings per share. This updated edition includes further enhancements to our interpretative guidance, including the earnings per share treatment of vested restricted stock units with deferred settlement provisions and instruments that may be settled in cash or stock. We also have included an example to illustrate the effect of a warrant that may be settled in cash or stock.

Technical Line: Accounting for the effects of natural disasters - Hurricane Sandy

In the aftermath of Hurricane Sandy, we are beginning to receive inquiries regarding the related financial reporting effects. Our Technical Line publication provides a reminder of existing accounting guidance that should be considered when accounting for the effects of natural disasters.

We additionally want to highlight that the Securities and Exchange Commission (SEC) announced it is preparing to extend filing deadlines for those affected by Hurricane Sandy and its aftermath. See the SEC standard setter update within for further discussion.

Conflict minerals: 6,000 issuers could need to take action

Our new paper Conflict minerals: new rules and next steps summarizes the SEC's new reporting rules for conflict minerals, as required by the Dodd-Frank Act.

Conflict minerals are defined as cassiterite, columbite-tantalite, wolframite and gold. Companies in the aerospace and defense, automotive, consumer products, diversified industrial products, manufacturing, power and utilities, technology and telecommunications industries use them to produce a wide variety of products.

The SEC's final rules require public companies to identify and disclose whether any of the conflict minerals they use originated in the Democratic Republic of the Congo or nine adjoining countries. The SEC estimates that about 6,000 public companies will be directly affected by the rule and that many private companies that supply them will be affected indirectly. Companies that need to file a Conflict Minerals Report will need to have it audited by an independent third party.


Standard Setter updates


Financial Accounting Standards Board (FASB)

FASB extends comment period

Due to Hurricane Sandy, the FASB extended the deadline on its invitation to comment on the Disclosure Framework to 30 November 2012.

6 November 2012 FASB meeting

The FASB discussed its projects on:

  • Liquidation basis of accounting
  • Consolidation: policy and procedures

For details, see the FASB Action Alert.

7 November 2012 FASB meeting

The FASB discussed its projects on:

  • Going concern
  • Accounting for financial instruments: liquidity and interest rate disclosures
  • Transfers and servicing: repurchase agreements and similar transactions

For details, see the FASB Action Alert.

Upcoming meetings and webcasts

14 November 2012 FASB meeting

The Board is scheduled to discuss the following projects:

  • Presentation of comprehensive income: reclassification out of accumulated other comprehensive income
  • Technical corrections - next phase
  • Insurance contracts

For additional details, 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 will extend filing deadline for registrants affected by Hurricane Sandy

The SEC said it expects to extend the filing deadline until 21 November for registrants affected by Hurricane Sandy with filings otherwise due 29 October to 20 November. A formal SEC action is expected to be released soon. The SEC staff will consider requests for further relief on a case-by-case basis.

See the SEC Hurricane Sandy information page for more information and further updates.

Center for Audit Quality (CAQ)

CAQ SEC Regulations Committee publishes September highlights

The Center for Audit Quality SEC Regulations Committee issued highlights from its 25 September 2012 meeting with the SEC staff.

The highlights include:

  • The SEC staff's observations from recent filing reviews on fair value disclosures and the application of ASU 2011-04
  • A discussion of disclosure requirements under the Iran Threat Reduction and Syria Human Rights Act of 2012
  • The staff's views on the presentation of certain items within the Contractual Obligations Table
  • An update on other SEC activities, including the JOBS Act and the SEC staff's Final Report on its IFRS Work Plan

American Institute of CPAs (AICPA)

New proposed financial reporting framework for SMEs

The AICPA issued an exposure draft of its Proposed Financial Reporting Framework for Small-and Medium-Sized Entities (FRF for SMEs). The FRF for SMEs is an other comprehensive basis of accounting (also known as a special purpose framework) that, when finalized, will offer small- and medium-sized entities a reliable, relevant, and simplified financial reporting solution that addresses marketplace demands. Comments are due by 30 January 2013.

Working draft of chapter 2 of Accounting and Valuation Guide on testing goodwill for impairment

The working draft of chapter 2 of the of Accounting and Valuation Guide, Testing Goodwill for Impairment, has been released. The comment deadline for this working draft is 31 December 2012.

International Financial Reporting Standards (IFRS)

IFRS Foundation to establish accounting standards advisory forum

In response to recommendations of the IFRS Foundation Trustee's strategy review released in February 2012, the IFRS Foundation has issued for public comment proposals to establish an advisory group to the IASB consisting of national accounting standard-setters and regional bodies with an interest in financial reporting. Comments are due by 17 December 2012.

Upcoming Thought center webcasts and podcasts


US election results: making sense of the 'fiscal cliff' and related tax issues
Tax legislative update: federal edition
9 November 2012, 1:00 p.m. Eastern time

How the JOBS Act is changing the IPO process
Live from the Ernst & Young Strategic Growth Forum
13 November 2012, 7:30 p.m. Eastern time

IFRS 9 Financial instruments: what to expect from changes to hedge accounting
27 November 2012, 11:00 a.m. Eastern time

Conflict minerals: new rules and next steps
27 November 2012, 2:00 p.m. Eastern time

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