6 January 2017
Comment Letter - FASB proposal on the scope of modification accounting in the stock compensation guidance
In our comment letter, we support the Board’s objective to reduce the cost and complexity of applying modification accounting and believe many of the proposed amendments would meet that objective. However, we believe the FASB should include additional guidance about how the amendments would be operationalized.
21 November 2016
To the Point - FASB proposes changes to the scope of modification accounting for share-based payments
The FASB proposed excluding certain changes to the terms or conditions of a share-based payment award from the scope of the modification accounting guidance. Entities would not apply the modification accounting guidance if the value, vesting requirements and classification of a share-based payment award are the same immediately before and after a change to the terms or conditions of the award. Comments are due by 6 January 2017.
3 November 2016
Financial Reporting Developments - Share-based payment
We have updated our Financial reporting developments publication on share-based payment to reflect the new guidance in ASU 2016-09 and to clarify and enhance our interpretative guidance. Refer to Appendix F of the publication for a summary of the updates.
11 May 2016
Technical Line - A closer look at the new guidance on accounting for share-based payments to employees
Our publication takes a closer look at how entities will be affected by ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. Entities will have to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., the recordkeeping of APIC pools will no longer be necessary). The guidance on employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing, and two practical expedients for nonpublic entities have been added.
28 April 2016
To the Point - FASB makes targeted amendments to the accounting for employee share-based payments
The FASB issued final guidance that will change how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., APIC pools will be eliminated). The guidance on employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing, and two practical expedients for nonpublic entities have been added. We have updated our publication to reflect the FASB staff’s recent response to a technical inquiry about one aspect of the new guidance. The staff said a change in the net-share settlement terms of a share-based payment plan or outstanding award to allow the withholding of shares up to the maximum statutory tax rate would not be accounted for as a modification.
25 April 2016
Comment letter - FASB proposal on changes to disclosure requirements for defined benefit plans
In our comment letter, we support the proposed elimination of certain disclosure requirements but have concerns about how entities would apply the materiality assessments under the FASB’s proposed ASU on materiality. We also are concerned that certain proposed disclosure requirements, together with current ones required by ASC 715, Compensation – Retirement Benefits, could further reduce disclosure effectiveness.
25 April 2016
Comment letter - FASB proposal on changes to the reporting of net periodic pension cost and net periodic postretirement benefit cost
In our comment letter, we said we agree that only the service cost component of net periodic pension cost and net periodic postretirement benefit cost should be eligible for capitalization in assets. We also believe that the prior service cost or credit component should be presented in the same financial statement line item as the current service cost component within operating income. However, we have concerns about the proposed amendment that would require entities to present the other components of net periodic pension cost and net periodic postretirement benefit cost outside a measure of operations.
28 January 2016
To the Point - Employers’ presentation and disclosures for defined benefit retirement plans may change
The FASB issued two proposals that would change certain presentation and disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The first proposal would require an employer to report the service cost component of net periodic benefit cost separately from the other components in the income statement and would require that only the service cost component be eligible for capitalization in assets. The second proposal would require new disclosures and eliminate certain disclosures. Comments on both proposals are due by 25 April 2016.
15 October 2015
To the Point - Updated mortality improvement scale should be considered in sponsors’ financial statements
The Society of Actuaries issued an updated mortality improvement scale that could affect a sponsor’s benefit obligations and contributions. The updated mortality improvement scale reflects two additional years of Social Security mortality data that have been recently released and were not included in the MP-2014 scale. Sponsors that have not yet issued financial statements for any fiscal year need to evaluate whether the updated scale provides additional evidence about conditions that existed at the balance sheet date.
30 September 2015
To the Point - Potential alternative to develop discount rates used to measure defined benefit plan costs
The SEC staff said recently that when a yield curve is used to determine discount rates, it would not object to a company changing from using a weighted average discount rate to the spot rate approach for measuring the interest and service cost components of net periodic benefit cost for defined-benefit pension plans and other defined-benefit post-retirement plans. The SEC staff also said the effects would be accounted for prospectively as either a change in estimate or a change in estimate that is inseparable from a change in accounting principle. Companies that do not use a yield curve approach for determining discount rates (e.g., use a bond matching approach) should discuss any changes in approach with their auditors and the SEC staff before making a change.
14 August 2015
Comment Letter - FASB proposal to simplify share-based payment accounting
In our comment letter, we said we believe that the proposal would reduce costs and complexity by allowing all entities to elect to account for forfeitures of share-based payments as they occur and by providing two practical expedients for nonpublic entities. We support increasing the threshold for the exception to liability classification related to shares withheld for employees’ taxes and propose that the exception be extended to partnerships and other pass-through entities that do not have a withholding obligation. While we agree with the FASB’s proposal to eliminate the accounting for the pool of excess tax benefits, we believe that excess tax benefits and tax deficiencies should be recorded in additional paid-in capital, rather than in the income statement.
31 July 2015
To the Point - FASB simplifies financial reporting by employee benefit plans
The FASB issued final guidance to simplify certain aspects of employee benefit plan accounting, while satisfying the needs of users of financial statements, including participants and the Department of Labor. The guidance, which was developed by the Emerging Issues Task Force, simplifies the measurement, presentation and related disclosures for fully benefit-responsive investment contracts and disclosures about plan investments. It also allows a plan with a fiscal year end that doesn’t coincide with the end of a calendar month to make an accounting policy election to measure its investments and investment-related accounts using the month end closest to its fiscal year end. The guidance is effective for fiscal years beginning after 15 December 2015. Earlier application is permitted.
22 July 2015
Technical Line - GASB overhauls government retiree health care rule
The GASB issued new guidance that will change the way state and local governments calculate and report the costs and obligations associated with defined benefit other postemployment benefit (OPEB) plans. The new standard will make a government’s obligations more transparent, and many governments will likely report a much larger OPEB liability than they do today. The guidance is effective for fiscal years beginning after 15 June 2017, and early application is encouraged.
9 June 2015
To the Point - FASB proposal would change how companies account for employee share-based payments
The FASB proposed changing how public and private companies account for share-based payments to employees as part of its broader simplification initiative. The proposal would change the guidance on accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation, forfeitures and income tax effects when awards vest or are settled (i.e., APIC pools would be eliminated). It also would provide classification guidance for awards with contingent repurchase features and give private companies the option to use two practical expedients. Comments are due by 14 August 2015.
24 April 2015
To the Point - FASB proposes simplifying financial reporting by employee benefit plans
The FASB issued a proposal that would simplify certain aspects of employee benefit plan accounting, while satisfying the needs of users of financial statements, including participants and the Department of Labor. The proposal, which was developed by the Emerging Issues Task Force, would simplify the measurement of fully benefit-responsive investment contracts and disclosures about plan investments. It also would allow plans with fiscal years that don’t end at the end of a calendar month to choose a simpler way of measuring their investments and investment-related accounts. Comments are due by 18 May 2015.
16 April 2015
To the Point - FASB allows employers to simplify measurement date for defined benefit plan assets and obligations
The FASB issued final guidance that allows employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the calendar month closest to their fiscal year ends. Employers that make this election must apply the alternative measurement date to all defined benefit plans. The guidance also allows all employers to elect to remeasure defined plan assets and obligations in interim periods at the closest calendar month end to an event that triggers the remeasurement.
18 December 2014
To the Point - FASB to propose more ways to simplify accounting for employee share-based payments
The FASB tentatively decided to propose two practical expedients that private companies could use to simplify their accounting for share-based payments to employees. For both public and private companies, the Board also tentatively decided to align the classification guidance for put and call rights that are contingent on an event within an employee’s control.
9 December 2014
Comment letter – FASB proposal to simplify the measurement date of an employer’s defined benefit obligation and plan assets
In our comment letter, we supported the FASB's effort to address the cost and complexity for employers with fiscal year ends that do not fall on the end of a calendar month by providing a practical expedient to measure their defined benefit obligations and plan assets as of the end of the month closest to their fiscal year ends. We also recommended that the Board provide the same practical expedient for employee benefit plans.
30 October 2014
To the Point - Benefit plan sponsors may need to consider new mortality tables in making year-end assumptions
The Society of Actuaries finalized new mortality tables and a new mortality improvement scale that could increase a sponsor’s benefit obligations and contributions. Although sponsors are not required to use the tables or the improvement scale, they may need to consider the new mortality information when developing year-end mortality assumptions. Our To the Point publication tells you what you need to know about the final mortality tables.
9 October 2014
To the Point - FASB launches project to simplify share-based payment accounting
The FASB added a project to its agenda on the accounting for share-based payments for both public and private entities. At the same meeting, the FASB made tentative decisions on the accounting for an employee’s use of shares to satisfy the employer’s minimum statutory income tax withholding obligation, forfeitures, income taxes when awards vest or are settled and the presentation of excess tax benefits on the statement of cash flows. Our To the Point publication tells you what you need to know about these developments.
14 August 2014
Technical Line - GASB proposes changes in accounting for other postemployment benefits
The GASB has proposed changing how state and local governments calculate and report the costs and obligations associated with defined benefit other postemployment benefit (OPEB) plans. Government employers would have to record an OPEB liability in their accrual-basis financial statements for defined benefit plans in a manner more similar to private sector entities. The proposal would make a government’s obligations more transparent, and many governments would likely report a much larger OPEB liability than they do today. Our Technical Line publication analyzes the proposed guidance and highlights key changes from current practice.
19 June 2014
To the Point - Awards with targets that affect vesting and that could be achieved after the requisite service period
The FASB issued guidance that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition. Our To the Point publication tells you what you need to know about the new guidance.
15 May 2014
To the Point - New mortality tables proposed: longer lives could mean higher benefit plan obligations
The Society of Actuaries has proposed new mortality tables for benefit plan sponsors to use when measuring their benefit plan costs and obligations. If and when the proposal is finalized, sponsors would need to consider the changing trends in life expectancies when determining their best estimate of the mortality rate for measuring defined benefit plan costs and obligations. Our To the Point publication tells you what you need to know about the new mortality tables.
23 August 2012
Technical Line - Most governments will soon record costs of their pension plans earlier
The GASB issued a new standard that will significantly change how government employers account for the cost of defined benefit pension plans. Our Technical Line publication tells you what you need to know about the standard.
13 June 2012
Technical Line - Supreme Court ruling on health care law could affect financial reporting
The US Supreme Court is expected to rule by the end of June on the constitutionality of the health care law. The financial reporting consequences may be significant, depending on what the Court decides and a company’s operations. The timing of the ruling could make second-quarter financial reporting challenging. Our Technical Line summarizes these possible consequences.
22 September 2011
To the Point - Companies that participate in multiemployer plans will have to disclose more
The FASB issued an ASU that requires companies participating in multiemployer pension plans to disclose more information about their involvement in those plans. The new disclosures will be required this year for calendar year-end public companies and will be deferred for one year for nonpublic entities. Our To the Point publication summarizes what you need to know about the new requirements.
14 July 2011
To the Point - Government pension rules face possible overhaul
The GASB proposals would require governments to report more prominently in their statements of financial position net pension liabilities that, in many cases, would be larger than what they currently report. Our To the Point publication summarizes what you need to know about the GASB proposals.
16 June 2011
To the Point - US perspective on IFRS amendments to employee benefit accounting
The IASB today finalized amendments to International Accounting Standard (IAS) 19, Employee Benefits. While this was not a joint project with the FASB, the IASB’s amendments to IAS 19 may serve as a starting point for future changes to accounting for pension and other postretirement benefits under US GAAP. Our To the Point summarizes the rule from a US perspective.
9 June 2011
Technical Line - Avoiding ‘cheap stock’ issues
Our Technical Line reminds companies of the importance of having contemporaneous independent valuations to support share-based compensation cost recorded in the 12 months before an IPO.
12 November 2010
Hot Topic - Health care reform: year-end accounting considerations for postretirement health care plans
Our Hot Topic highlights some of the accounting considerations for sponsors of postretirement health care plans, including the effects of the new health care legislation.
31 August 2010
Hot Topic - FASB Issues proposed ASU on disclosure about an employer’s participation in a multiemployer plan
Our Hot Topic summarizes the FASB proposed ASU that would enhance the disclosure requirements for participants in multiemployer pension plans.
23 June 2010
Health care reform: A summary of accounting considerations
Our publication provides a summary, in one location, of previously published key accounting considerations resulting from the health care reform legislation..
14 May 2010
Hot Topic - Health care reform: limitations on compensation deductions
The new health care legislation includes a provision to limit the deduction for compensation paid to all officers, employees, directors and other workers who provide services for a covered health insurance provider to $500,000 regardless to whether such compensation is paid during or subsequent to the taxable year. Our publication provides a brief overview of the limitation and financial reporting considerations for share-based compensation.
14 April 2010
Hot Topic - Accounting for income taxes: changes in Medicare Part D and the Reconciliation Act
As discussed in our Hot Topic, 0n 14 April 2010, the staff of the SEC’s Office of the Chief Accountant announced that they would not object to a registrant accounting for the effects of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 together. For calendar year and quarter end entities, this announcement should not change the accounting for the Acts. However, entities that have a period end between the enactment dates of the Acts likely are affected by the SEC staff’s announcement.
14 April 2010
Hot Topic - Accounting for postretirement health care plans: The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010
In March 2010, President Obama signed into law historic health care legislation. The new legislation will likely affect the cost of providing health care benefits for retirees. Our Hot Topic discusses the accounting for postretirement health care plans under the Act.
25 February 2009
Hot Topic - Accelerated vesting of stock options
Our Hot Topic describes the accounting considerations associated with the accelerated vesting of an out-of- the-money stock option as well as certain views on the related accounting as shared with us by the SEC staff.
31 December 2008
Hot Topic - FASB issues FSP 132 (R)-1 amending FAS 132 disclosure provisions
The FSP amends FASB Statement No. 132(R), employer’s disclosures about pensions and other postretirement benefits, to require additional disclosures about assets held in an employer’s defined benefit pension or other postretirement plan. Our Hot Topic summarizes the FSP’s provisions.
5 December 2008
Hot Topic - Pensions and OBEPs: Current economic environment and assumed discount rate considerations
Our Hot Topic addresses frequently asked questions surrounding the effect of the current economic environment on assumed discount rates used to determine employers’ pension and other postretirement benefit obligations.
3 June 2008
Hot Topic - FASB Statement No.158 -Year 2 implementation issues
Our Hot Topic focuses on the accounting and reporting for pension and postretirement health plans under Statement 158 including transition provisions and related disclosure requirements.
2 May 2008
Comment Letter - FASB Proposed FSP FAS 132R-a-pension disclosure matters
This comment letter provides our views on the FASB proposed FSP on pension disclosure matters.
7 December 2007
Hot Topic - Actuarial assumptions - How do you estimate discount rates?
Our Hot Topic discusses various considerations for determining assumed discount rates since the discount rate assumption can significantly affect the determination of the funded status of a company's pension or other postretirement benefit plan.