AccountingLink

    To the Point

    26 October 2017

    To the Point - AICPA staff answers questions about the definition of a public business entity
    The AICPA staff issued a technical question and answer document to address questions raised by preparers about certain terms used in the definition of a public business entity (PBE). The document reflects the AICPA staff’s recent discussions with the FASB staff, which may change an entity’s conclusion about whether it is a PBE.

    12 October 2017

    To the Point - SEC proposes modernizing and simplifying certain Regulation S-K disclosure requirements
    The SEC proposed amending Regulation S-K to modernize and simplify certain disclosure requirements as part of a broader review aimed at reducing the compliance burden on registrants while still providing all material information to investors. Among other thing, the proposal would allow a registrant to omit a discussion of the earliest annual period from Management’s Discussion and Analysis if the discussion is not considered to be material and the discussion of that period was included in the prior-year Form 10-K. The proposal also would allow a registrant to omit commercially sensitive and confidential information without obtaining advance permission from the SEC staff. Comments are due within 60 days.

    10 October 2017

    To the Point - How companies should prepare for the audit of the new revenue standard
    The PCAOB issued a staff alert discussing what auditors need to do to audit a company’s implementation of the new revenue recognition standard. While the alert is aimed at auditors, it provides a roadmap for management about how to prepare for the audit of the company’s implementation of the new standard.

    5 October 2017

    To the Point - PCAOB asks for more input on its proposal on supervision of other auditors
    The PCAOB issued a supplemental request for comment on its proposal to strengthen the requirements for supervising other auditors who participate in an audit but don’t issue the auditor’s report. Comments are due by 15 November 2017.

    2 October 2017

    To the Point - FASB proposes narrow amendments and technical corrections to the new leases standard
    The FASB proposed narrow amendments and technical corrections to clarify how to apply certain aspects of the new leases standard. The proposed clarifications would address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things. Comments are due by 13 November 2017.

    29 September 2017

    To the Point - FASB proposes clarifying the new guidance for recognizing and measuring financial instruments
    The FASB proposed technical corrections and improvements to its new standard on recognizing and measuring financial instruments that would clarify that entities would use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative. The amendments would also clarify the guidance on how to apply the measurement alternative and the presentation requirements for financial liabilities measured under the fair value option. Comments are due by 13 November 2017.

    28 September 2017

    To the Point - FASB proposes transition practical expedient for land easements and clarification on applying ASC 842
    The FASB proposed adding a transition practical expedient for land easements in the new leases standard that would permit an entity to continue applying its current accounting policy for land easements that existed or expired before the standard’s effective date. The proposal also would clarify that an entity would evaluate whether land easements are leases under the new standard before applying the guidance on intangible assets. Comments are due by 25 October 2017.

    13 September 2017

    To the Point - Proposed alternative to agreed-upon procedures engagements would address stakeholder needs
    The AICPA has issued an exposure draft proposing the creation of a new attestation service that companies could use to have an accountant report to interested parties on the findings of procedures the accountant performed on an aspect of a company's business. The newly proposed service, selected procedures service would give companies a way to meet the needs of various stakeholders in situations that go beyond what is allowed for an agreed-upon procedures engagement.

    28 August 2017

    To the Point - FASB amends hedge accounting guidance to better reflect entities' risk management activities
    The FASB issued final guidance amending its hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments also simplify the application of hedge accounting in certain situations. The guidance is effective in 2019 for calendar-year public business entities and 2020 for all other calendar-year companies, with early adoption permitted in any interim or annual period.

    11 August 2017

    To the Point - Update on accounting for pre-production and tooling activities and costs under ASC 606
    Manufacturing and production companies in various industries have raised questions about how they should account for activities and costs incurred prior to the production of goods under a supply arrangement after they adopt the new revenue recognition standard. As public companies finalize their ASC 606 accounting policies and prepare to adopt the new standard, a consensus has emerged that a number of views related to the accounting for pre-production and tooling activities could be appropriate.

    10 August 2017

    To the Point - FASB proposes clarifying the guidance for contributions received and contributions made
    The FASB proposed clarifying the guidance on how entities determine whether a transfer of assets is a contribution or an exchange transaction and on how they distinguish between conditional and unconditional contributions. Although the accounting for contributions primarily affects not-for-profit entities, the proposal would apply to all entities (including business entities) that receive or make contributions. Comments are due by 1 November 2017.

    3 August 2017

    To the Point - AICPA issues new attestation guide amid growing investor interest in sustainability reporting
    To address the growing interest in sustainability reporting, the AICPA issued a new attestation guide to assist accountants in performing and reporting on companies’ sustainability information. Investors and other stakeholders are more often taking into account sustainability issues in their decision making, and many believe it is important for this information to be subject to independent assurance.

    18 July 2017

    To the Point - FASB simplifies the accounting for financial instruments with ‘down round’ features
    The FASB issued final guidance that eliminates today’s requirement to consider “down round” features when determining whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. Entities that present earnings per share pursuant to ASC 260 will recognize the effect of a down round feature in a freestanding equity-classified financial instrument only when it is triggered. The effect of triggering such a feature will be recognized as a dividend and a reduction to income available to common shareholders in basic EPS.

    6 July 2017

    To the Point - SEC staff substantially expands scope of confidential review program for draft registration statements
    The SEC staff in the Division of Corporation Finance said it will accept draft initial registration statement submissions from all companies and Securities Act registration statement submissions in the first year after a company goes public for review on a non-public basis. The SEC staff also said that companies may now omit financial information that they reasonably believe will not be required at the time the registration statement is publicly filed. These expansions of the confidential review program are the first actions by the SEC staff to ease regulatory requirements under Chairman Jay Clayton, who has said that facilitating capital formation is a priority.

    29 June 2017

    To the Point - The FASB proposes more changes to the consolidation guidance
    The FASB proposed more changes to the consolidation guidance, including allowing private companies to make an accounting policy election to not apply the variable interest entity (VIE) guidance for certain common control arrangements. It also proposed changing two aspects of the VIE model for related party groups. Comments are due by 5 September 2017.

    16 June 2017

    To the Point - FASB TRG for credit losses discusses implementation issues
    Members of the FASB TRG for credit losses reached general agreement on three implementation issues and may revisit two others. They generally agreed that entities can elect to use a discount rate adjusted for expected prepayments to determine the allowance for credit losses and can elect to maintain existing pools of purchased credit impaired assets at adoption or on an ongoing basis. They also generally agreed that entities should consider the cash flows of the assets underlying a beneficial interest, including expected prepayments, to determine whether the guidance on purchased financial assets with credit deterioration applies. The TRG may revisit questions about how to determine the life of a credit card receivable and how to forecast troubled debt restructurings.

    8 June 2017

    To the Point - PCAOB proposes expanding guidance on auditing estimates and using the work of specialists
    The PCAOB proposed expanding the requirements for auditing accounting estimates, including fair value measurements. The PCAOB also proposed expanding the requirements for evaluating the work of a company’s specialist and applying a risk-based approach to supervising and evaluating the work of specialists employed or engaged by the auditor. Comments on both proposals are due by 30 August 2017.

    5 June 2017

    To the Point - PCAOB adopts final standard to significantly change the auditor’s report
    The Public Company Accounting Oversight Board (PCAOB) adopted a final standard that requires auditors to include significantly more information in their auditor’s reports. The standard requires the auditor to include in the report a discussion of critical audit matters for audits of large accelerated filers beginning in 2019 and all other filers in 2020. The standard also requires auditors to add information about auditor tenure, clarify the language about the auditor’s responsibilities and change the organization and format of reports are effective for periods ending on or after 15 December 2017. The standard is subject approval by the SEC, and interested parties will have an opportunity to provide comments.

    11 May 2017

    To the Point - FASB clarifies when changes to share-based payments must be accounted for as modifications
    The FASB issued final guidance that clarifies when changes to the terms or conditions of a share-based payment must be accounted for as modifications. Entities will apply modification accounting if the value, vesting conditions or classification of the award changes. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2017. Early adoption is permitted, including adoption in any interim period.

    26 April 2017

    To the Point - AICPA issues criteria for evaluating how an entity manages cybersecurity risk
    The AICPA issued Description Criteria for Management’s Description of an Entity’s Cybersecurity Risk Management Program and updated its Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality, and Privacy that together can be used by entities to describe their cybersecurity risk management programs and evaluate controls in these programs. An entity also can voluntarily choose to engage an independent public accountant to evaluate management’s description and whether the controls over its program were suitably designed and operated effectively.

    20 April 2017

    To the Point - Auditors would perform more tests and provide more information in reports on ERISA plans
    The Auditing Standards Board of the American Institute of Certified Public Accountants proposed a Statement on Auditing Standards for financial statement audits of employee benefit plans that are subject to the Employee Retirement Income Security Act (ERISA) in an effort to improve the quality of these audits and the relevance of the auditor's report. This publication focuses on how plan sponsors would be affected by the proposal, which would be effective for audits of financial statements for periods ending on or after 15 December 2018. Comments are due by 21 August 2017. We encourage plan sponsors to review the proposal, discuss it with their auditors and ERISA counsel and consider providing comments.

    6 April 2017

    To the Point - SEC Chief Accountant provides guidance on how audit committees can be more effective
    In a recent speech, SEC Chief Accountant Wesley Bricker discussed how audit committees can effectively discharge their oversight responsibilities. Among other things, he said it is important for audit committees to understand the financial reporting risks related to implementing new accounting standards, support controls over the disclosure of non-GAAP financial measures, understand changes in the business and operating environments, set a positive tone at the top to support effective internal control over financial reporting, and make sure the committee is not overloaded with responsibilities beyond its core mission.

    4 April 2017

    To the Point - FASB shortens the amortization period for certain purchased callable debt securities held at a premium
    The FASB issued guidance to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Today, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The guidance does not change the accounting for callable debt securities held at a discount. For public business entities, the guidance is effective for fiscal years beginning after 15 December 2018, and interim periods therein. For all other entities, it is effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Early adoption is permitted, including in an interim period.

    30 March 2017

    To the Point - Brexit withdrawal notification doesn’t trigger immediate tax accounting consequences
    The United Kingdom (UK) government’s formal notification of its intent to withdraw from the European Union (EU) raised the question of whether that action constituted a change in tax law for income tax accounting purposes. We believe that the withdrawal notification does not trigger immediate income tax accounting consequences. Companies should instead account for changes to their income tax accounts when a new tax law or treaty is enacted or the UK actually withdraws from the EU, whichever is earlier. Affected companies should disclose information about the status of the UK withdrawal efforts and the potential income tax effects of its eventual withdrawal.

    10 March 2017

    To the Point - Employers’ presentation of defined benefit retirement plan costs will change
    The FASB issued new guidance that will change how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. The standard is effective for public business entities for annual periods beginning after 15 December 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.

    9 March 2017

    To the Point - FASB proposes simplifying the accounting for share-based payments to nonemployees
    The FASB proposed aligning the accounting for share-based payments to nonemployees with that for employees, with certain exceptions. The proposal would expand the scope of ASC 718 to include share-based payments made to nonemployees in exchange for goods and/or services used or consumed in an entity’s own business. The proposal would not change today’s cost attribution guidance for nonemployee awards but would move it from ASC 505 50 to ASC 718. The proposal would also expand two practical expedients in ASC 718 to nonemployee awards for nonpublic entities. Comments are due by 5 June 2017.

    2 March 2017

    To the Point - SEC proposes requiring the use of Inline XBRL
    The SEC proposed a rule that would require operating companies and mutual funds to use Inline XBRL and embed tags in their financial statements and their risk/return summaries, respectively. The proposal would require Inline XBRL tagging on the same information operating companies and mutual funds currently include in separate XBRL exhibits. The requirement would be phased in over three years for operating companies based on filing status and over two years for mutual funds based on net assets. Comments are due 60 days after the proposal is published in the Federal Register.

    28 February 2017

    To the Point - FASB amends employee benefit plan master trust reporting
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that will change the reporting requirements for an employee benefit plan that holds an interest in a master trust. The guidance also eliminates a disclosure requirement related to 401(h) retiree health accounts.

    23 February 2017

    To the Point - Clarifications to guidance on the derecognition of nonfinancial assets and in substance nonfinancial assets
    The FASB issued new guidance that clarifies the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. It also clarifies that the derecognition of businesses is in the scope of ASC 810 and defines an in substance nonfinancial asset.

    9 February 2017

    To the Point - Narrow amendments to several topics could change practice for some entities
    The FASB issued ASU 2016-19, Technical Corrections and Improvements, to clarify guidance, correct errors and make minor improvements to the Accounting Standards Codification. While most of the amendments are not expected to have a significant effect on practice, some of them may change how some entities apply aspects of the guidance on fair value measurement, joint and several liability, transfers and servicing, real estate sales and software licenses. Many of these amendments are effective for calendar-year entities in the first quarter of 2017.

    27 January 2017

    To the Point - FASB simplifies the accounting for goodwill impairment
    The FASB issued final guidance that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for interim and annual goodwill impairment testing dates after 1 January 2017.

    19 January 2017

    To the Point - FASB retains consolidation guidance for NFP general partners of for-profit limited partnerships
    The FASB issued new guidance that retains the presumption that a not-for-profit (NFP) entity that is a general partner of a for-profit limited partnership or similar entity controls the entity, unless that presumption can be overcome. The FASB also clarified that NFP entities (other than business-oriented health care entities) with investments in certain for-profit entities may continue to elect to measure those investments at fair value.

    12 January 2017

    To the Point - FASB proposes changes to inventory disclosure requirements
    The FASB proposed requiring all entities to make additional disclosures regarding changes in inventory outside the normal purchase, manufacture or sale of inventory and the composition of inventory. The proposal also would require all entities to make certain inventory disclosures currently required by the SEC. It would also require additional disclosures by entities that report segment information and those that apply the retail inventory method. Comments are due by 13 March 2017.

    12 January 2017

    To the Point - Proposal would simplify how entities determine the balance sheet classification of debt
    The FASB proposed replacing today’s rules-based guidance for determining whether to classify debt as current or noncurrent on the balance sheet with a principles-based approach that would require debt to be classified as noncurrent only when it is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date or when the entity has a contractual right to defer settlement for at least one year (or operating cycle, if longer) after the balance sheet date. An exception would be provided for waivers of debt covenant violations received after the balance sheet date but before the financial statements are issued. Comments are due by 5 May 2017.

    12 January 2017

    To the Point - Rule changes for centrally cleared derivatives could affect accounting
    The Chicago Mercantile Exchange and LCH.Clearnet Limited have amended their rulebooks to legally characterize variation margin payments for over-the-counter derivatives they clear as settlements of the derivatives’ exposures rather than collateral against the exposures. The changes could have accounting implications for both end-users and institutions that serve as clearing members.

    6 January 2017

    To the Point - FASB narrows the definition of a business
    The FASB issued new guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606.

    22 December 2016

    To the Point - FASB issues technical corrections and improvements to the new revenue standard
    The FASB issued 13 technical corrections and improvements on narrow aspects of the guidance it issued in Accounting Standards Update 2014-09. The amendments address questions that stakeholders have raised but don’t change any of the principles in the new revenue guidance. The amendments have the same effective date and transition requirements as the revenue standard. No further changes to the new standard are currently expected before the effective date.

    1 December 2016

    To the Point - Tax rules on related party debt are narrower than what the Treasury Department and the IRS proposed
    The Treasury Department and the IRS issued regulations that will treat as stock for US federal income tax purposes certain related party interests that would otherwise be treated as indebtedness, and also establish extensive documentation requirements for those interests. The rules are limited to related party borrowings from a US entity to an affiliate that is not included in the US consolidated tax return. Entities need to identify and evaluate their related party loans that are in the scope of the rules to determine how they will be affected.

    17 November 2016

    To the Point - FASB addresses the presentation of restricted cash in the statement of cash flows
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer have to classify transfers between cash and restricted cash.

    8 November 2016

    To the Point - FASB TRG reaches general agreement on four more revenue recognition issues
    Members of the FASB Transition Resource Group for Revenue Recognition (FASB TRG) reached general agreement on implementation issues involving capitalization and amortization of incremental costs of obtaining a contract, payments to customers, over time revenue recognition and sales- or usage-based royalties that contain minimum guarantees. While this is the last scheduled FASB TRG meeting, FASB Vice Chairman James Kroeker said entities can continue to send the FASB questions about implementation, and more TRG meetings could be scheduled if enough broad questions are received.

    27 October 2016

    To the Point - FASB limits deferral of income tax effects of intercompany transfers to those involving inventory
    The FASB issued final guidance that will require companies to account for the income tax effects of intercompany transfers of assets other than inventory (e.g., intangible assets) when the transfer occurs. The guidance is effective for public business entities in annual periods beginning after 15 December 2017, and for all other entities in annual periods beginning after 15 December 2018. Early adoption is permitted as of the beginning of an annual period (i.e., early adoption is permitted only in the first interim period).

    27 October 2016

    To the Point - New VIE guidance on evaluating indirect interests held by related parties under common control
    The FASB changed how a single decision maker or service provider considers indirect interests held by related parties under common control when applying the consolidation guidance on determining whether it is the primary beneficiary of a variable interest entity (VIE) under the VIE Model. The new guidance is effective for public entities for annual periods beginning after 15 December 2016.

    27 October 2016

    To the Point - SEC adopts rules to enhance investment company reporting
    The SEC adopted a rule that requires certain registered investment companies to report information about their monthly portfolio holdings to the SEC in an XML format on new Form N-PORT within 30 days of the end of each month. The SEC also adopted a requirement that registered investment companies, except face-amount certificate companies, file census-type information annually with the SEC in an XML format on new Form N-CEN within 75 days of the end of their fiscal year (or calendar year for unit investment trusts). The SEC also amended Regulation S-X to standardize and enhance disclosures about derivatives and other items in investment company financial statements.

    20 October 2016

    To the Point - Rules on fund liquidity risk management and swing pricing
    The SEC adopted a rule that requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish a liquidity risk management program and expand their disclosures about their liquidity and redemption practices The SEC also gave open-end funds (except for money market funds and exchange-traded funds) the option to use swing pricing to adjust their net asset value for costs associated with satisfying requests for shareholder purchases or redemptions (e.g., trading costs) in certain circumstances.

    13 October 2016

    To the Point - New rules may affect how entities classify and account for investments in certain money market funds
    Entities will need to consider whether changes in the way money market funds operate under SEC rules will affect their ability to continue to classify investments in certain funds as cash equivalents. Effective tomorrow, institutional prime money market funds are required to have floating net asset values, and all money market funds are allowed to impose liquidity fees on redemptions or temporarily suspend redemptions in certain situations. This To the Point publication addresses the financial accounting and reporting considerations that investors in these funds will need to consider as a result of those changes.

    6 October 2016

    To the Point - Companies should consider possible changes to the tax treatment of certain related party debt instruments
    Companies (foreign or domestic) that issue debt to related parties (including intercompany debt) may be affected by regulations proposed to change the US federal income tax treatment of this type of debt. Companies should begin identifying arrangements that could be affected. Under the proposal, certain related party debt could be treated as equity for US federal income tax purposes. It is not clear whether the regulations will be issued in their proposed form or whether they will be changed significantly. The issues are complex, and the regulations could become final soon.

    29 September 2016

    To the Point - Proposal would change accounting and disclosures for long-duration contracts for insurers
    The FASB proposed changing how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs. Comments are due by 15 December 2016.

    22 September 2016

    To the Point - Proposals would provide criteria for evaluating how a company manages cybersecurity risk
    The AICPA issued two proposals that together provide a framework for evaluating how a company manages cybersecurity risk. One proposal would provide separate sets of criteria to be used by management to describe its cybersecurity risk management program and for public accounting firms to use to report on management’s description. The second proposal would revise the AICPA trust services criteria public accounting firms to evaluate the controls for SOC2 engagements so they could be used evaluate controls over a cybersecurity risk management program. The final criteria and related auditor guidance are expected to be issued in early 2017.

    8 September 2016

    To the Point - FASB aims to more clearly portray entities’ hedging activities in the financial statements
    The FASB proposed targeted amendments to its hedge accounting guidance that are intended to more clearly portray entities’ hedging activities in the financial statements. The proposal is also intended to simplify the application of hedge accounting. Comments on the exposure draft are due by 22 November 2016.

    1 September 2016

    To the Point - FASB clarifies the classification of certain cash receipts and cash payments
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that clarifies the classification of certain cash receipts and cash payments. The amendments also clarify how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows.

    26 August 2016

    To the Point - FASB changes certain requirements for the financial statements of not-for-profit entities
    The FASB issued final guidance that changes certain financial statement requirements for not-for-profit (NFP) entities. NFPs will no longer be required to distinguish between resources with temporary and permanent restrictions on the face of their financial statements, meaning they will present two classes of net assets instead of three. The guidance also will change how NFPs report certain expenses and provide information about their available resources and liquidity.

    4 August 2016

    To the Point - Federal agencies propose revising Form 5500 filed by employee benefit plans
    The US Department of Labor, the Internal Revenue Service and the Pension Benefit Guaranty Corporation are seeking comments on their joint proposal to revise the Form 5500 filed by employee benefit plans. The proposal would apply to the Form 5500 for the 2019 plan year. Comments are due by 4 October 2016.

    14 July 2016

    To the Point - SEC proposes eliminating redundant and outdated disclosures
    The SEC issued a proposal that would eliminate disclosure requirements that are redundant or outdated in light of changes in SEC requirements, US GAAP or IFRS or changes in technology or the business environment. The SEC is also seeking comments on whether it should modify or eliminate certain disclosure requirements that overlap with US GAAP and refer others to the FASB for potential incorporation into US GAAP.

    7 July 2016

    To the Point - SEC adopts final rule on resource extraction disclosures
    The SEC adopted a final rule that requires resource extraction issuers (REIs) to disclose payments they made to foreign governments or the US federal government by type and total amount for each project related to the commercial development of oil, natural gas or minerals in an annual Form SD filed with the SEC within 150 days of their fiscal year end. The rule, which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, also requires REIs to disclose the type and total amount of payments made to each government for all projects. The rule is effective for fiscal years ending on or after 30 September 2018.

    29 June 2016

    To the Point - VIE guidance on evaluating indirect interests held by related parties under common control may change
    The FASB proposed changing how a single decision maker or service provider considers indirect interests held by related parties under common control when applying the consolidation guidance on determining whether it is the primary beneficiary of a variable interest entity (VIE) under the VIE Model. Comments are due by 25 July 2016.

    20 June 2016

    To the Point - FASB decides to issue final income tax guidance on intercompany transactions
    The FASB decided that the exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception would no longer apply to intercompany sales and transfers of other assets (e.g., intangible assets). The Board then directed the staff to draft a final standard to make the change.

    16 June 2016

    To the Point - FASB issues sweeping changes to credit loss guidance
    The FASB issued a new credit loss standard today that changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. Virtually all entities will be affected.

    9 June 2016

    To the Point - Clarifying the accounting for the derecognition of nonfinancial assets and in substance nonfinancial assets
    The FASB proposed clarifying the guidance on how to account for the derecognition of nonfinancial assets and in substance nonfinancial assets once an entity adopts the new revenue recognition guidance. The proposal also would define what constitutes an in substance nonfinancial asset. Comments are due by 5 August 2016.

    24 May 2016

    To the Point - Global tax changes may affect multinational companies
    Governments around the world are developing legislation and reconsidering their interpretations of existing tax law to address concerns that multinational companies are shifting profits to jurisdictions with lower tax rates. Many of these efforts are based on recommendations the Organisation for Economic Co-operation and Development issued in its Base Erosion and Profit Shifting project. Multinational companies need to make sure they have processes and controls in place to track developments in countries that are significant to their operations and address any accounting implications in the appropriate period.

    19 May 2016

    To the Point - SEC staff updates guidance on non-GAAP financial measures
    The SEC staff updated its interpretations of the rules on non-GAAP financial measures and added new guidance to address its concerns about some types of non-GAAP financial measures and the manner of presentation of all such measures in earnings releases and SEC filings. In the updates, the staff clarified when it will consider non-GAAP measures misleading or too prominent. The staff also provided guidance on per-share non-GAAP measures and the income tax effects of adjustments used to calculate non-GAAP measures.

    13 May 2016

    To the Point - PCAOB reproposes significant changes to the auditor’s report
    The PCAOB issued a reproposal that would require auditors to include significantly more information in their auditor’s reports to make them more relevant and informative for investors and other stakeholders. The reproposal would require auditors to include information about matters that were communicated or required to be communicated to the audit committee that related to material accounts or disclosures and involved especially challenging, subjective or complex auditor judgment. The reproposal would also change the format and standard language of the auditor’s report and require auditors to include information about auditor tenure and auditor independence. Comments are due by 15 August 2016.

    12 May 2016

    To the Point - Policy issues for audit committee comment in the SEC’s S-K Concept Release on disclosure effectiveness
    Audit committees may want to comment on the concept release the SEC issued recently on how to improve business and financial disclosures required by Regulation S-K. Audit committee members may be most interested in the questions that address financial reporting issues such as materiality, risk management and public policy matters that could shape future SEC rulemaking to update its corporate disclosure requirements.

    10 May 2016

    To the Point - FASB issues narrow-scope amendments and practical expedients for its revenue standard
    The FASB issued final amendments to its new revenue recognition guidance on transition, collectibility, noncash consideration and the presentation of sales and other similar taxes. The amendments address implementation issues discussed by the Joint Transition Resource Group for Revenue Recognition created by the FASB and the IASB and are intended to reduce the cost and complexity of applying the new revenue standard.

    28 April 2016

    To the Point - FASB delays effective dates of its upcoming credit impairment standard
    The FASB decided to delay the effective dates of the new credit impairment standard by one year in response to feedback it received from constituents. The first revised effective date would be the first quarter of 2020 for calendar-year public business entities that are SEC filers. Early adoption in the first quarter of 2019 would be permitted for all calendar-year entities. After discussing the costs and benefits of the new standard, the FASB also voted to issue the final guidance. The FASB expects to issue the new standard by the end of the second quarter of 2016.

    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.

    21 April 2016

    To the Point - PCAOB proposes strengthening requirements for audits involving other auditors
    The PCAOB issued a proposal that would amend several of its standards to strengthen the requirements for supervising other auditors who participate in an audit. The proposal would also create a new standard for dividing responsibility for the audit with another accounting firm. Comments are due by 29 July 2016.

    20 April 2016

    To the Point - FASB Transition Resource Group for Revenue Recognition discusses five more implementation issues
    Members of the FASB Transition Resource Group for Revenue Recognition (FASB TRG) discussed five more implementation issues stakeholders have raised about the new revenue standards and reached general agreement on several of them. The FASB will need to consider whether any further action is needed to address the issues on which the members of the FASB TRG did not reach general agreement. They involved considering “class of customer” when evaluating whether a material right exists and scoping of asset management fees from incentive-based capital allocation arrangements, such as carried interest arrangements. Our publication includes a list of questions and answers on which FASB TRG members reached general agreement.

    15 April 2016

    To the Point - FASB amends the licenses and performance obligations guidance in its new revenue standard
    The FASB issued final amendments to clarify the guidance on accounting for licenses of intellectual property (IP) and identifying performance obligations in its new revenue recognition standard. The amendments clarify how an entity should evaluate the nature of its promise in granting a license of IP and when a promised good or service is distinct within the context of a contract. The amendments also allow entities to disregard goods or services that are immaterial in the context of a contract.

    14 April 2016

    To the Point - CPAs will seek written assertions and representations under new AICPA attestation standards
    The AICPA’s Auditing Standards Board issued final clarified attestation standards that will require accountants to request written assertions and written representations for all examinations, reviews and agreed-upon procedures engagements. The clarified standards are effective for reports dated on or after 1 May 2017.

    14 April 2016

    To the Point - SEC explores possible changes to Regulation S-K requirements for business and financial disclosures
    The SEC issued a concept release seeking comment on possible ways to enhance the effectiveness of business and financial disclosures required by Regulation S-K. The concept release also seeks feedback on the disclosure framework the SEC uses to determine disclosure requirements and how it might improve the delivery of information to investors. Comments are due 90 days after publication in the Federal Register.

    7 April 2016

    To the Point - Transition Resource Group for credit losses discusses FASB’s proposed guidance
    At the first public meeting of the FASB’s Transition Resource Group (TRG) for credit losses, TRG members generally agreed that a staff draft of portions of the new guidance on estimating credit losses is sufficiently clear. Members of the TRG suggested that the FASB staff and the Board make only minor clarifications as they proceed with final drafting. The FASB plans to discuss the costs and benefits of issuing the standard and the effective date at a meeting later this month. The Board plans to issue the new standard by 30 June 2016.

    31 March 2016

    To the Point - FASB moves closer to issuing a proposal on income tax disclosures
    The FASB revisited the tentative decisions it reached at meetings last year on income tax disclosures related to foreign earnings and indefinite reinvestment assertions, unrecognized tax benefits and other income tax topics. Based on outreach the Board and its staff performed, the FASB tentatively decided to add certain disclosure requirements and reverse several of its earlier decisions. The FASB plans to issue a proposal seeking public comment on changes to the income tax disclosure guidance after its staff completes some additional outreach.

    31 March 2016

    To the Point - Japan tax reform law has income tax accounting implications
    Japan enacted a tax reform law on 29 March 2016 that will reduce Japan’s national corporate income tax and local enterprise tax rates and make other changes to the tax law. Entities that are subject to these taxes and report under US GAAP will need to recognize the effects of income tax rate changes on deferred tax balances in the period in which the legislation was enacted.

    18 March 2016

    To the Point - FASB issues amendments to the principal versus agent guidance in its new revenue standard
    The FASB issued final amendments to the principal versus agent guidance in its new revenue standard that clarify how an entity should identify the unit of accounting for the principal versus agent evaluation and apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent, revise existing examples and add new ones.

    16 March 2016

    To the Point - FASB eliminates retrospective application of equity method
    The FASB issued final guidance eliminating the requirement that an investor retrospectively apply the equity method when an investment that it previously accounted for using another method qualifies for the equity method. Early adoption is permitted.

    15 March 2016

    To the Point - FASB clarifies guidance on assessing contingent put and call options in debt instruments
    The FASB issued final guidance clarifying that an assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence in ASC 815-15-25-42. Because many entities are already using only the decision sequence, the guidance will not change practice for these entities.

    10 March 2016

    To the Point - FASB says hedge accounting relationships may continue after a novation
    The FASB issued final guidance clarifying that the novation of a derivative contract in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship.

    10 March 2016

    To the Point - Final guidance eliminates effective dates in PCC alternatives
    The FASB issued final guidance that eliminates the effective dates in the four private company alternatives developed by the Private Company Council (PCC) and allows private companies to forgo a preferability assessment the first time they elect each of these alternatives. It also extends the transition provisions in the alternatives indefinitely.

    9 March 2016

    To the Point - FASB develops a model to recognize breakage for certain prepaid stored-value products
    The FASB issued final guidance requiring entities that sell prepaid stored-value products redeemable for goods, services or cash at third-party merchants to derecognize liabilities related to those products for breakage (i.e., the value that is ultimately not redeemed by the consumer). This new derecognition model will prevent liabilities related to breakage from being recognized in perpetuity and provide better information to users of financial statements.

    25 February 2016

    To the Point - FASB issues final guidance that will change the accounting for leases
    The FASB issued final guidance that requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases.

    4 February 2016

    To the Point - Centers for Medicare & Medicaid Services issue rule that may affect entities’ drug rebate estimates
    The Centers for Medicare & Medicaid Services released the covered outpatient drugs final rule that clarifies the Medicaid reimbursement and drug rebate program provisions of the Patient Protection and Affordable Care Act. Life sciences entities need to evaluate the effect of the rule on their financial statements and disclosures, including their 2015 financial statements and disclosures (e.g., Medicaid rebate estimates for inventory in the distribution channel) if they haven’t yet issued their financial statements or made them available to be issued. The rule is effective 1 April 2016. The definition of a line extension drug remains open for comment.

    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.

    28 January 2016

    To the Point - New guidance on classifying and measuring financial instruments - health care not-for-profit entities
    The FASB issued final guidance that will change how entities, including business-oriented health care not-for-profit (NFP) entities, measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The new guidance also changes certain disclosure requirements and other aspects of current US GAAP. It does not change the guidance for classifying and measuring investments in debt securities. Health care NFPs can early adopt certain provisions in financial statements that have not yet been issued or made available to be issued.

    7 January 2016

    To the Point - FASB makes targeted amendments to guidance on classifying and measuring financial instruments
    The FASB issued final guidance that will change how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The new guidance also changes certain disclosure requirements and other aspects of current US GAAP. It does not change the guidance for classifying and measuring investments in debt securities and loans. All entities can early adopt the new guidance on changes in own credit, and non-public business entities can early adopt a provision that eliminates the fair value disclosures for financial instruments not recognized at fair value.

    22 December 2015

    To the Point - Some ‘tax extenders’ are made permanent, others are extended
    The tax law that President Barack Obama signed on 18 December 2015 retroactively reinstates certain expired tax provisions known as tax extenders. The law made certain tax provisions permanent, extended others for five years and extended others for two years. The income tax accounting effect, including the retroactive effect, of a tax law change is accounted for in the period of enactment, which in this case is the fourth quarter of 2015 for a calendar-year company.

    17 December 2015

    To the Point - SEC proposes rule to limit use of derivatives by regulated investment companies
    The SEC proposed a rule to enhance investor protection by setting restrictions on the use of derivatives and financial commitment transactions by mutual funds, exchange-traded funds, closed-end funds and business development companies. In proposing the rule, the SEC said it was responding to growth in the volume and complexity of derivatives and their increased use by certain funds.

    16 December 2015

    To the Point - PCAOB adopts final rules for audit transparency disclosures
    The PCAOB adopted final rules that, subject to SEC approval, would require audit firms to name the engagement partner and provide information about other accounting firms that participated in the audit in a new form that would be filed with the PCAOB. Disclosure of the name of the audit partner would be required for auditors’ reports issued on or after 31 January 2017, and disclosures of other accounting firms would be required for auditors’ reports issued on or after 30 June 2017.

    16 December 2015

    To the Point - SEC proposes a new rule about payments to governments for extractive activities
    The SEC proposed rules that would require resource extraction issuers to disclose payments they made to foreign governments or the US Federal Government related to the commercial development of oil, natural gas or minerals in an annual Form SD filed with the SEC.

    10 December 2015

    To the Point - New legislation makes changes to JOBS Act and other SEC requirements
    The Fixing America’s Surface Transportation Act, which was signed into law recently, changed provisions of the Jumpstart Our Business Startups Act (JOBS Act) and other SEC requirements in an effort to further facilitate capital formation by smaller companies. Some of the changes take effect immediately (i.e., they are self-implementing) while others require the SEC to change its rules. The legislation also requires the SEC to study the requirements in Regulation S-K for all issuers, report to Congress with recommendations and propose rules to modernize and simplify these requirements.

    8 December 2015

    To the Point - FASB proposes changes to fair value measurement disclosures
    The FASB proposed eliminating, modifying and adding certain fair value measurement disclosure requirements as part of its disclosure framework project. Comments are due by 29 February 2016.

    24 November 2015

    To the Point - FASB issues final guidance to simplify one aspect of income tax accounting
    The FASB issued final guidance that requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Because early adoption is permitted, companies can start applying this guidance in interim and annual financial statements that have not yet been issued.

    24 November 2015

    To the Point - FASB proposes changes to the definition of a business
    The proposal would (1) require that, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of transferred assets and activities is not a business, (2) require that a business include at least one substantive process and (3) narrow the definition of outputs. The proposed definition of a business would reduce the number of transactions that are accounted for as business combinations. Comments are due by 22 January 2016.

    23 November 2015

    To the Point - FASB sets an effective date for the new leases standard and modifies the lease classification test
    The FASB decided that the new leases standard would be effective for public business entities for annual and interim periods beginning after 15 December 2018. For nonpublic business entities, the effective date would be annual periods beginning after 15 December 2019, and interim periods the following year. Early adoption would be permitted for all entities. The FASB also decided to modify the economic life classification criterion for certain leases. With these decisions, the FASB completed redeliberations and directed its staff to proceed with the final standard, which it plans to issue in early 2016. The FASB revised the decisions posted on its website to say that the new leases standard would be effective for certain not-for-profit entities and employee benefit plans for annual and interim periods beginning after 15 December 2018 (i.e., the public business entity effective date). The previously posted decisions didn’t address these entities. We have updated our To the Point publication on the effective date to reflect this clarification.

    20 November 2015

    To the Point - Our recommendations for changing Regulation S-X disclosures about entities other than the registrant
    Our To the Point publication summarizes our recommendations in comment letters to the SEC on how it can enhance the effectiveness of disclosures required by Regulation S-X.

    19 November 2015

    To the Point - Entities would have to make certain disclosures about government assistance they receive
    The FASB proposed requiring for-profit entities to make certain disclosures about government assistance resulting from legally enforceable agreements in which an entity receives value from a government. An entity would have to disclose information about its existing government assistance agreements, including the nature, terms and conditions of the assistance, and its accounting policies for the assistance. Comments on the exposure draft are due by 10 February 2016.

    12 November 2015

    To the Point - Preparing for the new credit impairment standard
    Now that the FASB has set effective dates for the new credit impairment standard, entities should start planning for implementation.

    11 November 2015

    To the Point - 2015 OMB Compliance Supplement may result in significant changes in audits of federal awards
    Non-federal entities that receive federal government awards need to be prepared for changes in how their auditors will audit compliance with federal rules, particularly the requirements of the Uniform Guidance that now apply to certain awards. These entities will need to distinguish between expenditures subject to the Uniform Guidance and those subject to Office of Management and Budget circulars so auditors can test selected federal awards against the appropriate criteria.

    11 November 2015

    To the Point - GASB issues more authoritative Implementation Guide
    The GASB approved the issuance of authoritative implementation guidance for the first time. It is effective for reporting periods beginning on or after 15 June 2015.

    11 November 2015

    To the Point - GASB requires disclosures for tax abatement agreements
    The GASB recently issued Statement No. 77, Tax Abatement Disclosures, which is effective for reporting periods beginning on or after 15 December 2016.

    10 November 2015

    To the Point - Joint Transition Resource Group for Revenue Recognition addresses more implementation issues
    Members of the Joint Transition Resource Group for Revenue Recognition (TRG) addressed four more implementation issues stakeholders have raised about the new revenue standards and reached general agreement on many questions. TRG members expressed diverse views on certain questions related to restrictions and renewals of licenses of intellectual property. Our publication includes a list of questions and answers on which TRG members reached general agreement.

    5 November 2015

    To the Point - SEC adopts crowdfunding rules
    The SEC approved final rules that will allow certain US private companies to raise up to $1 million in a 12-month period from potentially large pools of investors over the internet. The rule limits the total value of crowdfunding securities an investor can purchase in a 12-month period to $2,000 to $100,000, depending on the investor’s annual income and net worth, and requires that securities be sold through SEC-registered intermediaries. With these rules, which will be effective 180 days after publication in the Federal Register, the SEC has completed all major rulemaking mandated by the Jumpstart Our Business Startups Act.

    29 September 2015

    To the Point - SEC proposes liquidity risk rules for mutual funds and ETFs
    The SEC proposed requiring that all open-end mutual funds (excluding money market funds) and exchange-traded funds implement a liquidity risk management program and giving mutual funds the option to use swing pricing to adjust their net asset value for costs associated with satisfying requests for shareholder purchases or redemptions in certain circumstances.

    6 August 2015

    To the Point - SEC finalizes ‘pay ratio’ rule
    As mandated by the Dodd-Frank Act, the SEC approved the final rule that requires most registrants to calculate and disclose the ratio of their principal executive officer’s total annual compensation to the total annual compensation of their median employee (the pay ratio). The rule mostly follows the SEC’s proposal from September 2013 but provides companies additional flexibility in determining the pay ratio. Registrants will be required to make pay ratio disclosures for their first fiscal year beginning on or after 1 January 2017.

    6 August 2015

    To the Point - Simplifying the presentation of debt issuance costs
    We have updated our publication to reflect an SEC staff member’s announcement at the June 2015 meeting of the Emerging Issues Task Force that the staff will not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The question arose after the FASB issued ASU 2015-03 on the presentation of debt issuance costs in April 2015. The ASU doesn’t address the presentation of the costs of obtaining a revolving line of credit.

    26 March 2015

    To the Point - SEC adopts 'Regulation A+' to expand exempt offerings
    The SEC adopted amendments to allow private companies to make exempt public offerings under Regulation A of up to $50 million of securities within a 12-month period. The rules, required by the Jumpstart Our Business Startups Act, establish two tiers of offerings with different requirements.

    4 September 2013

    Technical Line - How to apply S-X Rule 3-14 to real estate acquisitions
    The SEC staff in the Division of Corporation Finance recently revised its guidance on the S-X Rule 3-14 reporting requirements for acquisitions of real estate operations and probable acquisitions. Application of the rule has been subject to various interpretations by the SEC staff, preparers and their advisers over the years. Our Technical Line describes the staff’s revisions and provides information to help registrants contemplating real estate acquisitions or initial SEC registrations of real estate investment trusts interpret and apply the rule.

    20 October 2011

    To the Point - SEC staff issues guidance on cybersecurity disclosures
    In response to an increase in the frequency and severity of cyber attacks and breaches, the SEC staff provided a framework for registrants to consider in evaluating whether to disclose information about risks and incidents involving cybersecurity. Our To the Point discusses the SEC guidance on cybersecurity disclosures.