US Week in Review - Week ending 16 August 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.

    Standard Setter updates

    Financial Accounting Standards Board (FASB)

    FASB proposes presenting reclassifications out of AOCI in one place

    The FASB today proposed requiring companies to present separately by component reclassifications out of accumulated other comprehensive income (AOCI) to enhance disclosures in a way that the Board believes would not impose significant costs to preparers. Companies would be required to provide tabular disclosure of the effect of items reclassified out of AOCI on the respective line items of net income for items that US GAAP requires to be reclassified to net income in their entirety. For other items, companies would have to list in the table cross-references to other disclosures that are already required about them. Comments are due by 15 October 2012.

    Upcoming meetings and webcasts

    22 August 2012 FASB meeting

    The Board is scheduled to discuss the following project:

    • Accounting for financial instruments: impairment

    For additional details, see the FASB calendar.

    5 September 2012 webcast on FASB disclosure framework project

    The Board will hold a webcast from 1 p.m. to 2 p.m. Eastern time on its recent Invitation to Comment on a project to establish a framework to improve the effectiveness of disclosures in the notes to financial statements.

    For more details and to register, see the FASB site.

    Education sessions

    See the FASB calendar for upcoming education sessions. No decisions are made at these sessions.

    Securities and Exchange Commission (SEC)

    New Iran sanctions law requires disclosures in periodic reports

    President Barack Obama signed a new Iran sanctions act on 10 August 2012 that, among other things, requires public companies to disclose in their annual and quarterly reports filed with the SEC whether they or their affiliates knowingly engaged in various prohibited activities involving Iran.

    The new act amends Section 13 of the Exchange Act of 1934 to require public companies to self-report any prohibited activities, including the nature and extent of the activity, gross revenues and net profits attributable to the activity and whether the registrant or any of its affiliates intends to continue engaging in such activities. Disclosures are required in annual and quarterly reports filed with the SEC 180 days after enactment.

    Public Company Accounting Oversight Board (PCAOB)

    PCAOB adopts standard for communications with audit committees

    The PCAOB adopted Auditing Standard No. 16, Communications with Audit Committees, and amendments to other PCAOB standards that are intended to enhance the relevance and timeliness of communications between the auditor and the audit committee.

    Pending approval from the SEC, the standard and the amendments will be effective for public company audits of fiscal periods beginning after 15 December 2012. The standard would also apply to the audits of brokers and dealers when the SEC directs those audits to comply with PCAOB standards.

    The standard is substantially consistent with the re-proposal issued on 20 December 2011 and does not add any new performance requirements for auditors other than communications. The PCAOB is requesting that the standard and the amendments apply to the audits of "emerging growth companies" as defined in the Jumpstart Our Business Startups Act (JOBS Act).

    International Federation of Accountants/International Auditing and Assurance Standards Board (IFAC/IAASB)

    IAESB exposure draft on IES 8: Professional Development for Engagement Partners Responsible for Audits of Financial Statements

    The International Accounting Education Standards Board (IAESB) has issued a proposed revision of International Education Standard (IES) 8, Professional Development for Engagement Partners Responsible for Audits of Financial Statements. The revised standard proposes the professional development requirements for aspiring engagement partners and serving engagement partners who provide assurance services for audits of financial statements. Comments are due by 11 December 2012.

    Center for Audit Quality (CAQ)

    CAQ SEC Regulations Committee publishes June highlights

    The Center for Audit Quality SEC Regulations Committee posted the highlights from its 27 June 2012 meeting with the SEC staff.

    The highlights include:

    • The SEC staff's views on non-GAAP financial measures related to pension accounting
    • A revised definition from the staff of "continuing impact" for pro forma income statement adjustments
    • A clarification of the staff's views on retrospectively revising historical financial statements incorporated by reference into a new or amended registration statement
    • An update on other SEC activities, including the JOBS Act and recommendations by the SEC Advisory Committee on Small and Emerging Businesses

    Upcoming Thought center webcasts and podcasts

    The Ernst & Young Q3 2012 financial reporting update
    Co-sponsored by Financial Executives International (FEI)
    6 September 2012, 1:00 p.m. Eastern time

    Evolving role of today's CFO
    Featured in FEI's CFO Community of Interest
    Hosted by Ernst & Young LLP
    16 October 2012, 2:00 p.m. Eastern time


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