US Week in Review - Week ending 21 November 2013

    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 EY.

    What’s new from EY

    To the Point: Boards to redeliberate key aspects of lease accounting - again

    The FASB and the IASB discussed the feedback they received on their joint lease accounting proposal and decided to redeliberate the following topics: lease definition and scope, lessee accounting model, lessor accounting model, lease classification, lease measurement provisions and disclosure requirements. Our To the Point publication tells you what you need to know about the Boards' redeliberation plans.

    Updated FRD on bankruptcies, liquidations and quasi-reorganizations

    We have updated our Financial Reporting Developments publication on bankruptcies, liquidations and quasi-reorganizations to include guidance on applying ASU 2013-07, Liquidation basis of accounting, and to include guidance on accounting for quasi-reorganizations.

    EITF Update: November 2013

    The Emerging Issues Task Force (EITF) reached final consensuses on the following issues:

    • Measuring the Financial Assets and Financial Liabilities of a Consolidated Financing Entity
    • Accounting for Service Concession Arrangements
    • Accounting for Investments in Affordable Housing Projects
    • Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

    The EITF reached a consensus-for-exposure on the following issue:

    • Classification of Certain Government Insured Residential Mortgage Loans upon Foreclosure by a Creditor

    The EITF also discussed but didn't reach a final conclusion about whether, when and how public and nonpublic companies should establish a new accounting basis in an acquired entity's standalone financial statements.

    Our EITF Update publication explains what you need to know about these issues.

    Standard Setter updates

    Financial Accounting Standards Board (FASB)

    Financial Accounting Foundation (FAF) names new trustee

    The FAF announced that it has appointed Maryland State Treasurer Nancy K. Kopp to the FAF Board of Trustees, effective 1 January 2014.

    FAF issues post-implementation review report

    The FAF review team issued a report on its post-implementation review of FASB Statement No. 109, Accounting for Income Taxes (codified in ASC 740). See the FAF's site for details.

    20 November 2013 joint FASB-IASB videoconference meeting

    The Boards discussed their projects on:

    • Accounting for financial instruments: classification and measurement
    • Leases (see our To the Point publication above)

    For additional details, see the FASB's Summary of Board Decisions.

    Upcoming meetings and webcasts

    25 November 2013 FASB meeting

    The FASB is scheduled to decide whether to endorse the following decisions reached at the 30 September – 1 October 2013 Private Company Council meeting:

    • PCC Issue No. 13-01B, Accounting for goodwill subsequent to a business combination
    • PCC Issue No. 13-03A, Accounting for certain receive-variable, pay-fixed interest rate swaps – simplified hedge accounting approach

    For additional details, see the FASB's calendar.

    Education sessions

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

    Securities and Exchange Commission (SEC)

    SEC staff issues interpretations on new general solicitation rules under Regulation D

    The Division of Corporation Finance issued additional guidance on the use of general solicitation and advertising in certain exempt offerings. Under new Rule 506(c) of Regulation D, issuers can use general solicitation if they take reasonable steps to verify that all purchasers are accredited investors. The SEC also permits general solicitation in resales under Rule 144A. The general solicitation rules were effective 23 September 2013.

    Among the compliance and disclosure interpretations (C&DIs) are the following:

    • Either the issuer or the financial intermediaries involved in the initial purchase of the securities may conduct general solicitation in a resale under Rule 144A.

    • An issuer that began a Rule 506 offering before 23 September 2013 or that begins a new offering in reliance on Rule 506(b) must amend its Form D notice if it continues the offering by using general solicitation under Rule 506(c). Likewise, an issuer that begins a Rule 506(c) offering but later decides not to engage in any general solicitation may rely on Rule 506(b) for the offering, as long as it satisfies the conditions of that rule and files an amended Form D.

    • If, subsequent to a sale using general solicitation under Rule 506(c), an issuer becomes aware that a purchaser does not satisfy the accredited investor criteria, the issuer can still rely on Rule 506(c) for the offer and sale, as long as the issuer took reasonable steps to verify and had a reasonable belief that the purchaser was an accredited investor at the time of sale.

    • An issuer that relies solely on one of the nonexclusive verification methods listed in the adopting release to validate accredited investor status must satisfy the specific requirements of the method (e.g., the net worth verification method requires documentation dated within three months of the purchase).

    The C&DIs are available on the SEC website.

    Government Accounting Standards Board (GASB)

    GASB Report

    The October 2013 issue of the GASB Report is available in AccountingLink.

    Upcoming Thought Center webcasts and podcasts

    EY Q4 2013 financial reporting update
    In co-operation with Financial Executives International (FEI)
    19 December 2013, 1:00 p.m. Eastern time


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