US Week in Review - Week ending 22 August 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
Technical Line: Insurance contracts proposal would overhaul accounting and disclosures for insurers and others
The FASB has issued an exposure draft on a principles-based model for accounting for insurance contracts. The proposal would apply to any entity that issues a contract that meets the definition of an insurance contract and would result in the measurement of many contract liabilities based on current assumptions, adjusted to reflect the time value of money. Comments are due by 25 October 2013. Our Technical Line publication tells you what you need to know about the proposed changes.
Technical Line: Movin' on up to accelerated filer status: You'll need an audit of ICFR for this year
With the increase in equity values in 2013, many non-accelerated filers will be required to transition to accelerated filer status in their upcoming Form 10-K. In addition to preparing for the transition to larger company reporting timelines and disclosures, these registrants must obtain auditor attestation as to the effectiveness of their internal control over financial reporting (ICFR) under Section 404(b) of the Sarbanes-Oxley Act.
Our Technical Line publication focuses on the transition from a filer status that allowed a Section 404(b) exemption and the timing of compliance with Section 404(b).
The Q3 2013 financial reporting update webcast is scheduled for 19 September from 1 p.m. to 2:30 p.m. Eastern time. This 90-minute webcast will feature EY panelists discussing recently issued exposure drafts, Private Company Council and SEC updates and other current financial reporting matters. To register, go to Q3 2013 financial reporting update.
Standard Setter updates
Financial Accounting Standards Board (FASB)
FASB issues proposal on PCC consolidation alternative
The Board issued for public comment a proposed alternative from the Private Company Council that would exempt private companies from evaluating certain common control leasing arrangements for consolidation under the variable interest entity guidance. For a description of the alternative, see our To the Point publication, Private company framework approved PCC proposes consolidation alternative.
FASB chair confirms that revenue recognition standard will be issued in Q4
FASB Chairman Russell Golden confirmed in an interview reported by the press that the FASB and the IASB now plan to issue final standards on revenue recognition in the fourth quarter of 2013, not the third quarter as they had planned. As we reported last week, FASB member Thomas Linsmeier told a conference earlier this month that the new standard would probably be issued in the fourth quarter.
Upcoming meetings and webcasts
No meetings are scheduled for the week of 26 August 2013. For additional details, see the FASB's calendar.
See the FASB's calendar for upcoming education sessions. No decisions are made at these sessions.
Government Accounting Standards Board (GASB)
FAF proposal on GASB scope of authority
The Financial Accounting Foundation (FAF) Board of Trustees issued for comment a revised proposal to clarify the characteristics of information the GASB may incorporate into the financial accounting and reporting concepts, standards and guidance it issues for state and local governments.
The proposal would require the GASB to consult with the FAF Trustees' Standard-Setting Process Oversight Committee to determine whether certain information that the GASB might consider for standard-setting activity is "financial accounting and reporting information" within the scope of the GASB's standard-setting mission.
Public Company Accounting Oversight Board (PCAOB)
Progress report on interim inspections of audits of brokers and dealers
In its second report on its interim inspections of audits of brokers and dealers, the PCAOB said it identified deficiencies in all of the registered public accounting firms and 57 of the 60 audits inspected. The deficiencies involved areas related to the customer protection and net capital rules, audits of financial statements and auditor independence, the report said.
The report, which covers inspections performed from March 2012 through December 2012, summarized observations from the inspections of 43 registered public accounting firms covering 60 audits of brokers and dealers registered with the SEC.
The interim inspection program, which the PCAOB launched two years ago, is expected to continue through the end of 2013. The PCAOB is gathering information to help it propose rules related to the audits of brokers and dealers, including a rule on the scope of a permanent inspection program that the PCAOB is expected to propose as soon as 2014.
The SEC recently approved amendments to Exchange Act Rule 17a-5 requiring that audits of broker-dealers be conducted in accordance with standards of the PCAOB. It is effective for broker-dealers with fiscal years ending on or after 1 June 2014.
Upcoming Thought Center webcasts and podcasts
EY Q3 2013 financial reporting update
In co-operation with Financial Executives International (FEI)
19 September 2013, 1:00 p.m. Eastern time
CFOs reveal hidden trends from earnings season
30 September 2013, 12:00 p.m. Eastern time