US Week in Review - Week ending 27 February 2014
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
Shareholder proposals may provide insights into current investor priorities
This month's edition of Let's talk: governance takes a look at emerging topics in shareholder proposals this proxy season, including data privacy, oversight of tax strategy and disclosure and oversight of lobbying expenditures, based on our review of more than 500 proposal submissions so far. Learning about these shareholder proposal trends may help companies and boards anticipate challenges and identify business areas requiring additional attention.
Reduce social compliance risks in the supply chain
Our new publication, Human rights and professional wrongs: rethinking corporate social compliance in the supply chain, discusses how companies can reduce social compliance risks in the supply chain. These issues are especially important in the retail, consumer products and electronics sectors. Companies need to take a proactive, risk-based approach in the supplier audit process, rather than a "check-the-box" approach, to uncover material social and labor risks in key geographies.
Standard Setter updates
FAF issues post-implementation review report
26 February 2014 FASB meeting
Accounting for financial instruments: classification and measurement - The FASB tentatively decided that an entity would not be required to separately evaluate the cash flow characteristics of (1) a host instrument that remains after bifurcation of an embedded derivative from a hybrid financial asset or (2) other financial assets that do not require bifurcation. Equity investments, which will be defined at a later meeting, would be measured at fair value through net income, consistent with the FASB's previous proposal. The Board also tentatively decided to allow an irrevocable fair value option for both hybrid financial assets and liabilities with embedded derivative features that require bifurcation.
Development stage entities - The Board decided to remove the guidance in Accounting Standards Codification (ASC) 915 for development stage entities (DSEs) (i.e., the definition of a DSE and the related presentation and disclosure requirements) and amend ASC 275 to clarify how entities that have not begun operations (e.g., those now called DSEs) would make the required risk and uncertainty disclosures. The guidance in ASC 810 on evaluating the sufficiency of a DSE's equity investment to determine whether it is a variable interest entity also will be removed.
The Board also discussed its project on Not-for-profit financial reporting: financial statements. For details, see the FASB's Tentative Board Decisions.
Upcoming meetings and webcasts
No meetings are scheduled for the week of 3 March 2014. For additional details, see the FASB's calendar.
See the FASB's calendar for upcoming education sessions. No decisions are made at these sessions.
Securities and Exchange Commission (SEC)
Luparello named Director of SEC's Trading and Markets Division
Stephen Luparello will take over as director of the SEC's Division of Trading and Markets. Mr. Luparello has been a partner in the law firm of WilmerHale specializing in broker-dealer compliance and regulation, securities litigation and enforcement. Before that, he was vice chairman of the Financial Industry Regulatory Authority (FINRA), where he was responsible for enforcement, market regulation and disclosure programs. John Ramsay, who has served as acting director since 2012, will leave the SEC next month.
International Accounting Standards Board (IASB)
February 2014 IASB Update
The February 2014 IASB Update summarizes the IASB meeting held in London on 19-20 February 2014.
International Federation of Accountants/International Auditing and Assurance Standards Board (IFAC/IAASB)
IAASB published new Framework for Audit Quality
The IAASB has issued its new publication, A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality. This Framework sets out to raise awareness of the key elements of audit quality, describing, in a holistic manner, the different input, process and output factors relevant to audit quality at the engagement, firm and national levels. It also demonstrates the importance of appropriate interactions among stakeholders and how they may facilitate improvement to audit quality.
Government Accounting Standards Board (GASB)
The February 2013 issue of the GASB Report is available.
Upcoming Thought Center webcasts and podcasts
CFO: need to know
A quarterly webcast series
5 March 2014, 12:00 p.m. Eastern time
Considerations for a US IPO listing
6 March 2014, 11:00 a.m. Eastern time
EY Q1 2014 financial reporting update
In co-operation with Financial Executives International (FEI)
27 March 2014, 1:00 p.m. Eastern time