US Week in Review - Week ending 7 June 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.

    Ernst & Young publications

    June 2012 Financial reporting briefs issued

    We have issued the general and industry-specific June 2012 editions of Financial reporting briefs. These publications provide you with a snapshot of the major accounting and regulatory developments that have occurred during the quarter. The Reference library at the end of each document lists our publications issued during the quarter, along with links to the publications on our AccountingLink website.

    The general Financial reporting briefs and the industry-specific editions are available online

    Ernst & Young comments on PCAOB proposal on related parties

    In our letter to the PCAOB, we support the Board's efforts to update its interim standards and offer suggestions we think will improve the final standard. For example, we recommend that the Board clarify certain statements in the proposal that seem to establish a presumption that every related-party transaction would be considered a significant risk and thus would require the performance of certain procedures to address such risks. We do not believe there should be such a presumption. We also recommend that the Board clarify its intent regarding proposed amendments requiring auditors to gain an understanding of compensation arrangements with executive officers.

    Standard Setter updates

    Financial Accounting Standards Board (FASB)

    Insurance contracts project

    During this week's Financial Accounting Standards Advisory Council meeting, FASB Chairman Leslie Seidman noted that the FASB and the IASB have not succeeded in converging several fundamental elements of the insurance contracts model, and said that the FASB will consider whether to make changes to US GAAP by comprehensively replacing existing guidance or by making targeted amendments. At a subsequent FASB Education Session, the Chairman clarified that the Boards intend to continue the insurance contracts project and will jointly deliberate the remaining issues.

    6 June 2012 FASB meeting

    Impairment of indefinite-lived intangible assets - After considering comments received, the Board decided that the ASU would be effective for fiscal years beginning after 15 September 2012 and early adoption would be permitted. If a company's impairment test is performed as of a date before the ASU is finalized, the company would be permitted to perform the qualitative assessment as long as it hasn't yet issued its financial statements for the most recent annual or interim period or made them available for issuance. A ballot draft will be developed.

    Not-for-profit financial reporting: financial statements - The Board discussed the staff's proposed project plan and asked the staff to proceed accordingly.

    Definition of a nonpublic entity - The Board decided that a company that otherwise meets the definition of a private company, and that (1) is a consolidated subsidiary of a public company, or (2) controls and consolidates a subsidiary that is a public company, would be included in the definition of a private company for financial reporting purposes. However, an employee benefit plan would not be included in the definition of a private company.

    Revenue recognition - The FASB met briefly to discuss feedback received from nonpublic entity stakeholders, including private companies, not-for-profit organizations and users of nonpublic entity financial statements. The FASB is expected to redeliberate some of the issues raised by these entities.

    For additional details of the Board's discussions, see the FASB Action Alert.

    Upcoming meetings and webcasts

    12-14 June 2012 FASB-IASB joint meeting

    The Boards are scheduled to discuss the following projects:

    • Insurance contracts
    • Leases
    • Classification and measurement of financial instruments
    • Investment companies

    For additional details of the planned discussions, see the FASB calendar.

    28 June FASB webcast

    The FASB announced a 28 June 2012 webcast, IN FOCUS: FASB Update for Nonpublic Entities, which will include an overview of several topics of interest to private companies and not-for-profit organizations, including: the FAF's new Private Company Council, the private company decision-making framework, the project on the definition of a nonpublic entity, and the work of the FASB's Not-for-Profit Advisory Committee.

    Additional information and registration is available on 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)

    2009 US GAAP XBRL Taxonomy will be phased out shortly

    Subject to approval by the Commission, the SEC staff plans to update EDGAR on 2 July 2012 to no longer support the 2009 US GAAP XBRL Taxonomy. Registrants may continue to use the 2011 US GAAP XBRL Taxonomy, but the SEC staff strongly encourages companies to adopt the latest version of the US GAAP taxonomy for their XBRL Exhibits (i.e., the 2012 taxonomy). Details about the taxonomies can be found on the FASB and SEC websites. A draft version of the updated EDGAR Filer Manual is also available on the SEC website.

    International Accounting Standards Board (IASB)

    May IFRS for SMEs Update

    The May edition of IFRS for SMEs Update provides the latest news surrounding IFRS for Small and Medium-sized Entities (SMEs).

    IFRIC draft interpretations

    The IFRS Interpretations Committee has published for public comment the following proposed guidance:

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

    IAASB Strategy and Work Program, 2012–2014

    The IAASB has issued its Strategy and Work Program setting the direction and priorities for the activities of the IAASB for the three-year period from January 2012 to December 2014. The Workplan focuses on auditor reporting as the foremost priority and, subject to developments thereon, completing on a priority basis projects already in progress, including those related to audit quality, disclosures, review engagements, and assurance engagements. The IAASB also will continue to monitor the adoption and implementation of ISAs globally and focus on standards and initiatives relevant to small- and medium-sized entities. It will continue to explore issues stemming from the global financial crisis relating to banking and fair values.

    PIOB Public Report

    The Public Interest Oversight Board's Seventh Public Report and last year's Financial Statements have been posted on its website. In addition to the customary overview of its oversight and external activities in the year, the report presents the PIOB´s evolved oversight methodology.

    Upcoming Thought center webcasts and podcasts

    The lessons learned from year-end reporting
    Hosted by Ernst & Young's Global IFRS Services
    26 June 2012, 11:00 a.m. Eastern time


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