US Week in Review - Week ending 7 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
The Jumpstart Our Business Startups Act (the Act) was enacted on 5 April 2012 to give private companies greater access to capital and make it easier for certain companies to go public. A year and a half later, we look at the effects of the Act on the IPO market and analyze how emerging growth companies are using the relief available to them under the Act. We also provide an update on the SEC's rulemaking to date under the Act and discuss what still must be done to implement its key remaining provisions.
The JOBS Act gives private companies greater access to capital and makes it easier for certain companies to go public. This publication updates our 8 November 2012 Technical Line. It discusses recent actions the SEC has taken to fulfill its mandate under the JOBS Act, as well as clarifications the SEC staff has made to its responses to frequently asked questions.
The number of initial public offerings (IPOs) in the US has increased during 2013, which is likely to be the strongest year for IPOs since 2007. Understanding suggestions from the SEC staff and leading practices in the registration process will help a company meet its deadlines and have the flexibility to respond to market conditions. Our To the Point publication updates our 24 May 2012 edition based on recent observations from our extensive experience with companies that have successfully completed IPOs.
Updated Technical Line: How to apply S-X Rule 3-14 and the latest SEC staff guidance to real estate acquisitions
The SEC staff in the Division of Corporation Finance recently revised its guidance on the S-X Rule 3-14 reporting requirements for acquisitions of real estate operations. This publication updates our 4 September 2013 Technical Line to reflect clarifications from the SEC staff related to the evaluation of whether Rule 3-14 or Rule 3-05 applies to the acquisition of a legal entity that holds real estate and has non-leasing operations, the evaluation of individually insignificant acquisitions after the end of the distribution period and the financial information the staff will accept for a significant acquisition of a property subject to a triple net lease.
We have updated our US GAAP versus IFRS: the basics publication, which describes similarities and differences between US GAAP and IFRS. The updated edition generally reflects guidance effective in 2013 and guidance finalized by the FASB and the IASB before 31 May 2013, including IFRS 10, Consolidated Financial Statements, and IFRS 11, Joint Arrangements.
We have updated our Financial Reporting Developments publication on intangible assets and goodwill to include a comprehensive example on the application of the qualitative assessment for goodwill and to make other enhancements to our guidance.
We have updated our Financial Reporting Developments publication on business combinations to incorporate guidance from two Technical Line publications on complex deal structures and to make other enhancements to our interpretive guidance.
Standard Setter updates
Financial Accounting Standards Board (FASB)
Exposure draft to improve financial reporting for development stage entities
The FASB proposed guidance that would eliminate the additional disclosure requirements for development stage entities within US GAAP. They would no longer have to present inception-to-date information about income statement line items, cash flows and equity transactions. See the proposal for more information.
6 November 2013 FASB meeting
Revenue recognition: The FASB voted to move forward with finalizing a new revenue recognition standard. The vote authorizes the Staff to prepare a ballot draft, which will be submitted to the FASB for final approval. A final revenue recognition standard is expected to be released in the first quarter of 2014.
Going concern: The FASB discussed the feedback it received on its proposal to require management to be primarily responsible for assessing an entity's ability to continue as a going concern and decided to redeliberate the following topics: (1) the threshold for disclosure of going concern uncertainties, (2) consideration of management's plans, (3) content of disclosures, (4) length of the assessment period, (5) definition of substantial doubt and (6) applicability of the requirement to evaluate whether substantial doubt exists to non-SEC filers. The FASB said it plans additional outreach to obtain more feedback on these topics, especially from preparers.
The Board also discussed its project on the Disclosure framework: Board's decision process.
For additional details, see the FASB's Summary of Board Decisions.
Upcoming meetings and webcasts
12 November 2013 meeting with the Private Company Council (PCC)
Members of the FASB and the PCC are scheduled to discuss:
- PCC Issue No. 13-02, Applying variable interest entity guidance to common control leasing arrangements
- 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
- PCC Issue No. 13-01A, Accounting for identifiable intangible assets in a business combination
- PCC Issue No. 13-03B, Accounting for certain receive-variable, pay-fixed interest rate swaps - combined instruments approach
They also plan to discuss the PCC town hall meeting and the FASB projects on leases, insurance contracts, reporting discontinued operations and the definition of a public business entity.
13 November 2013 FASB meeting
The FASB is scheduled to discuss its projects on Reporting discontinued operations and Technical corrections and improvements.
14 November 2013 Emerging Issues Task Force meeting
The Task Force is scheduled to discuss:
- Issue No. 13-E, Reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure
- Issue No. 13-F, Classification of certain government insured residential mortgage loans upon foreclosure by a creditor
- Issue No. 12-F, Recognition of new accounting basis (pushdown) in certain circumstances
- Issue No. 13-B, Accounting for investments in qualified affordable housing projects
- Issue No. 12-G, Measuring the financial liabilities of a consolidated collateralized financing entity
- Issue No. 12-H, Accounting for service concession arrangements
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)
CAQ SEC Regulations Committee publishes September highlights
The SEC Regulations Committee of the Center for Audit Quality (CAQ) published highlights from its 25 September 2013 meeting with the SEC staff. The highlights include:
- A discussion of recent SEC enforcement initiatives, including the use of the Accounting Quality Model to flag high-risk activities
- Application of the temporary scope exception from management's assessment of internal control over financial reporting to the acquisition of a business through a merger of entities under common control
- Potential practice issues related to the FASB's proposals to permit private companies to apply alternative accounting principles
- The staff's views about recalculating the significance of equity method investees under S-X Rule 3-09 after a change in accounting principle that requires retrospective application
- An update on other SEC activities, including recommendations by the SEC Investor Advisory Committee and the SEC Advisory Committee on Small and Emerging Companies
International Accounting Standards Board (IASB)
IFRS for SMEs
The October edition of IFRS for SMEs Update is a staff update on the latest news surrounding IFRS for Small and Medium-sized Entities.
Upcoming Thought Center webcasts and podcasts
News from the street: capital markets outlook for 2014 and beyond
Live from the EY Strategic Growth Forum
13 November 2013, 4:30 p.m. Eastern time
Insurance contracts: exposure draft comment letters
18 November 2013, 11:00 a.m. Eastern time