AccountingLink

    Compensation matters

    20 December 2018

    Financial Reporting Developments - Share-based payment (before the adoption of ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting)
    Our FRD publication on share-based payment has been updated to provide clarifications and enhancements to our interpretive guidance and to move our discussion of earnings-per share-related topics, including the effects of share-based payments on earnings per share, to our FRD publication on Accounting Standards Codification 260, Earnings per share. Refer to Appendix D of the publication for a summary of the updates.

    13 December 2018

    Technical Line - Settlement accounting reminders for employers considering pension plan de-risking strategies
    Employers considering pension plan de-risking strategies, such as making lump sum payments to plan participants and transferring their benefit obligations to third parties, need to determine whether the transactions qualify for settlement accounting. These de-risking strategies are attractive now because many pension plans are well funded. Employers are required to recognize a gain or loss on a settlement in the period in which all of the settlement criteria in Accounting Standards Codification 715 are met. It’s not appropriate to recognize settlements when they are probable and/or estimable. However, disclosure of probable settlements is encouraged.

    6 December 2018

    To the Point - New AICPA auditing standard will change the requirements for ERISA plan audits and auditor’s report
    The Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants voted to issue a Statement on Auditing Standards for financial statement audits of employee benefit plans that are subject to the Employee Retirement Income Security Act (ERISA) in an effort to improve the quality of these audits and the relevance of the auditor’s report. The ASB published what it called a “final balloted draft” of the standard, pending conforming amendments that may be added when it completes its project on auditor reporting next year. The effective date is expected to be no earlier than for audits of financial statements for periods ending on or after 15 December 2020.

    29 August 2018

    To the Point - FASB makes minor changes to disclosure requirements for sponsors of defined benefit plans
    The FASB issued final guidance that changes the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new ones that the FASB considers pertinent. The guidance is effective for fiscal years ending after 15 December 2020 for public business entities and fiscal years ending after 15 December 2021 for all other entities. Early adoption is permitted.

    2 August 2018

    Technical Line - A closer look at the guidance on accounting for share-based payments to nonemployees
    Our Technical Line summarizes the FASB’s final guidance that aligns the accounting for share-based payments to nonemployees with the accounting for share-based payments to employees, with certain exceptions, and describes how entities will apply the new measurement and transition provisions. Early adoption is permitted for entities that have adopted the new revenue guidance.

    21 June 2018

    To the Point - FASB simplifies the accounting for share-based payments to nonemployees
    The FASB issued final guidance to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatility in the income statement. Early adoption is permitted, including in an interim period, but not before an entity adopts ASC 606, Revenue from contracts with customers.

    1 June 2017

    Comment letter - FASB proposal to simplify the accounting for share-based payments to nonemployees
    In our comment letter, we support the FASB’s efforts to reduce the cost and complexity of accounting for share-based payments to nonemployees by aligning it, with certain exceptions, with the accounting for share-based payments to employees. In addition, we recommend that the Board broaden the definition of an employee, simplify the proposed transition and permit the use of the expected term when valuing certain nonemployee awards.

    11 May 2017

    To the Point - FASB clarifies when changes to share-based payments must be accounted for as modifications
    The FASB issued final guidance that clarifies when changes to the terms or conditions of a share-based payment must be accounted for as modifications. Entities will apply modification accounting if the value, vesting conditions or classification of the award changes. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2017. Early adoption is permitted, including adoption in any interim period.

    10 March 2017

    To the Point - Employers’ presentation of defined benefit retirement plan costs will change
    The FASB issued new guidance that will change how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. The standard is effective for public business entities for annual periods beginning after 15 December 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.

    28 February 2017

    To the Point - FASB amends employee benefit plan master trust reporting
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that will change the reporting requirements for an employee benefit plan that holds an interest in a master trust. The guidance also eliminates a disclosure requirement related to 401(h) retiree health accounts.

    6 January 2017

    Comment Letter - FASB proposal on the scope of modification accounting in the stock compensation guidance
    In our comment letter, we support the Board’s objective to reduce the cost and complexity of applying modification accounting and believe many of the proposed amendments would meet that objective. However, we believe the FASB should include additional guidance about how the amendments would be operationalized.