AccountingLink

    To the Point

    4 October 2018

    To the Point - Renewed focus on quarterly reporting
    Our publication highlights our views and those of business leaders and other stakeholders on quarterly reporting, following President Donald Trump’s tweet asking the SEC to consider allowing companies to provide financial information semiannually instead of quarterly. While we support quarterly reporting because it gives investors access to timely information to make decisions, we believe there are opportunities for the SEC and the Financial Accounting Standards Board to reduce the cost and burden of providing that information. We also support supplemental reporting on long-term value creation. We encourage companies to participate in the renewed dialogue on interim reporting by evaluating their own quarterly reporting and identifying ways that it could be made more efficient and effective.

    29 August 2018

    To the Point - FASB changes requirements for fair value measurement disclosures
    The FASB issued final guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The guidance is effective for all entities for fiscal years beginning after 15 December 2019, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements.

    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.

    23 August 2018

    To the Point - SEC amends rules to eliminate redundant and outdated disclosures
    The SEC adopted a final rule that eliminates or amends disclosure requirements that have become redundant or outdated. The SEC also referred certain of its disclosure items to the FASB for potential incorporation into US GAAP. The amendments are intended to simplify compliance without substantially changing the information provided to investors. The changes are effective 30 days after the final rule is published in the Federal Register.

    15 August 2018

    To the Point - FASB changes how insurers measure and disclose liabilities for long-duration insurance contracts
    The FASB issued final guidance that will significantly change how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs. The guidance is effective for public business entities for fiscal years beginning after 15 December 2020 and a year later for all other entities.

    14 August 2018

    To the Point - FASB proposes narrow-scope amendments to help lessors apply the new leases standard
    The FASB proposed allowing lessors to make an accounting policy election to not evaluate whether sales taxes and other similar taxes imposed by a third party on a lease revenue-producing activity are the primary obligation of the lessor as owner of the underlying leased asset. The proposal would require lessors to exclude certain lessor costs paid directly by lessees to third parties on the lessor’s behalf from variable payments if the amount paid is not readily determinable by the lessor. The proposal would also clarify that lessors are required to allocate (rather than recognize) certain variable payments to lease and non-lease components of a contract when the changes in facts and circumstances on which the variable payment is based occur. Comments are due by 12 September 2018.

    31 July 2018

    To the Point - FASB adds transition option and practical expedient for lessors to new leases standard
    The FASB added a transition option to the new leases standard that allows entities to not apply the new guidance in the comparative periods they present in their financial statements in the year of adoption. The FASB also provided a practical expedient that gives lessors an option to combine non-lease and associated lease components when certain criteria are met and requires a lessor to account for the combined component in accordance with the new revenue standard if the associated non-lease components are the predominant component.

    26 July 2018

    To the Point - SEC proposes streamlining disclosure requirements for certain registered debt offerings
    The SEC proposed simplifying and streamlining its financial disclosure requirements for companies that conduct registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. Among other things, the proposal would narrow the circumstances that would require separate financial statements of subsidiary issuers and guarantors and replace the current relief requiring condensed consolidating financial information with the ability to provide summarized financial information and narrative disclosures. The proposal also would eliminate the separate financial statement requirement for affiliates whose securities are pledged as collateral and replace it with disclosure requirements similar to those proposed for subsidiary issuers and guarantors. Comments are due within 60 days after publication in the Federal Register.

    19 July 2018

    To the Point - FASB issues narrow amendments to the new leases standard
    The FASB issued narrow amendments to clarify how to apply certain aspects of the new leases standard. The amendments address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things.

    12 July 2018

    To the Point - AICPA proposes changes to standards on agreed-upon procedures and other attestation engagements
    The AICPA proposed changing all of its attestation standards to align them more closely with international standards. The proposal would eliminate the requirement that accountants request a written assertion from the responsible party for most attestation engagements. The proposal would also eliminate many other requirements for agreed-upon procedures engagements in an effort to expand the types of engagements that would be permitted.

    12 July 2018

    To the Point - Argentina’s economy considered highly inflationary under US GAAP
    All of the three-year cumulative inflation rates commonly used to evaluate Argentina’s inflation currently exceed 100%. As a result, we expect entities to conclude that Argentina’s economy is highly inflationary under US GAAP no later than 30 June 2018. Because an economy is accounted for as highly inflationary beginning on the first day of the reporting period following the period in which the economy becomes highly inflationary, calendar-year entities that prepare quarterly interim financial statements with operations in Argentina have to begin applying the guidance on highly inflationary accounting no later than 1 July 2018.

    27 June 2018

    To the Point - FASB clarifies the guidance for contributions received and contributions made
    The FASB issued final guidance to clarify how entities will determine whether to account for a transfer of assets as an exchange transaction or a contribution and how they will determine whether a contribution is conditional. While accounting for contributions primarily affects not-for-profit entities, the clarified guidance applies to all entities (including business entities) that receive or make contributions, except for certain transactions such as transfers of assets business entities receive from government entities.

    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.

    14 June 2018

    To the Point - FASB TRG for Credit Losses discusses five topics and reaches general agreement on most implementation issues
    Members of the FASB Transition Resource Group (TRG) for Credit Losses discussed implementation topics related to recoveries, accrued interest, capitalized interest, prepayments and transfers of certain assets between categories and reached general agreement on most issues. The FASB staff plans to recommend amendments to ASC 326 to reflect some of the TRG members’ views.

    7 June 2018

    To the Point - FASB to issue final guidance on long-duration contracts for insurers
    The FASB voted to move ahead with a final standard that will change how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs. The new guidance will be effective for PBEs for fiscal years beginning after 15 December 2020 and a year later for all other entities. The FASB plans to issue an Accounting Standards Update in August 2018.

    1 May 2018

    To the Point - FASB proposes clarifying guidance on collaborative arrangements
    The FASB proposed clarifying that certain transactions between participants in a collaborative arrangement should be accounted for as revenue under ASC 606 when the participant is a customer. When the counterparty is not a customer, the proposal would preclude a transaction from being presented as revenue if it does not directly relate to third-party sales. Comments are due by 11 June 2018.

    4 April 2018

    To the Point - Companies should consider seeking relief from SEC disclosure requirements under Rule 3-13
    SEC officials are actively encouraging companies to use Rule 3-13 of Regulation S-X. We believe this means the staff is amenable to granting more Rule 3-13 requests and to work with companies to relieve financial statement burdens imposed by Regulation S-X that are unnecessary to protect investors. However, the staff cannot grant relief that is not requested, so companies need to be proactive.

    1 March 2018

    To the Point - FASB proposes guidance on accounting for implementation costs in cloud computing arrangements
    The FASB proposed requiring a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. The proposal would align the guidance for recognizing implementation costs incurred in a hosting arrangement that is a service contract with that for implementation costs incurred in an arrangement that includes an internal-use software license. The FASB also proposed new disclosures for implementation costs for all internal-use software and hosting arrangements.

    28 February 2018

    To the Point - FASB amends new guidance on recognizing and measuring financial instruments
    The FASB amended the new guidance on recognizing and measuring financial instruments to clarify that entities have to use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative. The amendments also clarify other aspects of the guidance on how to apply the measurement alternative and the presentation requirements for financial liabilities measured under the fair value option. The amendments are effective for calendar-year public business entities for annual periods beginning in 2018 and interim periods beginning in the third quarter of 2018. Early adoption is permitted.

    22 February 2018

    To the Point - Proposal would add a new benchmark interest rate for hedge accounting
    The FASB proposed adding the overnight index swap rate based on the Secured Overnight Financing Rate to the list of US benchmark interest rates in ASC 815 that are eligible to be hedged. The proposal would allow entities to designate changes in this rate as the hedged risk in hedges of interest rate risk for fixed-rate financial instruments. Comments are due by 30 March 2018.

    15 February 2018

    To the Point - FASB issues guidance on reclassification from OCI of tax effects related to tax reform
    The FASB issued an Accounting Standards Update that will permit entities to reclassify tax effects stranded in accumulated other comprehensive income (OCI) as a result of tax reform to retained earnings. The final guidance gives entities the option to reclassify these amounts, but requires new disclosures, regardless of whether they elect to do so. The guidance is effective for fiscal years beginning after 15 December 2018, and interim periods within those fiscal years. Early adoption in any period is permitted.

    7 February 2018

    To the Point - FASB moves ahead with guidance on reclassification of tax effects stranded in OCI by tax reform
    The FASB decided to finalize guidance that would permit entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings and directed the staff to draft a final Accounting Standards Update. The FASB decided to give entities the options to (1) reclassify these amounts rather than require reclassification and (2) apply the guidance retrospectively or in the period of adoption.

    25 January 2018

    To the Point - FASB issues transition practical expedient for land easements and clarification on applying ASC 842
    The FASB issued final guidance to provide an optional transition practical expedient for land easements in the new leases standard that permits an entity to continue applying its current policy for accounting for land easements that exist as of or expire before the effective date of ASC 842, Leases. An entity that elects the practical expedient must apply it to all of its existing or expired land easements that it didn’t previously account for under ASC 840.

    23 January 2018

    To the Point - FASB revises proposal to amend new guidance on recognizing and measuring financial instruments
    The FASB tentatively decided to revise its proposal to amend the new guidance on recognizing and measuring financial instruments to require an entity that voluntarily discontinues using the new measurement alternative for an equity security without a readily determinable fair value to measure that security and “all identical or similar investments of the same issuer” at fair value. Entities that make this change would not be permitted to measure subsequent purchases of identical or similar investments of the same issuer under the measurement alternative. The FASB directed the staff to draft a final ASU.

    9 January 2018

    To the Point - FASB proposes adding transition option and practical expedient for lessors to new leases standard
    The FASB proposed adding a transition option to the new leases standard that would allow entities to not apply the new guidance in the comparative periods they present in their financial statements in the year of adoption. The FASB also proposed a practical expedient that would provide lessors with an option to combine lease and non-lease components when certain criteria are met. Comments are due by 5 February 2018.

    26 October 2017

    To the Point - AICPA staff answers questions about the definition of a public business entity
    The AICPA staff issued a technical question and answer document to address questions raised by preparers about certain terms used in the definition of a public business entity (PBE). The document reflects the AICPA staff’s recent discussions with the FASB staff, which may change an entity’s conclusion about whether it is a PBE.

    12 October 2017

    To the Point - SEC proposes modernizing and simplifying certain Regulation S-K disclosure requirements
    The SEC proposed amending Regulation S-K to modernize and simplify certain disclosure requirements as part of a broader review aimed at reducing the compliance burden on registrants while still providing all material information to investors. Among other thing, the proposal would allow a registrant to omit a discussion of the earliest annual period from Management’s Discussion and Analysis if the discussion is not considered to be material and the discussion of that period was included in the prior-year Form 10-K. The proposal also would allow a registrant to omit commercially sensitive and confidential information without obtaining advance permission from the SEC staff. Comments are due within 60 days.

    10 October 2017

    To the Point - How companies should prepare for the audit of the new revenue standard
    The PCAOB issued a staff alert discussing what auditors need to do to audit a company’s implementation of the new revenue recognition standard. While the alert is aimed at auditors, it provides a roadmap for management about how to prepare for the audit of the company’s implementation of the new standard.

    5 October 2017

    To the Point - PCAOB asks for more input on its proposal on supervision of other auditors
    The PCAOB issued a supplemental request for comment on its proposal to strengthen the requirements for supervising other auditors who participate in an audit but don’t issue the auditor’s report. Comments are due by 15 November 2017.

    2 October 2017

    To the Point - FASB proposes narrow amendments and technical corrections to the new leases standard
    The FASB proposed narrow amendments and technical corrections to clarify how to apply certain aspects of the new leases standard. The proposed clarifications would address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things. Comments are due by 13 November 2017.

    13 September 2017

    To the Point - Proposed alternative to agreed-upon procedures engagements would address stakeholder needs
    The AICPA has issued an exposure draft proposing the creation of a new attestation service that companies could use to have an accountant report to interested parties on the findings of procedures the accountant performed on an aspect of a company's business. The newly proposed service, selected procedures service would give companies a way to meet the needs of various stakeholders in situations that go beyond what is allowed for an agreed-upon procedures engagement.

    28 August 2017

    To the Point - FASB amends hedge accounting guidance to better reflect entities' risk management activities
    The FASB issued final guidance amending its hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments also simplify the application of hedge accounting in certain situations. The guidance is effective in 2019 for calendar-year public business entities and 2020 for all other calendar-year companies, with early adoption permitted in any interim or annual period.

    11 August 2017

    To the Point - Update on accounting for pre-production and tooling activities and costs under ASC 606
    Manufacturing and production companies in various industries have raised questions about how they should account for activities and costs incurred prior to the production of goods under a supply arrangement after they adopt the new revenue recognition standard. As public companies finalize their ASC 606 accounting policies and prepare to adopt the new standard, a consensus has emerged that a number of views related to the accounting for pre-production and tooling activities could be appropriate.

    10 August 2017

    To the Point - FASB proposes clarifying the guidance for contributions received and contributions made
    The FASB proposed clarifying the guidance on how entities determine whether a transfer of assets is a contribution or an exchange transaction and on how they distinguish between conditional and unconditional contributions. Although the accounting for contributions primarily affects not-for-profit entities, the proposal would apply to all entities (including business entities) that receive or make contributions. Comments are due by 1 November 2017.

    3 August 2017

    To the Point - AICPA issues new attestation guide amid growing investor interest in sustainability reporting
    To address the growing interest in sustainability reporting, the AICPA issued a new attestation guide to assist accountants in performing and reporting on companies’ sustainability information. Investors and other stakeholders are more often taking into account sustainability issues in their decision making, and many believe it is important for this information to be subject to independent assurance.

    18 July 2017

    To the Point - FASB simplifies the accounting for financial instruments with ‘down round’ features
    The FASB issued final guidance that eliminates today’s requirement to consider “down round” features when determining whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. Entities that present earnings per share pursuant to ASC 260 will recognize the effect of a down round feature in a freestanding equity-classified financial instrument only when it is triggered. The effect of triggering such a feature will be recognized as a dividend and a reduction to income available to common shareholders in basic EPS.

    6 July 2017

    To the Point - SEC staff substantially expands scope of confidential review program for draft registration statements
    The SEC staff in the Division of Corporation Finance said it will accept draft initial registration statement submissions from all companies and Securities Act registration statement submissions in the first year after a company goes public for review on a non-public basis. The SEC staff also said that companies may now omit financial information that they reasonably believe will not be required at the time the registration statement is publicly filed. These expansions of the confidential review program are the first actions by the SEC staff to ease regulatory requirements under Chairman Jay Clayton, who has said that facilitating capital formation is a priority.

    29 June 2017

    To the Point - The FASB proposes more changes to the consolidation guidance
    The FASB proposed more changes to the consolidation guidance, including allowing private companies to make an accounting policy election to not apply the variable interest entity (VIE) guidance for certain common control arrangements. It also proposed changing two aspects of the VIE model for related party groups. Comments are due by 5 September 2017.

    16 June 2017

    To the Point - FASB TRG for credit losses discusses implementation issues
    Members of the FASB TRG for credit losses reached general agreement on three implementation issues and may revisit two others. They generally agreed that entities can elect to use a discount rate adjusted for expected prepayments to determine the allowance for credit losses and can elect to maintain existing pools of purchased credit impaired assets at adoption or on an ongoing basis. They also generally agreed that entities should consider the cash flows of the assets underlying a beneficial interest, including expected prepayments, to determine whether the guidance on purchased financial assets with credit deterioration applies. The TRG may revisit questions about how to determine the life of a credit card receivable and how to forecast troubled debt restructurings.

    8 June 2017

    To the Point - PCAOB proposes expanding guidance on auditing estimates and using the work of specialists
    The PCAOB proposed expanding the requirements for auditing accounting estimates, including fair value measurements. The PCAOB also proposed expanding the requirements for evaluating the work of a company’s specialist and applying a risk-based approach to supervising and evaluating the work of specialists employed or engaged by the auditor. Comments on both proposals are due by 30 August 2017.

    5 June 2017

    To the Point - PCAOB adopts final standard to significantly change the auditor’s report
    The Public Company Accounting Oversight Board (PCAOB) adopted a final standard that requires auditors to include significantly more information in their auditor’s reports. The standard requires the auditor to include in the report a discussion of critical audit matters for audits of large accelerated filers beginning in 2019 and all other filers in 2020. The standard also requires auditors to add information about auditor tenure, clarify the language about the auditor’s responsibilities and change the organization and format of reports are effective for periods ending on or after 15 December 2017. The standard is subject approval by the SEC, and interested parties will have an opportunity to provide comments.

    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.

    26 April 2017

    To the Point - AICPA issues criteria for evaluating how an entity manages cybersecurity risk
    The AICPA issued Description Criteria for Management’s Description of an Entity’s Cybersecurity Risk Management Program and updated its Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality, and Privacy that together can be used by entities to describe their cybersecurity risk management programs and evaluate controls in these programs. An entity also can voluntarily choose to engage an independent public accountant to evaluate management’s description and whether the controls over its program were suitably designed and operated effectively.

    20 April 2017

    To the Point - Auditors would perform more tests and provide more information in reports on ERISA plans
    The Auditing Standards Board of the American Institute of Certified Public Accountants proposed 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. This publication focuses on how plan sponsors would be affected by the proposal, which would be effective for audits of financial statements for periods ending on or after 15 December 2018. Comments are due by 21 August 2017. We encourage plan sponsors to review the proposal, discuss it with their auditors and ERISA counsel and consider providing comments.

    6 April 2017

    To the Point - SEC Chief Accountant provides guidance on how audit committees can be more effective
    In a recent speech, SEC Chief Accountant Wesley Bricker discussed how audit committees can effectively discharge their oversight responsibilities. Among other things, he said it is important for audit committees to understand the financial reporting risks related to implementing new accounting standards, support controls over the disclosure of non-GAAP financial measures, understand changes in the business and operating environments, set a positive tone at the top to support effective internal control over financial reporting, and make sure the committee is not overloaded with responsibilities beyond its core mission.

    4 April 2017

    To the Point - FASB shortens the amortization period for certain purchased callable debt securities held at a premium
    The FASB issued guidance to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Today, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The guidance does not change the accounting for callable debt securities held at a discount. For public business entities, the guidance is effective for fiscal years beginning after 15 December 2018, and interim periods therein. For all other entities, it is effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Early adoption is permitted, including in an interim period.

    30 March 2017

    To the Point - Brexit withdrawal notification doesn’t trigger immediate tax accounting consequences
    The United Kingdom (UK) government’s formal notification of its intent to withdraw from the European Union (EU) raised the question of whether that action constituted a change in tax law for income tax accounting purposes. We believe that the withdrawal notification does not trigger immediate income tax accounting consequences. Companies should instead account for changes to their income tax accounts when a new tax law or treaty is enacted or the UK actually withdraws from the EU, whichever is earlier. Affected companies should disclose information about the status of the UK withdrawal efforts and the potential income tax effects of its eventual withdrawal.

    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.

    2 March 2017

    To the Point - SEC proposes requiring the use of Inline XBRL
    The SEC proposed a rule that would require operating companies and mutual funds to use Inline XBRL and embed tags in their financial statements and their risk/return summaries, respectively. The proposal would require Inline XBRL tagging on the same information operating companies and mutual funds currently include in separate XBRL exhibits. The requirement would be phased in over three years for operating companies based on filing status and over two years for mutual funds based on net assets. Comments are due 60 days after the proposal is published in the Federal Register.

    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.

    23 February 2017

    To the Point - Clarifications to guidance on the derecognition of nonfinancial assets and in substance nonfinancial assets
    The FASB issued new guidance that clarifies the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. It also clarifies that the derecognition of businesses is in the scope of ASC 810 and defines an in substance nonfinancial asset.

    9 February 2017

    To the Point - Narrow amendments to several topics could change practice for some entities
    The FASB issued ASU 2016-19, Technical Corrections and Improvements, to clarify guidance, correct errors and make minor improvements to the Accounting Standards Codification. While most of the amendments are not expected to have a significant effect on practice, some of them may change how some entities apply aspects of the guidance on fair value measurement, joint and several liability, transfers and servicing, real estate sales and software licenses. Many of these amendments are effective for calendar-year entities in the first quarter of 2017.

    27 January 2017

    To the Point - FASB simplifies the accounting for goodwill impairment
    The FASB issued final guidance that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for interim and annual goodwill impairment testing dates after 1 January 2017.

    19 January 2017

    To the Point - FASB retains consolidation guidance for NFP general partners of for-profit limited partnerships
    The FASB issued new guidance that retains the presumption that a not-for-profit (NFP) entity that is a general partner of a for-profit limited partnership or similar entity controls the entity, unless that presumption can be overcome. The FASB also clarified that NFP entities (other than business-oriented health care entities) with investments in certain for-profit entities may continue to elect to measure those investments at fair value.

    12 January 2017

    To the Point - FASB proposes changes to inventory disclosure requirements
    The FASB proposed requiring all entities to make additional disclosures regarding changes in inventory outside the normal purchase, manufacture or sale of inventory and the composition of inventory. The proposal also would require all entities to make certain inventory disclosures currently required by the SEC. It would also require additional disclosures by entities that report segment information and those that apply the retail inventory method. Comments are due by 13 March 2017.

    12 January 2017

    To the Point - Proposal would simplify how entities determine the balance sheet classification of debt
    The FASB proposed replacing today’s rules-based guidance for determining whether to classify debt as current or noncurrent on the balance sheet with a principles-based approach that would require debt to be classified as noncurrent only when it is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date or when the entity has a contractual right to defer settlement for at least one year (or operating cycle, if longer) after the balance sheet date. An exception would be provided for waivers of debt covenant violations received after the balance sheet date but before the financial statements are issued. Comments are due by 5 May 2017.

    6 January 2017

    To the Point - FASB narrows the definition of a business
    The FASB issued new guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606.

    22 December 2016

    To the Point - FASB issues technical corrections and improvements to the new revenue standard
    The FASB issued 13 technical corrections and improvements on narrow aspects of the guidance it issued in Accounting Standards Update 2014-09. The amendments address questions that stakeholders have raised but don’t change any of the principles in the new revenue guidance. The amendments have the same effective date and transition requirements as the revenue standard. No further changes to the new standard are currently expected before the effective date.

    1 December 2016

    To the Point - Tax rules on related party debt are narrower than what the Treasury Department and the IRS proposed
    The Treasury Department and the IRS issued regulations that will treat as stock for US federal income tax purposes certain related party interests that would otherwise be treated as indebtedness, and also establish extensive documentation requirements for those interests. The rules are limited to related party borrowings from a US entity to an affiliate that is not included in the US consolidated tax return. Entities need to identify and evaluate their related party loans that are in the scope of the rules to determine how they will be affected.

    17 November 2016

    To the Point - FASB addresses the presentation of restricted cash in the statement of cash flows
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer have to classify transfers between cash and restricted cash.

    8 November 2016

    To the Point - FASB TRG reaches general agreement on four more revenue recognition issues
    Members of the FASB Transition Resource Group for Revenue Recognition (FASB TRG) reached general agreement on implementation issues involving capitalization and amortization of incremental costs of obtaining a contract, payments to customers, over time revenue recognition and sales- or usage-based royalties that contain minimum guarantees. While this is the last scheduled FASB TRG meeting, FASB Vice Chairman James Kroeker said entities can continue to send the FASB questions about implementation, and more TRG meetings could be scheduled if enough broad questions are received.

    27 October 2016

    To the Point - FASB limits deferral of income tax effects of intercompany transfers to those involving inventory
    The FASB issued final guidance that will require companies to account for the income tax effects of intercompany transfers of assets other than inventory (e.g., intangible assets) when the transfer occurs. The guidance is effective for public business entities in annual periods beginning after 15 December 2017, and for all other entities in annual periods beginning after 15 December 2018. Early adoption is permitted as of the beginning of an annual period (i.e., early adoption is permitted only in the first interim period).

    27 October 2016

    To the Point - New VIE guidance on evaluating indirect interests held by related parties under common control
    The FASB changed how a single decision maker or service provider considers indirect interests held by related parties under common control when applying the consolidation guidance on determining whether it is the primary beneficiary of a variable interest entity (VIE) under the VIE Model. The new guidance is effective for public entities for annual periods beginning after 15 December 2016.

    27 October 2016

    To the Point - SEC adopts rules to enhance investment company reporting
    The SEC adopted a rule that requires certain registered investment companies to report information about their monthly portfolio holdings to the SEC in an XML format on new Form N-PORT within 30 days of the end of each month. The SEC also adopted a requirement that registered investment companies, except face-amount certificate companies, file census-type information annually with the SEC in an XML format on new Form N-CEN within 75 days of the end of their fiscal year (or calendar year for unit investment trusts). The SEC also amended Regulation S-X to standardize and enhance disclosures about derivatives and other items in investment company financial statements.

    20 October 2016

    To the Point - Rules on fund liquidity risk management and swing pricing
    The SEC adopted a rule that requires registered open-end funds, including mutual funds and exchange-traded funds but not money market funds, to establish a liquidity risk management program and expand their disclosures about their liquidity and redemption practices The SEC also gave open-end funds (except for money market funds and exchange-traded funds) the option to use swing pricing to adjust their net asset value for costs associated with satisfying requests for shareholder purchases or redemptions (e.g., trading costs) in certain circumstances.

    6 October 2016

    To the Point - Companies should consider possible changes to the tax treatment of certain related party debt instruments
    Companies (foreign or domestic) that issue debt to related parties (including intercompany debt) may be affected by regulations proposed to change the US federal income tax treatment of this type of debt. Companies should begin identifying arrangements that could be affected. Under the proposal, certain related party debt could be treated as equity for US federal income tax purposes. It is not clear whether the regulations will be issued in their proposed form or whether they will be changed significantly. The issues are complex, and the regulations could become final soon.

    29 September 2016

    To the Point - Proposal would change accounting and disclosures for long-duration contracts for insurers
    The FASB proposed changing how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs. Comments are due by 15 December 2016.

    22 September 2016

    To the Point - Proposals would provide criteria for evaluating how a company manages cybersecurity risk
    The AICPA issued two proposals that together provide a framework for evaluating how a company manages cybersecurity risk. One proposal would provide separate sets of criteria to be used by management to describe its cybersecurity risk management program and for public accounting firms to use to report on management’s description. The second proposal would revise the AICPA trust services criteria public accounting firms to evaluate the controls for SOC2 engagements so they could be used evaluate controls over a cybersecurity risk management program. The final criteria and related auditor guidance are expected to be issued in early 2017.

    1 September 2016

    To the Point - FASB clarifies the classification of certain cash receipts and cash payments
    The FASB issued final guidance, based on an Emerging Issues Task Force consensus, that clarifies the classification of certain cash receipts and cash payments. The amendments also clarify how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows.

    26 August 2016

    To the Point - FASB changes certain requirements for the financial statements of not-for-profit entities
    The FASB issued final guidance that changes certain financial statement requirements for not-for-profit (NFP) entities. NFPs will no longer be required to distinguish between resources with temporary and permanent restrictions on the face of their financial statements, meaning they will present two classes of net assets instead of three. The guidance also will change how NFPs report certain expenses and provide information about their available resources and liquidity.

    4 August 2016

    To the Point - Federal agencies propose revising Form 5500 filed by employee benefit plans
    The US Department of Labor, the Internal Revenue Service and the Pension Benefit Guaranty Corporation are seeking comments on their joint proposal to revise the Form 5500 filed by employee benefit plans. The proposal would apply to the Form 5500 for the 2019 plan year. Comments are due by 4 October 2016.

    10 March 2016

    To the Point - FASB says hedge accounting relationships may continue after a novation
    The FASB issued final guidance clarifying that the novation of a derivative contract in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship.

    29 September 2015

    To the Point - SEC proposes liquidity risk rules for mutual funds and ETFs
    The SEC proposed requiring that all open-end mutual funds (excluding money market funds) and exchange-traded funds implement a liquidity risk management program and giving mutual funds the option to use swing pricing to adjust their net asset value for costs associated with satisfying requests for shareholder purchases or redemptions in certain circumstances.

    6 August 2015

    To the Point - SEC finalizes ‘pay ratio’ rule
    As mandated by the Dodd-Frank Act, the SEC approved the final rule that requires most registrants to calculate and disclose the ratio of their principal executive officer’s total annual compensation to the total annual compensation of their median employee (the pay ratio). The rule mostly follows the SEC’s proposal from September 2013 but provides companies additional flexibility in determining the pay ratio. Registrants will be required to make pay ratio disclosures for their first fiscal year beginning on or after 1 January 2017.

    6 August 2015

    To the Point - Simplifying the presentation of debt issuance costs
    We have updated our publication to reflect an SEC staff member’s announcement at the June 2015 meeting of the Emerging Issues Task Force that the staff will not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The question arose after the FASB issued ASU 2015-03 on the presentation of debt issuance costs in April 2015. The ASU doesn’t address the presentation of the costs of obtaining a revolving line of credit.

    9 July 2015

    To the Point - SEC proposes requiring ‘clawback’ policies and disclosures
    The SEC proposed a rule that would direct national securities exchanges to establish listing standards that would require companies to claw back incentive-based compensation received by current and former executive officers during the three years preceding an accounting restatement. The proposal would apply to all listed companies except for certain registered investment companies. Comments will be due 60 days after the proposal is published in the Federal Register.

    7 May 2015

    To the Point - SEC proposes ‘pay versus performance’ disclosures
    The SEC proposed rules requiring companies to disclose the relationship between their executive compensation and their total shareholder return (TSR). The so-called pay versus performance disclosures would be included in proxy or information statements in which executive compensation disclosures are required. Our publication discusses the proposed requirements and which registrants would be affected.

    26 March 2015

    To the Point - SEC adopts 'Regulation A+' to expand exempt offerings
    The SEC adopted amendments to allow private companies to make exempt public offerings under Regulation A of up to $50 million of securities within a 12-month period. The rules, required by the Jumpstart Our Business Startups Act, establish two tiers of offerings with different requirements.

    12 February 2015

    To the Point - SEC proposes proxy disclosure of policies on hedging by employees, officers and directors
    The SEC proposed a rule that would require most registrants to disclose whether they permit any employees, officers or directors to hedge their holdings of the company’s equity securities or those of certain related entities. The proposal, which is mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is intended to help shareholders understand how employees’ and directors’ interests align with their own.

    20 October 2011

    To the Point - SEC staff issues guidance on cybersecurity disclosures
    In response to an increase in the frequency and severity of cyber attacks and breaches, the SEC staff provided a framework for registrants to consider in evaluating whether to disclose information about risks and incidents involving cybersecurity. Our To the Point discusses the SEC guidance on cybersecurity disclosures.