PwC agrees with the proposed change to limit the disclosures to derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset or subject to a master netting arrangement or similar agreement.
PwC encourages the Board to continue its outreach to investors and other stakeholders as it decides which alternatives to proceed with and develops them into a proposal. PwC generally supports the Board's effort to improve the relevance and comparability of financial reporting by developing a framework for setting disclosure requirements.
PwC generally believes that the draft framework identifies the appropriate matters to consider when determining whether a modification is appropriate. It identifies the significant differentiating factors that could support financial reporting differences between public and private companies.
PwC supports the proposal to provide information about the impact of reclassifications from accumulated other comprehensive income to net income in a single footnote. Most of the information to be disclosed is already included elsewhere in the financial statements. Consolidating it and providing a roadmap to the related disclosures will provide users with improved information without the operational challenges and costs that would have resulted from requiring separate presentation on the face of the income statement of the effects of the reclassifications on individual line items, particularly when such information is not readily available.
PwC suggests enhancements to the proposed guidance in the event that others believe it will be helpful to preparers and financial statement users and will improve consistency as to when and how to prepare financial statements using the liquidation basis of accounting.
PwC agrees that improved disclosures about liquidity and interest rate risks could provide a deeper understanding of an entity's risk profile. While the Firm encourages the Board to continue its outreach to analysts and preparers as it further develops the proposed disclosures, it offers a number of recommendations for the Board's consideration.
PwC generally supports the use of a qualitative assessment that could result in an entity not having to measure the fair value of an indefinite-lived intangible asset in certain circumstances, such as when the asset's recently calculated fair value substantially exceeded its carrying amount and no significant adverse changes have since occurred.
PwC agrees with the boards' objectives and supports a single revenue recognition model that provides clearer and more consistent guidance. PwC supports the overall project. There are, however, areas where the concepts could be more clearly articulated, might be challenging to apply, or do not appear cost-beneficial. In the letter, these areas are explained in the firm's responses to the boards' questions, including responses to the FASB's questions on the US GAAP consequential amendments.
PwC does not believe that measuring all real estate investments at fair value will necessarily yield better reporting for all types of investors. However, we do believe that fair value for entities that are fundamentally investing entities, as opposed to operating entities, would provide more relevant information to users of financial statements. Further, even among investing entities that account for their real estate investments at fair value, significant diversity in application exists with respect to presentation, measurement, consolidation and disclosure.
PwC supports the FASB and IASB's efforts to develop an approach for assessing whether a decision maker is using its decision-making authority in a principal or an agent capacity. However, consolidation is only one of two important elements needed to achieve convergence in the recognition of financial assets and liabilities by financial entities. PwC's preference is for the Boards to work together to reach a converged solution for all aspects of recognition, including considering their respective guidance for derecognition of financial instruments.
PwC is concerned about the significant differences between the Boards' respective proposals. For example, the Boards' differ in their proposed treatment of a controlling financial interest in an investment company held by a non-investment company parent. PwC believes that such significant differences should be eliminated in order to achieve a truly converged standard.
PwC strongly supports FAF's plan to create the Private Company Standards Improvement Council and to maintain FASB as the sole authoritative standard-setting board for public and private companies. The Foundation's plan is the appropriate response to the private company financial reporting community's concerns about the relevance, growing complexity, and costs of compliance associated with U.S. GAAP.
PwC supports the Board's efforts to clarify the Codification, correct unintended application of guidance, and conform the use of the term fair value throughout the Codification. PwC generally agrees with the proposed changes and believes they meet the project's objective to improve the Codification. PwC provides some observations on several amendments that it believes require further consideration or clarification.
PwC supports the FASB's decision to indefinitely defer the requirement in ASU 2011-05 to measure and present reclassifications from accumulated other comprehensive income to net income by income statement line item in net income and also in other comprehensive income.