Flashline - Week ending November 1, 2012 (No. 2012-43)

Flashline 11/02/2012 by Assurance services

PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters). This week's topics include:

  • PwC comments on FASB staff paper on private company decision-making framework
  • In brief: FASB to amend and clarify scope of balance sheet offsetting disclosures
  • In brief: IFRS Foundation responds to SEC’s final report on IFRS “Work Plan”
  • FASB extends comment deadline on private company decision-making framework
  • FASB meetings and project updates
  • PCAOB Standing Advisory Group to meet on November 15-16
  • PCAOB issues updated FAQs on broker-dealer funding rules
  • COSO publishes new ERM thought paper on risk assessment in practice


PwC

PwC comments on FASB staff paper on private company decision-making framework

PwC submitted its response letter on the FASB staff paper, Private Company Decision-Making Framework (the draft framework). We support the establishment of a framework for determining when modifications to U.S. GAAP are appropriate for private companies. A framework for making these determinations will improve the consistency, transparency, and efficiency of the standard setting process for private companies.

Generally, we believe 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. Our response letter further outlines our observations and recommendations to the board.

In brief: FASB to amend and clarify scope of balance sheet offsetting disclosures

Over the past several months, issuers and other constituents in a variety of industries have raised concerns to the FASB staff and board regarding the scope of the new balance sheet offsetting disclosures required by Accounting Standards Update 2011-11, Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). In response to those concerns, at its October 31 meeting the FASB decided to amend and clarify the scope of the disclosures. Specifically, it decided to limit the scope of the disclosures to only derivatives, repurchase agreements, and securities lending transactions.

The disclosures required by ASU 2011-11 are effective in Q1 2013 for calendar year-end companies. The board plans to release an exposure draft with the revised scope language in the coming weeks. In brief 2012-48 provides further information on the FASB's decision and what's next.

In brief: IFRS Foundation responds to SEC’s final report on IFRS “Work Plan”

On October 23, the IFRS Foundation (the organization that oversees the IASB) published a response (the “Foundation Staff response”) to the SEC’s final report on its IFRS Work Plan (the “SEC Staff report”) issued in July 2012. The Foundation Staff response is an assessment of the matters discussed in the SEC Staff report, including the operations of the IFRS Foundation and the IASB, the use of IFRS as global accounting standards, and issues related to incorporating IFRS into the US financial reporting system. In brief 2012-47 provides an overview of the Foundation Staff response.

Financial Accounting Standards Board (FASB)

FASB extends comment deadline on private company decision-making framework

The FASB announced that it has extended the deadline for commenting on the FASB staff paper, Private Company Decision-Making Framework, until November 9, 2012. The FASB decided to extend the deadline to provide private company stakeholders affected by Hurricane Sandy more time to submit their feedback.

FASB meetings and project updates

Meeting summary: The FASB met on October 31 and discussed its projects on (1) accounting for financial instruments (classification, measurement, and impairment) and (2) balance sheet offsetting (a scope clarification of ASU 2011-11). See the FASB’s website for a summary of the decisions reached at the meeting. [Also, see PwC’s In brief article above regarding the FASB’s decision to amend and clarify the scope of ASU 2011-11.]

Next open board meetings: The FASB is scheduled to meet on November 6 and 7. The board plans to discuss its projects on: (1) liquidation basis of accounting, (2) consolidation: policy and procedures, (3) going concern, (4) accounting for financial instruments: liquidity and interest rate disclosures, and (5) transfers and servicing: repurchase agreements and similar transactions. See the FASB’s website for more information on the meetings.

Project updates: The FASB has updated the following project summaries:

Public Company Accounting Oversight Board (PCAOB)

PCAOB Standing Advisory Group to meet on November 15-16

The PCAOB announced that it will hold a meeting of its Standing Advisory Group (SAG) on November 15-16. The SAG agenda includes a discussion of recent PCAOB developments and the board's current standard-setting activities. Additionally, the SAG will discuss:

  • Auditor's Reporting Model: A potential approach to the auditor's reporting model that could increase its transparency and relevance to financial statement users.
  • Fraud: Consideration of engaging in outreach and research regarding the auditor's approach to detecting fraud.

PCAOB issues updated FAQs on broker-dealer funding rules

The PCAOB has published an updated frequently asked questions (FAQs) document that sets forth the staff's views on issues related to the implementation of the PCAOB's funding rules as they relate to brokers and dealers.

Committee of Sponsoring Organizations (COSO)

COSO publishes new ERM thought paper on risk assessment in practice

Recognizing the evolving nature of enterprise risk management (ERM) in recent years, COSO has released a new thought paper titled Risk Assessment in Practice. The paper provides the latest thinking on risk assessment approaches and techniques that have emerged as the most useful and sustainable for decision-making. It represents another in a series of papers published by COSO aimed at helping organizations move up the maturity curve in their ongoing development of a robust ERM program.

Edited by:

Brad Mescher
Director
Phone: 1-973-236-7261
Email: brad.mescher@us.pwc.com

Saira Gilani
Senior Manager
Phone: 1-973-236-5811
Email: saira.s.gilani@us.pwc.com

Flashline is a weekly alert highlighting current financial-reporting developments (including accounting, auditing and regulatory matters) and is produced by the National Professional Services Group of PwC. This publication has been prepared for general information on matters of interest only, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this material was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PwC, its members, employees and agents shall not be responsible for any loss sustained by any person or entity who relies on this publication.