PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters). This week's topics include:
Dataline: Accounting and disclosure implications of Hurricane Sandy
On October 29, 2012 Hurricane Sandy, one of the largest Atlantic hurricanes on record, came ashore in the United States. When the storm made landfall, it was no longer categorized as a hurricane (it was categorized as a post-tropical cyclone). Hurricane Sandy caused wide-spread flooding and wind damage across the mid-Atlantic, including lower Manhattan. This resulted in prolonged power outages, disruption of public transportation, and gasoline shortages from Virginia to New Hampshire. The most severe damage and disruption occurred in New York and New Jersey.
Hurricane Sandy is expected to be the second-costliest Atlantic hurricane in history, only surpassed by Hurricane Katrina in 2005. Many businesses were disrupted by Hurricane Sandy and its aftermath including the New York Stock Exchange, which was closed for two days.
In brief: FASB plans to propose amendments to repurchase agreement accounting model before year-end
At its November 7 meeting, the FASB (the “board”) discussed the effect on financial reporting complexity of the decisions reached in its project on accounting for repurchase agreements ("repos"). The board confirmed its previous decisions on the project and indicated it will issue an exposure draft for public comment later this quarter. The comment letter period will end on March 29, 2013.
The board also made decisions at this meeting about transition, early adoption, and transition disclosures. This In brief article provides an overview of those decisions.
Webcast: Revenue recognition exposure draft update – November 29
The FASB and IASB (the "boards") issued a revised exposure draft for their joint revenue recognition proposal in November 2011. The boards have been re-deliberating the project since July 2012 and have made several tentative decisions on the comments received from constituents on the exposure draft.
We invite you to join us on Thursday, November 29, from 1:30 pm to 3:00 pm ET for a webcast when we will discuss key topics re-deliberated and related business impacts. You can register for the webcast through the CFOdirect Network.
Webcast: Q4 Current accounting and reporting developments webcast — December 13
Hosted by PwC's National Professional Services Group, our quarterly webcasts are designed to keep you informed about emerging accounting, regulatory, and market developments impacting financial reporting. Please join us on Thursday, December 13 at 1:00 pm ET for this 90 minute webcast featuring insights from a broad range of PwC specialists who will update you on current technical topics and emerging issues that may impact your business. You can register for the webcast through the CFOdirect Network.
FASB meetings and project updates
Meeting summary: The FASB met on November 14 and discussed its projects on (1) presentation of comprehensive income: reclassification out of accumulated other comprehensive income, (2) technical corrections (next phase), and (3) insurance contracts. See the FASB’s website for a summary of the decisions reached at the meeting.
Next open board meeting: The FASB has the following meetings scheduled for next week:
See the FASB’s website for more information on the meetings.
Project updates: The FASB has updated the following project summaries:
SEC provides regulatory relief for entities impacted by Hurricane Sandy
To address compliance issues arising from Hurricane Sandy and its aftermath, the SEC issued an order that provides regulatory relief to publicly traded companies. The order extends to November 21 the filing deadline for reports of public companies affected by the hurricane that were due between October 29 and November 20, provided that the filer discloses the reason(s) why it cannot file on a timely basis. The SEC also directed its staff to take the position that a company’s form eligibility would not be affected by the extension.
In addition to relief for public companies, the order provides regulatory relief for investment companies, accountants, transfer agents, and others affected by Hurricane Sandy.
SEC issues compliance guides on conflict minerals and resource extraction disclosure rules
The SEC has published the following small entity compliance guides:
FinREC issues working draft of new chapter of AICPA guide: Testing Goodwill for Impairment
The AICPA's Financial Reporting Executive Committee (FinREC) has issued a working draft of a new chapter of the AICPA Accounting and Valuation Guide: Testing Goodwill for Impairment. The new chapter discusses and illustrates how to perform the optional qualitative assessment to determine whether it is necessary to perform the two-step goodwill impairment test as described in the goodwill guidance (FASB ASC 350-20).
The new chapter was developed in response to feedback received on a prior working draft released in November 2011. Informal feedback on the new chapter is requested by December 31, 2012
COSO extends comment period on internal control compendium to December 4
COSO has extended the public comment period from November 20 to December 4, 2012, on its Internal Control over External Financial Reporting: Compendium of Approaches and Examples (the Compendium). The Compendium is part of COSO’s overall project to update its Internal Control–Integrated Framework and was developed to assist users when applying the updated framework to external financial reporting objectives.
COSO decided to extend the comment period to allow interested parties affected by Hurricane Sandy more time to provide comments on the proposed documents.
IAASB issues proposal to enhance auditor responsibilities for disclosures beyond the financial statements
IFAC’s International Auditing and Assurance Standards Board (IAASB) has published for public comment an exposure draft titled International Standard on Auditing (ISA) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon. The proposed standard clarifies and enhances the scope and focus of auditor efforts on “other information” – that is, information included in documents containing or accompanying an entity’s audited financial statements.
Under the proposed standard, the auditor is required to read and consider the other information in light of the understanding of the entity and its environment the auditor has acquired during the course of the audit. The auditor is required to respond appropriately when the auditor identifies a potential material inconsistency in the other information or a material misstatement in the audited financial statements
Comments on the exposure draft are requested by March 14, 2013.
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.