Flashline - Week ending December 6, 2012 (No. 2012-48)
Flashline
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters). This week's topics include:
- Dataline: 2012 year-end accounting and reporting considerations — Leading practices and lessons learned on key topics
- Dataline: Eurozone uncertainties — Financial reporting considerations of a country's exit from the Eurozone
- Reminder: Q4 accounting and reporting developments webcast—December 13
- AICPA holds 40th Annual National Conference on Current SEC and PCAOB Developments
- FASB meetings and project updates
- SEC issues updated compliance and disclosure interpretations re: "Exchange Act Sections"
- PCAOB publishes Practice Alert on maintaining and applying professional skepticism in audits
- PCAOB publishes 2013 budget and 2012-2016 strategic plan
- IASB proposes amendments to clarify acceptable methods of depreciation and amortization
- IFRS Foundation releases updated IFRS Taxonomy for investment entities
- IFRS for SMEs Update — November 2012
- IFAC proposes guidance on project and investment appraisal for sustainable value creation
- List of available speeches from the 40th Annual AICPA National Conference on Current SEC and PCAOB Developments
PwC
Dataline: 2012 year-end accounting and reporting considerations — Leading practices and lessons learned on key topics
This year end, entities continue to face many complex financial reporting issues such as providing new fair value disclosures, accounting for debt modifications, and evaluating revenue recognition guidance. Also, economic challenges around the world continue to have broad financial reporting implications. For example, instability in the Eurozone may affect accounts receivable reserves, investments and goodwill impairment assessments, and the need for a valuation allowance on deferred taxes in certain jurisdictions, or require enhanced disclosures.
Dataline 2012-20 is intended to serve as a timely reminder of leading practices and lessons learned on key issues that companies should consider as they navigate the year-end financial reporting process. The topics were garnered from a variety of sources including Securities and Exchange Commission (SEC) staff comment letters, restatements, and our own observations.
Dataline: Eurozone uncertainties — Financial reporting considerations of a country's exit from the Eurozone
The Eurozone debt crisis continues to persist, leading some to believe that the crisis might result in a country exiting the Euro and adopting a new local currency. Many companies that could be affected by a country's exit from the Euro have started to consider how that might affect their operations, financing, and business strategies. Companies should also consider the financial reporting implications of the creation of a new currency. The actual financial reporting implications of a country's exit from the Euro will depend on how the exit is conducted. Dataline 2012-19 discusses potential financial reporting implications for companies that report under US GAAP.
Reminder: Q4 accounting and reporting developments webcast—December 13
At 1:00 pm ET on Thursday, December 13, we will be hosting our fourth quarter 2012 'Current Accounting and Reporting Developments' webcast. This 90-minute webcast is designed to provide insights and information about key emerging accounting, regulatory, and market developments impacting financial reporting. On the webcast, you’ll hear from a broad range of PwC specialists who will update you on matters that may impact your business. We invite you to pre-register for the webcast through the CFOdirect Network. Participants in the live webcast will be eligible to receive 1.5 CPE credits.
American Institute of Certified Public Accountants (AICPA)
AICPA holds 40th Annual National Conference on Current SEC and PCAOB Developments
On December 3-5, members of various regulators and standard setters spoke at the AICPA's 40th Annual National Conference on Current SEC and PCAOB Developments. Many of the speakers at the AICPA conference have released the text of their speeches or other presentation materials. This week's Flashline includes an Appendix that provides a listing of those speakers, a brief description of the topics each addressed, and links to each one's speech or presentation materials.
Look for a PwC Dataline coming next week that will provide a summary and analysis of the key accounting, auditing, and reporting matters addressed at the conference, including the FASB's views on IFRS and private company reporting, and commentary from various sources on the status of the three joint priority projects of the FASB and IASB: (1) revenue recognition, (2) financial instruments, and (3) leasing.
Financial Accounting Standards Board (FASB)
FASB meetings and project updates
Meeting summary: The FASB did not hold any board meetings this week.
Next open board meeting:
The FASB’s next board meeting will be held on December 12. The FASB will discuss its projects on: (1) accounting for financial instruments: classification and measurement, (2) investment companies, (3) liquidation basis of accounting, and (4) reporting discontinued operations. See the FASB’s website for further information on the meeting.
Project updates: The FASB has updated the following project summaries:
Securities and Exchange Commission (SEC)
SEC issues updated compliance and disclosure interpretations re: "Exchange Act Sections"
The SEC's Division of Corporation Finance (Corp Fin) released an update to its Compliance and Disclosure Interpretations (C&DIs) on Exchange Act Sections. Seven new questions have been added regarding the Iran Threat Reduction and Syria Human Rights Act of 2012, signed into law on August 10, 2012.
Public Company Accounting Oversight Board (PCAOB)
PCAOB publishes Practice Alert on maintaining and applying professional skepticism in audits
The PCAOB published Staff Audit Practice Alert No. 10, Maintaining and Applying Professional Skepticism in Audits to remind auditors of their requirement to exercise professional skepticism throughout their audits. The PCAOB continues to observe instances in which circumstances suggest that some auditors did not appropriately apply professional skepticism in their audits. Accordingly, the Alert focuses on the importance of professional skepticism, the appropriate application of professional skepticism in audits, and certain important considerations for audit firms' quality control systems. The timing of the release of the Alert is intended to assist audit firms' emphasis in upcoming calendar year-end audits on the importance of the appropriate use of professional skepticism.
PCAOB publishes 2013 budget and 2012-2016 strategic plan
The PCAOB has published its 2013 fiscal-year budget and its 2012-2016 strategic plan. The strategic plan for 2012-2016 serves as the foundation for the 2013 budget as required by the SEC’s PCAOB budget rule. The 2013 budget is subject to approval by the SEC.
International Accounting Standards Board (IASB)
IASB proposes amendments to clarify acceptable methods of depreciation and amortization
The IASB has published for public comment an exposure draft of proposed amendments to IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets. IAS 16 and IAS 38 both establish the principle for the basis of depreciation and amortization as being the expected pattern of consumption of the future economic benefits of an asset. The objective of the proposed amendments is to ensure that preparers do not use revenue-based methods to calculate charges for the depreciation or amortization of property, plant and equipment or intangible assets. This is because a revenue-based method reflects a pattern of economic benefits being generated from the asset, rather than the expected pattern of consumption of the future economic benefits embodied in the asset.
Comments are requested by April 2, 2013.
IFRS Foundation releases updated IFRS Taxonomy for investment entities
The IFRS Foundation, the oversight body of the IASB, published the International Financial Reporting Standards (IFRS) Taxonomy 2012 interim release for investment entities. IFRS Taxonomy interim releases contain additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs published by the IASB, thereby allowing entities wishing to report electronically using the latest IFRSs to do so without the need for these entities to create their own taxonomy concepts.
IFRS for SMEs Update — November 2012
The IASB's IFRS for SMEs Update is a staff summary of news relating to the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). The November 2012 issue covers, among other things, (1) staggering the terms of the members of the SMEIG and (2) a status report on IFRS for SMEs translations.
International Federation of Accountants (IFAC)
IFAC proposes guidance on project and investment appraisal for sustainable value creation
IFAC's Professional Accountants in Business (PAIB) Committee released for comment proposed International Good Practice Guidance (IGPG), Project and Investment Appraisal for Sustainable Value Creation. This principles-based guidance is intended to help the accountancy profession to facilitate sustainable organizations, financial markets, and economies by taking into account economic, environmental, and social considerations for project appraisal and investment decisions.
Comments on the exposure draft are requested by February 28, 2013.
Appendix
List of available speeches from the 40th Annual AICPA National Conference on Current SEC and PCAOB Developments
Many of the speakers at the AICPA conference have released the text of their speeches or other presentation materials. Below is a listing of those speakers along with a brief description of the topics they addressed. Click on each speaker's name and you will be taken to his or her speech or presentation materials.
- AICPA Chairman Richard Caturano
Welcomes conference participants and discusses the forward-looking nature of the CPA profession and its ability to embrace the many changes ahead, including economic, financial reporting and auditing, and regulatory changes. Also, discusses some of the AICPA’s recent and upcoming initiatives, as well as the need to attract and retain top talent within the profession.
- CAQ Executive Director Cindy Fornelli
Discusses the CAQ’s policy efforts on behalf of the public company auditing profession in 2012 and its agenda for 2013.
- FASB Chairman Leslie Seidman
Provides some key messages on accomplishments by the FASB and future considerations related to IFRS. Also, notes the FASB’s extensive outreach efforts and consideration of cost-benefit analyses throughout its accounting standards development.
- IASB Chairman Hans Hoogervorst
Reports on the continued progress of IFRS around the world and discusses the United States’ influence on IFRS and on the current convergence projects.
- PCAOB Chairman James Doty
Highlights the PCAOB’s strategic plan for the coming year, which includes continued outreach to audit committees, tracking measures of audit quality, inspections, and standard setting.
- PCAOB Chief Auditor Martin Baumann
Discusses the Auditing Standard No. 16, Communications with Audit Committees, professional skepticism, and the PCAOB's standard-setting projects on the auditor's reporting model and going concern.
- SEC Acting Chief Accountant Paul Beswick
Comments on the three FASB projects addressing disclosures in the financial statements — (1) liquidity and interest rate disclosures, (2) going concern, and (3) disclosure framework — noting intentions for a roundtable in the coming months to discuss whether these disclosures issues should be further explored. Also cautions against being "first to press" with non-authoritative implementation guidance that may impact development with respect to the convergence projects.
- SEC Commissioner Luis A. Aguilar
Discusses capital formation and the important role the accounting profession plays therein. Also, notes the 10-year anniversary of Sarbanes-Oxley and the importance of internal controls, regardless of whether or not a company is exempt from auditor attestation requirements.
- SEC Deputy Chief Accountant Brian Croteau
Discusses the six near-term priorities included in the PCAOB’s 2012-2016 strategic plan and highlights observations on disclosures about the use of third-party pricing services.
- SEC Deputy Chief Accountant Julie A. Erhardt
Summarizes global concerns and considerations for incorporating IFRS into a country’s national accounting standards, including “domestic upgrade”, foreign investment, and foreign access.
- SEC Senior Associate Chief Accountant Jenifer Minke-Girard
Summarizes the IFRS Work Plan, including the six key areas of the plan, and discusses the overall findings and observations in the SEC staff’s final report on the IFRS Work Plan.
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.