PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
Dataline: Responses are in on the FASB and IASB's financial instruments classification and measurement proposals
The comment periods for the FASB and IASB’s exposure drafts on financial instruments—classification and measurement ended on May 15, 2013 and March 28, 2013, respectively. Their proposals would broadly converge the accounting for debt investments and financial liabilities, but there are a number of other notable differences, including in the accounting for equity investments.
A majority of respondents to the FASB’s proposal support the goal of reducing complexity in financial instruments accounting, but many believe it will not be achieved under the proposals. Many feel that the cash flow characteristics test inappropriately limits the number of debt investments that will be eligible for amortized cost or fair value through other comprehensive income measurement. While respondents tended to agree with a business model assessment, a majority feel that the restrictions on sales out of the amortized cost category would inappropriately limit companies' ability to manage their credit risk exposures.
The IASB's proposal, comprising limited amendments to its classification and measurement standard, generally received support. A majority of respondents support adding a fair value through other comprehensive income category to the amortized cost and fair value through net income categories for debt investments.
Joint redeliberations will begin in July and are expected to run into the fourth quarter of 2013.
This Dataline provides a summary of the comments received on the boards' respective proposals.
Tax accounting insights: FASB ratifies consensus on netting unrecognized tax benefits
Last week, the FASB ratified the final consensus reached by the Emerging Issues Task Force (EITF) in Issue 13-C, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. We expect the final Accounting Standards Update (ASU) to be issued within the next few weeks.
The new accounting guidance requires the netting of unrecognized tax benefits (UTBs) against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. Under the new guidance, UTBs will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the UTBs. This is a change from prior guidance provided by the FASB staff.
This publication discusses the new accounting guidance, highlights key takeaways to consider when implementing it, and discusses transition.
FASB issues three Private Company Council proposals for public comment
The FASB issued for public comment three Private Company Council (PCC) proposals that address private company stakeholder concerns raised about the relevance and complexity of three aspects of U.S. Generally Accepted Accounting Principles (GAAP). The proposals are contained in the following exposure drafts:
During the exposure period, the FASB staff will research and analyze whether the proposals should be extended to public companies or not-for-profit organizations—which will be discussed with the board at a future meeting.
Comments on the exposure drafts are requested by August 23. Also, see PwC’s In brief article for more information about the proposals.
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 July 10. The topics for the meeting will be announced on the FASB’s website prior to meeting.
Project updates: The FASB has updated the summaries of its projects on:
IASB provides relief for novation of derivatives
The IASB has published narrow-scope amendments to IAS 39, Financial instruments: Recognition and measurement. Similar provisions will be incorporated into the forthcoming chapter on hedge accounting in IFRS 9, Financial instruments. The amendments provide relief from parts of the hedge accounting requirements when a derivative is novated to a central counterparty (CCP), such as a central clearing organization, provided certain conditions are met.
Also, see PwC's In brief article for an overview of the new guidance.
IFRS for SMEs Update — June 2013
The June 2013 edition of the IASB's IFRS for SMEs Update covers, among other things, (1) new guidance to assist micro-sized entities apply the IFRS for SMEs, (2) IFRS Foundation's progress towards global adoption of full IFRSs and the IFRS for SMEs, (3) a status report on IFRS for SMEs translations, and (4) where to obtain IFRS for SMEs materials.
IESBA eNews — June 2013
This issue of IESBA eNews provides a summary of decisions made at the June 10-12 meeting of the IFAC's International Ethics Standards Board for Accountants (IESBA). Some of the topics discussed were:
GASB issues implementation guide for new standard on financial reporting for pension plans
The GASB published an implementation guide titled Guide to Implementation of GASB Statement 67 on Financial Reporting for Pension Plans. The guide is an authoritative resource designed to assist preparers and auditors of state and local government pension plan financial reports as they prepare to implement Statement 67, which is effective for fiscal years beginning after June 15, 2013.
The guide answers key implementation questions on topics such as:
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. It is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. To access additional content on financial reporting issues, register for CFOdirect Network (www.cfodirect.pwc.com), PwC’s online resource for financial executives.