PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
Dataline: FASB and IASB exposure drafts on insurance contracts may impact fixed-fee service contracts
The FASB and IASB’s exposure drafts (ED) on accounting for insurance contracts, issued in June, describe proposals that may fundamentally change the accounting by non-insurers that sell fixed-fee service contracts.
The proposals would apply to contracts rather than entities. Based on how “insurance contracts” would be defined, contracts entered into by many non-insurers would be in the scope of the proposals. The proposals would require the use of a “current value” discounted cash flow measurement for insurance contract liabilities. Any excess of expected premiums over expected claims and expenses would be deferred as “margin” and amortized into income over future periods. Expected losses would be recognized immediately.
Given the significance of the proposals, non-insurers should assess their fixed-fee service contracts to determine if they would be in scope. If an entity has contracts within the scope of the proposals, it could have a significant impact on its financial results, systems, and investor reporting. Comments on the proposals are due October 25.
Our Dataline highlights the impact these proposals may have on fixed-fee service contracts.
2013 Corporate Directors Survey results: IT, communications, and executive comp
Last week we highlighted the first release in a series on the results of our 2013 Annual Corporate Directors Survey. That release focused on board composition and behavior.
This week we continued the series with releases that provide an inside look at information technology, stakeholder communications, and executive compensation. Conducted in the summer of 2013, 934 public company directors responded to the survey. Of those, 70% serve on the boards of companies with more than $1 billion in annual revenue.
For more information or to download all of the releases in the series, please visit the CFOdirect Network.
Coming next week…we’ll wrap up the series by releasing our findings on strategy, risk management, and the regulatory and governance environment. We’ll also launch the complete 2013 survey results.
Reminder: Conflict minerals webcast—September 17
We invite you to join us at 1:00 pm ET on Tuesday, September 17, for our webcast “Conflict minerals–Looking ahead to the first deadline.” During the one hour webcast, we will share our perspectives on:
You can pre-register for the webcast through the CFOdirect Network. Participants will be eligible to receive 1.0 CPE credits.
IFRS news—September 2013
This issue of IFRS news looks at (1) the IFRS Foundation’s report on global adoption of IFRS, (2) IASB and FASB deliberations in response to comments received on their proposed changes to financial instruments accounting, (3) recent progress on the IASB and FASB’s revenue project, (4) topics covered at the first meeting of the rate regulation consultative group, (5) recent activities under the IASB’s post-implementation review program, and (6) the IASB’s upcoming conceptual framework roundtables. Also, Hector Cabrera from PwC Accounting Consulting Services’ Central team discusses income statement presentation.
FASB to issue exposure draft on development stage entities
On September 11, the FASB voted to issue an exposure draft intended to improve financial reporting about public and private development stage entities. The board expects to issue the exposure draft by the end of October.
Based on the recommendation of the Private Company Council (PCC) at its July 16, 2013 meeting, the FASB added a project to its technical agenda to address financial reporting cost and complexity for all organizations in the development stage. A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which (1) planned principal operations have not commenced or (2) planned principal operations have commenced, but have produced no significant revenue.
FASB extends comment period on proposed ASU re: consolidated collateralized financing entities
At its September 11 meeting, the FASB decided to extend the public comment period on proposed FASB Accounting Standards Update (ASU), Consolidation (Topic 810): Measuring the Financial Liabilities of a Consolidated Collateralized Financing Entity, to October 17, 2013. The board decided to extend the comment period for an additional month in response to feedback that the original 60-day comment period may be insufficient for constituents to adequately analyze the proposal’s conceptual and operational implications.
FASB meetings and project updates
Meeting summary: As highlighted above, at the FASB’s September 11 meeting it (1) voted to issue an exposure draft on development stage entities and (2) decided to extend the comment deadline of the proposed ASU on consolidated collateralized financing entities. The board also discussed its project on consolidation—policy and procedures. See the FASB’s website for a summary of the decisions reached at the meeting.
Next open board meetings: The following meetings are scheduled for next week:
See the FASB’s website for more information on the meetings.
Leases roundtable: On September 16, the FASB and IASB will host the next in their series of public roundtable meetings on their revised joint proposals on leases that were published in May 2013. This roundtable is being held in London. See the FASB’s website for more information this and other upcoming leases roundtables.
Project update: The FASB has updated the summary of its project on not-for-profit financial reporting: financial statements.
IFRS Foundation proposes interim release of 2013 IFRS Taxonomy
The IFRS Foundation released for public comment an exposure draft of the Interim Release Package for the IFRS Taxonomy 2013. The IFRS taxonomy is a translation of International Financial Reporting Standards (IFRSs) into eXtensible Business Reporting Language (XBRL). The interim release package is an update to the 2013 Taxonomy annual release and includes various structural updates and improvements, such as amendments to reflect the IAS 36 narrow-scope amendments issued on May 29 of this year. Comments on the exposure draft are requested by November 11, 2013.
SEC will not appeal resource extraction payments ruling; plans to issue revised proposal
The SEC said last week it will not appeal a US District Court's decision to vacate its resource extraction payments rule, which would have required resource extraction issuers to disclose payments made to US and foreign governments. Instead, the SEC plans to rewrite the rule to address the judge's findings in the case. The SEC did not provide a timetable for its revised proposal.
SEC issues small entity compliance guide on recently amended broker-dealer rules
The SEC has published a small entity compliance guide that summarizes and explains the SEC's rules that amend certain broker-dealer reporting, audit, and notification requirements. The new rules are intended to provide additional safeguards, strengthen audit requirements, and enhance oversight in the way broker-dealers maintain custody of their customers’ assets.
Broker-dealers are required to begin filing new quarterly reports with the SEC and annual reports with the Securities Investor Protection Corporation (SIPC) by the end of 2013. The requirement for broker-dealers to file annual reports with the SEC is effective June 1, 2014.
ASEC releases white paper on independent, third-party assurance services
The AICPA’s Assurance Services Executive Committee (ASEC) developed a new white paper, Assurance Services: A White Paper for Providers and Users of Business Information, to help educate providers and users of business information on the value and essential qualities of independent, third-party assurance services to increase confidence in reported information.
PEEC proposes change to definition of "those charged with governance"
The AICPA’s Professional Ethics Executive Committee (PEEC) has issued an exposure draft proposing a new definition of those charged with governance in the AICPA’s Code of Professional Conduct. The objective of the change is to more closely align the definition with the Auditing Standards Board (ASB), International Standard on Auditing (ISAs), and International Ethics Standards Board for Accountants (IESBA) definitions and related guidance. Comments on the exposure draft are requested by November 10, 2013.
PAIB eNews—September 2013
This issue of IFAC's PAIB Committee eNews highlights the following:
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, visit CFOdirect Network (www.cfodirect.pwc.com), PwC’s online resource for financial executives.