Flashline - Week ending September 19, 2013 (No. 2013-38)

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Flashline 09/20/2013 by Assurance services
Flashline - Week ending September 19, 2013 (No. 2013-38)

At a glance

This week's PwC update on financial reporting includes: The quarter close: A look at this quarter’s financial reporting issues — Q3 2013... Regulatory and standard setting developments — September 2013... PwC comments on FASB and IASB lease proposal... FASB meetings and project updates... and more.

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

This week's topics include:

  • The quarter close: A look at this quarter’s financial reporting issues — Q3 2013
  • Point of view: The future of US standard-setting — The road ahead
  • EITF observer — September 2013
  • Regulatory and standard setting developments — September 2013
  • 2013 Corporate Directors Survey — Complete results now available
  • PwC comments on FASB and IASB lease proposal
  • PwC comments on FASB's going concern proposal
  • Reminder: Q3-2013 Current Accounting and Reporting Developments webcast — September 23rd
  • Save the date: Leases webcast — October 9
  • FASAC issues results of 2013 FASB Stakeholder Survey
  • FASB meetings and project updates
  • SEC proposes rule for CEO pay ratio disclosure
  • AICPA issues guidance on performing agreed-upon procedures engagements on XBRL-formatted information
  • CAQ publishes highlights of May 2013 International Practices Task Force joint meeting with SEC staff
  • PEEC adopts revisions to nonattest services
  • IFRS Foundation and IOSCO agree on protocols to enhance consistency in the implementation of IFRS globally
  • IFRIC Update—September 2013

PwC

The quarter close: A look at this quarter’s financial reporting issues — Q3 2013

This edition of The quarter close and related video perspectives highlight current developments in financial reporting that will be keeping companies busy into the next quarter. Here’s a preview of what you need to know now, and what’s in store through the end of the year:

  • Private company developments could have public company implications
  • A focus on the statement of cash flows
  • Accounting for common control transactions
  • Contingencies—getting the fundamentals right
  • FASB's proposal on insurance contracts could affect more than just insurers
  • EITF's latest decisions
  • And more

Point of view: The future of US standard-setting — The road ahead

As the era of joint standard-setting with the IASB comes to a close, this Point of view sets out why the FASB should continue to focus on improving the quality of US GAAP in key areas while preventing further divergence between US GAAP and IFRS when feasible. We encourage the FASB to prioritize topics where simplification is needed and where the current guidance no longer provides decision useful information that meets the evolving needs of stakeholders.

The FASB should also continue to play a central role in providing implementation guidance on the converged standards (revenue recognition, leasing, and financial instruments). This will help to ensure that implementation of those standards results in quality financial reporting and that a high degree of global comparability is maintained.

The creation of the Private Company Council is an important development for preparers and users of private company financial statements. We encourage the FASB to view the Council’s decision-making process as an opportunity to improve the quality and efficiency of financial reporting for all companies, whether public or private.

EITF observer — September 2013

At its September 13 meeting, the FASB’s Emerging Issues Task Force (EITF) reached consensuses-for-exposure on two issues affecting certain stock-based awards with performance targets and certain hybrid financial instruments. Discussions also continued on an issue affecting investments in qualified affordable housing projects. The consensuses-for-exposure must first be ratified by the FASB at its October 2 meeting before being exposed for public comment.

This edition of EITF observer provides a synopsis of the discussions and decisions reached at the September 13 EITF meeting.

Regulatory and standard setting developments — September 2013

This issue of Regulatory and standard-setting developments provides a high-level summary of activities of the FASB, PCAOB, SEC, and others that may be of interest to audit committees, companies, and their stakeholders. It includes some of the relevant regulations, standards, and guidance that were recently issued or are on the horizon, both inside and outside of the US.

2013 Corporate Directors Survey—Complete results now available

This week we wrap up our series covering the results of our 2013 Annual Corporate Directors Survey. The last installment in the series focuses on strategy, risk management, and the regulatory and governance environment. In addition, we’ve published the complete 2013 survey results.

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.

To download all of the releases in the series and obtain the complete survey results, please visit the CFOdirect Network.

PwC comments on FASB and IASB lease proposal

The PwC global network of firms submitted a comment letter on the FASB and IASB’s lease proposal. The PwC network supports the proposal’s core principle that an entity should recognize assets and liabilities arising from a lease. We also agree with the boards' conclusion that the economic characteristics of leases take a variety of forms, and, therefore, different types of leases should be treated differently.

However, the PwC network does not support the boards’ proposal to classify leases based on a principle of consumption and the associated “property” and “other than property” lease categories. Rather, we propose incorporating IAS 17’s classification criteria for financing and operating leases into the standard, instead of the consumption principle. We also raise a number of other matters in our letter for the boards’ consideration, including where the concepts in the exposure draft could be more clearly articulated, where their current proposal might be challenging to apply, and where the guidance may not appear to produce benefits that compensate for their expected costs.

PwC comments on FASB's going concern proposal

In our comment letter on the FASB's proposed Accounting Standards Update, Presentation of Financial Statements (Topic 205): Disclosures of Uncertainties about an Entity's Going Concern Presumption, we express support of the board's efforts to add guidance to US GAAP to provide consistency in determining when and how management should assess going concern uncertainties and when to make related disclosures. We also provide some specific recommendations for the board to consider related to the proposal’s disclosure threshold, applicability to private entities, and alignment with auditing standards.

Reminder: Q3-2013 Current Accounting and Reporting Developments webcast — September 23rd

Please plan to attend our third quarter 2013 'Current Accounting and Reporting Developments' webcast at 1:00 pm ET on Monday, September 23. This 90-minute webcast will 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. The webcast will provide 1.5 CPE credits to participants.

We invite you to pre-register for the webcast through the CFOdirect Network.

Save the date: Leases webcast — October 9

We invite you to attend our leases webcast ‘Consensus remains elusive. What now?’ The webcast will analyze the comment letter responses to the FASB and IASB's revised exposure draft on leases. The webcast is being held on Wednesday, October 9 from 11:00 to 12:00 pm (ET). Webcast participants can qualify to receive 1.0 CPE credit.

You can pre-register for the webcast through the CFOdirect Network.

Financial Accounting Standards Board (FASB)

FASAC issues results of 2013 FASB Stakeholder Survey

The Financial Accounting Standards Advisory Council (FASAC), the FASB's primary advisory group, released the results of its recent survey of stakeholder views about the FASB’s future agenda. The survey provided FASB stakeholders with the opportunity to share their views on projects and areas that they believe are the most important for the FASB to address in the future. The top 5 projects and areas were as follows:

  • Disclosure framework
  • Accounting for financial instruments: hedging
  • Conceptual framework
  • Financial instruments with characteristics of equity
  • Pensions (tied for 5th)
  • Financial statement presentation (tied for 5th)

FASB meetings and project updates

Meeting summary: The FASB and IASB held joint board meetings on September 17-18. The boards discussed their projects on accounting for financial instruments (impairment, classification, and measurement) and revenue recognition. See the FASB’s website for a summary of the decisions reached at the meetings.

Next open board meeting: There are no board meetings planned for the week of September 23. The next board meeting is scheduled for October 2. The topics for this meeting will be announced next week.

Leases roundtable: On September 23, 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 Norwalk, Connecticut. See the FASB’s website for more information on this and other upcoming leases roundtables.

Project updates: The FASB has updated the summaries of its projects on:

Securities and Exchange Commission (SEC)

SEC proposes rule for CEO pay ratio disclosure

On September 18, the SEC voted 3 to 2 to propose a rule that would require public companies to calculate and disclose their CEO’s compensation as a multiple of the median pay of their employees.

The proposed rule was mandated under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which directed the SEC to amend Regulation S-K Item 402 (S-K 402) to require public companies to disclose (a) the median of the annual total compensation of all employees of the company (excluding the CEO), (b) the annual total compensation of the CEO, and (c) the ratio of these two amounts.

Our In brief article provides an overview of the key provisions of the proposed rule.

American Institute of Certified Public Accountants (AICPA)

AICPA issues guidance on performing agreed-upon procedures engagements on XBRL-formatted information

The AICPA issued Statement of Position (SOP) 13-2, Performing Agreed-Upon Procedures Engagements That Address the Completeness, Mapping, Consistency, or Structure of XBRL-Formatted Information. The SOP was developed by the AICPA XBRL Assurance Task Force to provide guidance for engagements in which a practitioner performs and reports on agreed-upon procedures related to the XBRL files. It is based on the application guidance of the principles and criteria in the exhibit of Principles and Criteria for XBRL-Formatted Information for issuers submitting exhibits to the SEC containing XBRL files. The new SOP supersedes SOP 09-1, Performing Agreed-Upon Procedures Engagements That Address the Completeness, Accuracy, or Consistency of XBRL-Tagged Data.

CAQ publishes highlights of May 2013 International Practices Task Force joint meeting with SEC staff

The AICPA Center for Audit Quality (CAQ) has published the highlights from the May 21, 2013, International Practices Task Force (IPTF) joint meeting with the SEC staff. Topics discussed at the meeting included:

  • Adoption of IFRS 11, Joint Arrangements, and application of Regulation S-X, Rule 3-09
  • Monitoring inflation in certain countries
  • Acceptability of absence of retrospectively restated audited annual financial statements for multijurisdictional disclosure system (MJDS) filers
  • Staff observations regarding the use of IFRS XBRL Taxonomy by Foreign Private Issuers
  • Staff observations regarding Argentina’s official exchange rate (which is significantly more favorable than a parallel market rate)

PEEC adopts revisions to nonattest services

The AICPA’s Professional Ethics Executive Committee (PEEC) adopted revisions to Interpretation No. 101-3, Nonattest Services, under Rule 101, Independence, of the AICPA Code of Professional Conduct. A new provision has been added to Interpretation 101-3 indicating that providing multiple nonattest services to an attest client could increase the significance of the threats to a member’s independence, despite the fact that, individually, the nonattest services would not impair independence under Interpretation 101-3. The new provision is effective for engagements covering periods beginning on or after December 15, 2014.

IFRS Foundation and International Organization of Securities Commissions (IOSCO)

IFRS Foundation and IOSCO agree on protocols to enhance consistency in the implementation of IFRS globally

The International Organization of Securities Commissions (IOSCO) and the IFRS Foundation have agreed on a set of protocols under which the two organizations will deepen their cooperation in support of their shared commitment to high standards of financial reporting.

IFRS Interpretations Committee

IFRIC Update — September 2013

The September 2013 edition of IFRIC Update provides a summary of the IFRS Interpretations Committee's September 10-11 meeting. The meeting included discussions of the Committee's current agenda item on IAS 19, Employee Benefits, specifically focused on employee benefit plans with a guaranteed return on contributions or notional contributions. Also covered were agenda decisions, issues considered for annual improvements, and discussion of other work in progress.

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. 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.