This week's PwC update on financial reporting includes: FASB votes to move forward with final standard on revenue recognition... PCAOB announces 'Center for Economic Analysis' ... PwC comments on ASB's attestation clarification and recodification proposal... and more.
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
FASB votes to move forward with final standard on revenue recognition
On November 6, the FASB voted to move forward with preparing a final standard on revenue recognition. The vote authorizes the FASB staff to prepare and issue a ballot draft of the standard. The ballot draft will be submitted to the FASB for final approval. The IASB will hold its vote to confirm balloting of the standard later this month.
The FASB’s decision follows the completion last week of the technical discussion of the joint project by the FASB and the IASB. At last week’s joint board meeting, the boards wrapped up their deliberations by reaching decisions on the constraint on recognizing revenue from variable consideration, accounting for licenses, and collectibility. See PwC’s In brief article for an overview of those decisions.
The final revenue standard is expected to be issued during the first quarter of 2014. It is expected to take effect for public companies in 2017, and for private companies in 2018.
FASB issues exposure draft on development stage entities
The FASB issued an exposure draft, based on the recommendation of the Private Company Council (PCC), intended to improve financial reporting about public and private development stage entities. A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which either (1) planned principal operations have not commenced or (2) planned principal operations have commenced, but have produced no significant revenue.
The exposure draft proposes to eliminate the distinction of being a development stage entity—as well as its related disclosure requirements for inception to date information about income statement line items, cash flows, and equity transactions. It aims to address concerns about the cost and relevance of the additional presentation requirements specific to development stage entities.
Comments on the exposure draft are requested by December 23, 2013.
FASB meetings and project updates
Meeting summaries: The FASB met on November 6 to discuss its projects on (1) revenue recognition (see above), (2) going concern, and (3) disclosure framework. See the FASB’s website for a summary of the decisions reached at the meeting.
Next open board meeting: The FASB will meet on November 13 to discuss its projects on (1) discontinued operations and (2) technical corrections and improvements.
In addition, the Private Company Council (PCC) and FASB members will meet on November 12. And the FASB’s Emerging Issues Task Force (EITF) will meet on November 14 (see EITF meeting materials below).
See the FASB’s website for more information on these meetings.
Project updates: The FASB has updated the summaries of its projects on:
Materials for the November 14 EITF meeting
The FASB staff has published the following materials for the November 14 EITF meeting:
To obtain all of the materials for the EITF meeting, visit the FASB’s website.
IASB Update — October 2013
This issue of IASB Update, issued by the IASB staff, provides a summary of the IASB’s October 28-November 1 meetings. The FASB joined the IASB in a joint session to discuss their projects on revenue recognition (also see PwC’s In brief article for an overview of those discussions).
Some of the topics discussed at the IASB-only sessions included: (1) redeliberation of three proposed amendments related to joint arrangements, (2) accounting for macro hedging, (3) financial instruments: impairment, and (4) rate regulated activities.
IFRS for SMEs Update — October 2013
The October edition of the IASB's IFRS for SMEs Update highlights various items such as: (1) the proposed limited amendments to the IFRS for SMEs, (2) the status of IFRS for SMEs translations, and (3) where to obtain IFRS for SMEs materials.
PwC comments on ASB's attestation clarification and recodification proposal
We submitted a comment letter expressing general support for the Auditing Standards Board’s (ASB) proposed Statement on Standards for Attestation Engagements, Attestation Standards: Clarification and Recodification (the proposed SSAE). The proposed SSAE is an output of phase one of a project to redraft the attestation standards. The proposal restructures the standards into a framework consisting of guidance common to all attestation engagements. It then layers on the requirements and guidance specific to each of the three types of attestation services: examinations, reviews, and agreed-upon procedures. Phase two of the project will address subject-matter specific engagements.
We believe the new structure may initially pose navigational challenges to practitioners since a practitioner performing an examination of prospective financial statements, for example, will need to consult three “chapters,” as they are called in the proposed SSAE: common concepts, examinations and financial forecasts, and projections. As a result, we would not object to eliminating the concepts common to all attestation engagements chapter and repeating its content in the chapters for examinations, reviews, and agreed-upon procedures.
We support the significant enhancements in the proposed SSAE, particularly for examinations and reviews, with relevant content from the clarified auditing standards, but also provide comments to improve the consistency and clarity of the guidance.
PCAOB announces 'Center for Economic Analysis'
The PCAOB announced that it is establishing a Center for Economic Analysis to study the role and relevance of the audit in capital formation and investor protection. The Center will advise the PCAOB on how economic theory, analysis, and tools can be better used to enhance the effectiveness of PCAOB program areas, including standard setting, inspections and other oversight activities.
CAQ issues highlights of September 25 meeting of SEC Regulations Committee
The AICPA’s Center for Audit Quality (CAQ) SEC Regulations Committee meets periodically with the staff of the SEC to discuss emerging financial reporting issues relating to SEC rules and regulations. Highlights of the September 25 meeting are now available.
Numerous financial reporting matters were discussed during the meeting. Some examples of the topics covered are:
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.