This week's PwC update on financial reporting includes: Accounting for income taxes: Year-end considerations... Setting the standard — What you need to know about the FASB's and IASB's standard setting activities — January 2014... SEC seeks comments on the PCAOB's proposed Dodd-Frank amendments for broker-dealer audit... 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:
Setting the standard: What you need to know about the FASB's and IASB's standard setting activities — January 2014
We've released the latest edition of Setting the standard, our quarterly publication designed to keep you informed about the standard setting activities of the FASB and IASB. This publication provides the most up-to-date information on the joint convergence projects, as well as updates on other current projects of the FASB.
In this edition, we give you the latest on where the boards stand with issuing their highly-anticipated final revenue recognition standards, as well as the progress being made on other joint projects. There’s plenty to explore, as the boards are redeliberating on financial instruments and charting a course ahead for their leases and insurance contracts projects. We also provide the most recent information on the FASB’s own standard-setting agenda, including its projects on discontinued operations, consolidation, repurchase agreements, going concern, and disclosure framework. Plus, we explore the significant strides being made in the area of private company reporting, including the FASB’s issuance of a final standard containing the definition of a “public business entity” as well as the private company decision making framework.
You can read about these projects and more in this edition of Setting the standard.
Accounting for income taxes: Year-end considerations
Calendar year 2013 has seen considerable activity across the global legislative and regulatory landscapes. We have seen changes to tax laws in several key territories, and certain legislative trends having a significant impact on income tax accounting. These developments, combined with an environment of economic uncertainty, have added to the challenges in accounting for income taxes. The following two publications were issued this week to highlight important items that companies should consider this year-end:
Practical tip: An emerging growth company should continually evaluate its status and related implications on its SEC filings
Title I of the JOBS Act created a number of special accommodations for a newly designated group of companies known as "emerging growth companies" (EGCs). This Practical tip highlights the importance of EGCs continuous evaluation and tracking of matters that may cause them to exit their EGC status and the implications of losing that status on their SEC filings.
Practical tip: Determining financial statement presentation for the acquisition of selected parts of an entity
When an SEC registrant acquires a business it is required to assess the significance of the acquired business to determine whether the acquiree's historical financial statements (and associated pro forma financial information) need to be filed with the SEC. A registrant might acquire selected parts of an entity as opposed to the entire operations of an entity. Whether the significant business acquired represents “substantially all” of an entity or “less than substantially all” of an entity will determine the financial statement presentation of the acquired business under Rule 3-05 of Regulation S-X.
This Practical tip explains this guidance and includes examples to help you apply it in practice.
The quarter close - Directors edition
The quarter close — Directors edition is designed to keep directors informed about the latest accounting and financial reporting issues. We create this version specifically for audit committee members and financial experts, basing it upon The quarter close, which is intended primarily for CFOs and Controllers.
The Q4-2013 edition discusses the following items: (1) the upcoming revenue recognition standard, (2) structured payables programs, (3) implications of government tax incentives, (4) retiree health plans, (5) implications of stock repurchases, (6) the PCAOB’s revised proposal on disclosing information about the auditors, (7) SEC rule making, and more.
FASB meetings and project updates
Meeting summary: The FASB met on January 8. The board discussed its project on consolidation—principal versus agent analysis. See the FASB’s website for a summary of the decisions reached.
Next open board meeting: The FASB will meet on January 15. The board plans to discuss its project on reporting discontinued operations. See the FASB’s website for further information on the meeting.
Project updates: The FASB has updated the summary of its projects on:
SEC seeks comments on PCAOB's proposed Dodd-Frank amendments for broker-dealer audits
The SEC is soliciting input regarding the PCAOB's proposed amendments to conform the board's rules and forms to the Dodd-Frank Act and make certain updates and clarifications.
The amendments insert references to audits and auditors of broker-dealers in relevant board rules, and call for broker-dealer audit client information on the board's registration, withdrawal, and reporting forms (PCAOB Forms 1, 1-WD, 2, 3, and 4). The amendments also require that registered firms that audit broker-dealers comply with certain of the board's professional practice standards; update a number of board rules and forms based on the board's experience administering and enforcing PCAOB rules; and make certain updates to the board's ethics and independence requirements.
If approved by the SEC, the amendments will take effect on June 1, 2014.
Comments are due 21 days from publication of the SEC comment notice in the Federal Register.
SEC staff publishes new compliance and disclosure interpretations
The SEC's Division of Corporation Finance (Corp Fin) has released updates to the following Compliance and Disclosure Interpretations (C&DIs) publications:
PCAOB updates standard-setting agenda
The PCAOB issued an updated standard-setting agenda which provides a brief project overview of the board's current standard-setting agenda and outlines key milestones on various standard-setting projects.
IFAC calls for renewed focus on global regulatory convergence to advance sustainable economic recovery
As Australia assumes the presidency of the G-20 for 2014, IFAC has reiterated its call on global policymakers to refocus on regulatory convergence, and said their failure to do so is stifling business confidence, economic stability, and ambitions for a sustainable recovery.
The global financial crisis highlighted the problems created by having “uneven playing fields” for multi-national organizations. Different regulatory arrangements in different jurisdictions allowed these organizations to engage in regulatory arbitrage, but at the same time created unnecessary costs and uncertainty for them and their key stakeholders. These differences limited the type and effectiveness of responses that governments, central banks, and regulators could take to address the problems created by the crisis.
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.