Flashline - Week ending March 13, 2014 (No. 2014-11)

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Flashline 03/13/2014 by Assurance services
Flashline - Week ending March 13, 2014 (No. 2014-11)

At a glance

This week's PwC update on financial reporting developments includes: Reminder: Q1 2014 Current Accounting and Reporting Developments webcast — Tuesday, March 18 ... Dataline: Goodwill accounting alternative — FASB and PCC issue final standard for private companies ... IFRS in the US: The importance of being financially bilingual... and more

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

This week's topics include:

  • Reminder: Q1 2014 Current Accounting and Reporting Developments webcast — Tuesday, March 18
  • Dataline: Goodwill accounting alternative — FASB and PCC issue final standard for private companies
  • SEC comment letter trends: Pensions and other postretirement benefits
  • IFRS in the US: The importance of being financially bilingual
  • IFRS news—March 2014
  • FASB responds to post-implementation review of FAS 157 on fair value measurement
  • FASB meetings and project updates
  • IAASB meeting highlights and decisions — December 2013

PwC

Reminder: Q1 2014 Current Accounting and Reporting Developments webcast — Tuesday, March 18

Our first quarter 2014 'Current Accounting and Reporting Developments' webcast will begin at 1:00 p.m. ET on Tuesday, March 18. This 90-minute webcast provides insights and information about key emerging accounting, regulatory, and market developments impacting financial reporting. The webcast will provide 1.5 CPE credits to participants.

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

Dataline: Goodwill accounting alternative — FASB and PCC issue final standard for private companies

The FASB recently issued ASU No. 2014-02, Accounting for Goodwill. For private companies, the new standard represents a fundamental overhaul of the existing accounting model for goodwill. A private company that elects to adopt the alternative will be able to both amortize goodwill and apply a simplified goodwill impairment test. Adoption of the standard is optional, so a private company can continue to apply the existing goodwill accounting model.

Before adopting the alternative, an eligible private company should carefully weigh both the impact of applying the standard on its key financial metrics, and the potential cost of unwinding the accounting and reapplying the existing goodwill accounting standard if its reporting requirements change because it no longer meets the definition of a private company.

The standard is effective for annual periods beginning after December 15, 2014 and interim periods within annual periods beginning after December 15, 2015. Early adoption is permitted.

The appendix to this Dataline discusses the private company goodwill accounting alternative. It serves as an insert to Chapter 11, "Accounting for Goodwill Postacquisition – U.S. GAAP", in our 2013 Global Guide to Accounting for Business Combinations and Noncontrolling Interests.

SEC comment letter trends: Pensions and other postretirement benefits

A continuing key theme emphasized by the staff of the Securities and Exchange Commission (“SEC staff”) is the importance of providing information to investors that is reliable, useful and transparent, particularly in areas of significant judgment. In our 2013 SEC comment letter trends:Pensions and other postretirement benefits publication, we have highlighted the more prevalent issues commented on by the SEC staff (from January 1, 2013 to September 15, 2013) and provided relevant examples of recent comments to aid preparers in ensuring their disclosures are robust and consistent with the accounting, valuation, and reporting guidance for pensions and OPEB.

Highlights of findings regarding these comment letters include the following:

  • 90% of the comments received related to 10-K and 10-K/A filings
  • When evaluated by section of the filing, 61% of the total number of comments received related to Management’s Discussion & Analysis of Financial Condition and Results of Operations (MD&A)
  • When evaluated by topical area, 37% of the comments received related to assumptions, 21% related to non-GAAP financial measures/adjustments, and 12% related to liquidity and cash flows, with the remainder across a variety of topics
  • When evaluated by industry, 57% of the comments received related to companies in the industrial products industry and 13% related to the retail industry, with the remainder across a variety of sectors

IFRS in the US: The importance of being financially bilingual

Continued global adoption affects US businesses, as additional countries permit or require IFRS for statutory reporting purposes and public filings. IFRS requirements elsewhere in the world also impact US companies through cross-border, merger and acquisition (M&A) activity, IFRS’ influence on US GAAP, and the IFRS reporting demands of non-US stakeholders. Therefore, while US public companies will not be required to adopt IFRS in the foreseeable future, our publication discusses why it’s increasingly important for a US capital market participant to be financially bilingual.

IFRS news—March 2014

This issue of IFRS news looks at (1) financial performance: change on the horizon, (2)  IFRS 3 – relevance versus complexity, (3) non-viability instruments, (4) insurance project, (5) IFRS 9 effective date, (6) new revenue standard delayed, (7) IFRS workplan, and (8) Q&As: non-controlling interests.

Financial Accounting Standards Board (FASB)

FASB responds to post-implementation review of FAS 157 on fair value measurement

The FASB responded to the Financial Accounting Foundation’s post-implementation review (PIR) report on FAS 157, Fair Value Measurement. Overall, the PIR concluded that Statement 157 met its objectives, including providing a single definition of fair value, establishing a framework for measuring fair value, expanding disclosures about fair value measurement, and simplifying and codifying fair value measurement guidance in a way that is understandable and decision-useful to the majority of users. As such, the FASB sees no need to undertake a comprehensive review of Statement 157.

However, the FASB acknowledges feedback summarized in the PIR Report that indicates some stakeholders find certain aspects of Statement 157 to be challenging. In considering this feedback, the FASB plans to conduct research and outreach with stakeholders in connection with in-process projects and initiatives, such as the disclosure framework project, the simplification initiative research project, the research project on accounting issues in employee benefit plan financial statements, and the ongoing involvement of the Private Company Council (PCC) and Not-for-Profit Advisory Committee (NAC).

FASB meetings and project updates

Meeting summary: The FASB met on March 12 and discussed its projects on (1) accounting for financial instruments—classification and measurement, (2) accounting for financial instruments—impairment, (3) consolidation—principle versus agent analysis, (4) transfers and servicing—repurchase agreements and similar transactions, and (5) financial statements of not-for-profit entities . See the FASB’s website for the board’s meeting summary.

Next open board meetings: The following meetings will be held next week:

  • March 18: Joint FASB/IASB meeting: The boards will discuss their projects on: (1) leases, and (2) insurance contracts.
  • March 19: Joint FASB/IASB meeting: The boards will discuss their project on leases.

See the FASB’s website for further information on the meetings.

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

Securities and Exchange Commission (SEC)

SEC re-opens comment period for asset-backed securities releases

The SEC announced that it is re-opening the comment period on two releases, Asset-Backed Securities (issued April 7, 2010), and Re-Proposal of Shelf Eligibility Conditions for Asset-Backed Securities ( issued July 26, 2011). The proposed rules would require greater accountability around asset-backed securities (ABS) when issuers seek to use an expedited registration process known as shelf registration. The Commission is re-opening the comment period to permit interested persons to comment on an approach for the dissemination of potentially sensitive asset-level data.

Comments are requested by March 28, 2014.

International Federation of Accountants (IFAC)

IAASB meeting highlights and decisions — December 2013

The IFAC’s International Auditing and Assurance Standards Board (IAASB) met on December 9-13, 2013 and discussed: (1) audit quality, (2) future strategy and work program, (3) auditor responsibilities relating to other information, and (4) disclosures. See IFAC’s website for highlights of the meeting.

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