This week's PwC update on financial reporting developments includes: Dataline: Simplified hedge accounting approach... FASB meetings and project updates... SEC extends comment period for asset-backed securities releases... and more
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
Dataline: Simplified hedge accounting approach -- New private company accounting alternative for certain interest rate swaps
On January 16, 2014, the FASB issued ASU No. 2014-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach.
This standard provides private companies with an accounting alternative intended to make it easier for certain interest rate swaps to qualify for hedge accounting. Under the simplified hedge accounting approach, an eligible private company would be able to apply hedge accounting to its receive-variable, pay-fixed interest rate swaps as long as certain conditions are met.
Existing guidance would be simplified in that a company electing this alternative would (1) be able to assume the cash flow hedge has no ineffectiveness, (2) have until the date on which the first annual financial statements are available to be issued after hedge inception to complete its necessary hedge documentation, and (3) have the option to recognize the interest rate swap at its settlement value, which excludes non-performance risk, instead of at its fair value.
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.
This Dataline summarizes the main provisions of the ASU, provides insights into key aspects of the standard and highlights relevant considerations for private companies that may consider adopting this accounting alternative.
FASB meetings and project updates
Next open board meeting: The FASB will meet on April 4. The board plans to discuss its projects on (1) accounting for financial instruments – classification and measurement, (2) investment companies: disclosures about investments in another investment company, and (3) disclosure framework: entity’s decision process. See the FASB’s website for further information on the meeting.
Project updates: The FASB has updated the summaries of its projects on:
SEC extends comment period for asset-backed securities releases
The SEC has extended the comment period until April 28, 2014 on two asset-backed securities releases that would require greater accountability around asset-backed securities when issuers seek to use an expedited registration process known as shelf registration.
SASB provisionally releases sustainability accounting standards for the Technology & Communication sector
The standards are intended to provide guidance to companies on identifying metrics associated with non-financial information that can be included in Management’s Discussion and Analysis of Form 10-K (at their discretion). The standards provide companies with guidance on potentially material topics, standard metrics associated with each topic, and technical guidance to assist companies in reporting on the metrics.
The SASB is an independent 501(c)3 non-profit organization and is accredited to set standards by the American National Standards Institute (ANSI). Its mission is to engage in the creation and dissemination of standards for use by publicly listed corporations, on a voluntary basis, for disclosing material sustainability issues. The SASB is not a regulator, and has no affiliation with the FASB or the AICPA.
PCAOB issues updated FAQs on issues related to non-US accounting firms
The PCAOB has published an updated frequently asked questions document that sets forth the staff’s views on issues related to non-US accounting firms. Specifically, question six was updated to remove certain countries subject to the European Union's Directive on Statutory Auditors.
IFRS Foundation publishes Proposed Interim Release 1 to the IFRS Taxonomy 2014
The IFRS Foundation has published for public comment the Proposed Interim Release 1 to the IFRS Taxonomy 2014, which incorporates the IFRS Taxonomy elements for IFRS 14, Regulatory Deferral Accounts.
IFRS Taxonomy interim releases contain additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs published by the IASB, thereby allowing entities wishing to report electronically using the latest IFRSs to do so without the need for these entities to create their own taxonomy concepts. They may also contain technical updates, new common practice elements or general taxonomy improvements.
Comments are requested by May 2, 2014.
IFRS for SMEs Update — March 2014
This edition of the IASB's IFRS for SMEs Update covers, among other things, (1) closure of comment period on proposed amendments to the IFRS for SMEs, (2) update on selection process of membership of the SME Implementation Group, (3) IFRS for SMEs translations: status report, and (4) where to obtain IFRS for SMEs materials.
IFRIC Update — March 2014
The March 2014 edition of IFRIC Update provides a summary of the IFRS Interpretations Committee's March 25 meeting. The meeting included discussions of the Committee's current agenda items on:
 SASB standards are considered provisional for one year after the initial release. During this time, SASB welcomes feedback from the public. SASB’s research team will incorporate this feedback before issuing the final standard one year after the issuance of the provisional standard.