This week's PwC update on financial reporting developments includes: In the loop: Reporting revenue — new model, new strategy?... Dataline: Revised standard significantly changes criteria for discontinued operations and disclosures for disposals... Webcast reminders: Revenue, EPS and IPOs webcasts next week... and more
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
In the loop: Reporting revenue — new model, new strategy?
This issue of In the loop discusses the newly issued revenue guidance and how it could impact a company's business practices and go-to-market strategies. Virtually all companies will see some level of change, and preparing for this change could be a significant effort. How will the new revenue accounting model affect your clients’ businesses?
Dataline: Revised standard significantly changes criteria for discontinued operations and disclosures for disposals
In April, the FASB issued a new standard changing the threshold for reporting discontinued operations and adding new disclosures for disposals. The new guidance defines a discontinued operation as a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.”
Having significant continuing involvement with a component after a disposal or failing to eliminate the operations or cash flows of a disposed component from an entity’s ongoing operations will no longer preclude presentation as a discontinued operation.
This Dataline summarizes the main provisions, provides insights into key aspects of the standard, and highlights areas to consider when applying the new guidance.
Practical tip: Parent company financial information when the registrant has a consolidated shareholders' deficit
SEC rules require a financial statement schedule containing condensed parent company-only financial information if the restricted net assets of consolidated subsidiaries exceed 25% of consolidated net assets as of the end of the most recently completed fiscal year. This Practical tip discusses this requirement and focuses on how to determine materiality in situations where a registrant has a consolidated shareholders' deficit.
Webcast reminders: Revenue, EPS and IPOs webcasts next week
We encourage you to join us for the following webcasts next week:
BoardroomDirect: May 2014 edition
The May 2014 edition of BoardroomDirect analyzes the concept of risk appetite in a company’s overall strategy and investment decisions. It also includes short items on: (1) a Delaware court decision to uphold a bylaw that shifts fees to unsuccessful plaintiffs, (2) how some multinationals have disclosed the impact of the new Venezuelan foreign exchange regime, (3) an update on the 2014 proxy season shareholder proposals, (4) Audit Quality Indicators being considered, and (5) conflict minerals disclosure rulings.
PwC comments on clarified subject-matter specific attestation standards
PwC submitted a comment letter supporting the Auditing Standard Board’s proposed Statement on Standards for Attestation Engagements, Subject-Matter Specific Attestation Standards: Clarification and Recodification (the proposed SSAE). The proposed SSAE applies the ASB’s clarity drafting conventions to AT 301, Financial Forecasts and Projections; 401, Reporting on Pro Forma Financial Information; and 601, Compliance Attestation which would be superseded. We support the proposed SSAE but identify possible improvements.
FASB and IASB announce the formation of Joint Transition Resource Group for revenue recognition
The FASB and IASB announced the formation of the Joint Transition Resource Group for the newly issued revenue recognition standard. The joint group is intended to inform the FASB and the IASB about potential implementation issues that could arise when companies and organizations implement the new standard. It will not issue any guidance. Members of the joint group include financial statement preparers, auditors and users representing a wide spectrum of industries, geographical locations and public and private companies and organizations.
The first meeting is scheduled for July 18, 2014. For more information on the purpose of this group and how to participate, see the FASB’s website.
FASB issues two final UGT implementation guides
The FASB issued two final U.S. GAAP Financial Reporting Taxonomy (UGT) Implementation guides, which are both subject to SEC approval:
FASB meetings and project updates
Meeting summary: The FASB met on June 4. The board discussed its projects on (1) insurance—disclosures about short-duration contracts and (2) accounting for financial instruments—classification and measurement. See the FASB’s website for the board’s meeting summary.
Next open board meeting: The FASB will meet on June 11. The board plans to discuss its projects on (1) disclosure framework, (2) accounting for financial instruments – classification and measurement, and (3) accounting for financial instruments – impairment. See the FASB’s website for further information on the meeting.
Project updates: The FASB has updated the summaries of its projects on:
Materials for the June 12 EITF meeting
The FASB staff has published the following materials for the June 12 EITF meeting:
To obtain all of the materials for the EITF meeting, visit the FASB’s website.
PCAOB to consider adopting Auditing Standard on related parties, amendments regarding significant unusual transactions, and other amendments
The PCAOB has scheduled an open meeting for Tuesday, June 10, to consider adopting an auditing standard on related parties, amendments to certain PCAOB auditing standards regarding significant unusual transactions, and other amendments to PCAOB auditing standards.
The standard and amendments would revise auditor performance requirements in areas that could pose significant risks of material misstatement in company financial statements.
IFRS for SMEs Update — May 2014
This edition of the IASB's IFRS for SMEs Update addresses various items such as (1) IFRS Foundation appoints members of the Small and Medium-sized Entities Implementation Group, (2) IASB discusses feedback on the IFRS for SMEs exposure draft, (3) IFRS for SMEs translations status report, and (4) where to obtain IFRS for SMEs materials.
IESBA eNews — April 2014
This issue of IESBA eNews provides a summary of decisions reached at the April 7-9, 2014 meeting of the IFAC's International Ethics Standards Board for Accountants (IESBA). The topics discussed were: