Update on the current board issues: February 2014

Audit committee issues


PCAOB extends public comment period for lead audit partner disclosure rule

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On January 30, the Public Company Accounting Oversight Board (PCAOB) announced it has extended until March 17 the comment period on the reproposed amendments to its auditing standards that that would require the name of the lead audit partner and certain other participants in the audit to be disclosed in the auditor’s report on the financial statements of public companies, brokers, and dealers.

The original comment period was set to end February 3.

For more background on the reproposed amendments, read PwC’s BoardroomDirect December 2013 (Audit committee issues: PCAOB proposes rule requiring disclosure of lead audit partner’s name).


FASB issues private company alternatives for goodwill and certain interest rate swaps

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On January 16, 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-02, Accounting for Goodwill, and ASU No. 2014-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps — Simplified Hedge Accounting Approach. These standards provide nonpublic entities with accounting alternatives which are intended to simplify the goodwill impairment model and make it easier for certain interest rate swaps to qualify for hedge accounting.

The standard update on goodwill permits a private company to subsequently amortize goodwill on a straight-line basis over a period of ten years, or less if the company demonstrates that another useful life is more appropriate. It also permits a private company to apply a simplified impairment model to goodwill. Goodwill is the residual asset recognized in a business combination after recognizing all other identifiable assets acquired and liabilities assumed.

The standard update on interest rate swaps gives private companies — other than financial institutions—the option to use a simplified hedge accounting approach to account for interest rate swaps that are entered into for the purpose of economically converting variable-rate interest payments to fixed-rate payments.

For more information on FASB’s actions, read PwC’s In brief: FASB issues final private company accounting alternatives for goodwill and certain interest rate swaps.