Update on the current board issues: March 2013

Audit committee issues


SEC staff paper on disclosure expected soon

The SEC staff is expected to issue a paper on disclosures in the next two months and hold a related roundtable in late spring or early summer, according to new SEC Chief Accountant Paul Beswick.

Speaking at the Practicising Law Institute’s SEC Speaks conference in February, Beswick pointed out the paper will look at the dividing line for what information goes in Management’s Discussion & Analysis (MD&A) vs. the financial statement footnotes.

“One of the things we are looking at is [feedback saying that] you are pulling too much forward-looking information from MD&A into disclosures,” he said. “We think the paper is important because we think you need a level set [of information].” [Read the Financial Executives International blog post from the PLI event.]

Beswick also referred to three projects the Financial Accounting Standards Board (FASB) is working on related to disclosures:


FASB, IASB set revenue recognition standard effective date

At their February 20 meeting, the FASB and IASB reached decisions on disclosure requirements, transition, and effective date for their forthcoming revenue recognition standard.

The boards decided to reduce or eliminate some of the proposed disclosures, but also added a few. Overall, companies should prepare for a significant increase in revenue disclosures in comparison to today’s requirements. require several new revenue disclosures in the annual financial statements.

The boards diverged on the topic of interim disclosures. The FASB concluded that many of the annual disclosures should also be provided in interim periods, but the IASB did not follow suit, requiring only disaggregated revenue disclosures. Incremental interim disclosures for U.S. companies will include information about contract balances and remaining performance obligations.

The boards also agreed to permit companies to apply a simplified transition method to adopt the new standard, as an alternative to restating all prior periods. Once it is finalized, the revenue standard as approved by the FASB will be effective for public company annual reporting periods, and interim periods therein, beginning after December 15, 2016 and for nonpublic companies beginning after December 15, 2017. The IASB decided the final standard will be effective for the first interim period within annual reporting periods beginning on or after January 1, 2017.

Read PwC's In brief: Boards conclude key revenue redeliberations with decisions on disclosures and transition (No. 2013-11) article for an overview of the boards’ recent decisions.