This week's PwC update on financial reporting includes: PwC comments on the IASB's exposure draft on regulatory deferral accounts... FASB and SEC issue proposed 2014 Taxonomies for review and comment... Materials for September 13 EITF meeting... and more.
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
2013 Annual Corporate Directors Survey: Board composition and behavior
The corporate governance landscape is experiencing unprecedented change: new perspectives on boardroom composition, higher levels of stakeholder engagement, more emphasis on emerging risks and strategies, and the increasing velocity of change in the digital world. These factors, coupled with calls for enhanced transparency around governance practices and reporting, the very active regulatory and lawmaking environment, and the enhanced power of proxy advisors, are all accelerating evolution, and in some cases creating a revolution, in the boardroom.
This summer, more than 930 public company directors responded to PwC’s 2013 Annual Corporate Directors Survey. Of those directors, 70% serve on the boards of companies with more than $1 billion in annual revenue. As a result, the study’s findings reflect the boardroom perspectives of today’s world-class companies. This issue of the 2013 Annual Corporate Directors Survey, which focuses on board composition and behavior, is the first in a series of four to be released over the next two weeks highlighting results from the survey.
BoardroomDirect: Update on current board issues—August 2013
This issue of BoardroomDirect includes an article about taking a fresh look at board composition in today’s state of board renewal where there is low turnover and directors are getting older. The newsletter also includes briefs on (1) an institutional investor group’s campaign to institute majority voting and a universal proxy ballot, (2) CalSTRS inaugural corporate governance report, (3) the latest on the SEC’s Dodd-Frank rule on CEO pay ratios, (4) the PCAOB’s proposed auditor reporting model standard and related amendments, and (5) FASB and IASB forming a joint resource group on revenue recognition.
Dataline: Joint and several liability arrangements—FASB issues new guidance to achieve consistency
In February 2013, the FASB issued Accounting Standards Update No. 2013-04, which addresses the diversity in practice related to accounting for joint and several liability arrangements. The standard addresses the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount under the arrangement is fixed at the reporting date. An entity would measure its obligation from a joint and several liability arrangement as the sum of the amount the entity agreed with its co-obligors that it will pay, and any additional amount the entity expects to pay on behalf of its co-obligors.
The standard is effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2013. Non-public companies will adopt the standard in fiscal years ending after December 15, 2014, and in interim and annual periods thereafter. Early adoption is permitted.
This Dataline discusses the key provisions of the new standard.
PwC comments on the IASB's exposure draft on regulatory deferral accounts
The PwC global network of firms submitted comments on the IASB's exposure draft, Regulatory Deferral Accounts. The PwC network supports the proposed interim standard on regulatory deferral balances. The interim standard will help resolve practice problems in some jurisdictions and reduce the barriers to adopting IFRS, but will not increase diversity in practice among entities that already apply IFRS. See our comment letter for other observations and our answers to the specific questions asked in the exposure draft.
FASB and SEC issue proposed 2014 Taxonomies for review and comment
The FASB released the proposed 2014 U.S. GAAP Financial Reporting Taxonomy for public comment. The proposed taxonomy contains updates for accounting standards and other recommended improvements to the official taxonomy, which is used by public issuers registered with the U.S. Securities and Exchange Commission (SEC).
The 60-day comment period is intended to solicit feedback on the updates from users of the taxonomy and to provide SEC filers, service providers, software vendors, and other interested parties with the opportunity to become familiar with and suggest revisions to the taxonomy, including incorporating new elements for current filings. The 2014 taxonomy is expected to be finalized and published in early 2014.
In addition, the SEC is seeking comments on the proposed 2014 updates to the SEC taxonomies.
The deadline to submit comments on both releases is October 31.
FASB meetings and project updates
Meeting summary: At its September 4 meeting, the FASB decided not to add a project to its agenda on how to determine the grant date of share-based payments when the terms and conditions of those awards contain discretionary provisions and clawback features. The FASB also continued deliberations on its project on not-for-profit financial reporting—financial statements. See the FASB’s website for a summary of the decisions reached at the meeting.
Next open board meeting: The FASB will meet on September 11 to discuss whether to extend the September 17 comment deadline of Proposed Accounting Standards Update, Consolidation (Topic 810): Measuring the Financial Liabilities of a Consolidated Collateralized Financing Entity (EITF Issue 12-g). The board also plans to discuss its projects on development stage entities and consolidation: policy and procedures. See the FASB’s website for more information on the meeting.
Leases roundtable: On September 10, the FASB and the IASB will host the first of several joint public roundtable meetings on their revised joint proposals on leases that were published in May 2013. See the FASB’s website for more information this and other upcoming leases roundtables.
Project updates: The FASB has updated the summaries of its projects on:
Materials for September 13 EITF meeting
The FASB staff has published the following materials for the September 13 EITF meeting:
AICPA releases FAQs on application of Independence Rules for affiliates of employee benefit plans
The AICPA has published frequently asked questions (FAQs) to help members better understand how the definitions and guidance provided in Interpretation No. 101-18, “Application of the Independence Rules to Affiliates,” apply to affiliates of employee benefit plans subject to the Employee Retirement Income Security Act (ERISA). Interpretation No. 101-18, under Rule 101, Independence, provides guidance on which entities should be considered an affiliate of a financial statement attest client and, therefore, subject to the same independence provisions of the AICPA Code of Professional Conduct applicable to the financial statement attest client. The questions and answers in this document cover (1) plan affiliates, (2) exceptions in Interpretation No. 101-18, and (3) difficulty in identifying affiliates of a plan.
GAO proposes revisions to standards for internal control in the federal government
The GAO has published for comment proposed revisions to the standards for internal control in the federal government. Internal control is the plans, methods, policies, and procedures an organization employs to ensure effective resource use in fulfilling its mission, goals, objectives, and strategic plan. GAO's Standards for Internal Control in the Federal Government, known as the Green Book, sets these standards for federal agencies.
Comments on the Green Book exposure draft are requested by December 2, 2013.
Flashline is a weekly alert highlighting current financial-reporting developments (including accounting, auditing and regulatory matters) and is produced by the National Professional Services Group of PwC. It is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. To access additional content on financial reporting issues, register for CFOdirect Network (www.cfodirect.pwc.com), PwC’s online resource for financial executives.