This week's PwC update on financial reporting includes: PwC comments on FASB proposal on applying VIE guidance to common control leasing arrangements... FASB publishes frequently asked questions about disclosure framework project... IFAC issues discussion paper on role and expectations of a CFO... and more.
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
PwC comments on FASB proposal on applying VIE guidance to common control leasing arrangements
In our comment letter on the FASB’s proposed Accounting Standards Update, Consolidation - Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements (a proposal of the Private Company Council), we offer the FASB and PCC some observations and suggestions.
The variable interest entity (VIE) consolidation guidance (i.e., the identification and analysis of implicit variable interests and their impact on the primary beneficiary analysis) has been challenging to apply in practice. We recommend that any simplification should apply to both private and public companies.
We also suggest amending the variable interest entity guidance for all entities to provide a presumption that the common parent of a lessor and lessee entity has a controlling financial interest in both these entities, unless substantive unrelated third party interests in the lessee entity indicate that the common parent does not have the unilateral power to change the rights that the lessee has with respect to the leased property (i.e., it would be inappropriate to disregard the variable interest represented by the lease). Our recommended approach—that the common parent is presumed to control both the lessee and lessor entities—along with the disclosures in the proposed standard would significantly reduce the cost and complexity to preparers while continuing to meet the needs of users.
FASB publishes frequently asked questions about disclosure framework project
The FASB has published frequently asked questions about its disclosure framework project, which aims to improve the effectiveness of disclosures in notes to financial statements for public and private companies and not-for-profit organizations. The disclosure framework project is intended to promote consistent decisions by the FASB about disclosure requirements and guide reporting organizations when making disclosure decisions.
FASB meetings and project updates
Meeting summary: The FASB did not hold any board meetings this week.
Next open board meetings: The FASB will hold the following board meetings next week:
See the FASB’s website for more information on these meetings.
Project update: The FASB has updated the summary of its project on disclosure framework.
IFAC issues policy position paper on enhancing organizational reporting
IFAC published Policy Position Paper 8, Enhancing Organizational Reporting, to emphasize the importance and usefulness of reporting broad-based information beyond that which is provided in traditional financial reporting. IFAC believes that enhanced organizational reporting provides important information for both internal and external stakeholders to support managing and directing operations, decision making, promoting transparency, and the discharge of accountability.
IFAC issues discussion paper on role and expectations of a CFOTo stimulate a global debate on preparing accountants for finance leadership, IFAC released a new discussion paper titled The Role and Expectations of a CFO. The paper features five principles that highlight the changing expectations, scope, and mandate of the chief financial officer (CFO) and finance leadership roles, and recommends actions professional accountancy organizations and employers can take to prepare professional accountants for career progression to finance leadership.
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, visit CFOdirect Network (www.cfodirect.pwc.com), PwC’s online resource for financial executives.