This week's PwC update on financial reporting includes: Private company reporter: PCC revises, re-approves final VIE alternative for common control leasing arrangements... PwC comments on PCAOB's reproposal to disclose name of engagement partner and certain other participants in the audit... IFRS news – February 2014... and more.
PwC's weekly alert highlighting current financial reporting developments (including accounting, auditing and regulatory matters).
This week's topics include:
Private company reporter: PCC revises, re-approves final VIE alternative for common control leasing arrangements
At its recent meeting, the Private Company Council (PCC) revised, then re-approved an accounting alternative that would offer private companies an exemption from applying the variable interest entity (VIE) consolidation model to certain common control leasing arrangements. The VIE consolidation model can be costly and complex to apply, and the approved alternative provides a form of relief to private companies by providing an exemption from applying the model to qualifying arrangements.
The approved alternative is now subject to final endorsement by the FASB. If endorsed, a final Accounting Standards Update (ASU) would likely be issued in the first half of 2014, and early adoption would be permitted.
Separately, the PCC continued its redeliberations on an accounting alternative for the recognition and measurement of intangible assets in a business combination. No decisions were reached, and the PCC is expected to resume discussions on the proposed alternative at its next meeting in April 2014.
The PCC also decided it would no longer pursue the combined instruments approach for certain interest rate swaps.
This edition of Private company reporter provides further information on the meeting.
PwC comments on PCAOB's reproposal to disclose name of engagement partner and certain other participants in the audit
PwC submitted a comment letter on the PCAOB’s reproposal of amendments to PCAOB auditing standards that are intended to improve the transparency of audits by requiring disclosure in the auditor’s report of the name of the engagement partner and information about other participants in the audit (audit participants).
Consistent with our previous response to the original proposal, we recognize that many users ascribe value to such information. We continue to support transparency, through means other than identification in the audit report itself, of the name of the engagement partner, when coupled with the name of a member or members of firm leadership. We also support providing the prescribed information about audit participants through means other than inclusion in the audit report.
We continue to believe that the perceived benefits of including information about the engagement partner and audit participants in the audit report itself are substantially outweighed by the significant potential litigation risks and costs that this creates and the practical difficulties created by the requirement to obtain consents. Instead, we suggest the following alternatives for providing the information, but there may be other workable approaches:
PwC comments on IASB's proposed amendments to allow equity method accounting in separate financial statements
The PwC global network of firms submitted comments on the IASB’s exposure draft: Equity Method in Separate Financial Statements (Proposed amendments to IAS 27). We do not object to the board’s proposal to restore the use of the equity method as one of the options to account for investments in subsidiaries, joint ventures and associates in an entity’s separate financial statements. However, we do not support the requirement for retrospective application of the exposure draft nor the proposed consequential amendment to IAS 28, Investments in Associates and Joint Ventures.
PwC comments on IFRS Interpretation Committee’s tentative agenda decision on share-based payment
The PwC global network of firms submitted comments to the IFRS Interpretation Committee's tentative agenda decision on IFRS 2, Share-based payment – price difference between the institutional offer price and the retail offer price for shares in an initial public offering. We support the committee’s decision not to take this question onto the agenda but not for the reasons given by the committee. We suggest the committee consider an alternative rationale in which the item is not taken on the agenda because the specific issue is territory specific and very narrow. Otherwise we believe the reasons given will increase diversity in practice regarding the application of IFRS 2 paragraph 13A and may also lead to diversity in the application of IFRS 13. Our letter further outlines our views on this matter.
IFRS news – February 2014
This issue of IFRS news looks at (1) needs of capital providers: EFRAG and ICAS report, (2) IFRIC 21 - just ‘levies’ or much more?, (3) how should business models affect accounting?, (4) interim standard on regulatory deferral accounts, (5) IFRS 9 redeliberations, (6) IFRS 3 post implementation review, (7) lease redeliberations, (8) IAS 1 narrow scope amendments, and (9) Q&As: money market funds.
On demand version: Q4-2013 Current Accounting and Reporting Developments webcast
Did you miss the Q4-2013 "Current Accounting & Reporting Developments" webcast on December 17? If so, you still have an opportunity to view the webcast and earn CPE credit! PwC is offering the Q4-2013 webcast in an on-demand format for your convenience. You can access this on-demand version whenever it works best for you. A post-event questionnaire, when completed, qualifies participants for 1.5 CPE credits.
Meeting summary: There were no meetings held in the past week.
Next open board meeting: The FASB will meet on February 12. The board plans to discuss its project on accounting for goodwill for public business entities and not-for-profits. See the FASB’s website for further information on the meeting.
SEC publishes Draft Strategic Plan for public comment
The SEC published for public comment its Draft Strategic Plan, which outlines the agency’s strategic goals, major initiatives, and performance metrics for fiscal years 2014 through 2018. The draft plan outlines more than 70 initiatives designed to support its primary strategic goals.
The Draft Strategic Plan focuses on the following strategic goals and objectives: (1) establish and maintain an effective regulatory environment, (2) foster and enforce compliance with the federal securities laws, (3) facilitate access to the information investors need to make informed investment decisions, and (4) enhance the Commission’s performance through effective alignment and management of human, information, and financial capital.
Comments are requested by March 10, 2014.
PCAOB extends comment period for reproposed amendments to improve audit transparency
The PCAOB has extended the comment period until March 17, 2014 on the reproposed amendments to its auditing standards that aim to provide transparency into audits of public companies, brokers, and dealers about the engagement partner and certain other participants in the audit.
GASB issues guidance for implementing pension standards
The GASB published a Guide to Implementation of GASB Statement 68 on Accounting and Financial Reporting for Pensions. The Guide is an authoritative resource designed to assist preparers and auditors of state and local government financial statements as they implement GASB Statement 68, which is effective for periods beginning after June 15, 2014. Topics addressed in the Guide include:
IFRS for SMEs Update — January 2014
This edition of the IASB's IFRS for SMEs Update includes various items such as (1) approaching comment deadline on the proposed amendments to the IFRS for SMEs, (2) nominations sought for membership of the SME Implementation Group, (3) a status report of IFRS for SMEs translation, and (4) where to obtain IFRS for SMEs materials.
IFAC and ICAS discuss key issues in developing IASB's conceptual frameworkIFAC and the Institute of Chartered Accountants of Scotland (ICAS) published a paper titled Do We Need A Roadmap For Financial Reporting?—Developing the IASB's Conceptual Framework to highlight some of the key issues to be considered in developing the IASB Conceptual Framework. IFAC and ICAS believe that it is important to engage all financial reporting stakeholders in the debate on the Conceptual Framework, as it will potentially become the roadmap for future financial reporting. The paper is not intended to offer solutions. Its purpose is instead to provide some context and raise areas for the IASB’s consideration around the key themes in the board’s Discussion Paper: A Review of the Conceptual Framework for Financial Reporting.
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.