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Financial Services

FSOC to Give Earlier Notice in SIFI Designation Process

Recognized as a positive step towards increasing transparency during the systemically important financial institutions (SIFI) designation process, the Financial Stability Oversight Council (“FSOC”) will give financial companies an earlier notice when under consideration for tougher regulatory supervision by the Federal Reserve. Approved on February 4th, the FSOC’s decision is in response to criticism over non-bank companies unfairly receiving the designation under a process created by the Dodd-Frank Act. The decision also changes the FSOC’s policy of informing prospective SIFI designees at three-part review process’ final stage. Instead, financial institutions will now be notified in the second phase of the review. Read More.

SEC Issues Final Reporting Rules for Financial Swaps

Enhancing its supervision of financial swaps, the Securities and Exchange Commission (“SEC”) has announced two final reporting rules that address a major weakness in the capital markets. Issued on February 11th, Release No. 34-74246, Security-Based Swap Data Repository Registration, Duties, and Core Principles, establishes registration and governance policies for swaps data warehouses that collect trading information; and Release No. 34-74244, Regulation SBSR—Reporting and Dissemination of Security-Based Swap Information, which outlines rules for communicating trades to the data warehouses. Per the final rules, data warehouses are required to record swap trades and store the data for five years, estimate brokers’ positions. Read More.

Consultation Paper on Expected Loss Model for Banks Issued

To prepare banks for the adoption of the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board’s (“IASB”) standards for writing down assets, the Basel Committee on Banking Supervision (“the Basel Committee”) has proposed guidance discussing its expectations for bank risk management procedures. Issued on Monday, the consultation paper outlines what is expected from banks for credit risk practices once they implement IASB’s July 2014-issued International Financial Reporting Standards (IFRS) 9, Financial Instruments, and FASB’s upcoming standard based on proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15). The accounting boards’ standards provide new requirements for banks. Read More.

Financial Stability Board Wants Consistency in Writing Down Bad Loans and Securities

With a public forum scheduled in April, the Financial Stability Board (“FSB”) hopes to push the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) to follow suit with its approach for marking down bad loans and securities. At its roundtable discussion, the international group of banks, financial regulators and finance ministries seek a common approach that inspires banks to adopt standards for impaired assets similar to the accounting boards’ ongoing efforts. Both accounting boards have been working on their own standards; IASB’s International Financial Reporting Standards (IFRS) 9, Financial Instruments, and FASB’s Proposed Accounting Standards Update (ASU). Read More.

FASB Calls for Eliminating Available-for-Sale Category

Attempting to reduce equity securities to two classifications, the Financial Accounting Standards Board (“FASB”) plans to review feedback from regulators on how the change would impact their supervision of the banking industry. Planned ahead of FASB’s upcoming meeting, the feedback will help the standard setter decide which of the three classifications to eliminate. FASB’s top choice for removal is “available-for-sale”, a category used for financial instruments assessed at fair value, but include changes in value noted in other income yet has no effect on net income. “Available-for-sale” also applies to instruments that the holder anticipates to keep unless urged to. Read More.

2014 U.S. GAAP & SEC Review Developments

As the year winds to a close, it is important to remember the recently issued rules and regulations from the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”) that could affect your company’s year-end financial reporting. Keeping these rules and regulations in focus not only ensures they are considered in your year-end reporting, but also allows for consideration of alternative adoption methods often provided for in the issuances. This issue of  A Closer Look , published by Accounting Research Manager®, a Wolters Kluwer, CCH premier research solution, summarizes these rules and regulations, as well as the SEC documents that provide. Read More.