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FASB Proposes Simplified Standard for Consolidated Reporting

A proposal to streamline guidance for voting interest entities and variable interest entities is coming this summer. At their June 21 meeting, Financial Accounting Standards Board (“FASB”) members unanimously approved the proposal that would put the aforementioned guidance in Topic 810, Consolidation, in a separate accounting standard. Designated as Topic 812, the new accounting standard would eliminate Topic 810 and organize voting interest entities and variable interest entities into subtopics. The reorganization assumes that once a company decides to follow the voting interest entities or variable interest entities accounting guidance, the company could go directly to the needed category. The. Read More.

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Consolidation Amendments Proposed to Help Private Companies

Giving private companies an easier way to apply its guidance for consolidation reporting, the Financial Accounting Standards Board (“FASB”) has issued Proposed Accounting Standards Update No. 2017-240, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The proposed changes to Accounting Standards Codification 810, Consolidation, exempts private companies from using guidance on variable interest entities for certain common control lease arrangements and related legal structures. Instead, private companies must use an accounting policy alternative for other businesses under common control that follow the same criteria. Only some common control arrangements, however, would qualify for the alternative. The. Read More.

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Treasury Report Questions FASB’s Credit Loss Standard

A June 12 report by Department of Treasury has recommended overhauling the U.S. financial regulatory system. While most of the overhaul focuses on easing bank requirements such as those from the Dodd-Frank Act, it also questions the need for the Financial Accounting Standards Board’s (“FASB”) credit loss standard. In response to the 2008 global financial crisis, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard addresses delayed disclosure of problematic loans that appeared healthy on banks’ balance sheets, but their loan portfolios became more troubling.. Read More.

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Short-Term Fixes to Liabilities and Equity Accounting in the Works

As accountants continue to struggle with differentiating liabilities and equity, Financial Accounting Standards Board (“FASB”) members have agreed to take action. Last week, Chairman Russell Golden ordered the FASB’s research team to develop short-term solutions that the board could quickly implement, and also continuously monitor significant problems that may require long-term answers. Golden said this approach would take longer, but making targeted changes to Topic 480, Distinguishing Liabilities From Equity, will be helpful. Possible changes may include new disclosures regarding financial instruments with characteristics of both equity and liabilities, streamlining how to split the measurement of hybrid instruments, and reorganizing. Read More.

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PCAOB Considering Revenue Recognition Interpretive Guidance for Auditors

Auditors could receive interpretive guidance on the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard. Last month, Public Company Accounting Oversight Board (“PCAOB”) Chief Auditor Martin Baumann said a project is in the works to determine what type of guide the board should release concerning Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers (Topic 606). To help public companies implement ASU No. 2014-09, Baumann remarked that the PCAOB is considering releasing an Audit Practice Alert. The PCAOB staff has already reviewed Staff Audit Practice Alert (“APA”) No. 12, Matters Related to Auditing Revenue in an Audit of. Read More.

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FASB and FASAC Discuss Technology’s Role in Future Standard-Setting

Without providing a clear picture of how the Financial Accounting Standards Board’s (“FASB”) agenda will be impacted by technological advances, the board’s Financial Accounting Standards Advisory Council (“FASAC”) considered the future of financial reporting at its June 15 meeting. FASB and FASAC members both agreed investment firms’ technology use has evolved to the point that financial reporting may also change. FASB member and former fund manager Harold Schroeder stressed that companies, auditors, and standard-setters are facing a rapidly changing business environment with multiple users that rely on financial information. Schroeder said as time goes on, the evolving financial landscape changes. Read More.

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