SEC Asked to Use Principles-Based Approach for Disclosure Updates
In response to the Securities and Exchange Commission’s (“SEC”) efforts to amend the disclosure requirements for bank holding companies, one Big Four accounting firm has asked the agency to develop a principles-based framework. One Big Four firm remarked that disclosures under a principle-based approach would better align with how registrants oversee their business. The firm said such disclosures may help financial information users since the requirements allow a registrant to exercise judgment in reviewing how to meet compliance. In addition, the Big Four firm noted that while strict and consistent requirements could help investors compare banks, they typically do not. Read More.
Final Standard for Securities Offerings Documents Approved
Last month, the American Institute of Certified Public Accountants’ Auditing Standards Board unanimously approved a final standard concerning an auditor’s responsibility regarding securities offerings documents not registered with the Securities and Exchange Commission (“SEC”). The final standard will likely be issued as Statement on Auditing Standards No. 133: Auditor Involvement With Exempt Offering Documents. It would impact securities that are not required to follow the SEC’s registration requirements and rules under the Securities Act of 1933. In addition, the standard will affect franchise offerings controlled by the Federal Trade Commission or appropriate state franchise laws. The standard could become effective. Read More.
FASB Clarifies the Customer in Service Concession Arrangements
The Financial Accounting Standards Board (“FASB”) is providing relief to companies confused about who is the customer in a service concession arrangement. Issued as Accounting Standards Update No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services, the new guidance states that the grantor is the customer in service concession arrangements. Public companies, in addition to nonprofits that have issued, or are a conduit bond obligor for, securities traded, listed, or quoted on an exchange or an over-the-counter market and an employee benefit plan that submits financial statements to the Securities and Exchange Commission, must apply. Read More.
Topics: Accounting Standards Update "ASU", FASB, Financial Accounting Standards Board "FASB", Revenue from Contracts with Customers (Topic 606), Securities and Exchange Commission "SEC", Service Concession Arrangements (Topic 853)
SEC Chief Accountant Advises Against Credit Loss Standard Delay
In an unexpected move, Wesley Bricker warned banks not to drag their feet when implementing the Financial Accounting Standards Board’s (“FASB”) credit loss standard. At Baruch College’s Annual Financial Reporting Conference, the Securities and Exchange Commission’s (“SEC”) chief accountant shared his general concerns over Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Although Bricker provided few details, he did highlight how critical it is for implementation of the standard to be correct. Bricker also remarked that some bankers have approached him with their own concerns. In response, he advises. Read More.
Topics: FASB, FASB credit loss standard, Financial Accounting Standards Board "FASB", Financial Instruments - Credit Losses (Topic 326), Securities and Exchange Commission "SEC", Transition Resource Group "TRG"
SEC’s Corp Fin Revises Crowdfunding Guidance
The Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance (“Corp Fin”) has revised its Compliance and Disclosure Interpretation, Crowdfunding (new Questions 201.02 and 202.01). The update includes new guidance on related party transaction disclosures and calculating the holders of record for determining eligibility to end the responsibility to file ongoing reports.
New PCAOB White Paper Discusses Emerging Growth Companies
A new white paper by the Public Company Accounting Oversight Board (“PCAOB”) features significant observations about emerging growth companies. Published as White Paper on Characteristics of Emerging Growth Companies , the report includes information from recent Securities and Exchange Commission (“SEC”) filings and statistics from third-party vendors as of November 15, 2016. Some of the key observations discuss the emerging growth companies with common equity securities on U.S. exchanges; the percentage of emerging growth companies not listed on an exchange and reported zero revenues and those that disclosed they were shell companies; and the filers that delivered management reports regarding internal control over financial reporting, and those filers. Read More.