United States: On The Horizon - June 25, 2013

FASB

All decisions reached at Board meetings are tentative and may be changed at future meetings. Decisions are included in an Exposure Draft only after a formal written ballot. Decisions reflected in Exposure Drafts are often changed in redeliberations by the Board based on information received in comment letters, at public roundtable discussions, and from other sources. Board decisions become final after a formal written ballot to issue a final Accounting Standards Update.

Board discusses disclosure framework at June 19 meeting

On June 19, the FASB discussed aspects of its disclosure framework project, including forward-looking disclosures, feedback from comment letters, the disclosure framework itself, and revisions to the technical plan.

The Board tentatively decided to consider requiring entities to disclose information about the following items related to the future:

  • Specific future changes or existing conditions with implications for the future
  • Management's future plans
  • Future-based assumptions and expectations that are built into a measurement presented or disclosed in the current period to the extent that they help to explain that measurement, with the exception of assumptions that

    • Are used in an impairment analysis that does not result in an impairment
    • Are not used as inputs in the current-period measurement or do not explain the current-period measurement

Comment letter respondents suggested that certain disclosures described in the Invitation to Comment, Disclosure Framework, might lead to required "forward-looking" information in the financial statements. The Board tentatively decided to modify some disclosures specifically identified by both respondents and the Board so that those disclosures focus more sharply on past events and existing conditions, for example, judgments and assumptions made when determining whether to consolidate an entity and current measures of the possible effect of an event or condition on future cash flows. The Board also tentatively agreed that judgments regarding the future prospects for losing suppliers or customers would be removed from consideration for disclosure under the framework.

Joint meeting held on June 18

The FASB and IASB held a joint informational meeting on June 18 to discuss feedback received on their respective proposals for the measurement and classification of financial instruments, but made no tentative decisions. Joint redeliberations on this project will begin in July when the Boards will discuss specific issues, beginning with contractual cash flow characteristics.

AICPA publishes alerts

The AICPA issued an Audit Alert, Service Organization Control Reports: Considerations for User and Service Auditors, to help practitioners gain a better understanding of service organization control engagements, identify useful resources, and learn about recent issues.

The AICPA also issued an Audit Risk Alert, State and Local Governmental Developments, to assist auditors in planning and performing audits of state and local governments. The alert provides guidance on the identification of significant risks, new and pending accounting pronouncements, and emerging practice issues.

GASB releases measurement proposals

The GASB recently issued for public comment a proposed Statement of Government Accounting Concepts Exposure Draft, Measurement of Elements of Financial Statements, which would guide the Board's future decisions on reporting the amounts of assets and liabilities. One objective of the proposed guidance is to enhance consistency in future GASB statements, resulting in increased comparability and consistency of fair value measurements and related disclosures by governments.

The proposal suggests measuring assets and liabilities using either the initial amount approach (determined when an asset is acquired or a liability is incurred) or a remeasured amount approach (determined each year at the financial reporting date). It also proposes four attributes for the measurement of assets and liabilities: historical cost, fair value, replacement cost, and settlement amount.

The GASB also issued Preliminary Views, Fair Value Measurement and Application, which describes the definition of fair value and how it should be measured, identifies which assets and liabilities should be measured at fair value, and indicates expanded fair value disclosures that are required. The Board's preliminary view is that most investments should be recognized at fair value, with exceptions for certain investments.

Concurrent with the release of the Exposure Draft and Preliminary Views, the GASB issued a Plain Language Supplement addressing both proposals. Its purpose is to assist nonaccountant financial statement users in understanding the proposals and to enable them to provide feedback on a number of questions specifically intended for users.

Comments on both proposals are due September 30.

International Federation of Accountants issues Consultation Draft

The International Federation of Accountants (IFAC) has issued a Consultation Draft of the proposed International Public Sector Governance Framework (International Framework) for government and individual public sector entities to use as a "benchmark" when establishing or updating their governance codes.

Recently issued bulletin

EITF Update 2013-01 summarizes the EITF's meeting held June 11, 2013, including decisions reached and background information about the Issues discussed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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