FASB addresses classification of cash receipts and payments

Contents FASB posts highlights of April 1 meeting
AICPA issues employee benefit plan guide
PCAOB approves reorganization of auditing standards

FASB posts highlights of April 1 meeting 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.

At its April 1 meeting, the Board tentatively decided to defer the effective date of ASU 2014-09, Revenue from Contracts with Customers, by one year. See the April 2 edition of On the Horizon for details.

At the same meeting, the Board discussed ways to promote the consistent application of existing guidance on classifying cash receipts and payments in the statement of cash flows. To timely reduce diversity in practice, the Board added to the Emerging Issues Task Force’s agenda a project to address classification for the following items:

  • Settlement of insurance claims, life insurance contracts, and zero coupon bonds
  • Debt prepayment or extinguishment costs
  • Restricted cash
  • Distributions from equity method investees
  • Contingent consideration payments after a business combination
  • Beneficial interests in securitization transactions
  • Cash receipts and payments that have aspects of more than one class of cash flows
The Board also added to its own agenda a research project to more broadly improve the guidance on classifying cash receipts and payments in the statement of cash flows.

AICPA issues employee benefit plan guide The AICPA has updated the Audit and Accounting Guide, Employee Benefit Plans, to provide industry-specific guidance on accounting, auditing, and regulatory issues.

PCAOB approves reorganization of auditing standards The PCAOB approved the reorganization of its auditing standards and adopted amendments to implement a topical system that will integrate existing interim and PCAOB-issued auditing standards.

The reorganization follows the flow of the audit process to help users navigate the standards more easily and efficiently. The standards will be reorganized into the following categories:

  • General Auditing Standards: Standards on broad auditing principles, concepts, activities, and communications
  • Audit Procedures: Standards for planning and performing audit procedures and obtaining audit evidence
  • Auditor Reporting: Standards for auditors’ reports
  • Matters Relating to Filings Under Federal Securities Laws: Standards on certain auditor responsibilities relating to SEC filings for securities offerings and reviews of interim financial information
  • Other Matters Associated with Audits: Standards for other work performed in conjunction with an audit

The amendments will remove references to superseded standards and inoperative language and references. They will not impose new requirements or change the substance of performing and reporting on audits performed under PCAOB standards.

The amendments will be effective, subject to SEC approval, as of December 31, 2016.

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