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ASU codifies SEC staff views on line-of-credit arrangements

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Contents
FASB
     ASU addresses SEC staff views on line-of-credit arrangements
     Board discusses potential agenda projects
PCAOB issues annual report on inspections of broker-dealer auditors
IIA publishes report on internal audit and cybersecurity
Comment letter issued




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.

ASU addresses SEC staff views on line-of-credit arrangements

The FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, adding the guidance contained in a recent SEC staff announcement to the Codification.

In April, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of the debt liability, but lacks authoritative guidance for debt issuance costs related to line-of-credit arrangements.

During the June 18 EITF meeting, the SEC staff announced that it would not object if an entity deferred and presented debt issuance costs as an asset and subsequently amortized the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit. ASU 2015-15 codifies the staff’s announcement.

ASU 2015-15 became effective upon issuance on August 18.

Board discusses potential agenda projects

At its agenda prioritization meeting on August 19, the FASB discussed staff research on a number of potential projects, deciding not to add any to its technical agenda at this time.




PCAOB issues annual report on inspections of broker-dealer auditors

The PCAOB issued its fourth annual report of inspection findings and deficiencies issued under its interim inspection program for auditors of broker-dealers registered with the SEC. The report covers inspections conducted in 2014 on audits for fiscal years ended on or before May 31, 2014.

PCAOB staff findings and deficiencies include

  • Independence findings in 26 of the 106 audits inspected, the majority of which related to assisting with the preparation of financial statements. Twenty of those audits were performed by firms that did not also audit public companies or other issuers.
  • Audit deficiencies that involve omitting, or insufficiently performing, procedures related to the customer protection rule, revenue recognition, reliance on records and reports, fair value accounting estimates, and financial statement presentation and disclosure

The findings and deficiencies noted do not necessarily indicate that a broker-dealer’s financial statements contained errors or that the broker-dealer was not in compliance with relevant SEC rules.




IIA publishes report on internal audit and cybersecurity

The Institute of Internal Auditors (IIA) published a report, “Internal Audit’s Role in Cyber Preparedness: The Importance of a Holistic Approach.” The report, developed by the Institute of Internal Auditors Research Foundation, details how the internal audit function is critical to cybersecurity preparedness and how organizations must learn to anticipate, withstand, and recover from cyberattacks to be truly cyber-prepared. The report stresses that it is key for boards of directors and audit committees to understand the tools and resources available to their organizations when crafting cybersecurity strategies, policies, and protocols.

The report identifies five key areas of cyber-preparedness:

  • Protection
  • Detection
  • Business continuity
  • Crisis management and communications
  • Continuous improvement



Comment letter issued

On August 20, the firm issued a comment letter in response to the FASB’s proposed ASU, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements for Not-for-Profit Entities.




© 2015 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.