On the Horizon: AICPA issues guide on use of new mortality tables

Contents FASB posts highlights of February 11 meeting
      Financial instruments – impairment
      Income taxes disclosure framework
Dodd-Frank Wall Street Reform and Consumer Protection Act
      SEC adopts rules for security-based swap data repositories
      Practice aid issued on use of mortality tables
      Additional Q&As published on conflict mineral reporting
Comment letter issued

FASB posts highlights of February 11 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.

The FASB met on February 11 to continue its redeliberations of the 2012 proposed ASU, Financial Instruments – Credit Losses, and to review the disclosure requirements for income taxes. Highlights of these discussions are featured below.

Financial instruments – impairment The Board tentatively decided to retain the existing disclosure requirements in current U.S. GAAP for available-for-sale securities updated to include the general principles within the proposed ASU for disclosing credit risk.

The Board also tentatively decided not to require an entity to disclose a period-to-period roll-forward of its portfolio of loans and debt securities measured at amortized cost, as well as debt securities measured at fair value through other comprehensive income. However, the Board did affirm the proposed roll-forward disclosure requirements for an entity’s allowance for expected credit losses for financial assets measured at amortized cost and at fair value through other comprehensive income.

The Board tentatively decided to require disaggregation of the disclosures of the credit quality indicators for all classes of financing receivables, except for revolving lines of credit (for example, credit cards), by asset-origination year (vintage year) limited to no more than five annual reporting periods, and an aggregate balance for all remaining vintage years. For interim periods, all assets originating in the year-to-date period would be considered current-period obligations. For example, in the third quarter 20X7 report, an entity would disclose all assets originating in the year-to-date 20X7, 20X6, 20X5, 20X4, 20X3, along with an aggregate for all prior years.

The Board also tentatively decided that entities would use the existing guidance in ASC 310-20-35-9 through 35-12, Receivables: Nonrefundable Fees and Other Costs, for determining the vintage year of a new loan resulting from a loan refinancing or restructuring. The Board made the following tentative decisions on the scope of these disclosure requirements:
  • Disclosure requirements that apply to loan commitments should also apply to financial guarantees that are not accounted for as insurance or at fair value through net income.
  • Disclosure requirements related to credit risk and the recognition of credit losses should apply to all entities and would include (1) loans made by a not-for-profit entity to fulfill its mission, and (2) reinsurance receivables (with the exception of the credit quality indicator disaggregation disclosure requirement).

The Board intends to discuss transition guidance for the proposed changes at its next meeting.

Income taxes disclosure framework The Board discussed the disclosure requirements for undistributed foreign earnings and tentatively decided that entities would be required to disclose the following information:
  • Income before taxes, disaggregated between domestic and foreign earnings
  • Foreign earnings further disaggregated for any country that is significant to total earnings
  • Domestic tax expense for taxes on foreign earnings
  • Undistributed foreign earnings that are no longer asserted to be indefinitely reinvested, as well as a discussion on why the assertion changed, disaggregated by each country that is significant to the total amount
  • Disaggregation of the temporary difference for the cumulative amount of indefinitely reinvested foreign earnings if any country comprises at least 10 percent of the disclosed total

The Board tentatively decided not to require disclosure of the following information:
  • Disaggregated deferred tax liabilities recorded for unremitted foreign earnings by country
  • An estimate of the unrecognized deferred tax liability on the basis of simplified assumptions
  • Current conditions or past events that have changed management’s plans for undistributed foreign earnings

Dodd-Frank Wall Street Reform and Consumer Protection Act The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) mandates numerous studies and regulatory rule changes. Initiatives that impact financial reporting are described in the On The Horizon as information becomes available.

SEC adopts rules for security-based swap data repositories Recently, the SEC adopted two Final Rules, mandated by Title VII of the Dodd-Frank Act, to increase transparency in the security-based swap market and to ensure that security-based swap data repositories (SDRs) maintain complete records of security-based swap transactions that can be accessed by regulators:
The SEC also proposed certain additional rules and rule amendments to Regulation SBSR related to reporting security-based swap transactions.
The Final Rules will become effective 60 days after publication in the Federal Register.

AICPA Practice aid issued on use of mortality tables The AICPA recently issued a Technical Inquiry Services (TIS) practice aid on TIS Section 3700.01, “Effect of New Mortality Tables on Nongovernmental Employee Benefit Plans (EBPs) and Nongovernmental Entities That Sponsor EBPs.” The TIS provides guidance on how and when entities should consider the recently issued mortality tables if the financial statements have not yet been issued.
The guidance notes that U.S. GAAP requires the evaluation of all available evidence through the date the financial statements are available to be issued. Therefore, plans should consider the GAAP requirements for the use of the “mortality assumption that reflects the best estimate of the plan’s future experience.”

Additional Q&As published on conflict mineral reporting The AICPA’s Financial Reporting Center has published additional questions and answers (Q&As) on conflict mineral reports. The new Q&As provide guidance on management representations under AT 101, Attest Engagements, including example representations, and on practitioners’ responsibilities with respect to gaining an understanding of and testing internal controls.

Comment letter issued On February 17, the firm issued a comment letter in response to the FASB’s proposed ASU, Disclosures about Investments in Other Investment Companies.

The comment letter is available on the firm’s public website at

© 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.