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FASB ready to draft proposed ASU for not-for-profit financial statements

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Contents
FASB posts highlights of March 4 meeting
      Financial statements of not-for-profit entities
      Fair value measurement disclosure review
XBRL guidance proposed on repurchase transactions
EITF releases agenda and materials for March 19 meeting



FASB posts highlights of March 4 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 March 4 to continue its discussion on financial statements for not-for-profit entities and to discuss disclosure requirements for fair value measurements. Highlights of the discussions are featured below.


Financial statements of not-for-profit entities
The Board focused its discussion on the expected costs, benefits, and complexities of the proposed guidance on financial statements for not-for-profit entities, and tentatively agreed that the overall benefits of the changes justify the costs of preparing and using information under the new guidance. However, the Board agreed to consider feedback from public exposure of the proposal and outreach. The FASB also considered input received during a recent Not-for-Profit Advisory Committee meeting and tentatively decided to include a question in the proposed ASU on the presentation of equity transfers.

The Board requested the staff to draft a proposed ASU and expects it to be issued for public comment in April.


Fair value measurement disclosure review
The Board tentatively decided to remove the following disclosure requirements from ASC 820, Fair Value Measurement, because they are inconsistent with the guidance in the 2014 proposed Concepts Statement, Conceptual Framework for Financial Reporting – Chapter 8: Notes to Financial Statements:

  • The policy for timing of transfers between the fair value hierarchy levels
  • The amount of and reasons for transfers between Levels 1 and 2
  • The internal valuation processes for Level 3 fair value measurements
  • For private companies, the change in the unrealized gains and losses for the period included in earnings (or changes in net assets) on recurring Level 3 fair value measurements that are held at the end of the reporting period

In addition, the Board tentatively decided to modify the ASC 820 disclosure requirements as follows:

  • For investments in certain entities that calculate net asset value, reporting entities would disclose the estimated timing of asset liquidations and the date when restrictions from redemptions might lapse only if the investment entity has communicated the information directly or indirectly to the reporting entity.
  • Private companies would no longer be required to reconcile the opening balances to the closing balances of recurring Level 3 fair value measurements and instead would disclose transfers into and out of Level 3 as well as purchases of Level 3 assets.

Lastly, the Board tentatively decided to require entities, excluding private companies, to disclose the unrealized gains and losses recognized in other comprehensive income and earnings (or changes in net assets) by level for recurring fair value measurements held at the end of the reporting period.



XBRL guidance proposed on repurchase transactions
The Board recently released a proposed guide for XBRL users titled Repurchase-to-Maturity Transactions and Repurchase Financings. The proposed guidance demonstrates the modeling for disclosures related to repurchase-to-maturity transactions and repurchase financings.

The comment period on the proposed guide ends May 1.




EITF releases agenda and materials for March 19 meeting
The EITF recently released its proposed agenda for the March 19 meeting, which will include the following topics:

  • Issue 14-A, “Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions”
  • Issue 14-B, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”
  • Issue 15-A, “Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets”
  • Issue 15-B, “Recognition of Breakage for Prepaid Stored-Value Cards”
  • Issue 15-C, “Employee Benefit Plan Simplifications”

Discussion materials will be posted on the FASB website as they become available prior to the meeting.



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