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Guidance proposed on principal versus agent considerations

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Contents
FASB
     Proposed guidance issued on principal versus agent considerations
     FASB posts highlights of August 26 meeting
SEC
     CorpFin updates Financial Reporting Manual
AICPA
     New Q&A issued on required supplementary information
     Audit and Accounting Guides published
GASB publishes new implementation guide




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.

Proposed guidance issued on principal versus agent considerations

The FASB issued a proposed ASU, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which would enhance the implementation guidance on principal versus agent considerations within ASC 606, Revenue from Contracts with Customers.

Next week’s edition of On the Horizon will include a summary of the proposal.

FASB posts highlights of August 26 meeting

At its meeting on August 26, the FASB discussed measurement within the Conceptual Framework as well as income tax disclosures as part of its Disclosure Framework project. The Board made no decisions on the Conceptual Framework project, but reached the following two tentative decisions on income tax disclosures.

While existing disclosures require entities to provide a tabular reconciliation of their beginning and ending aggregate unrecognized tax benefits, the Board tentatively decided that entities should also disclose

  • Settlements using existing tax assets presented separately from those settled in cash
  • A breakdown of the ending balance of the liability for unrecognized tax benefits by the balance-sheet line item in which the liability is recognized

The Board also tentatively decided to eliminate the requirement for all entities to disclose the nature and an estimate of the range for a reasonably possible change in the unrecognized tax benefit balance within the next 12 months or a statement indicating that an estimate of the range cannot be made.




SEC

The Financial Reporting Manual does not contain rules, regulations, or statements of the SEC and has not been approved by the Commission. It is not intended to be published views of the Division of Corporation Finance or of the Office of the Chief Accountant, such as a Staff Accounting Bulletin. The manual was designed as an internal reference document for Division of Corporation Finance staff and should not be relied on as authoritative.

CorpFin updates Financial Reporting Manual

The staff of the SEC’s Division of Corporation Finance (CorpFin) has updated the Financial Reporting Manual as of August 25, 2015.

Specifically, Sections 1320.3 and 1320.4 were revised to state that CorpFin will not require a delinquent registrant to file each of its delinquent reports separately, provided it files a comprehensive annual report on Form 10-K that includes all material information that would have been required in each delinquent filing. Prior to this revision, a delinquent registrant had to obtain relief from CorpFin’s Office of Chief Accountant to file a comprehensive annual report on Form 10-K in lieu of filing each of the delinquent reports separately.

The staff has clarified that filing a comprehensive annual report would not foreclose enforcement action for the registrant’s filing delinquencies and that the registrant would need to establish a sufficient history of making timely filings to be eligible to use Form S-3.




AICPA

New Q&A issued on required supplementary information

The AICPA issued Technical Inquiry Services (TIS) Section 9180.01, “Required Supplementary Information in Historical Prior Periods and Auditor Independence of the Entity,” to address the question as to whether an auditor is required, for purposes of complying with AU-C Section 730, Required Supplementary Information, to be independent of an entity for any historical prior period (back period) where required supplementary information (RSI) accompanied financial statements subject to an audit.

U.S. GAAS requires that an auditor be independent for any period audited and covered by the audit opinion. However, the auditor’s opinion on the basic financial statements does not cover RSI, which, in accordance with AICPA AU-C Section 730, is not considered part of the basic financial statements. The procedures that the auditor is required to perform on RSI do not provide the auditor with sufficient, appropriate audit evidence to express an opinion or provide any assurance on the RSI. As a result, the auditor is not required to be independent of the entity in those back periods for purposes of complying with AU-C Section 730 as long as the audit opinion does not cover RSI.

Audit and Accounting Guides published

The AICPA recently issued the following Audit and Accounting Guides to provide guidance on accounting, auditing, and regulatory issues:

  • Depository and Lending Institutions: Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies
  • Property and Liability Insurance Entities
  • Reporting on Controls at a Service Organization: Relevant to Security, Availability, Processing Integrity, Confidentiality, or Privacy (SOC2)



GASB publishes new implementation guide

The Governmental Accounting Standards Board (GASB) recently issued Implementation Guide 2015-1, which incorporates changes resulting from feedback received during the yearlong public exposure of previously issued implementation guidance. The objective of the guide is to provide guidance that clarifies, explains, or elaborates on existing GASB Statements and Interpretations.

The new guide supersedes all previously issued implementation guidance and is effective for reporting periods beginning after June 15, 2015.

Due to the new two-tiered GAAP hierarchy introduced by Statement 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, the GASB will expose for public comment all new implementation guidance, as is done for other GASB pronouncements, because of the implementation guidance’s elevated status to the second of two categories of authoritative U.S. GAAP, right below the GASB Statements.




© 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.