On the Horizon -- FASB aims to clarify ASC 610-20

Contents FASB posts highlights of February 17 meeting AICPA launches cybersecurity resource center for CPAs Department of Energy updates audit guide for Uniform Guidance Comment letter issued

FASB posts highlights of February 17 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 17 to discuss clarifying the scope of guidance in ASC 610-20, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets. The Board made the tentative decisions summarized below.

Undivided interests The Board tentatively decided not to provide in ASC 610-20 any explicit guidance on sales of undivided interests in an asset.

Partial sales transactions In addition, the Board tentatively decided to require, consistent with the new revenue guidance, that entities evaluate the assessment of control from the perspective of the counterparty in the transaction.

The Board also tentatively decided to clarify how an entity would evaluate the transfer of control when it transfers ownership interests in a subsidiary that consists of assets subject to the guidance in ASC 610-20. Examples of when control is transferred include (1) an entity transfers control of a 100% ownership interest in a wholly owned subsidiary to a single party when the counterparty obtains control of the asset, (2) an entity transfers control of an ownership interest in a subsidiary to multiple parties in which the entity does not retain an ownership interest in the former subsidiary when the other parties are deemed to collectively control the asset, and (3) an entity transfers control of an ownership interest in a subsidiary in which the entity retains a noncontrolling interest in that former subsidiary when the former subsidiary controls the asset.

Transition The Board tentatively decided that an entity does not need to apply the same transition method for ASC 606 and ASC 610-20. For example, an entity can elect to apply the modified retrospective approach when adopting the guidance in ASC 610-20 and the full retrospective approach for ASC 606. The Board tentatively clarified that if an entity applies a different transition approach to ASC 610-20, it must comply with the disclosure requirements for that approach, including disclosure of which method of transition is applied for both ASC 610-20 and ASC 606.

AICPA launches cybersecurity resource center for CPAs The AICPA recently launched the AICPA Cybersecurity Resource Center to provide access to news, information, events, and resources related to cybersecurity.

Department of Energy updates audit guide for Uniform Guidance The Department of Energy (DOE) has updated its audit guidance for for-profit entities that receive DOE awards to reflect the Uniform Guidance single audit requirements from 2 Code of Federal Regulations (CFR) 200, Uniform Administrative Requirements Cost Principles and Audit Requirements for Federal Awards. DOE Regulation 2 CFR 910 Subpart F, “Audit Requirements for For-Profit Entities,” should be read in its entirety to properly plan and execute an audit.

The DOE also issued POLICY FLASH 2016-12 to provide clarifying guidance related to certain provisions in DOE Regulation 2 CFR 910.515 on auditor reports.

The provisions of DOE Regulation 2 CFR 910 are effective for years beginning after December 31, 2015.

Comment letter issued On February 16, Grant Thornton issued a comment letter in response to the FASB’s proposed ASU, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.