On the Horizon: SEC rule requiring resource extraction payment disclosures nullified

Contents FASB posts highlights from February 15 meeting SEC      Final Rule requiring resource extraction issuers to disclose payments nullified

PCAOB updates guidance for filing Form AP

FASB posts highlights from February 15 meeting All decisions reached at Board meetings are tentative and may be changed at future meetings.

The FASB met on February 15 to redeliberate issues and comments received on a proposed ASU on hedging and to discuss outreach and research on revenue recognition. The Board’s actions are summarized below.

Accounting for financial instruments – hedging

The Board discussed feedback received on the proposed ASU, Targeted Improvements to Accounting for Hedging Activities, and tentatively decided to

  • Permit entities to return to a qualitative assessment of hedge effectiveness after performing a quantitative assessment of hedge effectiveness. The same principle and factors used in evaluating whether an entity can perform a qualitative assessment would be used both at hedge inception and after a quantitative assessment has been performed subsequent to hedge inception.
  • Allow additional time for private companies that are not financial institutions to perform and document their initial and subsequent hedge effectiveness testing. Specifically, only the statement of intent to hedge should be prepared at hedge inception. All initial and subsequent effectiveness assessments would need to be performed by the time the next set of financial statements is available to be issued.

Research on nonrecurring engineering and preproduction costs

The Board discussed research on the accounting for nonrecurring engineering and preproduction costs and the related reimbursement from customers. Board members indicated that the staff analysis in the Board Meeting Handout supplements the November 2015 Transition Resource Group discussion on this topic and directed the FASB staff to add the handout to the TRG resources on the FASB website.

SEC Final Rule requiring resource extraction issuers to disclose payments nullified On February 14, President Donald J. Trump signed House Joint Resolution 41 under the Congressional Review Act nullifying the SEC Final Rule, Disclosure of Payments by Resource Extraction Issuers.

The Final Rule was required by the Dodd-Frank Act and was adopted by the SEC in June 2016. It would have required resource extraction issuers engaged in the commercial development of oil, natural gas, or minerals that were required to file an annual report under the Securities Exchange Act of 1934 to disclose certain payments made to the U.S. federal government and to foreign governments.

PCAOB updates guidance for filing Form AP The Public Company Accounting Oversight Board (PCAOB) updated Staff Guidance, “Form AP, Auditor Reporting of Certain Audit Participants and Related Voluntary Audit Report Disclosure Under AS 3101, Reports on Audited Financial Statements,” to provide firms with guidance on the treatment of professional staff on secondment.

© 2017 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.