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On The Horizon: FASB redeliberates insurance contracts proposal

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ContentsFASB       Highlights from November 1 meeting posted
      Q4 2017 FASB Outlook e-newsletter published

AICPA      FinREC releases revenue recognition implementation working drafts

CAQ and Audit Analytics report on disclosure trends in audit oversight International Federation of Accountants (IFAC)       IPSASB issues proposal on accounting for social benefits

Comment letter issued



FASB
Highlights from November 1 meeting posted All decisions reached at Board meetings are tentative and may be changed at future meetings.

The FASB met on November 1 to discuss the insurance and disclosure framework projects as well as Codification improvements, and took the actions summarized below.

Insurance

The Board redeliberated the amendments related to the presentation and disclosure requirements for certain insurance contracts under the proposed ASU, Targeted Improvements to the Accounting for Long-Duration Contracts, and tentatively decided to

  • Present market-risk benefits separately in the statement of financial position as well as changes in their fair value separately in the statement of operations, except for changes in the fair value related to instrument-specific credit risk, which should be presented separately in other comprehensive income
  • Present the adjustment related to the liability for future policy benefit measurement assumptions separately in the statement of operations
  • Add certain additional disclosures, remove certain proposed disclosures, and affirm all other proposed disclosures
  • Reduce the frequency of certain disclosures to at least annually
  • Replace certain proposed transition disclosures

The Board will discuss the effective date at a future meeting. The staff will perform additional outreach for feedback on the proposed changes to the disclosure requirements.

Codification improvements: proposed elimination of ASC 995, U.S. Steamship Entities

The Board redeliberated the amendments in the proposed ASU, Technical Corrections and Improvements to Topic 995, U.S. Steamship Entities – Elimination of Topic 995, and tentatively affirmed its decision to eliminate ASC 995 from the Codification.

The Board also tentatively agreed that an entity would apply the proposed amendments on a modified prospective basis, with certain disclosures related to the amounts and types of temporary differences for which a deferred tax liability had not been previously recognized.

The effective date for all entities would be for annual and first interim periods beginning after December 15, 2018. Early adoption would be permitted for all entities, including adoption in an interim period.

The Board directed the staff to draft a final ASU for vote by written ballot.

Disclosure framework: Board’s decision process


The Board discussed issues related to the proposed Concepts Statement, Conceptual Framework for Financial Reporting – Chapter 8, Notes to Financial Statements, and made several tentative decisions.

The staff will draft the proposed chapter for external review and address any additional issues from this review. The Board will redeliberate issues related to materiality at a future meeting.

Q4 2017 FASB Outlook e-newsletter published The FASB issued the Q4 2017 edition of the FASB Outlook e-newsletter, which includes articles that discuss

  • An update on certain projects, including the disclosure framework and long-duration insurance contracts projects
  • How the FASB is reducing unnecessary complexity in standard setting
  • Information available to investors for decision-making
  • The FASB’s new web portal featuring guidance on implementing standards

The newsletter also includes a link to a video that discusses recent projects added to the Board’s agenda.



AICPAFinREC releases revenue recognition implementation working drafts The AICPA Financial Reporting Executive Committee (FinREC) released working drafts of revenue recognition implementation issues for comment. This latest set of working drafts discusses considerations about, and provides illustrative examples for, entities implementing the new revenue standard in the brokers and dealers, and telecommunications industries.

These implementation issues will be added to the AICPA audit and accounting guide on revenue recognition after the review of public comments and finalization of the issues.

The comment period for these working drafts ends January 2, 2018.



CAQ and Audit Analytics report on disclosure trends in audit oversightThe Center for Audit Quality (CAQ) and Audit Analytics issued their fourth annual report, “Audit Committee Transparency Barometer.” The 2017 report identified the following positive trends in key audit committee disclosure areas:

  • Thirty-seven percent of S&P 500 company proxy statements showed enhanced discussion of the audit committee’s considerations in recommending the appointment of the audit firm, up from 13 percent in 2014. Twenty-four percent of mid-cap companies showed enhanced discussion (up from 10 percent in 2014) compared to 17 percent of small-cap companies (up from 8 percent in 2014).
  • Thirty-eight percent of S&P 500 companies disclosed criteria considered when evaluating the audit firm, up from 8 percent in 2014. Twenty-eight percent of mid-cap companies disclosed criteria considered when evaluating the audit firm (up from 7 percent in 2014) compared to 27 percent of small-cap companies (up from 15 percent in 2014).



International Federation of Accountants (IFAC)IPSASB issues proposal on accounting for social benefits IFAC’s International Public Sector Accounting Standards Board (IPSASB) released for comment Exposure Draft 63, Social Benefits, which addresses accounting for social benefits provided by governments, such as retirement, unemployment, and disability benefits. Social benefit arrangements typically account for a significant portion of a government’s expenditures, but existing IPSASB standards do not provide guidance on how to account for social benefits.

The Exposure Draft includes a proposed definition of social benefits, and proposes recognition and measurement guidance for social benefit arrangements. It also proposes disclosure requirements that would assist financial statement users in evaluating the impact of social benefits on future government finances.

Comments on the proposal are due by March 31, 2018.



Comment letter issued On October 30, the firm submitted a comment letter in response to the FASB’s proposed ASU, Not-for-Profit Entities: Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (Topic 958).



© 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.