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On the Horizon: CorpFin updates Non-GAAP Financial Measures C&DIs

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Contents FASB posts highlights from April 5 meeting SEC       CorpFin updates Non-GAAP Financial Measures C&DIs

GASB issues new guidance for disclosures related to debt CAQ releases tool on leasing standard for audit committees


FASB posts highlights from April 5 meeting All decisions reached at Board meetings are tentative and may be changed at future meetings.

The FASB met on April 5 to discuss the proposed ASU, Disclosures by Business Entities about Government Assistance. The Board made no tentative decisions, but directed the staff to perform additional research on the project’s scope and potential disclosures.



SEC CorpFin updates Non-GAAP Financial Measures C&DIs The Compliance and Disclosure Interpretations described below reflect the views of the SEC staff. They are not rules, regulations, or statements of the SEC and have not been approved by the Commission. The interpretations are intended as general guidance and should not be relied on as definitive.

The SEC’s Division of Corporation Finance (CorpFin) staff recently updated Section 101, Business Combination Transactions, of its Non-GAAP Financial Measures Compliance and Disclosure Interpretations (C&DIs). Previous Questions 101.02 and 101.03 were renumbered, and new Questions 101.02 and 101.03 were added as follows:

  • Question 101.02 confirms that a registrant may rely on the answer to Question 101.01 if the same forecasts provided to its financial advisor are also provided to its board of directors or board committee. Question 101.01 explains that financial measures included in forecasts provided to a financial advisor and used in connection with a business combination are not considered non-GAAP financial measures if certain conditions are met. Refer to On the Horizon dated October 26, 2017 for further discussion on Question 101.01.
  • Question 101.03 explains that when forecasts provided to bidders in a business combination transaction are disclosed to comply with the anti-fraud and other liability provisions of the federal securities laws, the financial measures included in such forecasts are not considered non-GAAP financial measures.



GASB issues new guidance for disclosures related to debt The GASB recently issued Statement 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, to clarify which liabilities governments should include in their disclosures related to debt in the notes to the financial statements.

For purposes of these disclosures, the new guidance defines “debt,” which excludes accounts payable and leases, except for contracts reported as a financed purchase of the underlying asset. The new guidance also requires additional disclosures related to government debt obligations, including separate information in debt disclosures for direct borrowings and direct placements, and for other debt. Direct borrowings, such as those made under a loan agreement with a lender, and direct placements, such as those issued as a debt security directly to an investor, have terms negotiated directly with the investor or lender, and are not offered for public sale.

Statement 88 is effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged. Governments should apply this new guidance to the notes to the financial statements for all periods presented, unless it is not practicable. If this is the case, governments should disclose the reason for not applying Statement 88 to prior periods.



CAQ releases tool on leasing standard for audit committees The Center for Audit Quality (CAQ) released a new tool designed to help audit committees enhance their oversight over implementation of the new leases accounting standard. The tool, “Preparing for the Leases Accounting Standard: A Tool for Audit Committees,” includes an overview of ASC 842, Leases, and its requirements. It also recommends important questions for audit committee members to consider for successful implementation.

The CAQ notes that implementing the new standard is likely to require significant time and resources, impacting multiple divisions within an organization. The tool is meant to assist these efforts as the new standard will begin to take effect in January 2019.

The CAQ also released a brief press release regarding the new tool.



© 2018 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.