On The Horizon: FASB meets with TRG for credit losses

Contents FASB       Board meets with TRG for credit losses
      Taxonomy guides published

SEC       CorpFin accelerates release of serious deficiencies letters through EDGAR

EITF provides recap of June 7 meeting COSO publishes supplement for ERM Framework International Federation of Accountants       IAASB invites stakeholders to its global series of discussions on EER

Comment letter issued

FASB Board meets with TRG for credit losses The Board met with the Transition Resource Group for Credit Losses (TRG) on June 11 to discuss five implementation issues related to the FASB’s standard on credit losses, ASU 2016-13, Measurement of Credit Losses on Financial Instruments. In addition, the FASB staff presented a summary of several technical inquiries answered by the staff that may be of general interest to entities applying the new guidance.

The TRG discussed the following implementation issues:

  • How should capitalized interest be considered when estimating expected credit losses using a method other than discounted cash flow method
  • Accounting for expected credit losses on accrued interest
  • Accounting for allowances when transferring securities from available-for-sale to held-to-maturity classification and loans from held-for-sale to held-for-investment classification
  • Accounting for expected recoveries when estimating excepted credit losses on pool-level
  • Determining prepayment for the purposes of estimating expected credit losses on financial assets

The FASB staff presented its views in response to several technical inquiries, as follows:

  • Intercompany loans and receivables among entities under common control (parent-subsidiary, subsidiary-parent, subsidiary-subsidiary) are outside the scope of ASC 326, Financial Instruments – Credit Losses.
  • Cash flows from the disposition of returned leased assets should be included by a lessor in the estimate of expected credit loss on net investment in a lease under ASC 326.
  • Lessors should recognize changes in the collectibility of billed lease receivables as an adjustment to current-period lease income using the guidance in ASC 842, Leases, and not as a credit loss expense under the guidance in ASC 326.

The meeting materials are currently available on the FASB’s website. Future meetings will be announced on the FASB’s website.

A more detailed discussion of these implementation issues and technical inquiries will be included in a forthcoming New Developments Summary.

Taxonomy guides published The FASB Foundation published two Taxonomy Implementation Guides:

SEC CorpFin accelerates release of serious deficiencies letters through EDGAR As part of its ongoing efforts to enhance the transparency of the review process, the Division of Corporation Finance (CorpFin) recently announced its intentions to make serious deficiencies letters publicly available through EDGAR within 10 calendar days of the letter’s issuance, beginning with letters issued on June 15, 2018. Serious deficiencies letters are sent to issuers when a registration statement or offering document is not minimally compliant with statutory or regulatory requirements such that CorpFin staff has decided to defer its review until the issuer resolves the deficiencies by amending the filing. These letters will appear in companies’ filing histories on EDGAR as “SEC STAFF LETTER: SERIOUS DEFICIENCIES.”

EITF provides recap of June 7 meeting The FASB’s Emerging Issues Task Force (EITF) released a recap of its June 7 meeting during which it discussed issues related to accounting for certain costs incurred in a cloud computing arrangement, recognizing a liability related to a revenue contract of an acquiree in a business combination, and improving accounting for episodic television series.

Refer to the June 14 On the Horizon for additional information on the issues discussed.

COSO publishes supplement for ERM Framework The Committee of Sponsoring Organizations of the Treadway Commission (COSO) published a supplement to Enterprise Risk Management – Integrating with Strategy and Performance (ERM Framework). The supplement, Enterprise Risk Management: Integrating with Strategy and Performance – Compendium of Examples, includes illustrations and case studies of applying the ERM Framework to day-to-day practices, with industry-specific examples from financial services, consumer products, industrial products, energy, technology, healthcare, not-for-profit, and government.

Additional information can be found in the COSO press release.

International Federation of Accountants IAASB invites stakeholders to its global series of discussions on EER The International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants invites stakeholders to attend its global series of discussions on the future of assurance over emerging forms of external reporting (EER). The series is open to all stakeholders, with engagement desired from individuals who prepare EER reports, assurance practitioners, regulators, standard-setters, investors, and other users of EER reports. Individuals may register at with their name, organization, country, and the event they would like to attend.

For more information, including meeting dates and locations, refer to the IFAC website.

Comment letter issued On June 11, Grant Thornton LLP issued a comment letter in response to the FASB’s proposal on targeted improvements to collaborative arrangements.

© 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.