Second Quarter 2015 Standard Setter Update - eyjapan.jp · July 2015 This Second Quarter 2015 Standard Setter Update highlights significant developments in financial accounting and

Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments (current through 30 June 2015)

July 2015

Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

This Second Quarter 2015 Standard Setter Update highlights significant developments in financial accounting and reporting between 1 April 2015 and 30 June 2015 except as noted. This publication also includes summaries of certain proposals presently under consideration by the Financial Accounting Standards Board (FASB), the Emerging Issues Task Force (EITF), the Private Company Council (PCC), the Securities and Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB), the Auditing Standards Board (ASB) and the Governmental Accounting Standards Board (GASB). For additional details on these developments, we refer you to related EY publications, many of which can be found on our AccountingLink website. We will continue to keep you informed about important developments as they occur.

July 2015

To our clients and other friends

Contents Financial Accounting Standards Board ...................................................................... 1 Securities and Exchange Commission ..................................................................... 16 Public Company Accounting Oversight Board .......................................................... 24 Auditing Standards Board ...................................................................................... 27 Governmental Accounting Standards Board ............................................................ 28 Effective date matrices .......................................................................................... 33

i

Financial Accounting Standards Board Final FASB guidance

Technical Corrections and Improvements (ASU 2015-10) .......................................................... 1 Financial Services — Insurance (Topic 944), Disclosures about Short-Duration Contracts

(ASU 2015-09) ................................................................................................................... 1 Business Combinations (Topic 805), Pushdown Accounting — Amendments to SEC

Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (ASU 2015-08) .......................... 2 Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That

Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the FASB Emerging Issues Task Force) (ASU 2015-07) ....................................................................... 2

Earnings Per Share (Topic 260), Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the FASB Emerging Issues Task Force) (ASU 2015-06) ........................................................................................................ 3

Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (ASU 2015-05) ...................... 3

Compensation — Retirement Benefits (Topic 715), Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets (ASU 2015-04) ................ 3

Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03)............................................................................................ 4

Final guidance expected soon Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date ................... 5 Inventory (Topic 330), Simplifying the Measurement of Inventory .............................................. 5 Derivatives and Hedging (Topic 815), Application of the Normal Purchases and Normal

Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force) ............................................................ 6

Plan Accounting (Topics 960, 962, and 965) — (I) Fully Benefit-Responsive Investment Contracts, (II) Plan Investment Disclosures, and (III) Measurement Date Practical Expedient (a consensus of the FASB Emerging Issues Task Force) ........................................ 7

FASB exposure documents Issued this quarter

Compensation — Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting .......................................................................................................... 8

Investments — Equity Method and Joint Ventures (Topic 323), Simplifying the Equity Method of Accounting ......................................................................................................... 9

Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments ...................................................................................... 9

Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing ................................................................................................. 10

Pronouncements and proposals

ii Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Liabilities — Extinguishments of Liabilities (Subtopic 405-20), Recognition of Breakage for Certain Prepaid Stored-Value Cards (a consensus of the FASB Emerging Issues Task Force) .................................................................................... 11

Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954), Presentation of Financial Statements of Not-for-Profit Entities ................................................................... 11

Approved but not issued in Q2 2015 Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships ................. 12 Contingent Put and Call Options in Debt Instruments ................................................................ 12

Other proposals previously issued .................................................................................................. 13

Other FASB Revenue recognition developments ......................................................................................... 14 What’s next — agenda highlights............................................................................................... 14

Securities and Exchange Commission SEC rule proposals and other releases

Issued this quarter Possible Revisions to Audit Committee Disclosures (Release No. 33-9862) ............................... 16 Listing Standards for Recovery of Erroneously Awarded Compensation

(Release No. 33-9861) ...................................................................................................... 16 Additional Analysis Related to Proposed Pay Ratio Disclosure Rules (Release No. 33-9452) ...... 17 Investment Company Reporting Modernization (Release No. 33-9776) ..................................... 17 Amendments to Form ADV and Investment Advisers Act Rules (Release No. IA-4091) ............... 18 Pay versus Performance (Release No. 34-74835) .................................................................... 18

Highlights of certain proposals previously issued Disclosure of Hedging by Employees, Officers and Directors (Release No. 33-9723) .................. 19

Other proposals previously issued .................................................................................................. 20

Other SEC SEC staff to release ‘no review’ letters on EDGAR ..................................................................... 21 SEC staff issues interpretations on new rules under Regulation A ............................................. 21 SEC approves pilot program for increased tick sizes for smaller companies ............................... 22 2013 XBRL US GAAP Taxonomy no longer available ................................................................ 22 SEC Investor Advisory Committee ........................................................................................... 22 SEC Advisory Committee on Small and Emerging Companies .................................................... 23

iii

Public Company Accounting Oversight Board PCAOB proposed standards and other projects

Concept Release on Audit Quality Indicators (PCAOB Release No. 2015-005) ........................... 24 Supplemental Request for Comment: Rules to Require Disclosure of Certain Audit

Participants on a New PCAOB Form (PCAOB Release No. 2015-004) ................................. 24 Proposals previously issued ........................................................................................................... 25

Other PCAOB Staff consultation paper on auditor’s use of the work of specialists ........................................... 26 Audit Committee Dialogue publication issued ........................................................................... 26

Auditing Standards Board ASB exposure drafts

Proposals previously issued ........................................................................................................... 27

Governmental Accounting Standards Board Final GASB guidance

GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments ........................................................................................... 28

GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions ........................................................................................................ 28

GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans ................................................................................................................... 29

GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68 ............................................................ 29

GASB exposure drafts Issued this quarter

Accounting and Financial Reporting for Certain External Investment Pools ............................... 30 Blending Requirements for Certain Component Units, an amendment of GASB

Statement No. 14 ............................................................................................................. 30 Accounting and Financial Reporting for Irrevocable Split-Interest Agreements .......................... 31

Other proposals previously issued .................................................................................................. 31

Other GASB Implementation Guide No. 2015-1 ........................................................................................... 32 Preliminary views previously issued ......................................................................................... 32

iv Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective date matrices Effective date matrix — final FASB pronouncements ................................................................. 33 Effective date matrix — final SEC pronouncements and interpretive releases ............................. 39 Effective date matrix — final PCAOB pronouncements and rules ................................................ 40 Effective date matrix — final ASB standards .............................................................................. 41 Effective date matrix — final GASB pronouncements ................................................................. 42

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Technical Corrections and Improvements (ASU 2015-10) Date issued: 12 June 2015

Summary The FASB issued this Accounting Standards Update (ASU) to correct differences between original guidance and the Accounting Standards Codification (ASC), clarify the guidance, correct references and make minor improvements affecting a variety of topics. While most of the amendments are not expected to have a significant effect on practice, some of them could change practice for some entities.

Effective date Amendments that the Board deemed more substantive are effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015. The other amendments are effective immediately.

Financial Services — Insurance (Topic 944), Disclosures about Short-Duration Contracts (ASU 2015-09)

Date issued: 21 May 2015

Summary Insurers will be required to make additional disclosures about short-duration contracts (i.e., coverage provided for a fixed period of short duration, typically a year or less) for products such as auto, homeowners or health insurance. The disclosures focus on the liability for unpaid claims and claim adjustment expenses. Among other things, insurers will have to provide tables showing incurred and paid claims development information by accident year for the number of years claims typically remain outstanding (but not more than 10 years). Insurers also will have to provide a reconciliation of this information to the statement of financial position.

Effective date For public business entities, the guidance is effective for annual periods beginning after 15 December 2015 and interim periods within annual periods beginning after 15 December 2016. For other entities, it is effective for annual periods beginning after 15 December 2016 and interim periods within annual periods beginning after 15 December 2017.

Financial Accounting Standards Board

Final FASB guidance

2 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Business Combinations (Topic 805), Pushdown Accounting — Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (ASU 2015-08)

Date issued: 8 May 2015

Summary The ASU removes SEC staff guidance on pushdown accounting from the Codification. The SEC staff had previously rescinded its guidance by issuing Staff Accounting Bulletin No. 115 when the FASB issued its own pushdown accounting guidance in November 2014.

Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the FASB Emerging Issues Task Force) (ASU 2015-07)

Date issued: 1 May 2015

Summary The guidance eliminates today’s requirement to categorize within the fair value hierarchy investments whose fair values are measured at net asset value (NAV) using the practical expedient in ASC 820.

Instead, entities will have to disclose the fair values of such investments so that financial statement users can reconcile amounts reported in the fair value hierarchy table to the amounts reported on the balance sheet.

Entities will continue to disclose information to help users understand the nature and risks of investments measured using the NAV practical expedient, including whether it is probable that these investments will be sold at amounts other than NAV. These disclosures will also include a general description of the terms and conditions upon which the entity can redeem the investments. However, these disclosures will no longer be required for investments that are eligible for the NAV practical expedient but are not measured that way.

Effective date and transition The guidance will be effective for public business entities for fiscal years beginning after 15 December 2015 and interim periods within those years. For other entities, the guidance will be effective for fiscal years beginning after 15 December 2016 and interim periods within those years. Early adoption is permitted. The guidance will be applied retrospectively.

Other resources • To the Point, FASB eliminates requirement to categorize certain investments in the fair value

hierarchy (SCORE No. BB2980)

3

Earnings Per Share (Topic 260), Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the FASB Emerging Issues Task Force) (ASU 2015-06)

Date issued: 30 April 2015

Summary The guidance requires a master limited partnership to allocate the earnings or losses of a transferred business for periods before the date of a dropdown of net assets accounted for as a common control transaction entirely to the general partner for purposes of calculating historical earnings per unit. Additional disclosures also are required.

Effective date and transition The guidance is effective for fiscal years beginning after 15 December 2015, and interim periods within those years, and early adoption is permitted. Entities must apply the guidance retrospectively.

Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (ASU 2015-05)

Date issued: 15 April 2015

Summary The FASB amended its guidance on internal use software to clarify how customers in cloud computing arrangements should determine whether the arrangement includes a software license. The guidance

also eliminates the existing requirement for customers to account for software licenses they acquire by analogizing to the guidance on leases. Instead, entities will account for these arrangements as licenses of intangible assets.

Effective date For public business entities, the guidance is effective for annual periods, including interim periods within those annual periods, beginning after 15 December 2015. For all other entities, the guidance is effective for annual periods beginning after 15 December 2015 and interim periods in annual periods beginning after 15 December 2016. Early adoption is permitted for all entities.

Other resources • To the Point, FASB clarifies a customer’s accounting for payments made in a cloud computing

arrangement (SCORE No. BB2969)

Compensation — Retirement Benefits (Topic 715), Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets (ASU 2015-04)

Date issued: 15 April 2015

Summary An employer with a fiscal year end that does not coincide with a calendar month end is allowed to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to its fiscal year end (i.e., on an alternative measurement date). An employer

4 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

that uses this election must disclose it and consistently apply the practical expedient from year to year and to all of its defined benefit plans. This election is also allowed for interim remeasurements to permit an employer to remeasure defined plan assets and obligations in interim periods at the closest calendar month end to an event that triggers the remeasurement.

Effective date and transition The guidance is effective for public business entities for fiscal years beginning after 15 December 2015, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after 15 December 2016 and interim periods within fiscal years beginning after 15 December 2017. Prospective application is required, and early adoption is permitted.

Other resources • To the Point, FASB allows employers to simplify measurement date for defined benefit plan assets

and obligations (SCORE No. BB2967)

Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03)

Date issued: 7 April 2015

Summary The guidance requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the corresponding debt liability rather than as an asset. This will make the presentation of debt issuance costs consistent with the presentation of debt discounts or premiums. The guidance also addresses the long-standing conflict with the conceptual framework and improves consistency with IFRS. The recognition and measurement guidance for debt issuance costs is not affected.

The standard does not address the presentation of costs that do not have an associated liability. In response to questions, the SEC Observer to the EITF said at the June EITF meeting that the SEC staff would not object to an entity presenting the cost of securing a revolving line of credit as a deferred asset, regardless of whether a balance is outstanding (i.e., rather than presenting the cost as a deferred asset and reclassifying all or a portion of it as a direct deduction from the liability whenever a balance is outstanding). Under this approach, the entity still would have to amortize the costs over the term of the arrangement.

Effective date and transition The guidance is effective for public business entities for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after 15 December 2015, and interim periods within fiscal years beginning after 15 December 2016. Early adoption is permitted for financial statements that have not yet been issued. Upon adoption, an entity must apply the guidance retrospectively to all prior periods presented.

Other resources • To the Point, Simplifying the presentation of debt issuance costs (SCORE No. BB2963)

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The FASB has completed deliberations on these proposals or approved consensuses reached by the EITF and is expected to issue final guidance soon.

Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date

Date proposal issued: 29 April 2015 — comment period ended 29 May 2015

Summary The FASB proposed a one-year deferral of the effective dates of its new revenue recognition standard for public and nonpublic entities reporting under US GAAP.

The International Accounting Standards Board (IASB), which developed its new revenue standard jointly with the FASB, also proposed a one-year deferral.

Effective date Under the proposal, the new revenue recognition standard would be effective for public entities for annual reporting periods beginning after 15 December 2017 and interim periods therein. Nonpublic entities would be required to adopt the standard for annual reporting periods beginning after 15 December 2018, and interim periods within annual reporting periods beginning after 15 December 2019.

Both public and nonpublic entities would be permitted to adopt the standard as early as the original public entity effective date (i.e., annual reporting periods beginning after 15 December 2016 and interim periods therein). Early adoption prior to that date would not be permitted.

Note: The FASB decided on 9 July 2015 to defer the effective date of the new revenue standard by one year. The standard will be effective for public entities for annual reporting periods beginning after 15 December 2017 and interim periods therein. Nonpublic entities will be required to adopt the standard for annual reporting periods beginning after 15 December 2018, and interim periods within annual reporting periods beginning after 15 December 2019. All entities will be allowed to adopt the standard as early as the original public entity effective date.

Other resources • FASB Project Update: Revenue from Contracts with Customers

• To the Point, FASB decides to defer the new revenue standard by one year (SCORE No. BB3010)

• To the Point, FASB proposes a one-year deferral of the new revenue standard (SCORE No. BB2977)

Inventory (Topic 330), Simplifying the Measurement of Inventory

Date proposal issued: 15 July 2014 — comment period ended 30 September 2014

Summary This proposal would simplify the subsequent measurement of inventory by requiring entities to measure it at the lower of its cost and net realizable value (i.e., estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation). When evidence exists that the net realizable value of inventory is less than its cost, entities would

Final guidance expected soon

6 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

recognize the difference as a loss in earnings in the period in which it occurs. The amendments would eliminate existing guidance that requires a reporting entity also to consider the replacement cost of inventory and the net realizable value of inventory, less an approximately normal profit margin.

The FASB decided to add a scope exception for inventories measured using the last-in, first-out (LIFO) method and the retail inventory method (RIM). Entities that use the LIFO method and RIM would continue to apply their current impairment models.

Effective date and transition This guidance would be applied prospectively. The guidance would be effective for public business entities for annual periods beginning after 15 December 2016, including interim periods within those annual periods. For other entities, the guidance would be effective for annual periods beginning after 15 December 2016, and interim periods within annual periods beginning after 15 December 2017. Early adoption as of the beginning of an interim or annual period would be permitted.

Other resources • FASB Project Update: Simplifying the Subsequent Measurement of Inventory

• To the Point, Proposals would eliminate extraordinary items and simplify accounting for inventory (SCORE No. BB2787)

Derivatives and Hedging (Topic 815), Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force)

Date proposal issued: 23 April 2015 — comment period ended 18 May 2015 (Final consensus reached by the EITF in June 2015 and ratified by the FASB in July 2015. An ASU has not yet been issued.)

Summary The use of locational marginal pricing by an independent system operator (ISO) to determine a transmission charge or credit in a nodal energy market would not constitute a net settlement of a forward contract for the purchase or sale of electricity, even when legal title to the associated electricity is conveyed to the ISO during transmission. Consequently, these contracts would qualify for the normal purchases and normal sales scope exception to derivative accounting if they meet the other criteria in the guidance.

Effective date and transition The proposed guidance would be applied prospectively upon issuance.

Other resources • To the Point, Applying the normal purchases normal sales exception to power contracts in nodal

energy markets (SCORE No. BB2975)

• EITF Update, June 2015 meeting highlights (SCORE No. BB3003)

7

Plan Accounting (Topics 960, 962, and 965) — (I) Fully Benefit-Responsive Investment Contracts, (II) Plan Investment Disclosures, and (III) Measurement Date Practical Expedient (a consensus of the FASB Emerging Issues Task Force)

Date proposals issued: 23 April 2015 — comment period ended 18 May 2015 (Final consensus reached by the EITF in June 2015 and ratified by the FASB in July 2015. ASUs have not yet been issued.)

Summary The proposals would eliminate requirements that employee benefit plans measure the fair value of fully benefit-responsive investment contracts (FBRICs) and provide the related fair value disclosures.

Plans would be required to disaggregate their investments by general type either on the face of the financial statements or in the notes to the financial statements, and self-directed brokerage accounts would be one general type. Plans would no longer be required to disclose the net appreciation/depreciation in fair value of investments by general type or individual investments equal to or greater than 5% of net assets available for benefits.

In addition, a plan with a fiscal year end that doesn’t coincide with the end of a calendar month would be allowed to measure its investments and investment-related accounts using the month end closest to its fiscal year end.

Effective date and transition The proposals on the measurement of FBRICs and the disclosure of plan investments would be applied retrospectively for fiscal years beginning after 15 December 2015, with early adoption permitted. The guidance on the measurement date practical expedient would be applied prospectively for fiscal years beginning after 15 December 2015, with early adoption permitted.

Other resources • To the Point, FASB proposes simplifying financial reporting by employee benefit plans

(SCORE No. BB2974)

• EITF Update, June 2015 meeting highlights (SCORE No. BB3003)

8 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Compensation — Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting

Date issued: 8 June 2015 — comment period ends 14 August 2015

Summary The proposal is intended to simplify certain aspects of accounting for share-based payments to employees. The proposed improvements include:

• An employer with a statutory income tax withholding obligation would be allowed to repurchase more of an employee’s shares than it can today to cover income taxes on the award without triggering liability accounting, provided that the value of the shares repurchased does not exceed the amount calculated using the employee’s maximum individual statutory tax rate in the applicable jurisdiction.

• An employer would be allowed to elect to account for forfeitures of share-based payments meeting certain conditions as they occur or to estimate forfeitures and adjust the estimates as they change, as is currently required.

• An employer would be required to include all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. That is, additional paid-in capital (APIC) pools would be eliminated.

• For awards with put and call rights that are contingent on an event within an employee’s control, a company would focus solely on the probability that the contingent event would occur to determine whether to classify these awards as liabilities or equity.

The proposal also would provide two practical expedients for private companies. One would allow private companies to use a simplified method to estimate the expected term for certain awards. The other would allow them to make a one-time change in accounting principle to measure liability-classified awards at intrinsic value if they currently measure them at fair value.

Effective date The effective date has not yet been determined.

Other resources • FASB Project Update: Employee Share-Based Payment Accounting Improvements

• To the Point, FASB proposal would change how companies account for employee share-based payments (SCORE No. BB2998)

FASB exposure documents

9

Investments — Equity Method and Joint Ventures (Topic 323), Simplifying the Equity Method of Accounting

Date issued: 5 June 2015 — comment period ends 4 August 2015

Summary The guidance would eliminate the requirement that an investor identify, account for and make disclosures about the difference between its cost basis of an investment and its proportional interest in the equity of the investee (i.e., the basis difference). As a result, upon each acquisition, an investor would no longer have to determine the fair value of an investee’s assets and liabilities, allocate basis differences or track subsequent adjustments to determine equity method earnings. The FASB also proposed eliminating the requirement that an investor account for an equity method investment retrospectively when it increases its ownership to a level that initially qualifies for the equity method.

Effective date The effective date has not yet been determined.

Other resources • FASB Project Update: Simplifying the Equity Method of Accounting

• To the Point, FASB proposes simplifying equity method accounting (SCORE No. BB2997)

Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments

Date issued: 21 May 2015 — comment period ends 6 July 2015

Summary The proposal would eliminate the requirement for an acquirer in a business combination to account for measurement-period adjustments to provisional amounts retrospectively. Instead, an acquirer would recognize a measurement-period adjustment during the period in which the amount of the adjustment is determined. The acquirer also would recognize in current-period earnings the cumulative effects of these adjustments, including depreciation and amortization, within the individually affected income statement line items.

Effective date and transition The effective date has not yet been determined. The guidance would be applied prospectively to adjustments to provisional amounts that occur after the effective date.

Other resources • FASB Project Update: Accounting for Measurement Period Adjustments in a Business Combination

• To the Point, FASB proposes simplifying measurement-period adjustments in business combinations (SCORE No. BB2991)

• Comment letter (SCORE No. BB3009)

10 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing

Date issued: 12 May 2015 — comment period ended 30 June 2015

Summary The proposal would clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property (IP), which will determine whether the entity recognizes revenue over time or at a point in time. The proposal also would amend the guidance to address how entities should apply the exception for sales- and usage-based royalties to licenses of IP and recognize revenue for licenses that are not separate performance obligations.

The proposal would clarify how to determine whether promised goods or services are separately identifiable. In addition, it would add guidance to allow entities to disregard goods or services that are immaterial in the context of the contract and provide an accounting policy election for accounting for certain shipping and handling activities. The FASB also asked constituents in the proposal whether it should amend the guidance to make the requirement to treat a series of distinct goods or services as a single performance obligation an optional practical expedient.

Effective date The effective date and transition requirements for the proposed amendments would be the same as the effective date and transition requirements in the new revenue standard, including any deferral.

Note: The FASB decided on 9 July 2015 to defer the effective date of the new revenue standard by one year. The standard will be effective for public entities for annual reporting periods beginning after 15 December 2017 and interim periods therein. Nonpublic entities will be required to adopt the standard for annual reporting periods beginning after 15 December 2018, and interim periods within annual reporting periods beginning after 15 December 2019. All entities will be allowed to adopt the standard as early as the original public entity effective date.

Other resources • FASB Project Update: Revenue from Contracts with Customers

• To the Point, FASB proposes first round of amendments to its new revenue recognition standard (SCORE No. BB2984)

• To the Point, FASB proposes amendments to its new revenue recognition standard that will affect M&E entities (SCORE No. BB2986)

• Comment letter (SCORE No. BB3006)

11

Liabilities — Extinguishments of Liabilities (Subtopic 405-20), Recognition of Breakage for Certain Prepaid Stored-Value Cards (a consensus of the FASB Emerging Issues Task Force)

Date issued: 30 April 2015 — comment period ended 29 June 2015

Summary Entities that issue certain prepaid stored-value cards redeemable only at third-party merchants for goods or services, cash or a combination of the two would be required to recognize breakage (i.e., the value that is not redeemed by cardholders). Also, under the proposal, an issuer’s liability for those cards would be a financial liability. Entities would be required to disclose the methodology used to recognize breakage for prepaid cards and the significant judgments made in applying that methodology.

Effective date and transition The effective date has not yet been determined. The proposal would require a modified retrospective transition method, meaning an entity would make a cumulative catch-up adjustment to opening retained earnings in the period of adoption.

Other resources • FASB Project Update: EITF Issue No. 15-B: Recognition of Breakage for Prepaid Stored-Value Cards

• To the Point, Recognizing breakage for certain prepaid stored-value cards (SCORE No. BB2979)

Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954), Presentation of Financial Statements of Not-for-Profit Entities

Date issued: 22 April 2015 — comment period ends 20 August 2015

Summary The proposal would significantly change the financial statements of not-for-profit (NFP) entities. NFPs would be required to present two rather than three net asset classes and standardized measures of operating performance. The proposal also would change how NFPs report cash flows, classify expenses and provide information about liquidity.

Not-for-profit business-oriented health care entities would not be allowed to present a performance indicator as a US GAAP measure.

Effective date and transition The effective date has not yet been determined. The guidance would be applied retrospectively.

Other resources • FASB Project Update: Financial Statements of Not-for-Profit Entities

• To the Point, FASB proposes overhaul of not-for-profit financial statements (SCORE No. BB2978)

12 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Approved but not issued in Q2 2015

Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships

Date issued: (Consensus-for-exposure reached by the EITF in June 2015 and ratified by the FASB in July 2015. A Proposed ASU has not yet been issued.)

Summary A novation of a derivative contract in a hedge accounting relationship would not, in and of itself, require dedesignation of that hedge accounting relationship. The Task Force noted that when the only change to the derivative contract is the counterparty and there are no concerns about the collectibility of cash flows on the derivative, the risk profile of the derivative, and therefore the hedge relationship, is largely unchanged.

Effective date and transition The effective date has not yet been determined. Entities would apply the consensus-for-exposure prospectively to all existing hedge accounting relationships in which a change in derivative counterparty occurs after the effective date.

Other resources • FASB Project Update: EITF Issue No. 15-D: Effect of Derivative Contract Novations on Existing

Hedge Accounting Relationships

• EITF Update, June 2015 meeting highlights (SCORE No. BB3003)

Contingent Put and Call Options in Debt Instruments Date issued: (Consensus-for-exposure reached by the EITF in June 2015 and ratified by the FASB in July 2015. A Proposed ASU has not yet been issued.)

Summary An assessment of whether a contingent put or call option is clearly and closely related to the debt host would require only an analysis of the four-step decision sequence outlined in ASC 815-15-25-42. That is, an entity would not need to separately assess whether the contingent feature is indexed only to the interest rate or credit risk of the entity.

Effective date and transition The effective date has not yet been determined. Entities would apply the consensus-for-exposure using a modified retrospective transition method with a cumulative-effect adjustment as of the beginning of the period of adoption. Entities would be able to elect the fair value option for instruments that were previously accounted for as separate units of account due to the bifurcation of an embedded derivative.

Other resources • FASB Project Update: EITF Issue No. 15-E: Contingent Put and Call Options in Debt Instruments

• EITF Update, June 2015 meeting highlights (SCORE No. BB3003)

13

Other proposals previously issued • Income Taxes (Topic 740), I. Intra-Entity Asset Transfers and II. Balance Sheet Classification of

Deferred Taxes

• Date issued: 22 January 2015 — comment period ended 29 May 2015

• Derivatives and Hedging (Topic 815), Disclosures about Hybrid Financial Instruments with Bifurcated Embedded Derivatives

• Date issued: 24 February 2015 — comment period ended 30 April 2015

• Financial Services — Investment Companies (Topic 946), Disclosures about Investments in Other Investment Companies

• Date issued: 4 December 2014 — comment period ended 17 February 2015

• Conceptual Framework for Financial Reporting, Chapter 8: Notes to Financial Statements

• Date issued: 4 March 2014 — comment period ended 14 July 2014

• Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts

• Date related proposal issued: 27 June 2013 — comment period ended 25 October 2013

• Leases (Topic 842), a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)

• Date issued: 16 May 2013 — comment period ended 13 September 2013

• Financial Instruments — Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities

• Date issued: 14 February 2013 — comment period ended 15 May 2013

• Financial Instruments — Credit Losses (Subtopic 825-15)

• Date issued: 20 December 2012 — comment period ended 31 May 2013

Other resources • To the Point, FASB addresses collectibility assessment for lessors and other topics in leases project

(SCORE No. BB2985)

• Technical Line, Final standard on leases is taking shape (SCORE No. BB2952)

• To the Point, FASB poised to make significant changes to credit impairment model (SCORE No. BB2942)

• Financial reporting briefs — June 2015 (SCORE No. BB3000)

• 2014 Standard Setter Update (SCORE No. BB2918)

• Comment letter, Disclosures about Hybrid Financial Instruments with Bifurcated Embedded Derivatives (SCORE No. BB2976)

• Comment letter, Balance Sheet Classification of Deferred Taxes (SCORE No. BB2995)

• Comment letter, Intra-Entity Asset Transfers (SCORE No. BB2996)

14 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Revenue recognition developments The FASB decided to issue two more exposure drafts proposing amendments to the new standard. One would clarify the collectibility criterion and provide practical expedients to ease transition, among other things. The IASB also plans to propose certain limited amendments to its new standard on some of the topics in the FASB’s proposals.

The FASB and the IASB also tentatively decided to clarify the principal versus agent guidance in their new standards. The Boards agreed to propose new language and examples and revisions to both the indicators and some of the examples in the new standards.

The issues the Boards are trying to address with the proposals were first discussed by their Joint Transition Resource Group for Revenue Recognition (TRG). In 2015, the TRG met in March and July and is scheduled to meet in November.

Other resources • To the Point, Joint Transition Resource Group for Revenue Recognition discusses additional

implementation issues (SCORE No. BB3012)

• Technical Line, Nonpublic entity considerations for the new revenue standard (SCORE No. BB2923)

• Technical Line, New revenue standard affects more than just revenue (SCORE No. BB2772)

• Technical Line, A closer look at the new revenue recognition standard (SCORE No. BB2771)1

What’s next — agenda highlights FASB agenda In addition to the topics above, the FASB’s agenda includes:

• Accounting for financial instruments: hedging

• Clarifying the definition of a business

• Simplifying the balance sheet classification of debt

• Clarifying certain existing principles on statement of cash flows

• Disclosure framework: entity’s decision process

• Accounting for goodwill for public business entities and not-for-profit entities

• Accounting for identifiable intangible assets in a business combination for public business entities and not-for-profit entities

• Disclosures about interest income on purchased debt securities and loans

• Liabilities and equity: targeted improvements

• Disclosures by business entities about government assistance

1 A number of industry supplements to this Technical Line are available.

Other FASB

15

• Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost

• Conceptual framework: measurement and presentation

EITF agenda The EITF agenda includes a project on the classification of certain cash receipts and cash payments in the statement of cash flows. The Task Force is considering nine specific cash flow issues, six of which (cash flows associated with debt, business combination contingent consideration, restricted cash and insurance proceeds) were discussed at its June meeting. The remaining three issues (cash flows associated with equity investees, securitizations and those that may have aspects of more than one class of cash flows) will be first addressed in September. If the Task Force reaches a consensus-for-exposure on all issues and the FASB ratifies that consensus, the FASB will issue a proposed ASU.

The next EITF meeting is scheduled for 17 September 2015.

PCC agenda At its May meeting, the PCC discussed whether private companies should be allowed a one-time election to adopt accounting alternatives after their effective dates without having to demonstrate preferability under US GAAP. The PCC also discussed the FASB staff’s pre-agenda research on private company alternatives for the accounting for employee share-based payments and provided input on several FASB projects, including disclosures by business entities about government assistance, simplifying the balance sheet classification of debt and disclosure framework. The PCC asked the FASB to consider having its staff research application guidance on certain aspects of the variable interest entity model for private companies under common control.

The PCC will meet again on 21 July 2015. The PCC plans to host town hall meetings in Baltimore on 14 July 2015 and Orlando on 18 November 2015 for private company stakeholders to provide input on these and other potential projects.

Other resources • FASB Technical Agenda

• To the Point, FASB tries to make hedge accounting easier to apply and understand (SCORE No. BB3007)

• To the Point, PCC discusses effective date relief for private company alternatives and other topics (SCORE No. BB2982)

• EITF Update, June 2015 meeting highlights (SCORE No. BB3003)

• Comment letter, Three-year review of the Private Company Council (SCORE No. BB2983)

16 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Possible Revisions to Audit Committee Disclosures (Release No. 33-9862)

Date issued: 1 July 2015 — comment period ends 8 September 2015

Summary The SEC issued a concept release seeking comment on possible revisions to its audit committee disclosure rules. The release explores whether audit committees should provide more qualitative disclosures about how they execute their responsibilities to oversee the audit.

Currently, the audit committee report in the annual proxy statement must affirm only that the audit committee carried out certain specific responsibilities related to communications with the external auditor. The SEC is seeking to understand whether mandating additional disclosure about the audit committee’s oversight of the audit would provide useful information that would help investors make better investment decisions and voting decisions about whether to ratify the selection of the auditor or re-elect members of the audit committee to the board.

The concept release also seeks input on whether new and existing audit committee disclosures should be required to appear in one location in the annual proxy statement, whether the disclosures also should be required in the prospectus for registered securities offerings and whether the requirements should apply to smaller reporting companies and emerging growth companies.

The concept release is part of a broader effort by the SEC and the PCAOB to increase transparency of the audit process.

Other resources • To the Point, SEC seeks feedback on possible changes to audit committee disclosures

(SCORE No. CC0412)

Listing Standards for Recovery of Erroneously Awarded Compensation (Release No. 33-9861)

Date issued: 1 July 2015 — comment period ends 14 September 2015

Summary The SEC proposed rules that would require national exchanges to establish listing standards that would require companies to have policies to “claw back” incentive-based compensation from current and former executive officers in the event of a restatement. The so-called clawback rule was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

The proposal generally would require companies to recover incentive compensation paid to executive officers for up to three years before a restatement, regardless of whether the executive was at fault. The proposal would create a new definition of executive officer that would be similar to Section 16 of the Exchange Act of 1934. The proposal would apply to incentive compensation based on accounting-related measures, stock price or total shareholder return.

Securities and Exchange Commission

SEC rule proposals and other releases

17

All listed companies except for certain registered investment companies would be required to disclose their clawback policies and, after a restatement, information about compensation subject to clawback. Companies also would be required to make disclosures related to any decision not to pursue recovery from any officer because the direct expense would exceed the potential recovery. Companies also would be required to disclose estimates used to determine the amount of unearned compensation that was previously awarded based on stock price or total shareholder return.

Other resources • To the Point, SEC proposes requiring ‘clawback’ policies and disclosures (SCORE No. CC0413)

Additional Analysis Related to Proposed Pay Ratio Disclosure Rules (Release No. 33-9452)

Date issued: 4 June 2015 — comment period ended 6 July 2015

Summary The SEC’s Division of Economic and Risk Analysis issued an analysis related to the SEC’s 2013 proposal that would require companies to disclose the ratio of the chief executive’s compensation to the median annual compensation of all other employees. The analysis evaluates the potential effects on the pay ratio calculation of excluding certain categories of employees such as part-time, seasonal or temporary employees and those in other countries, as some commenters suggested the SEC should do.

The SEC staff said that additional analyses related to this proposal may be made available in the future.

Other resources • Division of Economic and Risk Analysis Memorandum: Potential Effect on Pay Ratio Disclosure of

Exclusion of Different Percentages of Employees at a Range of Thresholds

• To the Point, SEC proposes rule requiring most companies to disclose ‘pay ratio’ (SCORE No. CC0375)

• Comment letter — Pay ratio disclosure (SCORE No. CC0382)

Investment Company Reporting Modernization (Release No. 33-9776)

Date issued: 20 May 2015 — comment period ends 11 August 2015

Summary The SEC proposed modernizing and enhancing the reporting and disclosure of information by mutual funds and investment companies. Under the proposal, registered funds other than money market funds would file a new monthly portfolio report and a new annual report in a structured data format. The proposal would also amend Regulation S-X to standardize and enhance disclosures about derivatives in investment company financial statements and require disclosures about securities-lending activities. The proposal also would permit mutual funds and other investment companies to deliver shareholder reports by making them accessible on a website if they meet certain conditions.

18 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes enhancing reporting by investment companies and investment advisers

(SCORE No. BB2993)

Amendments to Form ADV and Investment Advisers Act Rules (Release No. IA-4091)

Date issued: 20 May 2015 — comment period ends 11 August 2015

Summary The SEC proposed amendments to the investment adviser registration and Part 1A of Form ADV to fill data gaps by requiring an adviser to provide information, in the aggregate, about the types of assets held in separately managed accounts and, in many cases, additional information about derivatives and borrowings.

The amendments also would incorporate “umbrella registration” for advisers to private funds and clarify existing items and instructions in the form.

The SEC also proposed amending its Advisers Act rules to, among other things:

• Require advisers to document performance calculations or rates of return used in any written communications the adviser distributes

• Require advisers to keep written communications they send and receive related to securities recommendations or the performance or rate of return of any managed accounts

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes enhancing reporting by investment companies and investment advisers

(SCORE No. BB2993)

Pay versus Performance (Release No. 34-74835)

Date issued: 29 April 2015 — comment period ended 6 July 2015

Summary The SEC proposed a rule that would require companies to disclose the relationship between their executive compensation and their total shareholder return (TSR). The so-called pay versus performance disclosures were mandated by the Dodd-Frank Act.

Companies would be required to disclose the following information for the most recent five years:

• The total compensation of the principal executive officer (PEO) that is already disclosed in the summary compensation table in the proxy statement, as well as the PEO’s “actual” compensation after adjustments for pensions and equity awards

19

• The average total compensation paid to the other named executive officers in the summary compensation table in the proxy statement, as well as their average “actual” compensation after adjustments for pensions and equity awards

• TSR of the company and its selected peer group

Companies also would be required to describe (1) the relationship between the actual executive compensation they paid and the company’s TSR and (2) the relationship between the company’s TSR and the TSR of its selected peer group. The relationships could be described in words, graphics or a combination of words and graphics.

The proposed rule would apply to all reporting companies, except for emerging growth companies, foreign private issuers and registered investment companies. Smaller reporting companies would have to disclose only three years of information.

The new disclosures would be required only in proxy or information statements with executive compensation disclosures under Regulation S-K Item 402, and the disclosure would not be incorporated by reference in 1933 Act registration statements. Companies also would be required to tag the new disclosures using XBRL in an exhibit to the proxy or information statement filed on EDGAR.

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes ‘pay versus performance’ disclosures (SCORE No. CC0411)

Highlights of certain proposals previously issued

Disclosure of Hedging by Employees, Officers and Directors (Release No. 33-9723)

Date issued: 9 February 2015 — comment period ended 20 April 2015

Summary The SEC proposed amendments to its rules that would require companies to disclose whether they permit their employees, officers or directors to purchase financial instruments or engage in transactions designed to hedge or offset any decrease in the market value of the company’s equity securities or those of certain related entities. The proposal would apply to all equity securities held by employees, officers and directors, directly or indirectly, not just equity securities granted as compensation. If a registrant does not permit any hedging transactions by its employees, officers and directors, or permits all hedging transactions, it could state that without further detail or description. The proposal would apply to all registrants, except for foreign private issuers and certain non-listed investment companies. The disclosures would be required in proxy or information statements related to the election of directors. The proposal would implement Section 955 of the Dodd-Frank Act.

Effective date The proposal does not suggest an effective date.

20 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Other resources • To the Point, SEC proposes proxy disclosure of policies on hedging by employees, officers and

directors (SCORE No. CC0407)

Other proposals previously issued • Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS

Act (Release No. 33-9693)

• Date issued: 18 December 2014 — comment period ended 2 March 2015

• Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule (Release No. IC-31184)

• Date issued: 23 July 2014 — comment period ended 14 October 2014

• Crowdfunding (Release No. 33-9470)

• Date issued: 23 October 2013 — comment period ended 3 February 2014

• Pay Ratio Disclosure (Release No. 33-9452)

• Date issued: 18 September 2013 — comment period ended 2 December 2013

• Amendments to Regulation D, Form D and Rule 156 under the Securities Act (Release No. 33-9416)

• Date issued: 10 July 2013 — comment period ended 4 November 2013

• Prohibition against Conflicts of Interest in Certain Securitizations (Release No. 34-65355)

• Date issued: 19 September 2011 — comment period ended 13 February 2012

• Incentive-Based Compensation Arrangements (Release No. 34-64140)

• Date issued: 29 March 2011 — comment period ended 31 May 2011

• End-User Exception to Mandatory Clearing of Security-Based Swaps (Release No. 34-63556)

• Date issued: 15 December 2010 — comment period ended 22 July 2013

• Reporting of Proxy Votes on Executive Compensation and Other Matters (Release No. 34-63123)

• Date issued: 18 October 2010 — comment period ended 18 November 2010

Other resources

• 2014 Standard Setter Update (SCORE No. BB2918)

• SEC in Focus — July 2015 (SCORE No. CC0414)

21

SEC staff to release ‘no review’ letters on EDGAR Summary The Division of Corporation Finance said the staff will begin releasing on its EDGAR website correspondence with registrants relating to registration statements filed under the Securities Act of 1933 that are not selected for review by the SEC staff. The SEC staff reviews certain transactional filings and notifies registrants when their registration statements will not be reviewed. Previously, these so-called no review letters were released only in response to requests under the Freedom of Information Act. The new policy will apply to registration statements with effective dates on or after 1 June 2015.

Other resources • Division of Corporation Finance announcement: SEC staff to release correspondence relating to

Securities Act registration statements that are not reviewed

SEC staff issues interpretations on new rules under Regulation A Summary The Division of Corporation Finance issued guidance on the new amendments to Regulation A that allow private companies to make exempt public offerings of up to $50 million of securities within a 12-month period. The rules, which were effective 19 June 2015, established two tiers of offerings. Tier 1 covers offerings of up to $20 million within a 12-month period. Tier 2 allows offerings of up to $50 million within 12 months but requires more robust initial and ongoing reporting.

The compliance and disclosure interpretations (C&DIs) include the following SEC staff views:

• Eligible issuers include voluntary filers of SEC reports, companies that suspended their Exchange Act reporting obligations, private subsidiaries of SEC registrants and companies with foreign operations managed from the US or Canada.

• A newly created entity may provide financial statements that only include a balance sheet as of the entity’s inception date if the filing or qualification date is within nine months of the inception date and not later than three months after the entity’s first fiscal year end.

• Resales of securities purchased in a Tier 2 offering are not exempt from state law registration and qualification requirements.

• A Regulation A issuer may request confidential treatment under Rule 83 of correspondence submitted during the staff review of a draft offering statement in the same manner as a review of a registered offering.

Other SEC

22 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

SEC approves pilot program for increased tick sizes for smaller companies Summary The SEC approved a plan by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) to implement a two-year pilot program to increase the tick sizes or trading increments of certain registrants. Registrants included in the program must have:

• Market capitalizations of $3 billion or less

• Average daily trading volumes of one million shares or less

• A daily volume weighted average share price of $2 per share or more

The current tick size is one cent. In the pilot, a control group consisting of 1,400 securities will continue to be quoted and traded at the current tick size of one cent and three test groups with 400 securities each will be quoted at five-cent increments, with different trading rules applying to each test group. The results of the pilot will be used to assess whether wider tick sizes improve the trading in the securities of smaller companies. The pilot program is expected to begin by May 2016, and the data for the first year will be released on an aggregated basis 18 months after the program begins.

Other resources • SEC order approving the National Market System Plan to implement a tick size pilot program

2013 XBRL US GAAP Taxonomy no longer available Summary The SEC staff removed the 2013 XBRL US GAAP taxonomy from its EDGAR system, which no longer supports filings using that version of the taxonomy. Earlier this year, the SEC staff updated the EDGAR system to allow companies to use the 2015 taxonomy. The system now only supports the 2014 and 2015 taxonomies. The SEC staff encourages companies to transition to the most recent version of the US GAAP taxonomy (i.e., 2015 taxonomy).

SEC Investor Advisory Committee Summary The Investor Advisory Committee, which was established by the Dodd-Frank Act to advise the SEC on regulatory priorities and initiatives to protect investors and promote investor confidence, met on 9 April 2015 to consider subcommittee recommendations that the SEC enhance protections for older investors. The committee didn’t make any formal recommendations to the SEC at the meeting, but draft recommendations are available for comment. The SEC’s Office of Investor Education and Advocacy also issued an investor alert for seniors to help them identify signs of investment fraud.

The Investor Advisory Committee will meet again on 16 July 2015 to discuss the draft recommendations and other matters.

Other resources • Investor alert for Seniors: Five Red Flags of Investment Fraud

• Draft recommendations of the Investor as Owner Subcommittee: Empowering elders and other investors

23

SEC Advisory Committee on Small and Emerging Companies Summary The SEC Advisory Committee on Small and Emerging Companies, which was established in 2011 to provide the SEC with advice and recommendations related to small and emerging companies on capital formation, trading securities, public reporting and corporate governance, met on 3 June 2015 to discuss disclosure effectiveness, intrastate crowdfunding and venture exchanges. The committee approved a recommendation that the SEC formalize a new exemption from registration for the resale of certain privately issued securities.

The Advisory Committee on Small and Emerging Companies will meet again on 15 July 2015 to discuss disclosure effectiveness and other matters.

Other resources • Recommendation regarding the “4(11/2) Exemption”

24 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Concept Release on Audit Quality Indicators (PCAOB Release No. 2015-005)

Date issued: 30 June 2015 — comments due by 29 September 2015

Summary

The PCAOB is seeking comment on 28 possible audit quality indicators (AQIs) and how they might be used by audit committees, audit firms, investors and regulators. The Board hopes to identify a manageable number of indicators that together can inform discussions on audit quality. The PCAOB noted that the indicators aren’t intended to be used as scores or grades for audits and would require context to be understood.

The concept release also seeks comments on how AQI data should be obtained and distributed, whether auditors should be required to provide AQIs or whether providing the information should be voluntary, which audits and audit firms should be subject to AQI reporting and whether any requirements to provide AQIs should be phased in.

The concept release is part of a broader effort by the PCAOB and the SEC to make the audit process more transparent.

Other resources • To the Point, PCAOB seeks comment on audit quality indicators (SCORE No. EE0992)

Supplemental Request for Comment: Rules to Require Disclosure of Certain Audit Participants on a New PCAOB Form (PCAOB Release No. 2015-004)

Date issued: 30 June 2015 — comments due by 31 August 2015

Summary

The PCAOB is seeking comment on whether to require audit firms to name the engagement partner and provide information about other public accounting firms that participated in the audit in a new form that would be filed with the PCAOB, as an alternative to disclosing this information in the auditor’s report, as it had previously proposed. The new form generally would be filed within 30 days after the date the auditor’s report is first included in an SEC filing and would include:

• The name of the engagement partner who led the audit for the most recent period

• The names, locations and extent of participation (as a percentage of total audit hours) of other public accounting firms that participated in the audit

• Participation can be presented as a range of percentages or a single percentage.

In a change from the PCAOB’s 2013 reproposal, audit firms would not be required to disclose specialists engaged (but not employed) by the auditor and non-accounting firm participants.

Public Company Accounting Oversight Board

PCAOB proposed standards and other projects

25

Effective date The Board is considering making the requirements effective for auditor’s reports issued or reissued on or after 30 June 2016, or three months after approval of the requirements by the SEC, whichever occurs later.

Other resources • To the Point, PCAOB proposes new approach for audit transparency disclosures

(SCORE No. EE0991)

Proposals previously issued • Proposed Auditing Standards, The Auditor’s Report on an Audit of Financial Statements When the

Auditor Expresses an Unqualified Opinion; The Auditor’s Responsibilities Regarding Other Information in Certain Documents Containing Audited Financial Statements and the Related Auditor’s Report; and Related Amendments to PCAOB Standards (PCAOB Release No. 2013-005)

• Date issued: 13 August 2013 — comment period ended 2 May 2014

• Concept Release on Auditor Independence and Audit Firm Rotation (PCAOB Release No. 2011-006)

• Date issued: 16 August 2011 — comment period ended 19 November 2012

• Application of the “Failure to Supervise” Provision of the Sarbanes-Oxley Act of 2002 and Solicitation of Comment on Rulemaking Concepts (PCAOB Release No. 2010-005)

• Date issued: 5 August 2010 — comment period ended 3 November 2010

• Proposed Auditing Standard, Confirmation (PCAOB Release No. 2010-003)

• Date issued: 13 July 2010 — comment period ended 13 September 2010

Other resources • 2014 Standard Setter Update (SCORE No. BB2918)

26 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Staff consultation paper on auditor’s use of the work of specialists

Date issued: 28 May 2015 — comments due by 31 July 2015

Summary

The PCAOB issued a staff consultation paper seeking input on whether it should update its rules on the auditor’s use of the work of specialists. The paper seeks comment on whether the PCAOB should develop a new standard, amend existing standards or take other steps to address inspection findings, practice issues and changes in accounting standards.

The paper notes that the use of specialists by both companies and auditors has grown in recent years, due partly to the increasing complexity of business transactions.

Audit Committee Dialogue publication issued

Summary The PCAOB issued what it said was the first in a series of Audit Committee Dialogue publications aimed at providing insights that may help audit committee members oversee their auditors.

The publication highlights audit areas in which the PCAOB has found significant deficiencies in recent years in its inspections of six large audit firms and some emerging risks the PCAOB is considering in inspections this year. It also includes questions audit committee members may want to ask their auditors on each topic.

The audit areas discussed are: (1) auditing internal control over financial reporting, (2) assessing and responding to risks of material misstatement, (3) auditing accounting estimates, including fair value measurements and (4) deficient work performed by other audit firms in cross-border audits. The emerging risks are: (1) the increase in mergers and acquisitions, (2) falling oil prices, (3) undistributed foreign earnings and (4) an audit firm’s ability to maintain audit quality while growing other business.

Other PCAOB

27

Proposals previously issued • Proposed Statement on Standards for Attestation Engagements, Reporting on an Examination of

Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting: Clarification and Recodification

• Date issued: 18 September 2014 — comment period ended 18 December 2014

• Proposed Statement on Auditing Standards, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements

• Date issued: 10 September 2014 — comment period ended 10 December 2014

• Proposed Statement on Standards for Attestation Engagements: Subject-Matter Specific Attestation Standards — Clarification and Recodification

• Date issued: 28 January 2014 — comment period ended 27 May 2014

• Proposed Statement on Standards for Attestation Engagements, Attestation Standards: Clarification and Recodification

• Date issued: 24 July 2013 — comment period ended 24 October 2013

Other resources • 2014 Standard Setter Update (SCORE No. BB2918)

• Comment letter (SCORE No. EE0975)

Auditing Standards Board

ASB exposure drafts

28 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments

Date issued: 29 June 2015 Summary The guidance simplifies the structure of the hierarchy of GAAP guidance that state and local governments follow when preparing financial statements in conformity with US GAAP and lists the order of priority for pronouncements to which a government should look for guidance.

The GASB statement reduces the GAAP hierarchy to two categories of authoritative guidance from four. The first category consists of GASB Statements of Governmental Accounting Standards. The second comprises GASB Technical Bulletins and Implementation Guides, as well as guidance from the American Institute of Certified Public Accountants that is cleared by the GASB.

The statement also addresses the use of authoritative and non-authoritative literature if the accounting treatment for a transaction or other event is not specified within the source of authoritative GAAP.

Effective date and transition The statement is effective for financial statements for periods beginning after 15 June 2015 and should be applied retroactively. Earlier application is permitted.

GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions

Date issued: 29 June 2015 Summary The statement replaces GASB Statement No.45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. Governments that are responsible only for postemployment benefits other than pensions (OPEB) liabilities related to their own employees and that provide OPEB through a defined benefit OPEB plan administered through a trust that meets specified criteria will report a net OPEB liability — the difference between the total OPEB liability and assets accumulated in the trust that are restricted to making benefit payments.

Governments that participate in a cost-sharing OPEB plan that is administered through a trust that meets the specified criteria will report a liability equal to their proportionate share of the collective OPEB liability for all entities participating in the cost-sharing plan. Governments that do not provide OPEB through a trust that meets specified criteria will report the total OPEB liability related to their employees.

The guidance also requires governments in all types of OPEB plans to present more extensive note disclosures and required supplementary information (RSI) about their OPEB liabilities. Some governments are legally responsible to make contributions directly to an OPEB plan or make benefit payments directly as OPEB comes due for employees of other governments. In what are called special funding situations, the guidance requires these governments to recognize in their financial statements a share of the other government’s net OPEB liability.

Governmental Accounting Standards Board

Final GASB guidance

29

Effective date and transition The guidance is effective for fiscal years beginning after 15 June 2017. Earlier application is encouraged.

GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans

Date issued: 29 June 2015 Summary The guidance replaces GASB Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and addresses the financial reports of defined benefit OPEB plans that are administered through trusts that meet specified criteria. The guidance follows the framework for financial reporting of defined benefit OPEB plans in Statement 45 by requiring a statement of fiduciary net position and a statement of changes in fiduciary net position. The guidance requires more extensive note disclosures and RSI related to the measurement of the OPEB liabilities for which assets have been accumulated, including information about the annual money-weighted rates of return on plan investments (i.e., a method of calculating period-by-period returns on OPEB plan investments that adjusts for the changing amounts actually invested).

Effective date and transition The guidance is effective for financial statements for fiscal years beginning after 15 June 2016. Earlier application is encouraged.

GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68

Date issued: 29 June 2015 Summary The guidance completes the suite of pension standards. Statement 73 establishes requirements for pensions and pension plans that are not administered through a trust meeting specified criteria (i.e., those not covered by Statements 67 and 68). The requirements in Statement 73 for reporting pensions generally are the same as in Statement 68, with modifications as needed for any assets accumulated for pensions that are provided through pension plans that are not administered through trusts that meet the criteria specified in Statement 68.

Effective date and transition The requirements that address accounting and financial reporting by employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68 are effective for fiscal years beginning after 15 June 2016. The requirements that address financial reporting for assets accumulated for purposes of providing those pensions are effective for fiscal years beginning after 15 June 2015. The requirements that amend Statements 67 and 68 are effective for fiscal years beginning after 15 June 2015. Earlier application is encouraged.

30 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Accounting and Financial Reporting for Certain External Investment Pools

Date issued: 30 June 2015— comment period ends 31 August 2015

Summary Existing standards allow external investment pools to measure their investments at amortized cost for financial reporting purposes if they follow substantially all of the provisions of the SEC’s Rule2a7 for money market funds. Likewise, participants in those pools are able to report their position in the pool at amortized cost per share. The proposal would replace the reference in GASB literature to Rule 2a7 with the GASB’s own set of criteria. This is being done in response to major changes in Rule 2a7 that take effect in 2016, under which many government pools would likely no longer qualify for amortized cost reporting. This would represent a significant change from current practice for both the pools and their participants.

The proposed guidance also would establish additional note disclosure requirements for external investment pools that measure all of their investments at amortized cost for financial reporting purposes and for governments that participate in those pools.

Effective date and transition The proposed guidance would be effective for reporting periods beginning after 15 June 2015, except for certain portfolio quality provisions and provisions related to shadow price calculations. Those provisions would be effective for reporting periods beginning after 15 December 2015. Earlier application would be encouraged.

A qualifying external investment pool that previously had not reported all of its investments at amortized cost would be allowed to elect to measure for financial reporting purposes all of its investments at amortized cost only upon initial application of the proposed guidance.

Blending Requirements for Certain Component Units, an amendment of GASB Statement No. 14

Date issued: 30 June 2015 — comment period ends 2 October 2015

Summary The proposed guidance addresses diversity in practice regarding the presentation of not-for-profit corporations in which the primary government is the sole corporate member. The GASB has proposed treating those component units as if they were activities of a primary government using a financial presentation method referred to as blending. The GASB believes the proposed approach would enhance consistency of application among governments reporting these types of component units.

Effective date and transition The proposed guidance would be effective for periods beginning after 15 June 2016 with earlier application encouraged.

GASB exposure drafts

31

Accounting and Financial Reporting for Irrevocable Split-Interest Agreements

Date issued: 12 June 2015 — comment period ends 18 September 2015

Summary The proposed guidance would require a government that receives resources under an irrevocable split-interest agreement to recognize the assets as well as a liability related to the other designated beneficiary’s portion of those assets and a deferred inflow of resources related to the government’s portion of those assets. If the agreement is administered by a third party, a government would recognize an asset for its beneficial interest. Revenue would be recognized when a government receives a disbursement under the agreement.

Effective date and transition The proposed guidance would be effective for periods beginning after 15 December 2016 with earlier application encouraged.

Other proposals previously issued • Tax abatement disclosures

• Date issued: 31 October 2014 — comment period ended 30 January 2015

Other resources • 2014 Standard setter update (SCORE No. BB2918)

32 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Implementation Guide No. 2015-1

Date approved by the board: 22 June 2015

Summary In connection with the issuance of Statement 76, the GASB approved this implementation guide, which covers all implementation guidance issued to date. Upon implementation of Statement 76, the Implementation Guide will become Category B GAAP.

Effective date and transition The implementation guide is effective for reporting periods beginning after 15 June 2015. Earlier application is permitted.

Preliminary views previously issued • Preliminary Views, Financial Reporting for Fiduciary Responsibilities

• Date issued: 20 November 2014 — comment period ended 6 March 2015

• Preliminary Views, Leases

• Date issued: 20 November 2014 — comment period ended 6 March 2015

Other GASB

33

Note: Early adoption generally is permitted unless otherwise noted.

Effective in 2015 for public(2) calendar year-end entities(3) ASU 2015-10 Technical Corrections and Improvements Effective upon issuance (12 June 2015) for amendments that do not have

transition guidance. Amendments that are subject to transition guidance: Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-14 Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40), Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2014.

ASU 2014-11 Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

Effective for the first interim or annual period beginning after 15 December 2014. Earlier application is prohibited. Disclosures for transactions accounted for as secured borrowings: Effective for annual periods beginning after 15 December 2014, and for interim periods beginning after 15 March 2015.

ASU 2014-10 Development Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation

Amendments to ASC 915: Effective for annual reporting periods beginning after 15 December 2014, and interim periods therein. Amendments to ASC 810: Effective for annual reporting periods beginning after 15 December 2015, and interim periods therein.

ASU 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

Effective for annual periods beginning on or after 15 December 2014, and interim periods within those years.

ASU 2014-05 Service Concession Arrangements (Topic 853) Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2014.

ASU 2014-04 Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2014.

ASU 2014-01 Investments — Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects

Effective for annual periods, and interim reporting periods within those annual periods, beginning after 15 December 2014.

ASU 2013-06 Not-for-Profit Entities (Topic 958), Services Received from Personnel of an Affiliate

Effective for fiscal years beginning after 15 June 2014, and interim and annual periods thereafter.

2 Refer to each ASU to determine which types of entities (e.g., public business entities, not-for-profits, employee benefit plans) are subject to these effective dates. 3 The JOBS Act allows emerging growth companies to follow private company effective dates for new or revised accounting standards issued after 5 April 2012.

However, an emerging growth company must follow public company effective dates for all such standards if it has disclosed an election to do so.

Effective date matrices

Effective date matrix — final FASB pronouncements

34 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective after 2015 for public(2) calendar year-end entities(3) ASU 2015-09 Financial Services — Insurance (Topic 944),

Disclosures about Short-Duration Contracts Effective for annual periods beginning after 15 December 2015, and interim periods within annual periods beginning after 15 December 2016.

ASU 2015-07 Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-06 Earnings Per Share (Topic 260), Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-05 Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

Effective for annual periods, including interim periods within those annual periods, beginning after 15 December 2015.

ASU 2015-04 Compensation — Retirement Benefits (Topic 715), Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-03 Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-02 Consolidation (Topic 810), Amendments to the Consolidation Analysis

Effective for fiscal years, and for interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2015-01 Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-16 Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-15 Presentation of Financial Statements — Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

Effective for annual periods ending after 15 December 2016, and interim periods within annual periods beginning after 15 December 2016.

ASU 2014-13 Consolidation (Topic 810), Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2015.

ASU 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Effective for annual periods and interim periods within those annual periods, beginning after 15 December 2015.

ASU 2014-09 Revenue from Contracts with Customers (Topic 606)

Effective for annual reporting periods beginning after 15 December 2016, including interim reporting periods within that reporting period. Earlier application is prohibited.(4)

4 On 9 July 2015, the FASB decided to defer the effective dates for its new revenue standard for public and nonpublic entities by one year. The FASB still

needs to issue an ASU to finalize the change.

35

Effective prior to 2015 for public(2) calendar year-end entities(3) ASU 2014-17 Business Combinations (Topic 805), Pushdown

Accounting Effective upon issuance (18 November 2014). After the effective date, an acquired entity may elect to apply the guidance to future change-in-control events or to its most recent change-in-control event.

ASU 2014-06 Technical Corrections and Improvements Related to Glossary Terms

Effective upon issuance (14 March 2014).

ASU 2013-12 Definition of a Public Business Entity — An Addition to the Master Glossary

The term “public business entity” is being used to consider the scope of new guidance beginning in 2014.

ASU 2013-11 Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2013.

ASU 2013-08 Financial Services — Investment Companies (Topic 946), Amendments to the Scope, Measurement, and Disclosure Requirements

Effective for an entity’s interim and annual reporting periods in fiscal years that begin after 15 December 2013. Earlier application is prohibited.

ASU 2013-07 Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting

Effective for an entity that determines liquidation is imminent during annual reporting periods beginning after 15 December 2013, and interim reporting periods therein.

ASU 2013-05 Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2013.

ASU 2013-04 Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2013.

ASU 2012-05 Statement of Cash Flows (Topic 230), Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows

Effective for fiscal years, and interim periods within those years, beginning after 15 June 2013.

ASU 2011-06 Other Expenses (Topic 720), Fees Paid to the Federal Government by Health Insurers

Effective for calendar years beginning after 31 December 2013.

Effective in 2015 for nonpublic(5) calendar year-end entities ASU 2015-10 Technical Corrections and Improvements Effective upon issuance (12 June 2015) for amendments that do not have

transition guidance. Amendments that are subject to transition guidance: Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-14 Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40), Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

Effective for annual periods ending after 15 December 2015, and interim periods beginning after 15 December 2015.

ASU 2014-11 Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

Effective for annual periods beginning after 15 December 2014, and interim periods beginning after 15 December 2015. Application prior to the effective date for public business entities is prohibited.

5 Refer to each ASU to determine which types of entities (e.g., private companies, not-for-profits, employee benefit plans) are subject to these effective dates.

36 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective in 2015 for nonpublic(5) calendar year-end entities ASU 2014-10 Development Stage Entities (Topic 915),

Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation

Amendments to ASC 915: Effective for annual reporting periods beginning after 15 December 2014, and for interim reporting periods beginning after 15 December 2015. Amendments to ASC 810: Effective for annual reporting periods beginning after 15 December 2016, and for interim reporting periods beginning after 15 December 2017.

ASU 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

Effective for annual periods beginning on or after 15 December 2014, and interim periods within annual periods beginning on or after 15 December 2015.

ASU 2014-07 Consolidation (Topic 810), Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-05 Service Concession Arrangements (Topic 853) Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-04 Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-03 Derivatives and Hedging (Topic 815), Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps — Simplified Hedge Accounting Approach

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-02 Intangibles — Goodwill and Other (Topic 350), Accounting for Goodwill

Effective for goodwill existing as of the beginning of the period of adoption and new goodwill recognized in annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-01 Investments — Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2013-11 Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2014.

ASU 2013-06 Not-for-Profit Entities (Topic 958), Services Received from Personnel of an Affiliate

Effective for fiscal years beginning after 15 June 2014, and interim and annual periods thereafter.

ASU 2013-05 Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

Effective for fiscal years beginning after 15 December 2014, and interim and annual periods thereafter.

37

Effective after 2015 for nonpublic(5) calendar year-end entities ASU 2015-09 Financial Services — Insurance (Topic 944),

Disclosures about Short-Duration Contracts Effective for annual periods beginning after 15 December 2016, and interim periods within annual periods beginning after 15 December 2017.

ASU 2015-07 Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

Effective for fiscal years beginning after 15 December 2016, and interim periods within those fiscal years.

ASU 2015-05 Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

Effective for annual periods beginning after 15 December 2015, and interim periods in annual periods beginning after 15 December 2016.

ASU 2015-04 Compensation — Retirement Benefits (Topic 715), Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

Effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017.

ASU 2015-03 Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs

Effective for fiscal years beginning after 15 December 2015, and interim periods within fiscal years beginning after 15 December 2016.

ASU 2015-02 Consolidation (Topic 810), Amendments to the Consolidation Analysis

Effective for fiscal years beginning after 15 December 2016, and for interim periods within fiscal years beginning after 15 December 2017.

ASU 2015-01 Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-18 Business Combinations (Topic 805), Accounting for Identifiable Intangible Assets in a Business Combination

If the first qualifying transaction occurs in the first fiscal year beginning after 15 December 2015, effective for that fiscal year’s annual financial reporting and for interim and annual periods thereafter. If the first qualifying transaction occurs in a fiscal year beginning after 15 December 2016, effective for the interim period that includes the date of the transaction and for interim and annual periods thereafter.

ASU 2014-16 Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity

Effective for fiscal years beginning after 15 December 2015, and interim periods within fiscal years beginning after 15 December 2016.

ASU 2014-15 Presentation of Financial Statements — Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

Effective for annual periods ending after 15 December 2016, and interim periods within annual periods beginning after 15 December 2016.

ASU 2014-13 Consolidation (Topic 810), Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

Effective for annual periods ending after 15 December 2016, and interim periods beginning after 15 December 2016.

ASU 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Effective for annual periods and interim periods within those annual periods, beginning after 15 December 2015.

ASU 2014-09 Revenue from Contracts with Customers (Topic 606)

Effective for annual reporting periods beginning after 15 December 2017, and interim reporting periods within annual reporting periods beginning after 15 December 2018. Application prior to the effective date for public entities is prohibited.(4)

38 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective prior to 2015 for nonpublic(5) calendar year-end entities ASU 2014-17 Business Combinations (Topic 805), Pushdown

Accounting Effective upon issuance (18 November 2014). After the effective date, an acquired entity may elect to apply the guidance to future change-in-control events or to its most recent change-in-control event.

ASU 2014-06 Technical Corrections and Improvements Related to Glossary Terms

Effective upon issuance (14 March 2014).

ASU 2013-12 Definition of a Public Business Entity — An Addition to the Master Glossary

The term “public business entity” is being used to consider the scope of new guidance beginning in 2014.

ASU 2013-08 Financial Services — Investment Companies (Topic 946), Amendments to the Scope, Measurement, and Disclosure Requirements

Effective for an entity’s interim and annual reporting periods in fiscal years that begin after 15 December 2013. Earlier application is prohibited.

ASU 2013-07 Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting

Effective for an entity that determines liquidation is imminent during annual reporting periods beginning after 15 December 2013, and interim reporting periods therein.

ASU 2013-04 Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date

Effective for fiscal years ending after 15 December 2014, and interim and annual periods thereafter.

ASU 2013-02 Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

Effective for fiscal years beginning after 15 December 2013, and interim and annual periods thereafter.

ASU 2012-05 Statement of Cash Flows (Topic 230), Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows

Effective for fiscal years, and interim periods within those years, beginning after 15 June 2013.

ASU 2012-04 Technical Corrections and Improvements Effective upon issuance (1 October 2012) for amendments that do not have transition guidance. Amendments that are subject to transition guidance: effective for fiscal periods beginning after 15 December 2013.

ASU 2012-01 Health Care Entities (Topic 954), Continuing Care Retirement Communities — Refundable Advance Fees

Effective for fiscal periods beginning after 15 December 2013.

ASU 2011-06 Other Expenses (Topic 720), Fees Paid to the Federal Government by Health Insurers

Effective for calendar years beginning after 31 December 2013.

39

Title Effective date Amendments for Small and Additional Issues Exemptions Under Section 3(b) of the Securities Act (‘Regulation A+’)

19 June 2015.

Credit Risk Retention The new rules are effective 24 December 2015 for residential mortgage-backed securitizations and 24 December 2016 for all other securitizations.

Asset-Backed Securities Disclosure and Registration 24 November 2014. Nationally Recognized Statistical Rating Organizations Certain amendments related to NRSRO were effective as early as

14 November 2014, and others were effective 15 June 2015. The reporting requirements related to ABS third-party due diligence reports were effective 15 June 2015. The first annual report on internal controls from NRSROs is due no later than 90 days after their fiscal year ending on or after 1 January 2015.

Money Market Fund Reform; Amendments to Form PF The amendments related to fees, gates and the floating NAV are effective 14 October 2016. Disclosures of significant events on a fund’s website and on new Form N-CR are effective 14 July 2015. The diversification, stress testing and disclosure requirements are effective 14 April 2016.

Treatment of Certain Collateralized Debt Obligations Backed Primarily by Trust Preferred Securities with Regard to Prohibitions and Restrictions on Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds

1 April 2014.

Removal of Certain References to Credit Ratings Under the Securities Exchange Act of 1934

7 July 2014.

Removal of Certain References to Credit Ratings Under the Investment Company Act

7 February 2014; compliance with the new rules was required by 7 July 2014.

Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds

21July 2015, but the Federal Reserve Board gave banking entities a one-year extension (i.e., to 21 July 2016) to conform their ownership interests in and sponsorship of certain covered funds including collateralized loan obligations. The Federal Reserve Board also announced its intention to grant banking entities an additional one-year extension (i.e., to 21 July 2017) for the same covered funds next year. In the meantime, banks with significant trading operations will have to report certain quantitative information in phases, based on the size of the entity, with the largest banks reporting by 30 June 2014 and others reporting by 30 April 2016 or 31 December 2016, depending on the size of the bank’s consolidated trading assets and liabilities.

Broker-dealer reports The Form Custody reporting requirements for broker-dealers were effective for the quarter ended 31 December 2013. The requirement for broker-dealers to file either a compliance report or an exemption report was effective 1 June 2014.

Conflict minerals Issuers are required to file Form SD for each calendar year; the initial report for 2013 was due 2 June 2014 and the report for 2014 was due 1 June 2015.

Listing standards for compensation committees The proxy disclosure requirements were effective for shareholder meetings after 1 January 2013 at which directors are elected. The NYSE and NASDAQ rule changes have tiered effective dates between 1 July 2013 and 31 October 2014.

Effective date matrix — final SEC pronouncements and interpretive releases

40 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Title Effective date Auditing Standard No. 18, Related Parties and Amendments to Certain PCAOB Auditing Standards Regarding Significant Unusual Transactions and Other Amendments to PCAOB Auditing Standards

Effective for audits of financial statements for fiscal years beginning on or after 15 December 2014, including reviews of interim financial information within these fiscal years.

Amendments to Conform the Board’s Rules and Forms to the Dodd-Frank Act and Make Certain Updates and Clarifications

The amendments to Forms 1, 1-WD, 3 and 4 will take effect on 1 July 2014. The amendments to Form 2 will take effect 1 April 2015.

Auditing Standard No. 17, Auditing Supplemental Information Accompanying Audited Financial Statements

Effective for reports on supplemental information that accompanies financial statements for fiscal years ending on or after 1 June 2014.

Attestation Standard No. 1, Examination Engagements Regarding Compliance Reports of Brokers and Dealers

Effective for examination engagements of fiscal years ending on or after 1 June 2014.

Attestation Standard No. 2, Review Engagements Regarding Exemption Reports of Brokers and Dealers

Effective for review engagements of fiscal years ending on or after 1 June 2014.

Auditing Standard No. 16, Communications with Audit Committees

Effective for audits of financial statements for fiscal years beginning on or after 15 December 2012.

Effective date matrix — final PCAOB pronouncements and rules

41

Title Effective date SAS No. 129, Amendment to Statement on Auditing Standards No. 122 Section 920, Letters for Underwriters and Certain Other Requesting Parties, as Amended

Effective for comfort letters issued on or after 15 December 2014.

SAS No. 128, Using the Work of Internal Auditors Effective for audits of financial statements for periods ending on or after 15 December 2014.

SSARS No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification

Effective for reviews, compilations and engagements to prepare financial statements for periods ending on or after 15 December 2015.

Effective date matrix — final ASB standards

42 Second Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Title Effective date Statement No. 76, the Hierarchy of Generally Accepted Accounting Principles for State and Local Governments

Effective for financial statements for periods beginning after 15 June 2015. Earlier application is permitted.

Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions

Effective for fiscal years beginning after 15 June 2017. Earlier application is encouraged.

Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans

Effective for financial statements for fiscal years beginning after 15 June 2016. Earlier application is encouraged.

Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68

Effective for financial statements for fiscal years beginning after 15 June 2016: requirements that address accounting and financial reporting by employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68. Effective for fiscal years beginning after 15 June 2015: requirements that address financial reporting for assets accumulated for purposes of providing those pensions. Effective for fiscal years beginning after 15 June 2015: requirements that amend Statements 67 and 68. Earlier application is encouraged.

Statement No. 72, Fair Value Measurement and Application

Effective for financial statements for reporting periods beginning after 15 June 2015. Earlier application is encouraged.

Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — an amendment of GASB Statement No. 68

Effective simultaneously with the provisions of Statement 68, for fiscal years beginning after 15 June 2014. Earlier application is encouraged.

Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees

Effective for financial statements for periods beginning after 15 June 2013. Earlier application is encouraged.

Statement No. 69, Government Combinations and Disposals of Government Operations

Effective for financial statements for periods beginning after 15 December 2013 with application on a prospective basis. Earlier application is encouraged.

Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27

Effective for financial statements for fiscal years beginning after 15 June 2014. Earlier application is encouraged.

Statement No. 67, Financial Reporting for Pension Plans — an amendment of GASB Statement No. 25

Effective for financial statements for fiscal years beginning after 15 June 2013. Earlier application is encouraged.

Effective date matrix — final GASB pronouncements

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