2017 Standard Setter Update Financial reporting and accounting developments (current through 31 December 2017)

January 2018

2017 Standard Setter Update Financial reporting and accounting developments

This 2017 Standard Setter Update highlights significant developments in financial reporting and accounting between 1 January 2017 and 31 December 2017, except as noted. Our Standard Setter Update publications also summarize certain proposals under consideration by the Financial Accounting Standards Board (FASB or Board), the Emerging Issues Task Force (EITF), the Private Company Council (PCC), the Securities and Exchange Commission (SEC or Commission), 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.

January 2018

To our clients and other friends

Contents Financial Accounting Standards Board ...................................................................... 1 Securities and Exchange Commission ..................................................................... 24 Public Company Accounting Oversight Board .......................................................... 39 Auditing Standards Board ...................................................................................... 43 Governmental Accounting Standards Board ............................................................ 49 Effective date matrices .......................................................................................... 55

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Financial Accounting Standards Board

Final FASB guidance Codification Improvements to Topic 995, U.S. Steamship Entities, Elimination of Topic 995

(ASU 2017-15) ................................................................................................................... 1 Income Statement — Reporting Comprehensive Income (Topic 220), Revenue Recognition

(Topic 605), and Revenue from Contracts with Customers (Topic 606), Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403 (SEC Update) (ASU 2017-14) ....................................................................... 1

Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update) (ASU 2017-13) ............... 1

Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12) .................................................................................................... 2

Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815), (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (ASU 2017-11) ......................... 3

Service Concession Arrangements (Topic 853), Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force) (ASU 2017-10) .................. 4

Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting (ASU 2017-09) ................................................................................................................... 4

Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities (ASU 2017-08) .................................... 5

Compensation — Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07) ............ 5

Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting (a consensus of the FASB Emerging Issues Task Force) (ASU 2017-06) ...........6

Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (ASU 2017-05) ...................................... 6

Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (ASU 2017-04) ................................................................................................................... 7

Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323), Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update) (ASU 2017-03) ............................................................................... 8

Not-for-Profit Entities — Consolidation (Subtopic 958-810), Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity (ASU 2017-02) ........................................................... 8

Business Combinations (Topic 805), Clarifying the Definition of a Business (ASU 2017-01) ......... 9

Pronouncements and proposals

ii 2017 Standard Setter Update Financial reporting and accounting developments

Final guidance expected soon Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842 ................. 10 Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee

Share-Based Payment Accounting ..................................................................................... 10 Debt (Topic 470), Simplifying the Classification of Debt in a Classified Balance Sheet

(Current versus Noncurrent) ............................................................................................. 11

FASB exposure documents Issued this quarter

Codification Improvements ...................................................................................................... 12 Other proposals previously issued

Technical Corrections and Improvements to Recently Issued Standards: (I) Accounting Standards Update No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, (II) Accounting Standards Update No. 2016-02, Leases (Topic 842) ................................... 12

Consolidation (Topic 812), Reorganization ............................................................................... 13 Not-for-Profit Entities (Topic 958), Clarifying the Scope and Accounting Guidance for

Contributions Received and Contributions Made ................................................................ 14 Technical Corrections and Improvements to Topic 942, Financial Services — Depository and

Lending, Elimination of Certain Guidance for Bad Debt Reserves of Savings and Loans ........ 14 Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for

Variable Interest Entities ................................................................................................... 15 Inventory (Topic 330), Disclosure Framework — Changes to the Disclosure Requirements

for Inventory .................................................................................................................... 16 Financial Services — Insurance (Topic 944), Targeted Improvements to the Accounting for

Long-Duration Contracts ................................................................................................... 16 Concepts Statement 8 — Conceptual Framework for Financial Reporting, Chapter 7:

Presentation ..................................................................................................................... 17 Income Taxes (Topic 740), Disclosure Framework — Changes to the Disclosure Requirements

for Income Taxes .............................................................................................................. 17 Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20),

Changes to the Disclosure Requirements for Defined Benefit Plans ..................................... 18 Fair Value Measurement (Topic 820), Disclosure Framework — Changes to the Disclosure

Requirements for Fair Value Measurement ........................................................................ 18 Government Assistance (Topic 832), Disclosures by Business Entities about

Government Assistance .................................................................................................... 19 Notes to Financial Statements (Topic 235), Assessing Whether Disclosures Are Material ........... 20 Conceptual Framework for Financial Reporting, Chapter 3: Qualitative Characteristics of

Useful Financial Information .............................................................................................. 20 Conceptual Framework for Financial Reporting, Chapter 8: Notes to Financial Statements......... 20

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Other FASB Credit losses implementation .................................................................................................. 22 Leases implementation ........................................................................................................... 22 What’s next — agenda highlights .............................................................................................. 23

Securities and Exchange Commission

SEC final rules Investment Company Reporting Modernization (Release No. 33-10442)................................... 24 Inflation Adjustments and Other Technical Amendments under Titles I and III of the JOBS

Act (Release No. 33-10332) ............................................................................................. 24 Exhibit Hyperlinks and HTML Format (Release No. 33-10322) .................................................. 24

SEC rule proposals and other releases Issued this quarter

FAST Act Modernization and Simplification of Regulation S-K (Release No. 33-10425) .............. 25 Other proposals and releases previously issued

Amendments to Investment Advisers Act Rules to Reflect Changes Made by the FAST Act (Release No. IA-4697) ...................................................................................................... 25

Inline XBRL Filing of Tagged Data (Release No. 33-10323) ....................................................... 26 Disclosure Update and Simplification (Release No. 33-10110) .................................................. 26 Amendments to Smaller Reporting Company Definition (Release No. 33-10107) ...................... 27 Modernization of Property Disclosures for Mining Registrants (Release No. 33-10098) ............. 27 Incentive-based Compensation Arrangements (Release No. 34-77776) .................................... 28 Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and

Consumer Protection Act (Release No. 34-77157) ............................................................ 28 Listing Standards for Recovery of Erroneously Awarded Compensation (Release No. 33-9861).... 29 Pay Versus Performance (Release No. 34-74835) ................................................................... 29 Disclosure of Hedging by Employees, Officers and Directors (Release No. 33-9723) .................. 30 Prohibition against Conflicts of Interest in Certain Securitizations (Release No. 34-65355) ....... 31 Reporting of Proxy Votes on Executive Compensation and Other Matters (Release No. 34-63123) .. 31

SEC staff guidance Guidance on accounting for US tax reform ............................................................................... 32 Updated Financial Reporting Manual ........................................................................................ 33 Revised guidance to reflect ASC 321 ....................................................................................... 34 Guidance on non-GAAP measures ........................................................................................... 34 Guidance on pay ratio disclosure requirements ........................................................................ 34 Interpretive guidance on financial reporting obligations for certain issuers using Regulation A .... 35

iv 2017 Standard Setter Update Financial reporting and accounting developments

Revised guidance to reflect new revenue standard ................................................................... 35 FAQs on rules that modernized investment company reporting................................................. 36 Transition to Rule 147A for intrastate offerings ....................................................................... 36 Guidance on crowdfunding ...................................................................................................... 36 Updated guidance on Regulation A .......................................................................................... 36

Other SEC 2018 US GAAP financial reporting and SEC reporting taxonomies available .............................. 37 SEC staff expands and clarifies nonpublic review program ........................................................ 37 SEC staff statement on conflict minerals rule ........................................................................... 38 SEC publishes IFRS taxonomy for FPIs ..................................................................................... 38 SEC seeks feedback on Industry Guide 3 bank disclosure rules .................................................. 38 Congress eliminates rules on disclosures of payments by resource extraction issuers ................ 38

Public Company Accounting Oversight Board

Final PCAOB guidance The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an

Unqualified Opinion (PCAOB Release No. 2017-001) ......................................................... 39 Staff Audit Practice Alert No. 15, Matters Related to Auditing Revenue from Contracts

with Customers................................................................................................................. 40

PCAOB proposed standards and other projects Proposals previously issued

Supplemental Request for Comment: Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard — Dividing Responsibility for the Audit with Another Accounting Firm (PCAOB Release No. 2017-005) ... 41

Proposed Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists (PCAOB Release No. 2017-003) ........................................................................................ 41

Proposed Auditing Standard — Auditing Accounting Estimates, Including Fair Value Measurements (PCAOB Release No. 2017-002) ................................................................. 42

Auditing Standards Board

Final ASB standards Auditor Involvement with Exempt Offering Documents (Statement on Auditing Standards

No. 133) ........................................................................................................................... 43 The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern

(Statement on Auditing Standards No. 132) ...................................................................... 43

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ASB exposure drafts Issued this quarter

Auditor Reporting; Addressing Disclosures in the Audit of Financial Statements ........................ 44 The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports ........... 44 Omnibus Statement on Auditing Standards — 2018 .................................................................. 45

Other proposals previously issued Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans

Subject to ERISA .............................................................................................................. 45

AICPA — other Attestation guide on sustainability ........................................................................................... 46 Reporting on an Entity’s Cybersecurity Risk Management Program and Controls ...................... 46 Description Criteria for Management’s Description of the Entity’s Cybersecurity Risk

Management Program ...................................................................................................... 46 Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality,

and Privacy ...................................................................................................................... 47 Proposals previously issued

Proposed Statement on Standards for Attestation Engagements, Selected Procedures ............. 47 Proposed Statement on Standards for Accounting and Review Services, Omnibus

Statement on Standards for Accounting and Review Services — 2018 ................................ 48 Attestation interpretations

Interpretation No. 4, Performing and Reporting on an Attestation Engagement Under Two Sets of Attestation Standards: Interpretation of AT-C Section 105 .............................. 48

Governmental Accounting Standards Board

Final GASB guidance GASB Statement No. 87, Leases ............................................................................................. 49 GASB Statement No. 86, Certain Debt Extinguishment Issues ................................................... 49 GASB Statement No. 85, Omnibus 2017 ................................................................................. 49 GASB Statement No. 84, Fiduciary Activities ........................................................................... 50 Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment

Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting) ............ 50 Implementation Guide No. 2017-2, Financial Reporting for Postemployment Benefit Plans

Other Than Pension Plans ................................................................................................. 51 Implementation Guide No. 2017-1, Implementation Guidance Update — 2017 ........................... 51

vi 2017 Standard Setter Update Financial reporting and accounting developments

GASB exposure drafts Issued this quarter

Accounting for Interest Cost during the Period of Construction ................................................. 52 Implementation Guide No. 201Y-X, Implementation Guidance Update — 201Y ........................... 52 Accounting and Financial Reporting for Majority Equity Interests, an amendment of

GASB Statement No. 14 .................................................................................................... 52 Other proposals previously issued

Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, an amendment of GASB Statements No. 34 and No. 38 ..................................................... 53

Other GASB Invitation to Comment, Financial Reporting Model Improvements — Governmental Funds .......... 54 What’s next — agenda highlights............................................................................................... 54

Effective date matrices

Effective date matrix — final FASB pronouncements ................................................................. 55 Effective date matrix — final SEC pronouncements and interpretive releases ............................. 63 Effective date matrix — final PCAOB pronouncements and rules ................................................ 64 Effective date matrix — final AICPA standards ........................................................................... 65 Effective date matrix — final GASB pronouncements ................................................................. 66

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Codification Improvements to Topic 995, U.S. Steamship Entities, Elimination of Topic 995 (ASU 2017-15)

Date issued: 5 December 2017

Summary The Accounting Standards Update (ASU) was issued to supersede obsolete guidance that allowed US steamship entities not to recognize deferred taxes for statutory reserve deposits made on or before 15 December 1992.

Effective date The ASU is effective for fiscal years and first interim periods beginning after 15 December 2018. Early adoption is permitted.

Income Statement — Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606), Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403 (SEC Update) (ASU 2017-14)

Date issued: 22 November 2017

Summary The ASU was issued to supersede, amend and add SEC paragraphs to the Accounting Standards Codification (ASC or Codification) to reflect the August 2017 issuance of SEC Staff Accounting Bulletin (SAB) 116 and SEC Release No. 33-10403. The SEC staff issued SAB 116 to align its revenue guidance with ASC 606, Revenue from Contracts with Customers. The SEC release says that vaccine manufacturers should recognize revenue and provide the disclosures required by ASC 606 when the enumerated vaccines are placed into federal government stockpile programs. Before adopting ASC 606, registrants should continue to refer to prior Commission and staff guidance on revenue recognition topics.

Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update) (ASU 2017-13)

Date issued: 29 September 2017

Summary The ASU adds SEC paragraphs to the new revenue and leases sections of the Codification on the announcement the SEC Observer made at the 20 July 2017 EITF meeting. The SEC Observer said that the SEC staff would not object if entities that are considered public business entities only because their financial statements or financial information is required to be included in another entity’s SEC filing use the effective dates for private companies when they adopt ASC 606 and ASC 842, Leases. This would include entities whose financial statements are included in another entity’s SEC filing because they are significant acquirees under Rule 3-05 of Regulation S-X, significant equity method investees under Rule 3-09 of Regulation S-X and equity method investees whose summarized financial information is included in a registrant’s financial statement notes under Rule 4-08(g) of Regulation S-X.

Financial Accounting Standards Board

Final FASB guidance

2 2017 Standard Setter Update Financial reporting and accounting developments

The ASU also supersedes certain SEC paragraphs in the Codification related to previous SEC staff announcements and moves other paragraphs upon adoption of ASC 606 or ASC 842.

Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12)

Date issued: 28 August 2017

Summary The guidance amends the hedge accounting model in ASC 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness.

Effective date and transition The guidance is effective for public business entities (PBEs) for fiscal years beginning after 15 December 2018, including interim periods within those years. For all other entities, it is effective in fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Early adoption is permitted in any interim period or fiscal year before the effective date.

For cash flow and net investment hedges existing at the date of adoption, entities will apply the new guidance using a modified retrospective approach (i.e., with a cumulative effect adjustment recorded to the opening balance of retained earnings as of the initial application date). The guidance provides transition relief to make it easier for entities to apply certain amendments to existing hedges (including fair value hedges) where the hedge documentation needs to be modified.

The presentation and disclosure requirements apply prospectively.

Other resources • To the Point, FASB amends hedge accounting guidance to better reflect entities’ risk management

activities (SCORE No. 04887-171US)

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Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815), (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (ASU 2017-11)

Date issued: 13 July 2017

Summary An entity will no longer have to consider “down round” features (i.e., a provision in an equity-linked financial instrument or an embedded feature that reduces the exercise price if the entity sells stock for a lower price or issues an equity-linked instrument with a lower exercise price) when determining whether certain equity-linked financial instruments or embedded features are indexed to its own stock. An entity that presents earnings per share (EPS) under ASC 260 will recognize the effect of a down round feature in a freestanding equity-classified financial instrument only when it is triggered. The effect of triggering such a feature will be recognized as a dividend and a reduction to income available to common shareholders in basic EPS. The new guidance will require new disclosures for financial instruments with down round features and other terms that change conversion or exercise prices.

The ASU also replaces today’s indefinite deferral of the guidance in ASC 480-10 for certain mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests with a scope exception. This change does not require any transition guidance because it does not have an accounting effect.

Effective date and transition For PBEs, the guidance in Part I of the ASU is effective for fiscal years beginning after 15 December 2018, and interim periods therein. For all other entities, it is effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Early adoption is permitted for financial statements of fiscal years or interim periods that have not yet been issued or that have not yet been made available for issuance. Entities will apply the guidance using a full or modified retrospective approach.

Other resources • To the Point, FASB simplifies the accounting for financial instruments with ‘down round’ features

(SCORE No. 04343-171US)

4 2017 Standard Setter Update Financial reporting and accounting developments

Service Concession Arrangements (Topic 853), Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force) (ASU 2017-10)

Date issued: 16 May 2017

Summary An operating entity in a service concession arrangement will consider the grantor the customer of the operation services it provides when applying the revenue guidance in ASC 606.

Effective date and transition Entities will apply the new guidance when they adopt ASC 606 using the same transition method (including applying the same applicable transition practical expedients) they use for ASC 606. However, an entity may early adopt the new guidance in either an interim or annual period. Effective date and transition guidance is also provided for entities that have early adopted ASC 606.

Other resources • EITF Update, March 2017 meeting highlights (SCORE No. 01303-171US)

Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting (ASU 2017-09)

Date issued: 10 May 2017

Summary The guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes.

The guidance also clarifies that a modification to an award could be significant and therefore require disclosure, even if modification accounting is not required. Therefore, an entity will have to make all of the disclosures about modifications that are required today, in addition to disclosing that compensation expense hasn’t changed, if that’s the case.

Effective date and transition The guidance is effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2017. Early adoption is permitted, including in any interim period for which financial statements have not yet been issued or made available for issuance. The guidance will be applied prospectively to awards modified on or after the adoption date.

Other resources • To the Point, FASB clarifies when changes to share-based payment awards must be accounted for

as modifications (SCORE No. 03149-171US)

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Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities (ASU 2017-08)

Date issued: 30 March 2017

Summary The FASB shortened the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Today, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The accounting for purchased callable debt securities held at a discount does not change under the new guidance.

Effective date and transition The guidance is effective for PBEs for fiscal years beginning after 15 December 2018, and interim periods therein. For other entities, it is effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Early adoption is permitted. The guidance will be applied using a modified retrospective approach.

Other resources • To the Point, FASB shortens the amortization period for certain purchased callable debt securities

held at a premium (SCORE No. 01543-171US)

Compensation — Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07)

Date issued: 10 March 2017

Summary Employers that sponsor defined benefit pension and/or other postretirement benefit plans will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets.

Effective date and transition The guidance is effective for PBEs for annual periods beginning after 15 December 2017, and interim periods therein. For other entities, it is effective for annual periods beginning after 15 December 2018, and interim periods within annual periods beginning after 15 December 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. Employers will apply the guidance on the presentation of the components of net periodic benefit cost in the income statement retrospectively. The guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component will be applied prospectively.

6 2017 Standard Setter Update Financial reporting and accounting developments

Other resources • To the Point, Employers’ presentation of defined benefit retirement plan costs will change

(SCORE No. 01039-171US)

Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting (a consensus of the FASB Emerging Issues Task Force) (ASU 2017-06)

Date issued: 27 February 2017

Summary An employee benefit plan will be required to report an interest in a master trust and the change in the value of that interest as separate line items on the statement of net assets available for benefits and the statement of changes in net assets available for benefits, respectively. A plan will have to disclose the master trust’s investments and other assets and liabilities, as well as the dollar amount of its interest in these balances. Investments measured at fair value will have to be presented by general type of investment. The guidance also eliminates a disclosure requirement related to 401(h) retiree health accounts for health and welfare plans.

Effective date and transition The guidance is effective for fiscal years beginning after 15 December 2018 and will be applied retrospectively. Early adoption is permitted.

Other resources • To the Point, FASB amends employee benefit plan master trust reporting (SCORE No. 00914-171US)

Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (ASU 2017-05)

Date issued: 22 February 2017

Summary The guidance clarifies the scope and application of ASC 610-20, which was issued with the new revenue recognition standard, on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. The guidance applies to nonfinancial assets, including real estate (e.g., buildings, land, solar farms), ships and intellectual property. The guidance also defines an in substance nonfinancial asset.

The ASU clarifies that ASC 610-20 applies to all nonfinancial assets unless another scope exception applies or the sale is to a customer. The ASU also clarifies that all businesses are derecognized using the guidance in ASC 810. When determining whether to derecognize the asset, the selling entity will need to consider the guidance in ASC 810 and ASC 606 to conclude whether control of the asset has transferred.

7

Effective date and transition The new guidance, like the new revenue standard, is effective for public entities (as defined) for annual reporting periods beginning after 15 December 2017, and interim periods therein. The new guidance is effective for nonpublic entities for annual reporting periods beginning after 15 December 2018, and interim periods within annual reporting periods beginning after 15 December 2019. All entities can early adopt as of annual reporting periods beginning after 15 December 2016, including interim periods therein. The new revenue standard and ASC 610-20 must be adopted concurrently.

Entities may adopt the new guidance using either a full or modified retrospective approach, as they can for the new revenue standard. However, an entity does not have to apply the same transition method for both the new revenue standard and ASC 610-20.

Other resources • Technical Line, A closer look at the guidance on derecognition of nonfinancial assets and in

substance nonfinancial assets (SCORE No. 02006-171US)

• To the Point, Clarifications to guidance on the derecognition of nonfinancial assets and in substance nonfinancial assets (SCORE No. 00864-171US)

Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (ASU 2017-04)

Date issued: 26 January 2017

Summary The guidance simplifies the accounting for goodwill impairment for all entities by eliminating the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard does not change the guidance on completing Step 1 of the goodwill impairment test. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. In addition, private companies will still have the option to elect the Private Company Council alternative on goodwill.

Effective date and transition The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after (1) 15 December 2019 for PBEs that meet the definition of an SEC filer, (2) 15 December 2020 for PBEs that are not SEC filers and (3) 15 December 2021 for all other entities. Early adoption is permitted for annual and interim goodwill impairment testing dates after 1 January 2017.

Other resources • To the Point, FASB simplifies the accounting for goodwill impairment (SCORE No. 00381-171US)

8 2017 Standard Setter Update Financial reporting and accounting developments

Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323), Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update) (ASU 2017-03)

Date issued: 23 January 2017

Summary The ASU amends the Codification for SEC staff announcements made at two EITF meetings. At the September 2016 meeting, the SEC staff expressed its expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance (including any amendments issued prior to adoption) on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M. The ASU incorporates these SEC staff views into ASC 250-10-S99-6 and adds references to that guidance in the transition paragraphs of each of the three new standards.

The ASU also conforms ASC 323-740-S99-2, which describes the SEC staff’s views on accounting for investments in qualified affordable housing projects, to the guidance issued in ASU 2014-01. The staff announced the change at the November 2016 EITF meeting.

Not-for-Profit Entities — Consolidation (Subtopic 958-810), Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity (ASU 2017-02)

Date issued: 12 January 2017

Summary The guidance retains the presumption that a not-for-profit (NFP) entity that is a general partner of a for-profit limited partnership or similar entity controls the limited partnership, unless that presumption can be overcome. That presumption was eliminated by the amendments in ASU 2015-02 but is now reinstated in the NFP consolidation guidance in ASC 958-810. The ASU also clarifies that NFP entities (other than business-oriented health care entities) with investments in certain for-profit entities may continue to elect to measure those investments at fair value.

Effective date and transition The latest amendments on the presumption are effective for annual periods beginning after 15 December 2016, and interim periods within annual periods beginning after 15 December 2017. An NFP that has not yet adopted ASU 2015-02 must adopt both ASUs using the same transition method. Early adoption is permitted for annual and interim periods. An NFP that early adopted ASU 2015-02 must apply the latest amendments on the presumption as of the effective date discussed above, using a retrospective approach for all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 were initially adopted. An NFP that has not yet adopted ASU 2015-02 must adopt the latest amendments at the same time it adopts ASU 2015-02.

Other resources • To the Point, FASB retains consolidation guidance for NFP general partners of for-profit limited

partnerships (SCORE No. 00261-171US)

9

Business Combinations (Topic 805), Clarifying the Definition of a Business (ASU 2017-01) Date issued: 5 January 2017

Summary The FASB changed its definition of a business in an effort to help entities determine whether a set of transferred assets and activities is a business. The guidance requires an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If the threshold is not met, the entity evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance narrows the definition of outputs by more closely aligning it with how outputs are described in the new revenue guidance.

Effective date The guidance is effective for PBEs for annual periods beginning after 15 December 2017, and interim periods within those periods. For all other entities, it is effective for annual periods beginning after 15 December 2018, and interim periods within annual periods beginning after 15 December 2019. Early adoption is permitted.

Other resources • Technical Line, A closer look at the FASB’s new guidance on the definition of a business

(SCORE No. 00635-171US)

• To the Point, FASB narrows the definition of a business (SCORE No. 00058-171US)

• Technical Line, How changes to the definition of a business will affect life sciences entities (SCORE No. 00345-171US)

• Technical Line, How changes to the definition of a business will affect real estate entities (SCORE No. 00347-171US)

10 2017 Standard Setter Update Financial reporting and accounting developments

The FASB has completed deliberations on these proposals and is expected to issue final guidance soon.

Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842 Date proposal issued: 25 September 2017 — comment period ended 25 October 2017

Summary The proposal would permit an entity to elect a transition practical expedient to not assess whether existing or expired land easements that were not assessed under today’s leases guidance are or contain a lease under ASC 842, Leases. An entity would continue to apply its current accounting policy for those land easements. An entity that previously assessed its land easements under today’s leases guidance would not be permitted to use the practical expedient for those arrangements. An entity that elects the practical expedient would be required to apply it consistently to all existing and expired land easements that were not previously assessed under today’s leases guidance. The Board subsequently decided to clarify that the transition practical expedient applies to all expired or existing land easements that were not accounted for under ASC 840, Leases.

The proposal also would clarify that an entity would evaluate whether land easements are leases under ASC 842 before applying the guidance in ASC 350-30, Intangibles — Goodwill and Other — General Intangibles Other Than Goodwill.

Effective date and transition The effective date and transition requirements for the proposed amendments would be the same as those in the new leases standard.

Other resources • To the Point, FASB proposes transition practical expedient for land easements and clarification on

applying ASC 842 (SCORE No. 05548-171US)

• Comment letter (SCORE No. 06053-171US)

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

Date proposal issued: 7 March 2017 — comment period ended 5 June 2017

Summary The proposal would align the accounting for share-based payments to nonemployees with that for employees, with certain exceptions. The scope of ASC 718 would be expanded to include share-based payments made to nonemployees in exchange for goods and/or services used or consumed in the entity’s own operations. The proposal would retain the cost attribution guidance for nonemployee awards currently in ASC 505-50 by moving it to ASC 718. The proposal would also expand two practical expedients in ASC 718 for nonpublic entities to nonemployee awards.

Effective date The guidance will be effective for PBEs for fiscal years beginning after 15 December 2018, including interim periods within that fiscal year. For nonpublic entities, the guidance will be effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC 606.

Final guidance expected soon

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

• To the Point, FASB proposes simplifying the accounting for share-based payments to nonemployees (SCORE No. 01123-171US)

• Comment letter (SCORE No. 03542-171US)

Debt (Topic 470), Simplifying the Classification of Debt in a Classified Balance Sheet (Current versus Noncurrent)

Date proposal issued: 10 January 2017 — comment period ended 5 May 2017 Summary Entities would determine whether to classify debt arrangements (and other instruments within the scope of the guidance) as current or noncurrent on the balance sheet using a principles-based approach. Debt would be classified as noncurrent only when it is contractually due to be settled more than one year (or operating cycle, if longer) after the balance sheet date or when the entity has a contractual right to defer settlement for at least one year (or operating cycle, if longer) after the balance sheet date. While this approach would require entities to classify debt based on legal rights existing at the balance sheet date, an exception would be provided for waivers of debt covenant violations received after the balance sheet date but before the financial statements are issued. In addition, entities would no longer be able to consider their intent and ability to refinance short-term obligations after the balance sheet date on a long-term basis to support noncurrent classification.

The Board subsequently decided to clarify that for debt due within one year, if an arrangement is in place before the balance sheet date that would allow an entity to avoid transferring current assets within one year from the reporting date (e.g., line of credit with a third party), the debt should be classified as noncurrent.

Effective date and transition For PBEs, the guidance would be effective for fiscal years beginning after 15 December 2019, and interim periods within those fiscal years. For all other entities, it would be effective for fiscal years beginning after 15 December 2020, and interim periods within fiscal years beginning after 15 December 2021. Early adoption would be permitted, and entities would apply the guidance prospectively to all debt arrangements and other instruments within the scope that exist as of the date of initial adoption.

Other resources • FASB Project Update: Simplifying the Balance Sheet Classification of Debt

• To the Point, Proposal would simplify how entities determine the balance sheet classification of debt (SCORE No. 00154-171US)

• Comment letter (SCORE No. 03112-171US)

12 2017 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Codification Improvements

Date issued: 3 October 2017 — comment period ended 4 December 2017

Summary The FASB proposed amendments to a variety of topics in the Codification to clarify the guidance, correct errors or make minor improvements.

Effective date and transition Transition guidance is provided for certain amendments, but others would be effective upon issuance of a final ASU.

Other resources • FASB Project Update: Codification Improvements

• Comment letter (SCORE No. 06871-171US)

Other proposals previously issued

Technical Corrections and Improvements to Recently Issued Standards: (I) Accounting Standards Update No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, (II) Accounting Standards Update No. 2016-02, Leases (Topic 842)

Date issued: 27 September 2017 — comment period ended 13 November 2017

Summary The FASB proposed amending the new guidance on recognizing and measuring financial instruments to clarify that entities would use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative for equity securities without readily determinable fair values. The amendments would also clarify the guidance on how to apply the measurement alternative and the presentation requirements for financial liabilities measured under the fair value option (FVO).

The FASB also proposed narrow amendments and technical corrections to clarify how to apply certain aspects of the new leases standard. The proposed clarifications would address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things.

FASB exposure documents

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Effective date and transition The effective date and transition requirements for the proposed amendments to the guidance on recognizing and measuring financial instruments would be the same as those in that guidance, except for the amendments relevant to FVO financial liabilities, which would be effective upon issuance for entities that that have early adopted the guidance on the separate presentation of the change in fair value related to own credit risk for financial liabilities measured using the FVO. The effective date and transition requirements for the proposed amendments to the new leases standard would be the same as those in that standard. For entities that have early adopted the leases standard, the proposed amendments would be effective upon issuance of a final ASU.

Other resources • To the Point, FASB proposes clarifying the new guidance for recognizing and measuring financial

instruments (SCORE No. 05601-171US)

• To the Point, FASB proposes narrow amendments and technical corrections to the new leases standard (SCORE No. 05625-171US)

• Comment letter, Technical corrections and improvements, Financial instruments recognition and measurement (SCORE No. 06458-171US)

• Comment letter, Technical corrections and improvements, Leases (SCORE No. 06516-171US)

Consolidation (Topic 812), Reorganization

Date issued: 20 September 2017 — comment period ended 4 December 2017

Summary The consolidation guidance would be reorganized in a new topic, ASC 812, which would separately address variable interest entities and voting interest entities in response to stakeholders’ concerns that today’s guidance is difficult to navigate. The guidance on the consolidation of entities controlled by contract would be moved to ASC 958, Not-for-Profit Entities, and certain aspects of the consolidation guidance would be clarified.

Effective date and transition The effective date has not yet been determined. Companies that have already adopted ASU 2015-02 would be required to apply the proposed guidance retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 were initially applied. Companies that have not yet adopted ASU 2015-02 would be required to adopt the proposed guidance at the same time using the same transition method.

Other resources • FASB Project Update: Consolidation Reorganization and Targeted Improvements

• Comment letter (SCORE No. 06795-171US)

14 2017 Standard Setter Update Financial reporting and accounting developments

Not-for-Profit Entities (Topic 958), Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made

Date issued: 3 August 2017 — comment period ended 1 November 2017

Summary The proposal would clarify the guidance on how entities determine whether to account for a transfer of assets as a contribution or an exchange transaction. This distinction is important because contributions are accounted for under the NFP guidance, and exchange transactions are subject to other guidance. The proposal also would clarify the guidance on how to distinguish between conditional and unconditional contributions, which can affect the timing of revenue recognition. Although the accounting for contributions primarily affects NFPs, the proposed amendments would apply to all entities (including business entities) that receive or make contributions.

Effective date and transition The effective date would be aligned with the new revenue standard. That is, the proposal would be effective for PBEs and NFPs that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market for annual periods beginning after 15 December 2017, and for interim periods therein. For all other entities, it would be effective for annual periods beginning after 15 December 2018, and interim periods within annual periods beginning after 15 December 2019. Early adoption would be permitted, regardless of whether an entity has early adopted the new revenue standard.

Entities would have the option of applying the proposal retrospectively to each period presented in the financial statements or on a modified prospective basis in the first set of financial statements following the effective date.

Other resources • FASB Project Update: Revenue Recognition of Grants and Contracts by Not-for-Profit Entities

• To the Point, FASB proposes clarifying the guidance for contributions received and contributions made (SCORE No. 04665-171US)

• Comment letter (SCORE No. 06210-171US)

Technical Corrections and Improvements to Topic 942, Financial Services — Depository and Lending, Elimination of Certain Guidance for Bad Debt Reserves of Savings and Loans

Date issued: 27 June 2017 — comment period ended 28 August 2017

Summary The proposal would amend ASC 942, Financial Services — Depository and Lending, to supersede outdated deferred tax guidance on bad debt reserves of savings and loans that arose after 31 December 1987, and guidance related to the Comptroller of the Currency’s Banking Circular 202, Accounting for Net Deferred Tax Charges.

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Effective date The amendments would be effective upon issuance.

Other resources

FASB Project Update: Codification Improvements

Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities

Date issued: 22 June 2017 — comment period ended 5 September 2017

Summary The proposal would create a new private company alternative in US GAAP that would allow a private company to not apply the variable interest entity (VIE) guidance to legal entities under common control if both the common control parent and the legal entity being evaluated for consolidation are not PBEs. The FASB also proposed changing two aspects of the VIE model for related party groups. When evaluating whether its fee constitutes a variable interest, the decision maker would have to consider its indirect interests held through related parties under common control on the same basis (i.e., a proportionate basis) as it does when considering whether it is the primary beneficiary of a VIE. In addition, the proposal would eliminate today’s most closely associated test and require entities to consider a new set of factors when power is shared among related parties or a related party group under common control holds a controlling financial interest and no single entity in the group has a controlling financial interest through its direct and indirect interests.

Effective date and transition An effective date has not yet been determined. Companies that have already adopted ASU 2015-02 would be required to apply the proposed guidance retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 were initially adopted. Companies that have not yet adopted ASU 2015-02 would be required to adopt the proposed guidance at the same time using the same transition method.

Other resources • FASB Project Update: Consolidation Targeted Improvements to Related Party Guidance for

Variable Interest Entities

• To the Point, The FASB proposes more changes to the consolidation guidance (SCORE No. 04073-171US)

• Comment letter (SCORE No. 04965-171US)

16 2017 Standard Setter Update Financial reporting and accounting developments

Inventory (Topic 330), Disclosure Framework — Changes to the Disclosure Requirements for Inventory

Date issued: 10 January 2017 — comment period ended 13 March 2017

Summary All entities would be required to make additional disclosures about changes in inventory that are outside the normal purchase, manufacture or sale of inventory and the composition of inventory. All entities also would have to make certain inventory disclosures currently required by the SEC. Entities that make segment disclosures would have to make disclosures about inventory by reportable segment if they provide that information to the chief operating decision maker. Entities that apply the retail inventory method would have to make additional qualitative and quantitative disclosures about the critical assumptions they use in their inventory calculations.

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

Other resources • FASB Project Update: Disclosure Framework — Disclosure Review: Inventory

• To the Point, FASB proposes changes to inventory disclosure requirements (SCORE No. 00156-171US)

• Comment letter (SCORE No. 01419-171US)

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

Date issued: 29 September 2016 — comment period ended 15 December 2016

Summary The proposal would change how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs. Insurers would be required to make annual updates to cash flow assumptions they use to measure the liability for future policy benefits, applied retrospectively as of the contract issue date with changes recognized in income. Insurers would be required to make quarterly updates to discount rate assumptions, the effect of which would be recognized in other comprehensive income. Insurers also would be required to measure certain market risk benefits at fair value through income, except for fair value changes attributable to a change in the instrument-specific credit risk, which would be recognized in other comprehensive income. Deferred acquisition costs would be amortized using assumptions consistent with those used in estimating the liability for future policy benefits for the related contracts.

The proposal would significantly change practice and require additional disclosures. Insurers currently base their liability for future policy benefits in traditional long-duration contracts, limited-payment contracts and participating life contracts on assumptions that are locked in at contract inception. They currently amortize deferred acquisition costs consistent with how revenue is recognized from the related insurance contracts.

17

Subsequently, the Board tentatively decided to retain today’s guidance on measuring the liability for future policy benefits for participating insurance contracts. Also, future policy benefits would be discounted using an upper-medium grade fixed-income instrument yield rather than an expected investment yield.

Effective date The effective date has not yet been determined.

Other resources • FASB Project Update: Insurance — Targeted Improvements to the Accounting for Long-Duration

Contracts

• Technical Line, A closer look at proposed changes in insurers’ accounting and disclosures for long-duration contracts (SCORE No. 03631-161US)

• To the Point, Proposal would change accounting and disclosures for long-duration contracts for insurers (SCORE No. 03105-161US)

• Comment letter (SCORE No. 04388-161US)

Concepts Statement 8 — Conceptual Framework for Financial Reporting, Chapter 7: Presentation

Date issued: 11 August 2016 — comment period ended 9 November 2016

Summary The FASB proposed adding a new chapter to its conceptual framework that would provide the Board with a framework to use when determining how information should be presented in the financial statements. The objective is to enhance the ability of financial statement users to assess prospects for future cash flows by addressing how to (1) group individual recognized items into line items and subtotals and (2) clarify the relationships among assets, liabilities and equity and the effects of related changes of those assets and liabilities on comprehensive income and cash flows.

Other resources • FASB Project Update: Conceptual Framework — Presentation

Income Taxes (Topic 740), Disclosure Framework — Changes to the Disclosure Requirements for Income Taxes

Date issued: 26 July 2016 — comment period ended 30 September 2016

Summary Entities would be required to make additional disclosures about foreign earnings (including those an entity asserts are indefinitely reinvested) and other income tax topics. The proposal would change the disclosure requirements related to uncertain tax positions and broaden the applicability of certain existing income tax disclosure requirements by replacing the term public entity with public business entity. The proposal is part of the FASB’s broader disclosure framework project.

18 2017 Standard Setter Update Financial reporting and accounting developments

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

Other resources • FASB Project Update: Disclosure Framework — Disclosure Review: Income Taxes

• To the Point, FASB proposes changes to income tax disclosure requirements (SCORE No. 02231-161US)

• Comment letter (SCORE No. 03169-161US)

Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20), Changes to the Disclosure Requirements for Defined Benefit Plans

Date issued: 26 January 2016 — comment period ended 25 April 2016

Summary As part of its disclosure framework project, the Board proposed requiring certain new disclosures and eliminating others for employers that sponsor defined benefit pension and/or other postretirement benefit plans.

Effective date and transition The effective date has not yet been determined. The proposal would be applied retrospectively for all periods presented, with one exception. Qualitative disclosures about plan assets measured at net asset value would be required beginning with the most recent period presented in the period of adoption.

Other resources • FASB Project Update: Disclosure Framework — Disclosure Review: Defined Benefit Plans

• To the Point, Employers’ presentation and disclosures for defined benefit retirement plans may change (SCORE No. BB3131)

• Comment letter (SCORE No. 00761-161US)

Fair Value Measurement (Topic 820), Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement

Date issued: 3 December 2015 — comment period ended 29 February 2016

Summary The FASB proposed adding, modifying and eliminating certain fair value measurement disclosure requirements as part of its disclosure framework project. The proposal would add new requirements for PBEs, NFP entities and employee benefit plans, such as requiring them to disclose the changes in unrealized gains and losses for the period included in other comprehensive income and earnings (or changes in net assets) for recurring Level 1, Level 2 and Level 3 fair value measurements of assets and liabilities held at the end of the reporting period, disaggregated by level of the fair value hierarchy. The proposal also would require these entities to provide the range, weighted average and time period used to develop the significant unobservable inputs used in Level 3 measurements.

19

Private companies would no longer have to disclose a full reconciliation of opening to closing balances of recurring Level 3 fair value measurements, including the changes in unrealized gains and losses for the period included in earnings (or changes in net assets) on recurring Level 3 measurements of assets and liabilities held at the end of the reporting period.

All entities would no longer be required to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for the timing of transfers between levels and (3) the valuation policies and procedures for Level 3 fair value measurements.

Effective date The effective date has not yet been determined.

Other resources • FASB Project Update: Disclosure Framework — Disclosure Review: Fair Value Measurement

• Comment letter (SCORE No. BB3144)

Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance

Date issued: 12 November 2015 — comment period ended 10 February 2016

Summary For-profit entities would be required to make certain disclosures about assistance they receive resulting from legally enforceable agreements with governments. The disclosures would include information to help financial statement users understand the nature, terms and conditions of the government assistance entities receive and their accounting policies for the assistance. The disclosure requirements would apply to certain arrangements accounted for under the income tax guidance (e.g., certain income tax credit agreements with a government) in addition to grants, loan guarantees and other types of government assistance.

Effective date and transition The effective date has not yet been determined. The guidance would be applied prospectively to all agreements existing at the effective date and those entered into after the effective date. Entities would be permitted to apply the guidance retrospectively.

Other resources • FASB Project Update: Disclosures by Business Entities about Government Assistance

• Comment letter (SCORE No. BB3138)

20 2017 Standard Setter Update Financial reporting and accounting developments

Notes to Financial Statements (Topic 235), Assessing Whether Disclosures Are Material Date issued: 24 September 2015 — comment period ended 8 December 2015

Summary As part of its disclosure framework project, the FASB proposed guidance on applying materiality to disclosure requirements to promote the appropriate use of discretion by reporting entities when determining which financial statement disclosures, individually or in the aggregate, to provide.

Effective date The amendments would be effective upon issuance.

Other resources • FASB Project Update: Disclosure Framework — Entity’s Decision Process

• Comment letter (SCORE No. BB3125)

Conceptual Framework for Financial Reporting, Chapter 3: Qualitative Characteristics of Useful Financial Information

Date issued: 24 September 2015 — comment period ended 8 December 2015

Summary The FASB proposed modifying the definition of materiality in Chapter 3 of FASB Concepts Statement No. 8 to indicate that materiality is a legal concept and to revise the definition.

Subsequently, the FASB tentatively decided to amend the current definition of materiality in the Conceptual Framework with language similar to the definition that was used in superseded FASB Concepts Statement No. 2. The FASB also tentatively decided to remove the reference to materiality as a legal concept.

Other resources • FASB Project Update: Disclosure Framework — Entity’s Decision Process

• Comment letter (SCORE No. BB3126)

Conceptual Framework for Financial Reporting, Chapter 8: Notes to Financial Statements Date issued: 4 March 2014 — comment period ended 14 July 2014

Summary The FASB proposed adding a chapter to its conceptual framework that would discuss the types of information that should be included in the notes to financial statements and list a series of questions the FASB would use to evaluate disclosure requirements. The new chapter also would discuss considerations for the Board to use in evaluating interim disclosures.

Subsequently, the FASB tentatively decided to retain financial statements of NFP entities and private companies but to exclude those of employee benefit plans from the scope of the Concepts Statement on notes to financial statements.

21

In a separate phase of the project, the Board is working on developing guidance that would allow companies to apply discretion in determining which disclosures they should make and issued two proposals on materiality (see above).

As part of the disclosure framework project, the FASB is reviewing the disclosure requirements for defined benefit plans by employers, fair value measurement, income taxes and inventory (see proposals above). The FASB also is evaluating the disclosure requirements for interim financial reporting.

Other resources • FASB Project Update: Disclosure Framework

22 2017 Standard Setter Update Financial reporting and accounting developments

Credit losses implementation

Summary At the June 2017 meeting of the FASB Transition Resource Group (TRG) for Credit Losses, members reached general agreement on three implementation issues. They generally agreed that entities can elect to maintain existing pools of purchased credit impaired assets at adoption or on an ongoing basis and that entities should consider the cash flows of the assets underlying a beneficial interest, including expected prepayments, to determine whether the guidance on purchased financial assets with credit deterioration applies. TRG members also generally agreed that entities can elect to use a discount rate adjusted for expected prepayments when using a discounted cash flow (DCF) method to determine the allowance for credit losses. The FASB subsequently clarified that entities may determine this prepayment-adjusted effective interest rate as of the adoption date to measure the allowance for credit losses for troubled debt restructurings that exist on that date.

The FASB subsequently decided that the effects of a troubled debt restructuring (TDR) not already included in the historical loss information should be recognized when the individual asset to be modified is specifically identified, rather than when a TDR is executed or at origination. Also, the effects of concessions on expected credit losses that can only be explicitly captured by a DCF method, such as interest rate concessions, should be measured using that method.

The Board also discussed methods to estimate the amount of expected future payments on credit card receivables when determining the life of that credit card receivable. The Board agreed that including all payments expected to be collected or only a portion of payments in the estimate are both acceptable methods.

Separately, the Board said it will issue a technical correction clarifying that entities may use spot rates, current forward curves or internally projected interest rates that are reasonable and supportable when they use a DCF method to measure credit losses on variable rate instruments.

Finally, the Board clarified certain consequential amendments in ASU 2016-13 and said that, when measuring credit losses, an entity should not recognize the effects of events that occur after the measurement date unless those events provide information that indicates that an error correction is necessary under ASC 250.

Other resources • To the Point, FASB TRG for credit losses discusses implementation issues (SCORE No. 03877-

171US)

Leases implementation

Summary In addition to the standard setting activity discussed above (related to land easements and technical corrections to ASC 842), the FASB directed the staff to draft a proposal that would provide transition relief allowing entities to apply the legacy guidance on leases in ASC 840, Leases, including its disclosure requirements, in the comparative periods presented in the year that they adopt the new leases standard. Entities that elect this option would record the cumulative effect of adoption on the effective date rather than at the beginning of the earliest comparative period presented.

Other FASB

23

The proposal also would provide lessors with an option to combine lease and non-lease components when the pattern of recognition for the combined component would be the same as accounting for the components separately and the combined component would be classified as an operating lease.

Other resources • To the Point, FASB proposes adding transition option and practical expedient for lessors to new

leases standard (SCORE No. 00129-181US)

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

• Distinguishing liabilities from equity (including convertible debt)

• Leases: targeted improvements to Topic 842

• Inclusion of the secured overnight financing rate swap rate as a benchmark interest rate for hedge accounting purposes

• Financial performance reporting: disaggregation of performance information

• Segment reporting

• Disclosure framework: disclosures (interim reporting)

• Collaborative arrangements: targeted improvements

• Improving the accounting for asset acquisitions and business combinations

• Conceptual framework: measurement

• Conceptual framework: elements

EITF agenda Members of the EITF discussed a customer’s accounting for implementation, setup, and other upfront costs (implementation costs) incurred in a cloud computing arrangement that is considered a service contract (Issue 17-A). They tentatively decided that such a customer would capitalize the hosting fees as an asset with a corresponding liability for unpaid hosting fees. The customer also would capitalize implementation costs (e.g., customization, configuration costs) as part of the asset as if they were costs related to a software license under ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software. The EITF asked the FASB staff to research how the asset would be classified and measured.

The next EITF meeting is scheduled for 18 January 2018.

PCC agenda At the December 2017 meeting, members of the PCC and the FASB discussed EITF Issue 17-A, the FASB’s project on Financial Performance Reporting: Disaggregation of Performance Information and the FASB’s decisions on its Invitation to Comment, Agenda Consultation. The next PCC meeting is scheduled for 20 April 2018.

Other resources • FASB Technical Agenda

24 2017 Standard Setter Update Financial reporting and accounting developments

Investment Company Reporting Modernization (Release No. 33-10442) Date issued: 8 December 2017

Summary The SEC issued a temporary final rule that requires funds in fund groups with $1 billion or more in net assets to maintain the information required in Form N-PORT in their records until April 2019 rather than file it with the SEC. The information that funds maintain in their records will be subject to examination by the SEC, which is reviewing how it handles sensitive, nonpublic information that is filed electronically. As a result, larger fund groups will be required to begin submitting reports on Form N-PORT on EDGAR by 30 April 2019, and smaller fund groups will be required to begin submitting reports on Form N-PORT by 30 April 2020.

Effective date The rule is effective 16 January 2018.

Inflation Adjustments and Other Technical Amendments under Titles I and III of the JOBS Act (Release No. 33-10332)

Date issued: 31 March 2017

Summary The SEC amended the definition of an emerging growth company (EGC) to increase the annual gross revenue threshold to $1.07 billion from $1 billion to reflect inflation as required by the Jumpstart Our Business Startups (JOBS) Act every five years.

The final rule also makes inflation adjustments in the thresholds specified under the crowdfunding rules for the maximum offering amount allowed in a 12-month period by a company, the investment limits for individual investors and the financial statement requirements for offerings.

The final rule also amends the cover pages of various SEC forms (e.g., Forms S-1, S-3, 10-K, 10-Q, 20-F) to add check boxes for issuers to indicate whether, at the time of the filing, they are EGCs and whether they have elected not to use the extended transition period relief available to EGCs under the JOBS Act for complying with any new or revised financial accounting standards.

Effective date The rule became effective on 12 April 2017.

Exhibit Hyperlinks and HTML Format (Release No. 33-10322) Date issued: 1 March 2017

Summary The rule requires registrants to include a hyperlink to each exhibit listed in the exhibit index of nearly all filings subject to Item 601 of Regulation S-K, as well as in Form F-10 and Form 20-F filings. To enable the inclusion of such hyperlinks, the rule also requires registrants to submit such filings in HTML.

Effective date The rule became effective on 1 September 2017 for accelerated filers and large accelerated filers and will be effective 1 September 2018 for smaller reporting companies and non-accelerated filers.

Securities and Exchange Commission

SEC final rules

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Issued this quarter

FAST Act Modernization and Simplification of Regulation S-K (Release No. 33-10425)

Date issued: 11 October 2017 — comment period ends 2 January 2018

Summary The proposed amendments to simplify and modernize certain disclosure requirements under Regulation S-K were recommended by the SEC staff in a report that was required by the Fixing America’s Surface Transportation Act of 2015 (FAST Act). The proposed amendments are part of a broader review aimed at reducing the compliance burden on registrants while still providing all material information to investors. Among other things, they would:

• Revise the requirements for Management’s Discussion & Analysis (MD&A) (Item 303(a) of Regulation S-K) to give reporting companies more flexibility to limit the discussion of the earliest of the three annual periods to what is material when that period’s MD&A had been previously filed in a Form 10-K

• Make it easier for registrants to omit certain commercially sensitive or confidential information from material contracts filed as exhibits if that information isn’t material

• Prohibit companies from cross-referencing in the footnotes to the financial statements to disclosure outside the financial statements unless permitted by SEC rule

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes modernizing and simplifying certain Regulation S-K disclosure

requirements (SCORE No. 05841-171US)

• Comment letter (SCORE No. 00012-181US)

Other proposals and releases previously issued

Proposals on the SEC’s current rulemaking agenda

Amendments to Investment Advisers Act Rules to Reflect Changes Made by the FAST Act (Release No. IA-4697)

Date issued: 3 May 2017 — comment period ended 8 June 2017

Summary The proposed rule would expand the registration exemptions available to investment advisers of small business investment companies (SBICs) under the Investment Advisers Act of 1940 to reflect the changes made by the FAST Act.

The proposed rule would amend the definition of a venture capital fund to include SBICs, which would extend the registration exemption under Rule 203(I)-1 to investment advisers of SBICs.

SEC rule proposals and other releases

26 2017 Standard Setter Update Financial reporting and accounting developments

The proposed rule also would expand the private fund adviser exemption to SBICs. Currently, the Investment Advisers Act of 1940 provides an exemption from registration with the SEC to investment advisers who solely advise private funds and have less than $150 million in assets under management in the US. The proposed rule would allow private fund investment advisers to exclude small business investment company assets from the $150 million exemption threshold.

Effective date The proposal does not suggest an effective date.

Inline XBRL Filing of Tagged Data (Release No. 33-10323) Date issued: 1 March 2017 — comment period ended 16 May 2017

Summary The proposed rule would require operating companies and mutual funds to use Inline XBRL and embed tags in their financial statements and their risk/return summaries, respectively, rather than provide this data in separate XBRL exhibits. The requirement would be phased in over three years for operating companies based on their filing status and over two years for mutual funds based on their net assets. As is the case for XBRL exhibits, Inline XBRL information would not have to be certified by company officers. In addition, companies would not need to involve their auditors with the Inline XBRL information.

Effective date The proposal does not suggest an effective date, but compliance under the phase-in schedule would begin one year after the effective date.

Other resources • To the Point, SEC proposes requiring the use of Inline XBRL (SCORE No. 00974-171US)

• Comment letter (SCORE No. 03231-171US)

Disclosure Update and Simplification (Release No. 33-10110)

Date issued: 13 July 2016 — comment period ended 2 November 2016

Summary As part of its disclosure effectiveness initiative, the SEC proposed eliminating disclosure requirements that are redundant or outdated in light of changes in SEC requirements, US GAAP or IFRS or changes in technology or the business environment. For example, the SEC proposed eliminating the ratio of earnings to fixed charges currently required by Item 503(d) of Regulation S-K. The Commission is also seeking comments on whether it should modify or eliminate certain disclosure requirements that overlap with US GAAP and refer others to the FASB for potential incorporation into US GAAP. The proposal was mandated by the FAST Act.

Other resources • To the Point, SEC proposes eliminating redundant and outdated disclosures (SCORE No. 02048-161US)

• Comment letter (SCORE No. 03620-161US)

27

Amendments to Smaller Reporting Company Definition (Release No. 33-10107) Date issued: 27 June 2016 — comment period ended 30 August 2016

Summary The SEC proposed a rule that would allow more companies to qualify as smaller reporting companies (SRCs) if they have a public float of less than $250 million (up from $75 million) or, if they have no public float, revenue of less than $100 million in the previous year (up from $50 million). The proposal would increase the number of companies eligible to use disclosure accommodations for SRCs, such as providing two years of financial statements, reducing executive compensation disclosures and excluding selected financial data.

Under the proposal, once companies exceed the applicable threshold, they would no longer qualify as SRCs unless they have a public float of less than $200 million (up from $50 million) at the end of their second fiscal quarter or, if they have no public float, annual revenues of less than $80 million in their most recent fiscal year (up from $40 million).

The proposal would not change the $75 million public float threshold in the definition of an accelerated filer, meaning that companies could qualify as SRCs under the proposed rule but still be subject to the reporting deadlines for accelerated filers, as well as auditor attestation to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act.

Other resources • Comment letter (SCORE No. 02785-161US)

Modernization of Property Disclosures for Mining Registrants (Release No. 33-10098) Date issued: 16 June 2016 — comment period ended 26 September 2016 Summary The SEC proposed a rule that would require registrants with material mining operations to make more comprehensive disclosures about mining properties than they do today. The rule also would align disclosures with current industry and global practices and standards. Examples of disclosures that mining registrants would have to make include:

• Property disclosures by any domestic or foreign registrant (other than certain Canadian issuers) with mining operations that are material to its business or financial condition

• Information about mineral resources and material exploration results, in addition to mineral reserves

• Summary disclosure for a group of properties that are individually immaterial but material in the aggregate, as well as more detailed disclosure about properties that are individually material

• A technical report summary from a qualified person that supports the disclosures of exploration results, mineral resources and/or mineral reserves for each material property and is filed as an exhibit to SEC filings (with the expert’s consent if a registration statement)

• Disclosure about the registrant’s controls over the reliability of its property disclosures and estimates

The proposed rule would rescind Industry Guide 7 and incorporate the mining property disclosure requirements into a new subpart of Regulation S-K.

28 2017 Standard Setter Update Financial reporting and accounting developments

Proposals required by statute but not on the SEC’s current rulemaking agenda

Incentive-based Compensation Arrangements (Release No. 34-77776) Date issued: 6 May 2016 — comment period ended 22 July 2016 Summary The SEC and five other federal agencies proposed a rule prohibiting excessive incentive-based compensation arrangements that encourage inappropriate risks by certain covered financial institutions (as defined by the rule), replacing their 2011 proposal. Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) mandated this rule, citing evidence indicating that such “flawed incentive-based compensation packages in the financial industry were one of the contributing factors of the 2007 financial crisis.”

Among other things, the proposed rule would consider compensation excessive when amounts paid are unreasonable or disproportionate to the value of the services performed by a covered person (e.g., if the covered person is connected to a fraudulent act or the compensation is dissimilar to compensation provided by comparable institutions) or the arrangement encourages inappropriate risks that could lead to material financial loss (e.g., if the arrangement doesn’t balance risks and rewards, the arrangement is contrary to effective risk management controls).

The rule would apply to covered financial institutions with total assets of $1 billion or more. There would be less prescriptive requirements for smaller covered institutions as determined by asset size.

Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Release No. 34-77157)

Date issued: 17 February 2016 — comment period ended 2 May 2016

Summary The SEC and the Federal Deposit Insurance Corporation (FDIC) proposed a rule to implement the Title II liquidation provisions of the Dodd-Frank Act applicable to covered broker-dealers. The proposed rule would clarify the role of the FDIC as a receiver and that of the Securities Investor Protection Corporation (SIPC) as a trustee in liquidation proceedings. The objective of the proposed rule is to facilitate the transfer of assets from the liquidating company without systemic disruptions while maintaining investor protections under the Securities Investor Protection Act of 1970.

Effective date The rule does not suggest an effective date.

29

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

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

Summary The SEC proposed rules that would require national exchanges to establish listing standards requiring 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 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.

All listed companies except for certain registered investment companies (RICs) 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 about 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.

Effective date The proposal does not suggest an effective date.

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

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

• 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

30 2017 Standard Setter Update Financial reporting and accounting developments

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 registrants, except for EGCs, foreign private issuers and RICs. SRCs 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 into 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)

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 was mandated by the Dodd-Frank Act.

Effective date The proposal does not suggest an effective date.

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

directors (SCORE No. CC0407)

31

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

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

Summary The SEC proposed a rule that would implement Section 621 of the Dodd-Frank Act and prohibit entities that package and sell asset-backed securities (ABS) from benefiting directly or indirectly from certain adverse events (e.g., a decline in the performance of the underlying asset pool, a decline in market value of the ABS) if a reasonable investor would consider the conflict important to his or her investment decision. The proposal also would prohibit entities involved in creating or selling an ABS from participating in transactions in which they would benefit directly or indirectly from adverse events for one year after the first sale of the ABS. Exceptions include activities related to risk-mitigating hedging, liquidity commitments and bona fide market making.

Effective date The proposal does not suggest an effective date.

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

Summary Section 951 of the Dodd-Frank Act requires institutional investors to report, at least annually, how they voted on executive compensation matters. The SEC proposed requiring institutional investment managers that manage a portfolio with an aggregate value in equity securities of at least $100 million to disclose the securities voted, executive compensation matters voted on, the number of shares voted and how the manager voted these shares.

Effective date The proposed effective dates have passed. These dates will be reevaluated when the SEC issues a final rule.

32 2017 Standard Setter Update Financial reporting and accounting developments

Guidance on accounting for US tax reform Date issued: 22 December 2017 Summary The SEC staff issued SAB 118 to provide guidance for companies that are unable to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (the Act) in the period of enactment.

In issuing the guidance, the SEC staff said it was clarifying the application of ASC 740, Income Taxes, for companies that do not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting under ASC 740 for the reporting period in which the Act was enacted.

Reporting provisional amounts

The SEC staff said that companies must first reflect in their financial statements the income tax effects of the Act for which the accounting under ASC 740 is complete. These completed amounts will not be provisional amounts.

The SEC staff said a company that hasn’t completed its accounting by its financial reporting deadline may report provisional amounts based on reasonable estimates. Those amounts will be subject to adjustment during a measurement period of up to one year. The staff’s guidance requires companies to make disclosures about any provisional amounts, including the additional information needed to complete the measurements.

A company that cannot make a reasonable estimate should not account for the Act’s effects until it can make such an estimate, the SEC staff said. The staff’s guidance requires companies to make disclosures about any aspects of the Act for which no accounting recognition has been given, including the reasons for the incomplete accounting.

The SEC staff in the Division of Investment Management issued guidance in which the staff confirmed that investment companies can also rely on SAB 118 for purposes of calculating their net asset value (NAV) and reporting measurement period adjustments. The SEC staff also reminded investment companies to make disclosures, where applicable, about any material effects of the Act on their NAV calculations and information about material aspects of the Act for which the accounting is incomplete. Such disclosures could be made in a press release, on a website or in another reasonable manner.

SAB 118 applies only to the application of ASC 740 in connection with the Act. The SEC staff said it cannot be applied to other changes in tax laws.

Other SEC disclosure considerations

The SEC staff also issued Compliance and Disclosure Interpretation (C&DI) 110.02 to answer questions companies have raised about reporting the effects of the Act. In the C&DI, the SEC staff said the remeasurement of a deferred tax asset (DTA) to reflect the effect of a change in tax rate or tax laws is not an impairment under ASC 740 and wouldn’t trigger an obligation to file a Form 8-K under Item 2.06, Material Impairments. However, the enactment of new tax rates or tax laws could have financial reporting implications, including whether it is more likely than not that the DTA will be realized.

SEC staff guidance

33

In the C&DI, the SEC staff also noted that registrants employing the measurement period approach described in SAB 118 that conclude that an impairment has occurred (e.g., recognizing or adding to a valuation allowance for DTAs) for the period that includes the enactment date due to changes resulting from the enactment of the Act may rely on the Instruction to Item 2.06. That instruction exempts registrants from filing a Form 8-K if the conclusion is made in connection with the preparation, review or audit of financial statements to be included in the next periodic report to be filed. In those situations, registrants must disclose the impairment, or a provisional amount with respect to that possible impairment, in that next timely filed periodic report.

Other resources • Technical Line, SEC staff provides guidance on accounting for the effects of US tax reform (SCORE

No. 00015-181US)

• Technical Line, A closer look at accounting for the effects of the Tax Cuts and Jobs Act (SCORE No. 00257-181US)

Updated Financial Reporting Manual Date issued: 1 December 2017 and 25 August 2017 Summary The SEC staff in the Division of Corporation Finance (Division) updated its Financial Reporting Manual to:

• Clarify that if an EGC that follows private company effective dates for new accounting standards loses its EGC status after the public company effective date of a new standard, it should generally adopt the new standard in its next filing after losing its EGC status. However, the staff said that it may not object to other alternatives, depending on the facts and circumstances

• Clarify that in preparing pro forma financial information, registrants must conform the date and method of adoption of new accounting standards by acquired businesses to their own, though the staff said it will consider requests for relief from this requirement

• Clarify that in preparing pro forma financial information for prior periods, registrants do not need to give effect to new accounting standards adopted retrospectively until they reissue historical financial statements for those periods that reflect the accounting change

• Allow registrants to request permission from the Division’s Office of the Chief Accountant (CF-OCA) to substitute abbreviated financial statements in lieu of the full financial statements of an acquired business identified as a predecessor

• Provide contact information for staff within the CF-OCA for companies and their advisers to use when requesting financial statement waivers under Rule 3-13 of Regulation S-X or obtaining clarifications on applicable rules and SEC filing requirements

• Incorporate its previously issued C&DIs on financial information that EGCs and non-EGCs can omit from draft and publicly filed registration statements (see further discussion below in “SEC staff expands and clarifies nonpublic review program”)

34 2017 Standard Setter Update Financial reporting and accounting developments

Revised guidance to reflect ASC 321 Date issued: 29 November 2017 Summary The SEC staff issued SAB 117 to state that once entities adopt ASC 321, Investments — Equity Securities, they should no longer apply SAB Topic 5.M, Other Than Temporary Impairment of Certain Investments in Equity Securities.

Guidance on non-GAAP measures Date issued: 17 October 2017 Summary The SEC staff issued C&DIs to clarify that:

• Financial measures included in forecasts provided to a financial advisor and used in connection with a business combination transaction are not non-GAAP financial measures if they are provided to the financial advisor for the purpose of rendering an opinion that is materially related to the business combination transaction and the forecasts are being disclosed in order to comply with Item 1015 of Regulation M-A or requirements under state or foreign law, including case law, regarding disclosure of the financial advisor’s analyses or substantive work.

• The exemption from Regulation G and Item 10(e) of Regulation S-K for non-GAAP financial measures disclosed in communications relating to a business combination transaction does not extend to the same non-GAAP financial measures disclosed in registration statements, proxy statements and tender offer statements other than in conjunction with the communications described above.

Guidance on pay ratio disclosure requirements Date issued: 21 September 2017 Summary The Commission released interpretive guidance stating that it won’t bring enforcement actions challenging pay ratio disclosures based on estimates made in good faith. The guidance also clarifies that registrants can use existing internal records, such as tax or payroll records, to determine the median employee’s annual compensation for use in the pay ratio disclosures many registrants will begin making in 2018.

The SEC staff separately released guidance and examples to help registrants determine how they can use statistical sampling methods and estimates in calculating their pay ratio. The staff also updated its C&DIs on pay ratio disclosures to reflect the Commission guidance.

The Commission and SEC staff guidance was issued in response to public feedback on the unexpected challenges that issuers are facing as they prepare to comply with the pay ratio rule. The pay ratio rule, which was mandated by the Dodd-Frank Act, requires registrants to begin disclosing the ratio between the pay of their median employee and their chief executive officer or other principal executive officer for the first fiscal year beginning on or after 1 January 2017. Emerging growth companies, smaller reporting companies, foreign private issuers and most registered investment companies are exempt from the requirement.

35

Interpretive guidance on financial reporting obligations for certain issuers using Regulation A

Date issued: 14 September 2017 Summary The SEC staff issued C&DIs to clarify when financial statements for a Regulation A offering filed concurrently with an Exchange Act registration must be current and when annual and quarterly financial statements must be filed.

The C&DIs clarify that an entity that files a post-qualification amendment for a Regulation A offering concurrently with Form 8-A to register a class of securities under the Exchange Act for trading on a national securities exchange must provide current financial statements (i.e., not older than nine months from the qualification date of a post-qualification Form 1-A).

These C&DIs also clarify that Regulation A issuers that register on Form 8-A can file their first annual report on Form 10-K for the preceding fiscal year within 90 days after the effective date of their Form 8-A. They can also file their first Form 10-Q (or 10-Qs covering two quarters) up to 45 days after the effective date of their Form 8-A or by the required due date of the Form 10-Q (as if the issuer had been required to file Form 10-Q), whichever is later.

Revised guidance to reflect new revenue standard Date issued: 18 August 2017 Summary The SEC staff issued SAB 116 to align its revenue guidance with ASC 606. SAB 116 states that once entities adopt ASC 606, they should no longer apply SAB Topic 13, Revenue Recognition, and SAB Topic 8, Retail Companies. It also modifies Section A, Operating-Differential Subsidies, of SAB Topic 11, Miscellaneous Disclosure, to clarify that registrants should present revenue from operating-differential subsidies separately from revenue from contracts with customers or as a credit in the costs and expenses section of the statement of income.

The SEC also issued a release stating that registrants should no longer use Securities Exchange Act Release 23507 or refer to the criteria in Accounting and Auditing Enforcement Release 108 to recognize revenue for bill-and-hold arrangements upon adoption of ASC 606. Instead, those entities should use the guidance for bill-and-hold arrangements in ASC 606.

Until they adopt ASC 606, registrants should continue to refer to prior Commission and staff guidance on revenue recognition topics.

Other resources • Financial reporting developments, Revenue from contracts with customers (ASC 606)

(SCORE No. BB3043)

36 2017 Standard Setter Update Financial reporting and accounting developments

FAQs on rules that modernized investment company reporting Date issued: 18 July 2017 Summary The staff of the SEC’s Division of Investment Management issued frequently asked questions (FAQs) about the investment company reporting modernization rules the SEC adopted in October 2016. The FAQs address: (1) compliance dates and general filing obligations, (2) Form N-PORT, (3) Regulation S-X and (4) Form N-CEN.

Transition to Rule 147A for intrastate offerings Date issued: 19 April 2017 Summary The SEC staff issued a C&DI to clarify that an issuer making ongoing offers and sales of securities under Rule 147 is allowed to transition to offers and sales in reliance on Rule 147A, which became effective 20 April 2017. Rule 147A is similar to amended Rule 147 but allows offers to be accessible to out-of-state residents and companies incorporated out of state, provided the offer indicates that it is limited to residents of one state.

Guidance on crowdfunding Date issued: 5 April 2017 Summary The SEC staff clarified in a C&DI that when determining its eligibility to terminate its reporting obligation, a crowdfunding issuer counts all holders of record of securities of the same class as the securities issued in the Regulation Crowdfunding offering that created the reporting obligation, even if those securities were not purchased in a Regulation Crowdfunding offering.

The SEC staff also clarified that a crowdfunding issuer should determine the 5% threshold for disclosing related party transactions in an offering document based on the target offering amount (i.e., the minimum necessary to close the offering) plus any amount already raised in reliance on the federal crowdfunding exemption in the previous 12-month period.

Updated guidance on Regulation A Date issued: 31 March 2017 Summary The SEC staff issued C&DIs to clarify that:

• The staff will not object if a Regulation A issuer does not include an auditor’s consent to use its auditor’s report on the financial statements in Form 1-K.

• An issuer of a Regulation A Tier 2 offering may follow the age of financial statements requirements specified in paragraph (b)(3)-(4) of Part F/S of Form 1-A, which permit the annual financial statements to be up to nine months old before requiring interim financial statements.

37

2018 US GAAP financial reporting and SEC reporting taxonomies available Date issued: 21 December 2017 Summary The 2018 US GAAP financial reporting taxonomy and SEC reporting taxonomy are available on the FASB website. The US GAAP financial reporting taxonomy includes updates for new accounting standards and other improvements. The SEC reporting taxonomy provides elements necessary to meet data-tagging requirements for financial schedules, condensed consolidating financial information for guarantors and disclosures about oil and gas production that are required by the SEC. The SEC is expected to approve the taxonomies in early 2018, after which registrants will be able to use them.

SEC staff expands and clarifies nonpublic review program Date issued: 17 August 2017 and 29 June 2017 Summary The SEC’s Division of Corporation Finance announced that, effective 10 July 2017, all companies will be allowed to submit their draft initial registration statements (and subsequent revisions) under both the Securities Act (e.g., Form S-1) and Section 12(b) of the Exchange Act (e.g., Form 10) for confidential review by the SEC staff. Previously, this option was only available to EGCs and eligible foreign private issuers.

Companies that elect this accommodation will be required to publicly file their registration statements and prior draft registration statement submissions at least 15 days before the expected effective date of the registration statement.

The SEC staff also expanded this accommodation to subsequent registration statements filed within one year after the effective date of an issuer’s initial Securities Act registration statement or an issuer’s Exchange Act Section 12(b) registration statement. Subsequently, the Division of Corporation Finance clarified that Securities Act registration statements submitted by all companies before an initial public offering (e.g., registration statements for an exchange offer of debt securities on Form S-4) are eligible for nonpublic review.

Companies that use this accommodation may omit from their draft registration statements annual and interim financial information that they reasonably believe they will not be required to present separately at the time of the contemplated offering (for EGCs) or the initial public filing (for non-EGCs). However, a registration statement must include all required financial statements under the applicable rules and forms in effect when the registration statement is initially filed (i.e., both EGCs and non-EGCs must include all required interim financial statements when they first file their registration statements). Previously, similar relief was only available to an EGC when submitting or filing an IPO registration statement.

Other resources • To the Point, SEC staff substantially expands scope of confidential review program for draft

registration statements (SCORE No. 04157-171US)

Other SEC

38 2017 Standard Setter Update Financial reporting and accounting developments

SEC staff statement on conflict minerals rule Date issued: 7 April 2017 Summary The SEC staff said in a statement that it would not recommend enforcement actions against companies that do not file the disclosures required by paragraph (c) of Item 1.01 of Form SD (e.g., the conflict minerals report) but make the other required disclosures (e.g., the reasonable country of origin inquiry) about conflict minerals. The staff’s statement came after a US District Court upheld the conclusion that the portion of the conflict minerals rules requiring companies to state that their products “have not been found to be ‘DRC conflict free’” violates the First Amendment and remanded rulemaking to the SEC.

In response, then-Acting Chairman Michael Piwowar directed the staff to consider whether and how the rule can be changed to avoid the “constitutional defect identified by the court.”

SEC publishes IFRS taxonomy for FPIs Date issued: 1 March 2017 Summary The SEC published its first IFRS Taxonomy for use by foreign private issuers (FPIs) that prepare their financial statements in accordance with IFRS as issued by the International Accounting Standards Board. FPIs are required to file XBRL-tagged financial statements in annual reports for fiscal periods ending on or after 15 December 2017.

SEC seeks feedback on Industry Guide 3 bank disclosure rules Date issued: 1 March 2017 — comment period ended 8 May 2017 The SEC asked for public comment on statistical and other disclosures required by Industry Guide 3, Statistical Disclosure by Bank Holding Companies. The request asked for feedback on potential improvements to the disclosure regime and the effects of regulation on bank holding companies, among other things.

Other resources • Comment letter (SCORE No. 03426-171US)

Congress eliminates rules on disclosures of payments by resource extraction issuers Date issued: 14 February 2017 Summary Congress eliminated SEC rules that would have required disclosures of payments made by resource extraction issuers to domestic and foreign governments for the commercial development of oil, natural gas or minerals. President Trump signed the bill into law. The rule was mandated by the Dodd-Frank Act.

39

The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion (PCAOB Release No. 2017-001)

Date approved by the SEC: 23 October 2017

Summary Auditors are required to include significantly more information in their auditor’s reports to make them more relevant and informative for investors and other stakeholders. The standard retains today’s pass/fail approach but requires auditors to include the following in their report:

• A discussion of critical audit matters (CAMs), defined as items communicated to the audit committee or required to be communicated to the audit committee that relate to accounts or disclosures that are material to the financial statements and involve especially challenging, subjective or complex auditor judgment

• Information about auditor tenure

• A statement that the auditor is required to be independent

• The phrase “whether due to error or fraud” in the description of the auditor’s responsibilities to obtain reasonable assurance about whether the financial statements are free of material misstatement

The standard generally applies to audits conducted under PCAOB standards, but CAMs do not have to be communicated for audits of (1) brokers and dealers reporting under the Securities Exchange Act of 1934 Rule 17a-5, (2) investment companies other than business development companies, (3) employee stock purchase, savings and similar plans and (4) emerging growth companies.

Effective date The requirements under the new standard, except for the requirement to communicate CAMs, will be effective for audits of financial statements for annual reporting periods ending on or after 15 December 2017. The requirement to communicate CAMs will be effective for annual periods ending on or after 30 June 2019 for large accelerated filers and 15 December 2020 for all other filers.

Other resources • To the Point, PCAOB adopts final standard to significantly change the auditor’s report

(SCORE No. 03611-171US)

• Staff Guidance — Changes to the Auditor’s Report Effective for Audits of Fiscal Years Ending on or After December 15, 2017

Public Company Accounting Oversight Board

Final PCAOB guidance

40 2017 Standard Setter Update Financial reporting and accounting developments

Staff Audit Practice Alert No. 15, Matters Related to Auditing Revenue from Contracts with Customers

Date issued: 5 October 2017

Summary The PCAOB’s staff audit practice alert may provide insight to companies about how auditors will approach the audit of a company’s implementation of the new revenue standard. The alert discusses what auditors should consider when auditing the transition adjustments and disclosures. It also discusses what the PCAOB expects auditors to do to evaluate whether revenue is recognized appropriately and whether the financial statements include appropriate disclosures. The alert also addresses internal control over financial reporting and highlights the importance of a company having effective controls over the processes it uses to both implement the revenue standard and apply it after adoption, including the requirement to identify and assess fraud risks.

Other resources • To the Point, How companies should prepare for the audit of the new revenue standard

(SCORE No. 05783-171US)

41

Proposals previously issued

Supplemental Request for Comment: Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard — Dividing Responsibility for the Audit with Another Accounting Firm (PCAOB Release No. 2017-005)

Date issued: 26 September 2017 — comment period ended 15 November 2017

Summary The PCAOB is seeking input on revisions to its 2016 proposal that would strengthen the requirements for supervising other auditors. The proposal would revise the requirements on how the lead auditor would be determined and how the lead auditor would assess another auditor’s compliance with independence and ethics requirements as well as the other auditor’s knowledge, skill and ability. It also would revise the requirements for the lead auditor to review the work of other auditors.

Other resources • To the Point, PCAOB asks for more input on its proposal on supervision of other auditors

(SCORE No. 05669-171US)

• Comment letter (SCORE No. 06507-171US)

Proposed Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists (PCAOB Release No. 2017-003)

Date issued: 1 June 2017 — comment period ended 30 August 2017

Summary The current requirements for testing and evaluating the work of a company specialist would be expanded to include evaluating:

• Whether company-produced data used by the specialist is complete and accurate, whether data obtained from external sources used by the specialist is relevant and reliable, and whether both types of data were appropriately used by the specialist

• Whether the methods used by the specialist are appropriate, and whether the significant assumptions used by the specialist are reasonable

• Whether the specialist’s work is relevant and reliable, and whether the specialist’s findings support or contradict the relevant assertion

The proposal also would expand the requirements for applying a risk-based supervisory approach to specialists employed and engaged by the auditor. Auditors would be required to establish and document an understanding with the specialist regarding the work to be performed, implement measures to determine that there is appropriate coordination of work with the specialist, evaluate whether the specialist’s work is in accordance with the auditor’s understanding with the specialist and evaluate whether the specialist’s findings and conclusions are consistent with results of the work performed by the specialist.

PCAOB proposed standards and other projects

42 2017 Standard Setter Update Financial reporting and accounting developments

Other resources • To the Point, PCAOB proposes expanding guidance on auditing estimates and using the work of

specialists (SCORE No. 03708-171US)

• Comment letter (SCORE No. 04951-171US)

Proposed Auditing Standard — Auditing Accounting Estimates, Including Fair Value Measurements (PCAOB Release No. 2017-002)

Date issued: 1 June 2017 — comment period ended 30 August 2017

Summary Certain key requirements in the existing standard on fair value measurements would be extended to all accounting estimates to create a uniform approach to substantive testing. The proposal would describe the auditor’s responsibilities to:

• Test the individual elements of the company’s process used to develop the estimate (i.e., assumptions, data and methods)

• Evaluate the company’s method for developing the estimate, including whether the method is in conformity with the requirements of the applicable financial reporting framework and appropriate for the nature of the related account and the business, industry and environment in which the company operates

• Consider certain factors in determining whether significant assumptions that are based on the company’s intent and ability to carry out a particular course of action are reasonable

In addition, the proposal aims to focus the auditor’s attention on addressing potential management bias in accounting estimates and would reinforce the need for professional skepticism. It also would establish requirements on how to determine whether pricing information obtained from third-party sources, including pricing services and brokers or dealers, provides sufficient appropriate audit evidence.

The proposal also would add an appendix to Auditing Standard (AS) 1105, Audit Evidence, which addresses the valuation of investments based on investee financial condition or operating results, such as equity method investments and investments measured at fair value for which the investee’s financial condition or operating results are a significant input into the fair value determination.

Other resources • To the Point, PCAOB proposes expanding guidance on auditing estimates and using the work of

specialists (SCORE No. 03708-171US)

• Comment letter (SCORE No. 04946-171US)

43

Auditor Involvement with Exempt Offering Documents (Statement on Auditing Standards No. 133)

Date issued: 26 July 2017

Summary The guidance requires an auditor to perform certain procedures when the auditor is involved with an exempt offering document. An auditor is considered to be involved when (1) the auditor’s report on the financial statements or the auditor’s review report on interim financial information is included or incorporated by reference in the exempt offering document and (2) the auditor performs one or more specified activities (e.g., issues a comfort letter) in connection with the exempt offering document. Exempt offerings are those that are not required to be registered under the Securities Act of 1933 and franchise offerings that are regulated by the Federal Trade Commission.

Effective date The standard is effective for exempt offering documents with which the auditor is involved that are initially distributed, circulated or submitted on or after 15 June 2018.

The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (Statement on Auditing Standards No. 132)

Date issued: 22 February 2017

Summary Statement on Auditing Standards (SAS) No. 132 supersedes SAS No. 126 but retains the requirement for the auditor to separately conclude whether there is substantial doubt about an entity’s ability to continue as a going concern. The new SAS also:

• Clarifies the auditor’s responsibility to separately conclude on the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements

• Requires the auditor to evaluate management’s going concern assessment required by ASC 205-40, Presentation of Financial Statements — Going Concern

• Aligns the definition of substantial doubt and the auditor’s assessment period with the guidance in ASC 205-40

• Requires the auditor to obtain sufficient appropriate audit evidence about the intent and ability of a third party or owner-manager to provide financial support when management’s plans to alleviate substantial doubt depend on that support

Effective date SAS No. 132 is effective for audits of financial statements for periods ending on or after 15 December 2017 and reviews of financial information for interim periods beginning after fiscal years ending on or after 15 December 2017.

Auditing Standards Board

Final ASB standards

44 2017 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Auditor Reporting; Addressing Disclosures in the Audit of Financial Statements

Date issued: 28 November 2017 — comment period ends 15 May 2018

Summary The proposal would change the form and content of the auditor’s report for audits of non-issuers. The changes would be consistent with those resulting from the new and revised International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and the new auditor reporting model recently adopted by the PCAOB. The revisions would include changes to the positioning of the opinion and the basis for opinion sections.

The proposal also would expand the description of management’s responsibilities for the preparation and fair presentation of the financial statements and require the report to identify those responsible for the oversight of the financial reporting process when they differ from those responsible for the preparation of the financial statements.

The proposal also would provide guidance for communicating key audit matters (KAMs) in the auditor’s report when auditors are engaged to do so. The guidance would be similar in concept to the new PCAOB-required communication of CAMs in the audit reports of issuers.

The proposal also would make changes to various auditing standards, converging them with the IAASB’s pronouncements that focus auditors’ attention on disclosures throughout the financial statement audit.

Effective date The effective date would not be before audits of financial statements for periods ending on or after 15 June 2019.

The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports

Date issued: 28 November 2017 — comment period ends 15 May 2018

Summary The proposal would clarify the auditor’s responsibilities for other information included in annual reports that contain, accompany or incorporate by reference the financial statements and the auditor’s report. Under today’s standard, the auditor is responsible to read the other information for consistency with the audited financial statements. Under the proposal, the auditor’s responsibilities would also include reading the other information for consistency with the auditor’s understanding of the entity and its environment. The auditor’s report also would include a separate section describing the auditor’s work with respect to other information.

Effective date The effective date would not be before audits of financial statements for periods ending on or after 15 June 2019.

ASB exposure drafts

45

Omnibus Statement on Auditing Standards — 2018

Date issued: 28 November 2017 — comment period ends 15 May 2018

Summary The proposal would minimize certain differences between the ASB’s auditing standards and those of the PCAOB on related parties and communications to those charged with governance. Among other things, the proposal would require the auditor to test the accuracy and completeness of the related parties and relationships and transactions with related parties identified by the entity, taking into account the information gathered during the audit. It would also require the auditor to communicate views relating to the entity’s significant unusual transactions and the potential effects of uncorrected misstatements on future-period financial statements.

Effective date The effective date would not be before audits of financial statements for periods ending on or after 15 June 2019.

Other proposals previously issued

Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA

Date issued: 20 April 2017 — comment period ended 29 September 2017

Summary Auditors would be required to perform certain audit procedures related to financial statements of benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) regardless of the assessed risks of material misstatement. Auditors would have to communicate their findings either in the auditor’s report on the financial statements or in a separate report.

When management imposes an ERISA-permitted audit scope limitation for information related to assets held for investment and certified by a qualified institution, the auditor would be required to evaluate whether the form and content of the financial statement disclosures about the certified investment information are in accordance with the applicable financial reporting framework. Also, the proposal would change the form and content of the auditor’s limited scope audit report, replacing the disclaimer of opinion typically issued under current standards.

Effective date The proposed standard would be effective for audits of ERISA plan financial statements for periods ending on or after 15 December 2018.

Other resources • To the Point, Auditors would perform more tests and provide more information in reports on ERISA

plans (SCORE No. 01831-171US)

• Comment letter (SCORE No. 04789-171US)

46 2017 Standard Setter Update Financial reporting and accounting developments

Attestation guide on sustainability

Date issued: 27 July 2017

Summary To address the growing interest in sustainability reporting, the American Institute of Certified Public Accountants (AICPA) issued a new attestation guide for accountants who perform engagements and report on companies’ sustainability information. Investors and other stakeholders are increasingly considering sustainability issues in their decision making, and many believe it is important for the information on these issues that companies provide to be subject to independent assurance.

Other resources • To the Point, AICPA issues new attestation guide amid growing investor interest in sustainability

reporting (SCORE No. 04558-171US)

Reporting on an Entity’s Cybersecurity Risk Management Program and Controls

Date issued: 23 May 2017

Summary The ASB’s guide is intended to help certified public accountants perform and report on voluntary examination engagements in the area of cybersecurity. The guide may also be helpful for entities that want to evaluate their own cybersecurity risk management programs and controls using the criteria the AICPA issued in April 2017.

Description Criteria for Management’s Description of the Entity’s Cybersecurity Risk Management Program

Date issued: 26 April 2017

Summary The set of criteria issued by the AICPA is intended to be used by management to describe an entity’s cybersecurity risk management program. The criteria can be used by public accounting firms to report on management’s description. When the AICPA developed the criteria, it considered the cybersecurity information published by industry experts, the information requested by regulators and the information report users may want to see. The AICPA also considered the risk that disclosing certain information could help hostile parties identify and exploit vulnerabilities in an entity’s cybersecurity risk management program.

Other resources • To the Point, AICPA issues criteria for evaluating how an entity manages cybersecurity risk

(SCORE No. 01969-171US)

AICPA — other

47

Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality, and Privacy

Date issued: 26 April 2017

Summary The AICPA revised its trust services criteria so they can be used by companies and independent public accountants to evaluate an entity’s internal controls in its cybersecurity risk management program. The revised trust services criteria, together with the description criteria, provide a roadmap for management to use in its self-assessment and for independent public accountants to use to support a wide range of services, including assessments of entity-wide risk management programs.

Other resources • To the Point, AICPA issues criteria for evaluating how an entity manages cybersecurity risk

(SCORE No. 01969-171US)

Proposals previously issued

Proposed Statement on Standards for Attestation Engagements, Selected Procedures

Date issued: 1 September 2017 — comment period ended 1 December 2017

Summary The AICPA’s Accounting and Review Services Committee (ARSC) proposed an attestation standard that would create a new service under which an accountant could perform procedures and report on findings beyond those currently allowed under the AICPA attestation standards for an agreed-upon procedures engagement. Under the proposal, an accountant would perform selected procedures over financial or nonfinancial information to report findings to various stakeholders to assist them in evaluating whether the subject matter (i.e., information) is in accordance with suitable criteria. As in agreed-upon procedures engagements, the accountant would present procedures and findings without expressing an opinion, a conclusion or any form of assurance. However, selected procedures engagements would have fewer requirements than agreed-upon procedures engagements, giving companies more flexibility in how they can meet the needs of their stakeholders.

Effective date The effective date would not be earlier than for reports dated on or after 1 May 2019. Early implementation would be permitted.

Other resources • To the Point, Proposed alternative to agreed-upon procedures engagements would address

stakeholder needs (SCORE No. 05180-171US)

• Comment letter (SCORE No. 06850-171US)

48 2017 Standard Setter Update Financial reporting and accounting developments

Proposed Statement on Standards for Accounting and Review Services, Omnibus Statement on Standards for Accounting and Review Services — 2018

Date issued: 14 September 2017 — comment period ended 14 December 2017

Summary The ARSC proposed a new omnibus standard that would provide requirements and guidance for compilations and reviews of financial statements prepared in accordance with a financial reporting framework generally accepted in another country or performed in accordance with both Statements on Standards for Accounting and Review Services (SSARS) and another set of compilation and review standards. The proposal also includes amendments that are intended to harmonize the accountant’s requirements to evaluate the entity’s ability to continue as a going concern in a SSARS review with the requirements in AU-C section 930, Interim Financial Information. The proposal would also provide clarifying guidance when accountants reference the work of other accountants in a review report.

Effective date The effective date would not be earlier than for compilations and reviews of financial statements for periods ending on or after 15 June 2019.

Attestation interpretations

Interpretation No. 4, Performing and Reporting on an Attestation Engagement Under Two Sets of Attestation Standards: Interpretation of AT-C Section 105

Date issued: 23 May 2017

Summary The interpretation of AT-C section 105, Concepts Common to All Attestation Engagements, clarifies that an attestation engagement may be performed and reported on in accordance with AICPA attestation standards and another set of attestation standards when both sets of standards are followed in their entirety. The interpretation also addresses the amendments to the attestation report if both sets of attestation standards are referenced.

49

GASB Statement No. 87, Leases

Date issued: 28 June 2017

Summary This guidance establishes a single approach for state and local governments to account for and report on leases based on the principle that leases are financings of the right to use an underlying asset. The guidance applies to lease contracts for nonfinancial assets, including vehicles, heavy equipment and buildings, but doesn’t apply to non-exchange transactions, such as donated assets, and leases of intangible assets, such as patents and software licenses. The standard includes limited exceptions to the single-approach guidance, including an exception for short-term leases (as defined).

A lessee government will be required to recognize a lease liability and an intangible asset representing the lessee’s right to use the leased asset. A lessor government will be required to recognize a lease receivable and a deferred inflow of resources. A lessor will continue to report the leased asset in its financial statements.

The standard also addresses accounting for lease terminations and modifications, sale-leaseback transactions, non-lease components embedded in lease contracts and leases with related parties.

Effective date The guidance is effective for reporting periods beginning after 15 December 2019. Earlier application is encouraged.

GASB Statement No. 86, Certain Debt Extinguishment Issues

Date issued: 15 May 2017

Summary State and local governments will apply the new guidance when accounting for transactions in which cash and other monetary assets acquired with only existing resources are placed in an irrevocable trust for the sole purpose of extinguishing debt. The standard also provides guidance on accounting for prepaid insurance on debt that is extinguished and requires more disclosures for debt that is defeased in substance.

Effective date The guidance is effective for reporting periods beginning after 15 June 2017. Earlier application is encouraged.

GASB Statement No. 85, Omnibus 2017

Date issued: 20 March 2017

Summary The guidance addresses several accounting and financial reporting issues identified during the implementation and application of certain GASB pronouncements, including:

• Blending a component unit in circumstances in which the primary government is a business-type activity reporting in a single column for financial statement presentation

Governmental Accounting Standards Board

Final GASB guidance

50 2017 Standard Setter Update Financial reporting and accounting developments

• Reporting amounts previously reported as goodwill and “negative” goodwill

• Classifying real estate held by insurance entities

• Measuring certain money market investments and participating interest-earning investment contracts at amortized cost

• Timing of the measurement of pension and other postemployment benefits (OPEB) liabilities and related expenditures recognized in financial statements prepared using the current financial resources measurement focus

• Recognizing on-behalf payments for pensions or OPEB in employer financial statements

• Simplifying certain aspects of the alternative measurement method for OPEB

The guidance also addresses issues similar to those covered in GASB Statements No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, and No. 82, Pension Issues.

Effective date The guidance is effective for reporting periods beginning after 15 June 2017. Earlier application is encouraged.

GASB Statement No. 84, Fiduciary Activities

Date issued: 31 January 2017

Summary The guidance addresses what constitutes fiduciary activities for financial reporting purposes, how fiduciary activities should be reported and when liabilities to beneficiaries should be recognized. The criteria for identifying fiduciary activities focus on (1) whether a state or local government controls the assets and (2) the beneficiaries with whom a fiduciary relationship exists. The guidance provides separate criteria for identifying fiduciary component units of governments and postemployment benefit arrangements that are fiduciary activities. Activities that meet these criteria should generally be reported as fiduciary funds in the basic financial statements.

Effective date The guidance is effective for reporting periods beginning after 15 December 2018. Earlier application is encouraged.

Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting)

Date issued: 19 December 2017

Summary The implementation guide clarifies the requirements of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as amended, and GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended.

51

Effective date Except for the questions and answers identified below, the requirements in the implementation guide are effective for reporting periods beginning after 15 June 2017.

The requirements of questions and answers 4.85, 4.103, 4.108, 4.109, 4.225, 4.239, 4.244, 4.245 and 5.1–5.4 are effective for actuarial valuations as of 15 December 2017. The requirements of questions and answers 4.484 and 4.491 (in circumstances in which OPEB are provided through an OPEB plan that is administered through a trust that meets the criteria in paragraph 4 of Statement No. 75) are effective in the first reporting period on or after 15 June 2018 that includes the measurement date of the (collective) net OPEB liability. Earlier application is encouraged if the statement addressed by the question and answer has been implemented.

Implementation Guide No. 2017-2, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans

Date issued: 9 May 2017

Summary The guide provides answers to more than 150 questions about GASB Statement No. 74.

Effective date The requirements in the guide, except for those in questions 4.80, 4.144 and 4.151, are effective for reporting periods beginning after 15 December 2016. The requirements in questions 4.80, 4.144 and 4.151 are effective for reporting periods beginning after 15 June 2017. Earlier application is encouraged if the related other postemployment benefits plan provision of Statement No. 85, Omnibus 2017, has been implemented.

Implementation Guide No. 2017-1, Implementation Guidance Update — 2017

Date issued: 28 April 2017

Summary The guide addresses practice issues related to accounting and financial reporting standards on the financial reporting entity, cash flow statements, pensions, certain investments, external investment pools, fund balance reporting and tax abatements. The guide also includes amendments to previously issued implementation guidance.

Effective date The guidance is effective for reporting periods beginning after 15 June 2017. Earlier application is encouraged if the state or local government has already implemented the standard addressed in the guide.

52 2017 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Accounting for Interest Cost during the Period of Construction

Date issued: 8 December 2017 — comment period ends 5 March 2018

Summary The proposed guidance would require that interest cost incurred during the period of construction be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. Such interest cost would not be capitalized as part of the historical cost of a capital asset.

Effective date The proposed guidance would be effective for reporting periods beginning after 15 December 2018. Earlier application is encouraged.

Implementation Guide No. 201Y-X, Implementation Guidance Update — 201Y

Date issued: 1 December 2017 — comment period ends 16 February 2018

Summary The proposed implementation guide would clarify, explain or elaborate on several standards issued for state and local governments. The guide would include 10 new questions and answers and eight amendments to previously issued questions and answers, which would become category B GAAP.

Effective date The requirements in the proposed implementation guide would be effective for reporting periods beginning after 15 June 2018. Earlier application is encouraged if the state or local government has already implemented the standard addressed in the guide.

Accounting and Financial Reporting for Majority Equity Interests, an amendment of GASB Statement No. 14

Date issued: 9 November 2017 — comment period ends 19 January 2018

Summary The proposed guidance would clarify the accounting and financial reporting for a state or local government’s majority equity interest in an organization that remains legally separate after acquisition. Under the proposal, a government’s majority equity interest in a legally separate organization would be reported as an investment if it meets the GASB’s definition of an investment and would generally be measured using the equity method. For all other majority equity interests in a legally separate entity, a government would report the legally separate entity as a component unit. The proposal also would provide guidance on remeasuring the assets and liabilities of a legally separate acquired entity that would be consistent with existing standards applicable to acquired entities that do not remain legally separate.

GASB exposure drafts

53

Effective date The proposed requirements would be effective for reporting periods beginning after 15 December 2018. The requirements would be applied retroactively, except for the provisions related to (1) reporting a majority equity interest in a component unit and (2) reporting a component unit in which the primary government acquired a 100% equity interest. Those provisions would be applied on a prospective basis. Earlier application would be encouraged.

Other proposals previously issued

Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, an amendment of GASB Statements No. 34 and No. 38

Date issued: 12 July 2017 — comment period ended 15 September 2017

Summary The proposed guidance is aimed at improving the information disclosed in the notes to government financial statements related to debt, including direct borrowings and direct placements. It also would clarify which liabilities governments should include when disclosing information about debt.

Effective date The proposed requirements would be effective for reporting periods beginning after 15 June 2018. Earlier application would be encouraged.

54 2017 Standard Setter Update Financial reporting and accounting developments

Invitation to Comment, Financial Reporting Model Improvements — Governmental Funds

Date issued: 22 December 2016 — comment period ended 31 March 2017 Summary The GASB asked for feedback on potential improvements to the existing financial reporting model for governmental funds, including:

• Recognition approaches (measurement focus and basis of accounting)

• Format of the governmental funds statement of resource flows

• Specific terminology

• Reconciliation to the government-wide statements

• A statement of cash flows for certain recognition approaches

What’s next — agenda highlights The GASB’s agenda also includes:

• Conduit debt

• Revenue and expense recognition

• Conceptual framework: recognition

• Implementation guidance — Fiduciary activities

• Implementation guidance — Leases

Other GASB

55

Note: Early adoption generally is permitted unless otherwise noted.

Effective in 2017 for public1 calendar year-end entities2 ASU 2017-13 Revenue Recognition (Topic 605), Revenue

from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments3

Amendments to ASC 606 and ASC 842: Effective upon announcement. Amendments to ASC 605: Effective upon adoption of the amendments in ASU 2014-09. Amendments to ASC 840: Effective upon adoption of the amendments in ASU 2016-02.

ASU 2017-03 Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323), Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update)3

Effective upon announcement.

ASU 2017-02 Not-for-Profit Entities — Consolidation (Subtopic 958-810), Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity

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

ASU 2016-19 Technical Corrections and Improvements Effective upon issuance (14 December 2016) 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 2016.

ASU 2016-17 Consolidation (Topic 810), Interests Held through Related Parties That Are under Common Control

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

ASU 2016-09 Compensation — Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting

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

ASU 2016-07 Investments — Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting

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

ASU 2016-06 Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments

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

ASU 2016-05 Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships

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

ASU 2015-17 Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes

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

ASU 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory

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

1 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. 2 The Jumpstart Our Business Startups 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. 3 This ASU adds or amends SEC paragraphs in the Codification that describe SEC guidance or SEC staff views that the FASB includes as a convenience to Codification users.

Effective date matrices

Effective date matrix — final FASB pronouncements

56 2017 Standard Setter Update Financial reporting and accounting developments

Effective after 2017 for public1 calendar year-end entities2 ASU 2017-15 Codification Improvements to Topic 995, U.S.

Steamship Entities, Elimination of Topic 995 Effective for fiscal years and first interim periods beginning after 15 December 2018.

ASU 2017-14 Income Statement — Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606), Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403 (SEC Update)3

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2017-12 Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities

Effective for fiscal years beginning after 15 December 2018, and interim periods within those fiscal years.

ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815), (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

Amendments in Part I: Effective for fiscal years beginning after 15 December 2018, including interim periods within those fiscal years. Amendments in Part II: Transition is not required.

ASU 2017-10 Service Concession Arrangements (Topic 853), Determining the Customer of the Operation Services

Entities that have not yet adopted ASC 606: Effective upon adoption of the amendments in ASU 2014-09. Entities that have adopted ASC 606: Effective for fiscal years beginning after 15 December 2017, including interim periods within those fiscal years.

ASU 2017-09 Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting

Effective for annual periods, including interim periods within those annual periods, beginning after 15 December 2017.

ASU 2017-08 Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2018.

ASU 2017-07 Compensation — Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Effective for annual periods beginning after 15 December 2017, including interim periods within those annual periods.

ASU 2017-06 Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting

Effective for fiscal years beginning after 15 December 2018.

ASU 2017-05 Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2017-04 Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment

Public business entities that meet the definition of an SEC filer: Effective for annual and any interim impairment tests performed for periods beginning after 15 December 2019. Other public business entities: Effective for annual and any interim impairment tests performed for periods beginning after 15 December 2020.

ASU 2017-01 Business Combinations (Topic 805), Clarifying the Definition of a Business

Effective for annual periods beginning after 15 December 2017, including interim periods within those periods.

57

Effective after 2017 for public1 calendar year-end entities2 ASU 2016-20 Technical Corrections and Improvements to

Topic 606, Revenue from Contracts with Customers

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-18 Statement of Cash Flows (Topic 230), Restricted Cash

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

ASU 2016-16 Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory

Effective for annual reporting periods beginning after 15 December 2017, including interim reporting periods within those annual reporting periods.

ASU 2016-15 Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments

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

ASU 2016-14 Not-for-Profit Entities (Topic 958), Presentation of Financial Statements of Not-for-Profit Entities

Effective for fiscal years beginning after 15 December 2017, and interim periods within fiscal years beginning after 15 December 2018.

ASU 2016-13 Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments

Public business entities that meet the definition of an SEC filer: Effective for fiscal years beginning after 15 December 2019, including interim periods within those years. Other public business entities: Effective for fiscal years beginning after 15 December 2020, including interim periods within those fiscal years. Earlier application is permitted only for fiscal years beginning after 15 December 2018, including interim periods within those fiscal years.

ASU 2016-12 Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-11 Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815), Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update)3

Amendments to ASC 815: Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015. Amendments to ASC 605 and ASC 932: Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-10 Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-08 Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-04 Liabilities — Extinguishments of Liabilities (Subtopic 405-20), Recognition of Breakage for Certain Prepaid Stored-Value Products

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

ASU 2016-02 Leases (Topic 842) Effective for fiscal years beginning after 15 December 2018, and interim periods within those fiscal years.

ASU 2016-01 Financial Instruments — Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2017. Earlier application is prohibited except for the presentation guidance in ASC 825-10-45-5 through 45-7.

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

Effective for annual reporting periods beginning after 15 December 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after 15 December 2016, including interim reporting periods within that reporting period.4

4 ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, provided a one-year deferral of the effective date for the new revenue standard for public and nonpublic entities

reporting under US GAAP.

58 2017 Standard Setter Update Financial reporting and accounting developments

Effective prior to 2017 for public1 calendar year-end entities2 ASU 2015-16 Business Combinations (Topic 805),

Simplifying the Accounting for Measurement-Period Adjustments

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

ASU 2015-12 Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Effective for fiscal years beginning after 15 December 2015.

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 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.

59

Effective prior to 2017 for public1 calendar year-end entities2 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 2014-10 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.

Effective in 2017 for nonpublic5 calendar year-end entities ASU 2017-02 Not-for-Profit Entities — Consolidation

(Subtopic 958-810), Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity

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

ASU 2016-19 Technical Corrections and Improvements Effective upon issuance (14 December 2016) for amendments that do not have transition guidance. Amendments to ASC 350-40: Effective for annual periods beginning after 15 December 2017, and interim periods in annual periods beginning after 15 December 2018. Other amendments that are subject to transition guidance: Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2016.

ASU 2016-17 Consolidation (Topic 810), Interests Held through Related Parties That Are under Common Control

Effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017, or upon adoption of the amendments in ASU 2015-02 if that standard is early adopted.

ASU 2016-07 Investments — Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting

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

ASU 2015-16 Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments

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

ASU 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory

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

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 2015-04 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 2015-02 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.

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.

60 2017 Standard Setter Update Financial reporting and accounting developments

Effective in 2017 for nonpublic5 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.

Effective after 2017 for nonpublic5 calendar year-end entities ASU 2017-15 Codification Improvements to Topic 995, U.S.

Steamship Entities, Elimination of Topic 995 Effective for fiscal years and first interim periods beginning after 15 December 2018.

ASU 2017-12 Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities

Effective for fiscal years beginning after 15 December 2019, and interim periods beginning after 15 December 2020.

ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815), (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

Amendments in Part I: Effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020. Amendments in Part II: Transition is not required.

ASU 2017-10 Service Concession Arrangements (Topic 853), Determining the Customer of the Operation Services

Entities that have not yet adopted ASC 606: Effective upon adoption of the amendments in ASU 2014-09. Entities that have adopted ASC 606: Effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019.

ASU 2017-09 Compensation — Stock Compensation (Topic 718), Scope of Modification Accounting

Effective for annual periods, including interim periods within those annual periods, beginning after 15 December 2017.

ASU 2017-08 Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities

Effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020.

ASU 2017-07 Compensation — Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Effective for annual periods beginning after 15 December 2018, and interim periods within annual periods beginning after 15 December 2019.

ASU 2017-06 Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting

Effective for fiscal years beginning after 15 December 2018.

ASU 2017-05 Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2017-04 Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment

Effective for annual and any interim impairment tests performed for periods beginning after 15 December 2021.

ASU 2017-01 Business Combinations (Topic 805), Clarifying the Definition of a Business

Effective for annual periods beginning after 15 December 2018, and interim periods within annual periods beginning after 15 December 2019.

61

Effective after 2017 for nonpublic5 calendar year-end entities ASU 2016-20 Technical Corrections and Improvements to

Topic 606, Revenue from Contracts with Customers

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-18 Statement of Cash Flows (Topic 230), Restricted Cash

Effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019.

ASU 2016-16 Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory

Effective for annual reporting periods beginning after 15 December 2018, and interim reporting periods within annual reporting periods beginning after 15 December 2019.

ASU 2016-15 Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments

Effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019.

ASU 2016-14 Not-for-Profit Entities (Topic 958), Presentation of Financial Statements of Not-for-Profit Entities

Effective for fiscal years beginning after 15 December 2017, and interim periods within fiscal years beginning after 15 December 2018.

ASU 2016-13 Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments

Effective for fiscal years beginning after 15 December 2020, and interim periods within fiscal years beginning after 15 December 2021. Earlier application is permitted only for fiscal years beginning after 15 December 2018, including interim periods within those fiscal years.

ASU 2016-12 Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-10 Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-09 Compensation — Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting

Effective for fiscal years beginning after 15 December 2017, and interim periods within fiscal years beginning after 15 December 2018.

ASU 2016-08 Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

Effective upon adoption of the amendments in ASU 2014-09.

ASU 2016-06 Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments

Effective for fiscal years beginning after 15 December 2017, and interim periods within fiscal years beginning after 15 December 2018.

ASU 2016-05 Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships

Effective for fiscal years beginning after 15 December 2017, and interim periods within fiscal years beginning after 15 December 2018.

ASU 2016-04 Liabilities — Extinguishments of Liabilities (Subtopic 405-20), Recognition of Breakage for Certain Prepaid Stored-Value Products

Effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019.

ASU 2016-02 Leases (Topic 842) Effective for fiscal years beginning after 15 December 2019, and interim periods within fiscal years beginning after 15 December 2020.

ASU 2016-01 Financial Instruments — Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities

Effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019. Application prior to the effective date for public business entities is prohibited, except for the presentation guidance in ASC 825-10-45-5 through 45-7 and the provision in ASC 825-10-65-2 that eliminates the fair value disclosures for financial instruments required by the General Subsection of ASC 825-10-50.

ASU 2015-17 Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes

Effective for annual periods beginning after 15 December 2017, and interim periods within annual periods beginning after 15 December 2018.

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

Effective for annual reporting periods beginning after 15 December 2018, and interim reporting periods within annual reporting periods beginning after 15 December 2019. Application prior to the original effective date for public entities is prohibited.4

62 2017 Standard Setter Update Financial reporting and accounting developments

Effective prior to 2017 for nonpublic5 calendar year-end entities ASU 2015-12 Plan Accounting: Defined Benefit Pension

Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Effective for fiscal years beginning after 15 December 2015.

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 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 2015-03 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 2015-01 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

Effective upon adoption of the accounting alternative.6

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.

6 The FASB issued ASU 2016-03, Intangibles — Goodwill and Other (Topic 350), Business Combinations (Topic 805), Consolidation (Topic 810), Derivatives and

Hedging (Topic 815), Effective Date and Transition Guidance, that eliminates the effective dates in the four alternatives developed by the PCC. The guidance makes all four PCC alternatives available for election immediately.

63

Title Effective date Inflation Adjustments and Other Technical Amendments under Titles I and III of the JOBS Act

12 April 2017.

Exhibit Hyperlinks and HTML Format The rule is effective 1 September 2017 for accelerated filers and large accelerated filers and 1 September 2018 for smaller reporting companies and non-accelerated filers.

Exemptions to Facilitate Intrastate and Regional Securities Offerings

The amendments to Rule 504 are effective 20 January 2017. Rule 147A and the amendments to Rule 147 are effective 20 April 2017. The repeal of Rule 505 of Regulation D is effective 22 May 2017.

Investment Companies Reporting Modernization The compliance date for Form N-PORT is 1 June 2018 for fund complexes with $1 billion or more in net assets, and 1 March 2020 for smaller fund complexes. Fund complexes with $1 billion or more in net assets are required to maintain in their records the information that is required to be included in Form N-PORT until April 2019. The compliance date for Form N-CEN is 1 June 2018. The amendments to Regulation S-X are effective for periods ending on or after 1 August 2017, but the SEC staff will accept full compliance with the amendments for earlier periods.

Investment Company Liquidity Risk Management Programs Fund complexes with net assets of $1 billion or more will be required to comply with the liquidity risk management program requirements starting 1 December 2018, while those with less than $1 billion in net assets will have to do so starting 1 June 2019.

Investment Company Swing Pricing 19 November 2018. Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act

9 June 2016.

Form 10-K Summary 9 June 2016. Simplification of Disclosure Requirements for Emerging Growth Companies and Forward Incorporation by Reference on Form S-1 for Smaller Reporting Companies

19 January 2016.

Crowdfunding 16 May 2016. Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule

The amendments are effective 26 October 2015. The compliance date is 14 October 2016.

Pay Ratio Disclosure The rule is effective 19 October 2015. Registrants will be required to make pay ratio disclosures for their first fiscal year beginning on or after 1 January 2017.

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

Money Market Fund Reform; Amendments to Form PF The rule is effective 14 October 2014. The compliance date for disclosures of significant events on a fund’s website and on new Form N-CR is 14 July 2015. The compliance date for diversification, stress testing and disclosure requirements is 14 April 2016. The compliance date for amendments related to fees, gates and the floating NAV is 14 October 2016.

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

21 July 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. On 6 July 2016, the Federal Reserve Board granted banking entities an additional one-year extension (i.e., to 21 July 2017) for the same covered funds. In the meantime, banks with significant trading operations 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.

Effective date matrix — final SEC pronouncements and interpretive releases

64 2017 Standard Setter Update Financial reporting and accounting developments

Title Effective date The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion

Effective for audits of financial statements for annual reporting periods ending on or after 15 December 2017, except for the requirement to communicate CAMs. Requirement to communicate CAMs will be effective for annual periods ending on or after 30 June 2019 for large accelerated filers and 15 December 2020 for all other filers.

Improving the Transparency of Audits: Rules to Require Disclosure of Certain Audit Participants on a New PCAOB Form and Related Amendments to Auditing Standards

Disclosure of the name of the audit partner will be required for auditors’ reports issued on or after 31 January 2017. Disclosure of other accounting firms participating in the audit will be required for auditors’ reports issued on or after 30 June 2017.

Rules to Implement the Reorganization of PCAOB Auditing Standards and Related Changes to PCAOB Rules and Attestation, Quality Control, and Ethics and Independence Standards

Effective as of 31 December 2016.

Effective date matrix — final PCAOB pronouncements and rules

65

Title Effective date SAS No. 133, Auditor Involvement with Exempt Offering Documents

Effective for exempt offering documents with which the auditor is involved that are initially distributed, circulated or submitted on or after 15 June 2018.

SAS No. 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern

Effective for audits of financial statements for periods ending on or after 15 December 2017 and reviews of financial information for interim periods beginning after fiscal years ending on or after 15 December 2017.

SAS No. 131, Amendment to Statement on Auditing Standards No. 122 Section 700, Forming an Opinion and Reporting on Financial Statements

Effective for audits of financial statements for periods ending on or after 15 June 2016.

Statement on Standards for Attestation Engagements No. 18, Attestation Standards: Clarification and Recodification

Effective for practitioners’ reports dated on or after 1 May 2017. Early adoption is permitted.

SSARS No. 23, Omnibus Statement on Standards for Accounting and Review Services — 2016

Effective upon issuance other than certain amendments relating to prospective financial information in AR-C Section 70 and AR-C Section 80 that are effective on or after 1 May 2017.

SSARS No. 22, Compilation of Pro Forma Financial Information

Effective for compilation reports on pro forma financial information dated on or after 1 May 2017.

Effective date matrix — final AICPA standards

66 2017 Standard Setter Update Financial reporting and accounting developments

Title Effective date Statement No. 87, Leases Effective for reporting periods beginning after 15 December 2019. Earlier

application is encouraged. Statement No. 86, Certain Debt Extinguishment Issues Effective for reporting periods beginning after 15 June 2017. Earlier application

is encouraged. Statement No. 85, Omnibus 2017 Effective for reporting periods beginning after 15 June 2017. Earlier application

is encouraged. Statement No. 84, Fiduciary Activities Effective for reporting periods beginning after 15 December 2018. Earlier

application is encouraged. Statement No. 83, Certain Asset Retirement Obligations Effective for reporting periods beginning after 15 June 2018. Earlier application

is encouraged. Statement No. 82, Pension Issues, an amendment of GASB Statements No. 67, No. 68, and No. 73

Effective for reporting periods beginning after 15 June 2016, except for the selection of assumptions in a circumstance in which an employer’s pension liability is measured as of a date other than the employer’s most recent fiscal year end. Earlier application is encouraged.

Statement No. 81, Irrevocable Split-Interest Agreements Effective for reporting periods beginning after 15 December 2016. Earlier application is encouraged.

Statement No. 80, Blending Requirements for Certain Component Units — an amendment of GASB Statement No. 14

Effective for reporting periods beginning after 15 June 2016. Earlier application is encouraged.

Statement No. 79, Certain External Investment Pools and Pool Participants

Effective for reporting periods beginning after 15 June 2015, except for certain provisions on portfolio quality, custodial credit risk and shadow pricing, which are effective for reporting periods beginning after 15 December 2015. Earlier application is encouraged.

Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans

Effective for reporting periods beginning after 15 December 2015. Earlier application is encouraged.

Statement No. 77, Tax Abatement Disclosures Effective for financial statements for periods beginning after 15 December 2015. Earlier application is encouraged.

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.

Effective date matrix — final GASB pronouncements

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