Gary Purwin, CEO of FINOP, LLC, presented at Citrin Cooperman's FINOP roundtable with a GAAP Update.

1. It’s Not Just GAAP!
But this is! GAAP Update
at Citrin Cooperman
By: Gary R. Purwin, CPA
FINOP, LLC

2. FASB Accounting Standards Update
No. 2014-09 – Revenue from Contracts with
Customers
• Part of a joint project with IASB to develop common revenue standards for US GAAP and IFRS (IFRS 15).
• Supersedes Topic 605 including most industry specific guidance.
• Effective Dates (May be extended):
• Public entities: reporting periods beginning after December 15, 2016
• Nonpublic entities: annual reporting periods beginning after December 15, 2017
• Core principle:
• An entity should recognize revenue to depict the transfer of promised goods and services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
and services.

3. FASB Accounting Standards Update
No. 2014-09 – Revenue from Contracts with
Customers (Cont’d)
• To achieve the core principle, an entity should apply the following steps:
• Identify the contract(s) with the customer.
• Fund or investor?
• Identify the performance obligations.
• Distinct, probable
• Determine the transaction price.
• Allocate the transaction price to the performance obligations in the contract.
• Will we be capitalizing more expenses?
• Recognize revenue when (or as) the entity satisfies the performance obligation.

4. Other Popular Revenue Subjects
• “Transition” fees when switching clearing brokers
• Gross vs. Net
• ASC 605-45 (and specifically 605-45-45)
• Recent SEC comments

5. FASB Accounting Standards Update
No. 2013-08 – Financial Services – InvestmentCompanies
• Redefines and simplifies the definition of the characteristics of an investment company, which would then apply
to entities not regulated under the Investment Company Act of 1940.
• Purpose is to provide capital appreciation and/or investment income from multiple investments to multiple
non-related party investors through a vehicle whose ownership interests are in the form of equity or
partnership interests.
• Provides investors with investment management services
• Manages substantially all of its investments on a fair value basis.
• Reduces complexity in accounting for noncontrolling interests in other investment companies.
• Effective in fiscal years that begin after December 15, 2013.

6. FASB Accounting Standards Update
No. 2013-08 – Financial Services – Investment Companies
(Cont’d)
• Typical investment partnerships (hedge funds) including master feeder structures would qualify
• Standard provides that the substance of the entity and its operations governs, so that there may be exceptions to
the single investment, single investor and other provisions.The Standard allows for judgment.
• Situations where Investment Company “status” may not be applicable:
• an investor owns ownership interests in an investment which are not accounted for at fair value
• Exit strategies do not include realizing returns from capital appreciation or investment income
• Consolidation issues with management entities – continued enforcement

7. Public vs. Non-public or Big GAAP vs. Little
GAAP or maybe no GAAP?
• Specifically No. 2014-02 Intangibles – Goodwill and Other
• AICPA’s Financial Reporting Framework for Small and Medium Entities (FRF
for SME)
• Who uses GAAP?

8. FASB Accounting Standards Update
No. 2014-03 – Derivatives and Hedging
• A consensus of the Private CompanyCouncil adopted by the FASB
• Effective for annual periods beginning after December 15, 2014.
• Allows for a “simplified” accounting for “plain vanilla” interest rate swaps

9. FASB Accounting Standards Update
No. 2013-11 – UnrecognizedTax Benefit
• Effective now for public entities, calendar year 2015 for non public entities
• Eliminates diversity in practice in that unrecognized tax benefits should now
be presented as a reduction to a deferred tax asset primarily related to a
NOL.
• Considered to be consistent with Subtopic 210-20 “Balance Sheet –
Offsetting”
• Note FASB has a tax accounting project on its agenda

10. MiscellaneousTopics
• Leases – Ongoing with no end in sight
• EITF 14-B –Takes Investments in Certain Entities That Calculate Net Asset
per Share out of the fair value hierarchy. Comments due by January 15, 2015

11. Gary R. Purwin, CPA
FINOP, LLC
914-523-3894
Gpurwin@finopllc.com