Weitere ähnliche Inhalte Kürzlich hochgeladen (20) The Ernst & Young Q4 2012 financial reporting update1. The Ernst & Young Q4 2012
financial reporting update
Co-sponsored with Financial
Executives International
13 December 2012
2. Disclaimer
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in the US.
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► The views expressed by panelists in this webcast are not
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© 2012 Ernst & Young LLP Page 2 Presentation title Young Q4 2012 financial reporting update
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3. Circular 230 disclaimer
► Any US tax advice contained herein was not
intended or written to be used, and cannot
be used, for the purpose of avoiding
penalties that may be imposed under the
Internal Revenue Code or applicable state or
local tax law provisions.
► These slides are for educational purposes
only and are not intended, and should not be
relied upon, as accounting advice.
© 2012 Ernst & Young LLP Page 3 Presentation title Young Q4 2012 financial reporting update
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4. Today’s moderator
Danita Ostling
Partner, Professional Practice Director
Ernst & Young LLP
Americas IFRS Leader
Ernst & Young organization
© 2012 Ernst & Young LLP Page 4 Ernst & Young Q4 2012 financial reporting update
5. Today’s agenda
► AICPA conference
► Year-end matters to consider
► Joint projects update
► Future considerations
© 2012 Ernst & Young LLP Page 5 Ernst & Young Q4 2012 financial reporting update
6. Today’s presenters
► Steven Jacobs
Ernst & Young LLP
Partner, Professional Practice
► Jackson Day
Ernst & Young LLP
Partner, Professional Practice Director
Accounting Standards Leader
► Alison Spivey
Ernst & Young LLP
Partner, Professional Practice
The information contained herein is a summary in nature. Viewers should consult their
own professional advisors to address their individual circumstances and concerns.
© 2012 Ernst & Young LLP Page 6 Ernst & Young Q4 2012 financial reporting update
7. Today’s agenda
► AICPA conference
► Year-end matters to consider
► Joint projects update
► Future considerations
© 2012 Ernst & Young LLP Page 7 Ernst & Young Q4 2012 financial reporting update
8. AICPA conference
Key remarks on IFRS
► Paul Beswick, Acting Chief Accountant
► “Please stay tuned”
► Julie Erhardt, International Deputy Chief Accountant
► Domestic upgrade
► Foreign investment needs
► Public capital market conformity
► Leslie Seidman, FASB Chairman
► FASB understands the unique needs of US stakeholders
and regulators
► US system cannot function with only broad principles
© 2012 Ernst & Young LLP Page 8 Presentation title Young Q4 2012 financial reporting update
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9. AICPA conference
SEC Staff discussion topics
► Income taxes
► Significant judgments to establish or reverse a
valuation allowance
► Guarantor financial statements
► Subsidiary release provisions
► Form and content of condensed consolidating information
► Contractual obligations table
► If timing and amounts are:
► Fixed and determinable – include in table (e.g., fixed-rate
debt interest payments)
► Uncertain – describe in a footnote (e.g., variable-rate debt
interest payments, uncertain tax positions)
© 2012 Ernst & Young LLP Page 9 Presentation title Young Q4 2012 financial reporting update
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10. AICPA conference
SEC Staff discussion topics (continued)
► Other recurring areas
► Segment reporting
► Variable interest entities
► MD&A disclosures
► Non-GAAP financial measures
► Goodwill impairment
► Iran Threat Reduction and Syria Human Rights Act
► Effective for any periodic report due after 6 February 2013
► Address all specified activities in calendar 2012
► Includes affiliates, which includes any person that directly
or indirectly controls, is controlled by or is under common
control with, the issuer
© 2012 Ernst & Young LLP Page 10 Presentation title Young Q4 2012 financial reporting update
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11. AICPA conference
Audit considerations
► Auditor independence, objectivity, skepticism and
mandatory audit firm rotation
► Continuing to evaluate feedback on concept release
► Pursuing other initiatives:
► PCAOB Release, Information for audit committees about
the PCAOB inspection process
► PCAOB Auditing Standard No. 16, Communications with
audit committees
► PCAOB Staff Audit Practice Alert No. 10, Maintaining
and applying professional skepticism in audits
► PCAOB comments on SOX 404 reporting
► Precision of review/monitoring controls
© 2012 Ernst & Young LLP Page 11 Presentation title Young Q4 2012 financial reporting update
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12. Today’s agenda
► AICPA conference
► Year-end matters to consider
► Joint projects update
► Future considerations
© 2012 Ernst & Young LLP Page 12 Ernst & Young Q4 2012 financial reporting update
13. Current events
Regulatory environment
Potential:
Decline in government spending ► Impairment
of long-lived
Fiscal cliff risks
assets,
Stock market volatility intangible
assets, and
Recession goodwill
► Decrease in
US credit rating downgrade investment
valuations
S ► Changes in
rule-making
Scrutiny of cost-benefit analyses
© 2012 Ernst & Young LLP Page 13 Presentation title Young Q4 2012 financial reporting update
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14. Opinion check
Which potential event is most likely to affect
your company:
A. Decline in government spending
B. Stock market volatility
C. Recession
D. Other
E. Does not apply (Ernst & Young, faculty, alumni,
other)
© 2012 Ernst & Young LLP Page 14 Ernst & Young Q4 2012 financial reporting update
15. Year-end closing reminders
Revenue recognition
► Evolving business model examples
► Sale of intangible items, which may be bundled with
physical goods
► Free online gaming with offer to sell virtual goods
► Hosted software arrangements
► Revenue recognition considerations
► Consider existing policies
► Analogize to other business models
► Update internal controls over financial reporting
© 2012 Ernst & Young LLP Page 15 Presentation title Young Q4 2012 financial reporting update
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16. Year-end closing reminders
Revenue recognition (continued)
► Multiple-element arrangements
► Review units of accounting
► Update allocation of arrangement consideration
► Disclosure considerations
► Warranties and rights of return
► Consider significant estimates
► Update key assumptions
► Consider changes in business (e.g., new products,
new markets)
► Perform look-back analysis
© 2012 Ernst & Young LLP Page 16 Presentation title Young Q4 2012 financial reporting update
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17. Year-end closing reminders
Allowance for doubtful accounts
► Be wary of overreliance on historical trends and data
► Disclose process and concentrations of credit risk
Example SEC Staff comment:
“We note your disclosure regarding your allowance for
doubtful accounts [and] your concentration of sales to
European countries. Considering the European sovereign
debt crisis and economic conditions and your concentration
of sales in these foreign countries, please explain to us in
more detail how you have assessed your outstanding
accounts receivable balances for potential impairment.”
© 2012 Ernst & Young LLP Page 17 Presentation title Young Q4 2012 financial reporting update
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18. Year-end closing reminders
Postretirement benefits
► Discount rate
► Objective is to determine best estimate of effective
settlement rate; varies by company and plan
► Method of estimating the discount rate should be applied
consistently unless facts and circumstances change
► Continued low interest rate environment
► Fewer high-quality bonds available, particularly in Europe
► Expected rate of return
► Management should reconsider whether expected rate of
return is appropriate given current economic environment
© 2012 Ernst & Young LLP Page 18 Presentation title Young Q4 2012 financial reporting update
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19. Year-end closing reminders
Accounting for natural disasters
► Asset impairments
► Insurance proceeds
► Up to the recognized loss – recognize when probable
of being received and costs have been incurred
► In excess of the recognized loss – follow gain
contingency guidance
► Future operating losses
► Recognize when related costs are incurred
► Loss contingencies
► Hedge accounting
► Disclosures
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20. Year-end closing reminders
Other areas to consider
► Inventory
► Adjustments to reduce to the lower of cost or market
► Investments
► Other-than-temporary impairments
► Fair value measurements
► Update for current market conditions
► Restructuring
► Changes in structure of business operations and
internal reporting
► Accruals for reductions in workforce
© 2012 Ernst & Young LLP Page 20 Presentation title Young Q4 2012 financial reporting update
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21. Opinion check
Which of the areas that we discussed do you
expect to most affect your company at year-end:
A. Revenue recognition
B. Allowance for doubtful accounts
C. Pensions
D. Impairment
E. Other
F. Does not apply (Ernst & Young, faculty, alumni, other)
© 2012 Ernst & Young LLP Page 21 Ernst & Young Q4 2012 financial reporting update
22. Accounting standards effective for 2012
Accounting standards update Public Private
companies companies
ASU 2012-07 — Accounting for Fair Value Information That
Arises after the Measurement Date and Its Inclusion in the 4
Impairment Analysis of Unamortized Film Costs
ASU 2012-04 — Technical Corrections and Improvements 4
ASU 2011-09 — Disclosures about an Employer’s
Participation in a Multiemployer Plan * 4
ASU 2011-08 — Testing Goodwill for Impairment 4 4
ASU 2011-07 — Presentation and Disclosure of Patient
Service Revenue, Provision for Bad Debts, and the
Allowance for Doubtful Accounts for Certain 4 4
Health Care Entities
ASU 2011-05 — Presentation of Comprehensive Income
and ASU 2011-12 — Deferral of the Effective Date for
Amendments to the Presentation of Reclassifications of 4 4
Items Out of Accumulated Other Comprehensive Income
in Accounting Standards Update No. 2011-05
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*These ASUs were effective for public companies in 2011
23. Accounting standards effective for 2012
Accounting standards update Public Private
companies companies
ASU 2011-04 — Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. 4 4
GAAP and IFRSs
ASU 2011-03 — Reconsideration of Effective Control
for Repurchase Agreements 4 4
ASU 2011-02 — A Creditor’s Determination of Whether
a Restructuring Is a Troubled Debt Restructuring 4
ASU 2010-28 — When to Perform Step 2 of the Goodwill
Impairment Test for Reporting Units with Zero or Negative 4
Carrying Amounts
ASU 2010-26 — Accounting for Costs Associated with 4 4
Acquiring or Renewing Insurance Contracts
© 2012 Ernst & Young LLP Page 23 Presentation title Young Q4 2012 financial reporting update
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24. SEC enforcement
SEC tips under
► Guide to the US Foreign
whistleblower program
Corrupt Practices Act (FCPA) Trading Corporate
► From SEC and Department and pricing disclosures
11% and
of Justice
financials
► Provides FCPA enforcement 18%
examples
► Defines key terms and
Offering
explains priorities Other fraud
► Does not provide 33% 19%
interpretative guidance
or bright lines
FCPA
► Provides examples of 4% Manipulation
matters not pursued 15%
© 2012 Ernst & Young LLP Page 24 Presentation title Young Q4 2012 financial reporting update
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25. Changes in auditor report for private
companies
Headings and subheadings
Management’s responsibilities
Auditor’s responsibilities
Opinion (basis for modification
paragraph, when applicable)
Additional paragraphs,
when applicable:
► Emphasis-of-matter
► Other-matter
Other reporting responsibilities,
when applicable
© 2012 Ernst & Young LLP Page 25 Presentation title Young Q4 2012 financial reporting update
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26. PCAOB Auditing Standard No. 16
Communications with Audit Committees
► Effective in 2013 for calendar-year public companies,
subject to SEC approval
► Management may make certain communications
to the audit committee (with auditor involvement)
► Key changes include:
► Processes and significant assumptions used in
making critical accounting estimates
► Significant unusual transactions, including
business rationale
► Difficult or contentious matters resulting in consultations
► Discussion of corrected and uncorrected misstatements
© 2012 Ernst & Young LLP Page 26 Presentation title Young Q4 2012 financial reporting update
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27. Today’s agenda
► AICPA conference
► Year-end matters to consider
► Joint projects update
► Future considerations
© 2012 Ernst & Young LLP Page 27 Ernst & Young Q4 2012 financial reporting update
28. Joint projects update
Current stage Q1-Q2 2013
Financial Instruments
FASB Deliberating Exposure Draft
Classification and
measurement Exposure Draft
IASB Deliberate comments
(limited amendments)
FASB Drafting Exposure Draft Exposure Draft
Impairment
IASB Deliberating comments Exposure Draft
FASB On hold
Final standard
Hedging Review draft (except macro hedging to be
IASB
(except macro hedging) included in a Discussion
paper)
FASB Drafting Exposure Draft Exposure Draft
Leases
IASB Drafting Exposure Draft Exposure Draft
FASB Deliberating comments Final standard
Revenue Recognition
© 2012 Ernst & Young LLP Page 28
IASB Deliberating comments
Presentation title Young Q4 2012 financial reporting update
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Final standard
29. Revenue recognition project
Redeliberations
► Identifying separate performance obligations P
July ► Satisfying separate performance obligations P
► Onerous performance obligations P
► Time value of money P
September
► Contracts with customers that contain nonrecourse, P
seller-based financing
► Contract issues – contract combinations and distribution P
► Contract modifications P
October
► Measures of progress P
► Licenses – rights vs. access
November ► Constraining the amount of revenue recognized P
► Collectibility, including presentation of customer credit risk P
P
Future meeting In process Complete
© 2012 Ernst & Young LLP Page 29 Presentation title Young Q4 2012 financial reporting update
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30. Revenue recognition project
Next steps
► Allocating the transaction price
December ► Costs
► Scope
► Nonfinancial assets
► Contract issues – credit cards
Upcoming ► Disclosures
topics ► Transition, effective date and early adoption
► Sweep issues and consequential amendments
► Cost-benefit analysis
Future meeting
© 2012 Ernst & Young LLP Page 30 Presentation title Young Q4 2012 financial reporting update
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31. Opinion check
As the debate over implementation
guidance continues, do you think that
the Boards should provide:
A. Less implementation guidance
B. More implementation guidance
C. No opinion
© 2012 Ernst & Young LLP Page 31 Ernst & Young Q4 2012 financial reporting update
32. Today’s agenda
► AICPA conference
► Year-end matters to consider
► Joint projects update
► Future considerations
© 2012 Ernst & Young LLP Page 32 Ernst & Young Q4 2012 financial reporting update
33. Accounting standards effective for 2013
Public Private
Accounting standards update companies companies
ASU 2012-07 — Accounting for Fair Value Information That
* 4
Arises after the Measurement Date and Its Inclusion in the
Impairment Analysis of Unamortized Film Costs
ASU 2012-06 — Subsequent Accounting for an
Indemnification Asset Recognized at the Acquisition
Date as a Result of a Government-Assisted Acquisition 4 4
of a Financial Institution
ASU 2012-04 — Technical Corrections and Improvements 4
ASU 2012-02 — Testing Indefinite-Lived Intangible Assets
for Impairment 4 4
ASU 2012-01 — Continuing Care Retirement 4
Communities — Refundable Advance Fees
ASU 2011-11 — Disclosures about Offsetting Assets 4 4
and Liabilities
ASU 2011-10 — Derecognition of in Substance Real
Estate — a Scope Clarification 4 4
© 2012 Ernst & Young LLP Page 33 Presentation title Young Q4 2012 financial reporting update
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*These ASUs were effective for public companies in 2012
34. SEC rulemaking update
Topic Current status
Conflict minerals and
► Final rules issued August 2012
payments by resource
► Effective 2013
extraction issuers
► Current legal challenges
(Dodd-Frank)
Clawbacks and other
compensation matters ► Awaiting proposals
(Dodd-Frank)
► Proposed rule – August 2012
General solicitation and
► SEC Staff deliberating
advertising (JOBS Act)
comments received
Crowdfunding and “Reg. A+”
► Awaiting proposals
(JOBS Act)
© 2012 Ernst & Young LLP Page 34 Presentation title Young Q4 2012 financial reporting update
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35. Liquidity and interest rate risk disclosures
Companies would be required to provide extensive
disclosures about liquidity and interest rate risks
► Significant issues identified:
► Disclosures focused on providing information about risks
already addressed by the SEC
► Disclosures do not represent how a company manages risk
► Standardized disclosures reduce relevancy because
financial institutions manage risk in different ways
► Benefits don’t appear to exceed costs
► Nonpublic and not-for-profit entities should be exempt
© 2012 Ernst & Young LLP Page 35 Presentation title Young Q4 2012 financial reporting update
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36. Private company reporting
► Private Company Council
► Plans a “look-back” analysis of existing US GAAP
► Review of private company decision-making framework
► Will address definition of a nonpublic entity
► We believe the FASB should consider:
► Disclosure and transition relief
► Increasing the transparency of its cost-benefit analysis
► Single, straight-forward definition of a non-public entity
We applaud the FASB’s commitment also to
consider the effects on public companies
© 2012 Ernst & Young LLP Page 36 Presentation title Young Q4 2012 financial reporting update
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37. Disclosure projects
Comment letter views
► We support decision to develop a framework
► Primary focus should be reducing existing disclosures
► Flexible disclosure requirements would result in second-
guessing of preparers by regulators and legal community
► Certain principles should be challenged and debated
► Strong reliance on cash flows as a basis for disclosure
► Boundary of the notes to the financial statements
► Materiality as applied to note disclosure
► Cost benefit analysis of disclosure
► FASB should continue to coordinate with SEC
and PCAOB
© 2012 Ernst & Young LLP Page 37 Presentation title Young Q4 2012 financial reporting update
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38. Other standard-setting activities
Active projects Current stage
Reclassifications out of accumulated
► Final standard expected 1Q 2013
other comprehensive income
Consolidation: policy and procedures ► Final standard expected 1H 2013
Investment companies ► Final standard expected 1H 2013
Repurchase agreements and
► Exposure draft expected Q4 2012
similar transactions
► Deliberating comments received on
Liquidation basis of accounting Proposed Update
► Final standard expected 1H 2013
Going concern ► Exposure draft expected 1H 2013
Scope clarification of disclosures about ► Comments due 21 December 2012
offsetting of financial instruments ► Final standard expected Q4 2012
© 2012 Ernst & Young LLP Page 38 Ernst & Young Q4 2012 financial reporting update
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The Ernst & Young Q4 2012
financial reporting update
Co-sponsored with Financial
Executives International
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