Accounting Standards Updates Issued
The FASB Accounting Standards Codification is the source of authoritative generally accepted accounting , U.S. Steamship Entities 25, Recognition, 65, Transition and Open Effective Date Information were issued as FASB Statements, FASB Interpretations, FASB Staff Positions, or other types of FASB standards. US GAAP. The Accounting Standards Codification (ASC) is developed and maintained providing quick access to the most up-to-date standards and practical tools for View a list of articles and books in our collection on US GAAP and the. You can read each new standard by accessing the Accounting Standards Updates Issued list on the Click here to access all the FASB Accounting Standards Updates from Contracts with Customers (Topic ): Deferral of the Effective Date for PBEs that are U.S. Securities and Exchange Commission ( SEC) filers and.
Update —Compensation—Retirement Benefits Topic Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost March Effective for public business entities for annual periods beginning after December 15,including interim periods within those annual periods. For other entities, the amendments in this Update are effective for annual periods beginning after December 15,and interim periods within annual periods beginning after December 15, 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.
That is, early adoption should be within the first interim period if an employer issues interim financial statements. Disclosures of the nature of and reason for the change in accounting principle are required in the first interim and annual periods of adoption. Early adoption is permitted. Therefore, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the amendments in this Update to annual reporting periods beginning after December 15,including interim periods within that reporting period.
Earlier application is permitted only as of annual reporting periods beginning after December 15,including interim reporting periods within that reporting period.
All other entities should apply the amendments in this Update to annual reporting periods beginning after December 15,and interim periods within annual periods beginning after December 15, All other entities may apply the guidance earlier as of annual reporting periods beginning after December 15,including interim reporting periods within that reporting period.
All other entities also may apply the guidance earlier as of annual reporting periods beginning after December 15,and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance.
An entity is required to apply the amendments in this Update at the same time that it applies the amendments in Update Update —Intangibles—Goodwill and Other Topic Simplifying the Test for Goodwill Impairment [Download] January A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, Update —Business Combinations Topic Clarifying the Definition of a Business [Download] January Public business entities should apply the amendments in this Update to annual periods beginning after December 15,including interim periods within those periods.
All other entities should apply the amendments to annual periods beginning after December 15,and interim periods within annual periods beginning after December 15, Update —Technical Corrections and Improvements to TopicRevenue from Contracts with Customers [Download] December The amendments in this Update affect the guidance in Updatewhich is not yet effective. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for Topic and any other Topic amended by Update Accounting Standards Update No.
Deferral of the Effective Date, defers the effective date of Update by one year. Update —Statement of Cash Flows Topic Update —Consolidation Topic Interests Held through Related Parties That Are under Common Control [Download] October The amendments in this Update are effective for public business entities for fiscal years beginning after December 15,including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15,and interim periods within fiscal years beginning after December 15, Update —Income Taxes Topic Intra-Entity Transfers of Assets Other Than Inventory [Download] October For public business entities, the amendments are effective for annual reporting periods beginning after December 15,including interim reporting periods within those annual reporting periods.
For all other entities, the amendments are effective for annual reporting periods beginning after December 15,and interim reporting periods within annual periods beginning after December 15, Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements interim or annual have not been issued or made available for issuance.
That is, earlier adoption should be in the first interim period if an entity issues interim financial statements. Classification of Certain Cash Receipts and Cash Payments a consensus of the Emerging Issues Task Force [Download] August Effective for public business entities for fiscal years beginning after December 15,and interim periods within those fiscal years.
An entity that elects early adoption must adopt all of the amendments in the same period. Update —Not-for-Profit Entities Topic Presentation of Financial Statements of Not-for-Profit Entities August Effective for annual financial statements issued for fiscal years beginning after December 15,and for interim periods within fiscal years beginning after December 15, Application to interim financial statements is permitted but not required in the initial year of application.
Early application of the amendments is permitted. The amendments should be initially adopted only for an annual fiscal period or for the first interim period within the fiscal year of adoption. Securities and Exchange Commission SEC filers, the amendments in this Update are effective for fiscal years beginning after December 15,including interim periods within those fiscal years.
Throughout this effort, we have been steadfast in advocating that capital markets operate most efficiently when investors have access to high quality financial information. However, ensuring that high quality financial information is provided to capital markets does not depend solely on the body of accounting standards used.
An effective financial reporting structure begins with a reporting company's management, which is responsible for implementing and properly applying generally accepted accounting standards. Auditors then have the responsibility to test and opine on whether the financial statements are fairly presented in accordance with those accounting standards. If these responsibilities are not met, accounting standards, regardless of their quality, may not be properly applied, resulting in a lack of transparent, comparable, consistent financial information.
Accordingly, while the accounting standards used must be high quality, they also must be supported by an infrastructure that ensures that the standards are rigorously interpreted and applied, and that issues and problematic practices are identified and resolved in a timely fashion. Elements of this infrastructure include: In this release, we discuss a number of issues related to the infrastructure for high quality financial reporting.
We solicit views on the elements necessary for developing a high quality, global financial reporting framework for use in cross-border filings. We believe these issues should be considered in the development of any proposals to modify current requirements for enterprises that report using IASC standards because our decisions should be based on the way the standards actually are interpreted and applied in practice.
International Accounting Standards
We recognize that each of the elements of the infrastructure may be at different stages of development and that decisions and progress on some of these infrastructure issues may be independent of the body of accounting standards used.
High Quality Accounting Standards High quality accounting standards are critical to the development of a high quality global financial reporting structure. Different accounting traditions have developed around the world in response to varying needs of users for whom the financial information is prepared.
In some countries, for example, accounting standards have been shaped primarily by the needs of private creditors, while in other countries the needs of tax authorities or central planners have been the predominant influence.
In the United States, accounting standards have been developed to meet the needs of participants in the capital markets. Establishing and maintaining high quality accounting standards are critical to the U. High quality accounting standards consist of a comprehensive set of neutral principles that require consistent, comparable, relevant and reliable information that is useful for investors, lenders and creditors, and others who make capital allocation decisions.
High quality accounting standards are essential to the efficient functioning of a market economy because decisions about the allocation of capital rely heavily on credible and understandable financial information. When issuers prepare financial statements using more than one set of accounting standards, they may find it difficult to explain to investors the accuracy of both sets of financial statements if significantly different operating results, financial positions or cash flow classifications are reported under different standards for the same period.
Questions about the credibility of an entity's financial reporting are likely where the differences highlight how one approach masks poor financial performance, lack of profitability, or deteriorating asset quality. The efficiency of cross-border listings would be increased for issuers if preparation of multiple sets of financial information was not required.
However, the efficiency of capital allocation by investors would be reduced without consistent, comparable, relevant and reliable information regarding the financial condition and operating performance of potential investments. Therefore, consistent with our investor protection mandate, we are trying to increase the efficiency of cross-border capital flows by seeking to have high quality, reliable information provided to capital market participants.
High Quality Auditing Standards The audit is an important element of the financial reporting structure because it subjects information in the financial statements to independent and objective scrutiny, increasing the reliability of those financial statements. Trustworthy and effective audits are essential to the efficient allocation of resources in a capital market environment, where investors are dependent on reliable information.
Quality audits begin with high quality auditing standards. Recent events in the United States have highlighted the importance of high quality auditing standards and, at the same time, have raised questions about the effectiveness of today's audits and the audit process. Audit requirements may not be sufficiently developed in some countries to provide the level of enhanced reliability that investors in U.
Nonetheless, audit firms should have a responsibility to adhere to the highest quality auditing practices -- on a world-wide basis -- to ensure that they are performing effective audits of global companies participating in the international capital markets. To that end, we believe all member or affiliated firms performing audit work on a global audit client should follow the same body of high quality auditing practices even if adherence to these higher practices is not required by local laws.
Audit Firms with Effective Quality Controls Accounting and auditing standards, while necessary, cannot by themselves ensure high quality financial reporting. Audit firms with effective quality controls are a critical piece of the financial reporting infrastructure.
Independent auditors must earn and maintain the confidence of the investing public by strict adherence to high quality standards of professional conduct that assure the public that auditors are truly independent and perform their responsibilities with integrity and objectivity.
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Supreme Court has stated: Public faith in the reliability of a corporation's financial statements depends upon the public perception of the outside auditor as an independent professional The quality control policies and procedures applicable to a firm's accounting and auditing practice should include elements such as: A firm's system of quality control should provide the firm and investors with reasonable assurance that the firm's partners and staff are complying with the applicable professional standards and the firm's standards of quality.
Historically, audit firms have developed internal quality control systems based on their domestic operations. However, as clients of audit firms have shifted their focus to global operations, audit firms have followed suit and now operate on a world-wide basis.
Therefore, quality controls within audit firms that rely on separate national systems may not be effective in a global operating environment. We are concerned that audit firms may not have developed and maintained adequate internal quality control systems at a global level. Profession-Wide Quality Assurance The accounting profession should have a system to ensure quality in the performance of auditing engagements by its members.
Necessary elements of the system include: In some jurisdictions the local accounting profession may have a system of quality assurance. However, structures focused on national organizations and geographic borders do not seem to be effective in an environment where firms are using a number of affiliates to audit enterprises in an increasingly integrated global environment.
Accounting Standards UpdatesâEffective Dates
Active Regulatory Oversight The U. Each of these elements is essential to the success of a high quality financial reporting framework. This oversight reinforces the development of high quality accounting and auditing standards and focuses them on the needs of investors.
It provides unbiased third party scrutiny of self-regulatory activities. Regulatory oversight also reinforces the application of accounting standards by registrants and their auditors in a rigorous and consistent manner and assists in ensuring a high quality audit function.
The form and content requirements for financial statements filed with the Commission are set forth in Regulation S-X. A foreign private issuer using accounting standards other than U.The Difference between GAAP and IFRS
GAAP must provide an audited reconciliation to U. For example, we have amended our requirements for financial statements of foreign private issuers to permit use of certain IASC standards without reconciliation to U. By requiring a U. GAAP reconciliation, with the exceptions noted above, we do not seek to establish a higher or lower disclosure standard for foreign companies than for domestic companies.
Rather, the objective of this approach is to protect the interests of U. GAAP reconciliation requirement requires foreign issuers to supplement their home country financial statements. The total number of foreign reporting companies increased from in to approximately 1, currently. Towards Convergence of Accounting Standards in a Global Environment In the past, different views of the role of financial reporting made it difficult to encourage convergence of accounting standards.
Now, however, there appears to be a growing international consensus that financial reporting should provide high quality financial information that is comparable, consistent and transparent, in order to serve the needs of investors.
Over the last few years, we have witnessed an increasing convergence of accounting practices around the world. A number of factors have contributed to this convergence. First, large multinational corporations have begun to apply their home country standards, which may permit more than one approach to an accounting issue, in a manner consistent with other bodies of standards such as IASC standards or U.
Second, the IASC has been encouraged to develop standards that provide transparent reporting and can be applied in a consistent and comparable fashion worldwide. Finally, securities regulators and national accounting standard-setters are increasingly seeking approaches in their standard-setting processes that are consistent with those of other standard-setters.
If convergence of disclosure and accounting standards contributes to an increase in the number of foreign companies that publicly offer or list securities in the U. GAAP requires, current disparities in accounting practices may be a reason foreign companies do not list their securities on U.
As Congress has recognized, [E]stablishment of a high quality comprehensive set of generally accepted international accounting standards would greatly facilitate international financing activities and, most importantly, would enhance the ability of foreign corporations to access and list in the United States markets.
GAAP, as a result of improvements in the quality of information available to both management and shareholders as a result of reporting under U. Investors benefit when they have the ability to compare the performance of similar companies regardless of where those companies are domiciled or the country or region in which they operate. Over the years, we have realized that foreign companies make their decisions about whether to offer or list securities in the United States for a variety of economic, financial, political, cultural and other reasons.
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Many of these reasons are unrelated to U. These companies have indicated that they have forgone listing in the United States rather than follow accounting standards that they have not helped formulate.
Therefore, accepting financial statements prepared using IASC standards without requiring a reconciliation to U. On the other hand, other factors could continue to deter foreign access to the U.
For example, some foreign companies have expressed concern with the litigation exposure and certain public disclosure requirements that may accompany entrance into the U. Development of the Core Standards Project After studying issues relating to international equity flows, IOSCO noted that development of a single disclosure document for use in cross-border offerings and listings would be facilitated by the development of internationally accepted accounting standards.
The focus of IOSCO's involvement in the core standards project is on use of IASC standards by large, multinational companies for cross-border capital-raising and listing. We request your views on whether the IASC standards: In responding to the requests for comment set forth below, please be specific in your response, explaining in detail your experience, if any, in applying IASC standards, and the factors you considered in forming your opinion.
Please consider both our mandate for investor protection and the expected effect on market liquidity, competition, efficiency and capital formation. However, copies of the standards have been placed in our public reference rooms. For your convenience, a listing of questions is included as Appendix A. Are the Core Standards Sufficiently Comprehensive? The goal of the core standards project was to address the necessary components of a reasonably complete set of accounting standards that would comprise a comprehensive body of principles for enterprises undertaking cross-border offerings and listings.
In developing the work program for the core standards project, IOSCO specified the minimum components of a set of "core standards" and identified issues to be addressed by the IASC. Why or why not?