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FASB Proposes Changes in Pension and Post-retirement Reporting

Published on March 29, 2016

The Financial Accounting Standards Board has issued two proposed accounting standards updates to improve financial reporting by employers related to defined benefit pension and other postretirement benefit plans.

One of the proposed updates, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans, is part of the FASB’s broader disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements by focusing on the information considered to be most relevant to users of financial statements. 

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Companies Expected to See Biggest Impact from New Leasing Standard

Published on March 29, 2016

The lease accounting standard that the Financial Accounting Standards Board plans to release this quarter is expected to have a major impact on many companies, requiring current off-balance sheet leasing activities to be reflected on balance sheets for the first time. 

Earlier this month the International Accounting Standards Board released its version of the standard, which differs in some key respects from FASB’s (see IASB Releases Lease Accounting Standard). A new study from LeaseAccelerator, a developer of equipment lease management software, examines the impact of the new leasing standards on major U.S. corporations, listing the off-balance sheet lease obligations of the 500 largest U.S. public companies. The report, “Who is Most Impacted by the New Lease Accounting Standards?” aims to provide greater awareness of the potential impact of the new lease accounting standards. 

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Companies Getting Ready for FASB's Leasing Standard

Published on March 29, 2016

The Financial Accounting Standards Board is expected to release its long-awaited lease accounting standard this quarter, and companies are bracing for the impact on their balance sheets. 

The changes will require companies to gather significantly more information and require more management judgments each reporting period, according to PricewaterhouseCoopers. The changing model might affect financial ratios and metrics, “lease vs. buy” decisions, accounting processes and controls, along with technology. 

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Revenue recognition, lease standards challenge preparers

Published on March 29, 2016

Important new standards for revenue recognition and leases are causing difficulty for corporate financial statement preparers, a new survey shows.

Just 29% of corporate preparers said their companies have a clear plan to implement the new revenue recognition standard, according to a KPMG LLP survey of nearly 400 financial executives at the firm’s annual Accounting & Financial Reporting Symposium.

The revenue recognition standard was issued in May 2014 by FASB and the International Accounting Standards Board (IASB) in an international convergence project but is undergoing clarifying changes as a result of questions raised with the boards’ joint transition resource group. The standard was designed to create comparability across industries and jurisdictions, with a more principles-based approach than previously existed for U.S. GAAP reporting entities.

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FASB plans to issue new leases standard on February 25, 2016

Published on March 29, 2016

The FASB said it plans to issue its new leases standard on February 25, 2016. The standard will require lessees to recognize most leases on their balance sheets and could have significant financial reporting and business implications.

Internal Audit Increasingly Proves Its Value

Published on March 23, 2016

The internal audit function is increasingly providing significant value, according to a new report by PricewaterhouseCoopers. PwC surveyed more than 1,600 chief audit executives, senior management and board members. Fifty-four percent of the respondents indicated internal audit is contributing significant value, up six points from a similar PwC survey last year. In addition, 62 percent of the respondents said they expect more value from internal audit, with 55 percent anticipating internal audit will be a more proactive trusted advisor within the next five years.

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FASB Removes Effective Dates for Private Company Accounting Alternatives

Published on March 23, 2016

The Financial Accounting Standards Board has issued an accounting standards update for private companies that opt to apply private company accounting alternatives, removing the effective dates for four of the alternatives. 

They include:

Previously, if a private company elected to adopt an accounting alternative after its effective date, it had to assess whether the accounting alternative was preferable to its accounting policy at that time. The new accounting standards update permits a private company to forgo the preferability assessment the first time it elects a private company accounting alternative.

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New FASB Leases Standard Brings Transparency to Lessee Balance Sheets

Published on March 23, 2016

Lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months under a new financial reporting standard issued by FASB

Accounting Standards Update (ASU) No. 2016-02Leases, will apply to both types of leases—capital (or finance) leases and operating leases. Previously, GAAP has required only capital leases to be recognized on lessee balance sheets.

As under current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease for lessees primarily will depend on its classification as a finance or operating lease:

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New Leasing Standard Could Benefit Companies

Published on March 23, 2016

The Financial Accounting Standards Board’s new lease accounting standard could have some positive payoffs for companies if they take a careful approach to implementing it.

FASB released the long-awaited standard after a decade of work with the International Accounting Standards Board as one of their major convergence projects.

The standard will add operating leases to the balance sheet for the first time for many companies, and they will need to begin tracking down all of their leases. Companies today are required to disclose their leasing commitments. With the new standard and the prominence on the balance sheet, they need to ensure that the information they have is complete and accurate. While we tend to find companies tend to have a relatively good arm around their real estate portfolio, the equipment leases are probably a category of assets where they may be a bit more disbursed across an organization. Even though it might not be the most significant part of what they’re putting on the balance sheet, it may be one of the more significant efforts in order to get there.

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FASB Streamlines Move to Equity Method of Accounting

Published on March 23, 2016

The Financial Accounting Standards Board has issued an accounting standards update making it easier for companies to transition to the equity method of accounting.

Stakeholders told FASB that the requirement to retroactively adopt the equity method of accounting is costly and time consuming when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. They said the requirement does not provide a clear benefit to users of financial statements.

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