Current Developments: US SEC and Financial Reporting Developments

Transcription

1 Current Developments: US SEC and Financial Reporting Developments September 2017 kpmg.com/us/frv

2 Current Developments: US September 2017 The 2018 effective date of the revenue standard for public companies is almost here. The SEC staff has provided relief to certain public business entities from having to adopt the revenue standard on January 1, The SEC staff also continues to closely monitor SAB 74 disclosures for newly issued accounting standards. Our publication summarizes US SEC matters and other financial reporting developments potentially affecting you in the current period or near term.

3 Contents Current quarter financial reporting matters... 4 SEC staff effective date relief for certain public business entities... 4 SEC expands nonpublic reviews of registration statements... 4 CAQ SEC Regulations Committee meeting... 4 SEC updates FAQs on IFRS Taxonomy... 5 Cybersecurity risk and the accounting profession... 5 Status of inflation in Argentina... 6 Recommended reading and CPE opportunities... 8 We have ignition... 8 What does your organization need Big(ger) data or big(ger) insights?... 8 Time is running out to comply with the new FASB revenue recognition standard... 8 Understanding the operation, impact and practical implications of the multilateral instrument... 9 Upcoming CPE opportunities... 9 Current Developments: US September

4 1 Current quarter financial reporting matters SEC staff effective date relief for certain public business entities The SEC staff recently announced that it will not object if certain public business entities (PBEs) use private company adoption dates for the new revenue and leases standards. Specifically, this relief applies to an entity that meets the definition of a PBE only because it is required to include its financial statements or financial information in another entity s filing with the SEC and otherwise would not meet the definition of a PBE. The announcement applies to only this narrow group of PBEs and is limited to the new revenue and leases standards (i.e. it does not extend to other accounting standards). Resources: KPMG s Defining Issues, SEC grants relief for private company financial information included in a public company s filing SEC expands nonpublic reviews of registration statements Effective July 10, the Division of Corporation Finance is permitting most companies to submit initial draft registration statements to the SEC for nonpublic review. This process is available for IPOs, Exchange Act initial registration statements and most offering documents filed in the first year after a company has entered the public reporting system. The accommodation gives companies increased control and flexibility over the timing and content of their offering. Many documents will not be available for public review until nearer the time that the securities offering occurs. Resources: KPMG s Defining Issues, SEC expands nonpublic reviews of registration statements CAQ SEC Regulations Committee meeting The Center for Audit Quality (CAQ) SEC Regulations Committee met in March 2017 and discussed several reporting matters. SAB 74 disclosures about newly issued standards. The Committee shared observations about current trends in SAB 74 disclosures for the revenue, leases and credit impairment standards. The SEC staff is monitoring SAB 74 disclosures and will comment on those that appear to be deficient. Current Developments: US September

5 Non-GAAP financial measures. The staff noted improved compliance with the guidance about non-gaap financial measures, resulting in a decline in staff comments. The staff did not identify new areas of focus in its review of non-gaap financial measures. Definition of a business interaction between the new GAAP definition of a business and the S-X Article 11 definition. The staff stated that ASU , which clarifies the definition of a business, does not affect the definition of a business in Article 11 of Regulation S-X. Therefore, it is possible for a registrant to reach different conclusions about what constitutes a business under US GAAP and the SEC s guidance. If an acquired set is a business under the SEC s rules, registrants may need to publicly file financial statements and pro forma financial information for the acquired set even if it does not meet the US GAAP definition of a business. Electronic submission of pre-filing correspondence. The staff stated that electronic submission (via an to CF-OCA at dcaoletters@sec.gov) of interpretive requests, waiver requests and similar pre-filing correspondence is sufficient; submitting paper documents is not necessary. Resources: March 2017 meeting highlights SEC updates FAQs on IFRS Taxonomy The SEC recently updated its FAQs about the IFRS-based XBRL Taxonomy to assist foreign private issuers in meeting XBRL reporting requirements. Earlier this year, the SEC posted to its website the IFRS Taxonomy to enable foreign private issuers that prepare financial statements under IFRS to submit them in XBRL. Foreign private issuers must begin submitting their financial statements in XBRL using the IFRS Taxonomy in their first annual report on Form 20-F or Form 40-F for fiscal periods ending on or after December 15, 2017 but may file IFRS XBRL-formatted financial statements earlier. Resources: KPMG s web article; Notice of availability of IFRS Taxonomy Cybersecurity risk and the accounting profession A recently issued CAQ publication discusses the audit firms role in addressing cybersecurity challenges and protecting companies from cybersecurity risks. Additionally, the AICPA developed a cybersecurity risk management reporting framework to assist organizations as they communicate relevant and useful information about the effectiveness of their cybersecurity risk management programs. Current Developments: US September

6 Status of inflation in Argentina In conjunction with its November 2016 meeting, the Center for Audit Quality SEC Regulations Committee s International Practices Task Force (IPTF) began calculating three year cumulative inflation rates based on monthly data from several indices and monitoring the Wholesale Price Index (WPI) for Argentina. In late December 2016, several US accounting firms submitted a white paper to the SEC staff of the Office of the Chief Accountant. The firms recommended that, based on the IPTF s calculations as of September 30, 2016, the SEC staff should not require a registrant to consider Argentina s economy as highly inflationary under US GAAP for the reporting period from October 1, 2016 to December 31, The SEC staff responded that it would not object to the firms recommendation. At its May 2017 meeting, the IPTF updated the three-year cumulative inflation rates in the white paper as of December 31, 2016 and March 31, 2017 to reflect inflation data published by Argentina s Bureau of Statistics. The table shows the three-year cumulative inflation rates (as of four consecutive quarter-end dates) included in the May 2017 Meeting Highlights. Indices considered As of 9/30/16 As of 12/31/16 As of 3/31/17 As of 6/30/17* 1 Indices used Greater Buenos Aires (CPI GBA) to December 2013; Argentina Consumer Price Index (IPCNu) January 2014 to October 2015; City of Buenos Aires only index (IPC BA) November 2015 to April 2016; new CPI GBA from May 2016 to relevant periodend 2 Same as #1 except that the San Luis province index (IPC SL) was used instead of the IPC- BA for November 2015 to April National Wholesale Price Index (WPI) 100.2% 104.2% 97.3% 98.9% 98.3% 102.2% 95.5% 97.0% 93.5% 90.9% 75.9% 72.8% * The information as of June 30, 2017 has been derived from Argentina s Bureau of Statistics and was not included in the IPTF analysis. Using the updated data in its cumulative computations, the IPTF observed that it does not appear that Argentina s economy would be considered highly inflationary under US GAAP for the reporting periods from January 1, 2017 to June 30, 2017 for calendar year-end registrants. The IPTF also observed that registrants would be expected to Current Developments: US September

7 have appropriate controls in place to monitor Argentina s reported inflation data throughout 2017 and to consider other pertinent economic indicators to determine whether Argentina should be considered highly inflationary. The inflation data published by Argentina s Bureau of Statistics through June 2017 was relatively consistent with data published as of March 31, Additionally, a World Economic Outlook report issued in July 2017 noted that Argentina is expected to exit its recession in Registrants should continue to closely monitor the country s economic environment. Resources: IPTF Meeting Highlights Current Developments: US September

8 2 Recommended reading and CPE opportunities We have ignition In an interview with Consulting Magazine, Mike Nolan, KPMG s Vice Chair of Innovation & Enterprise Solutions, talks about disruption and the firm s global Ignition Centers, the high-level strategizing that takes place at these centers and how companies are embracing disruption through innovation. Nolan explains the C-Suite s view on tackling disruption and how KPMG Ignition can help companies to address disruption head on. Read the article. What does your organization need Big(ger) data or big(ger) insights? In a byline article for CIO Review, KPMG s Sreekar Krishna outlines five important concepts that are sweeping the data world: serverless computing, real-time analytics, machine learning, fail-fast experimentation and testing-in-production. Krishna explains that with all of this available data, expectations for reduced costs and greater returns are high. However, many companies are realizing that the grass on the other big data side is not as green as they expected. Although Big Data has provided boosts to the bottom line, the next generation of Big Data will require substantial investment into big insights. Read the article. Time is running out to comply with the new FASB revenue recognition standard In a byline article for New Jersey CPA Magazine, KPMG s Kevin Bogle says research indicates that some companies may have trouble meeting the reporting deadlines on at least one of two major accounting standards that financial statement preparers must implement over the coming two years. Read the article. Current Developments: US September

9 Understanding the operation, impact and practical implications of the multilateral instrument Bloomberg BNA Tax Management International Journal featured an article authored by KPMG s International Tax practice National Leader Manal Corwin and Washington National Tax Principal Jesse Eggert (international tax group), examining the Organization for Economic Co-operation and Development s (OECD) Multilateral Instrument (MLI). The article, which focuses on the operation, impact and practical implications of the MLI, stressed the need for companies to consider: reviewing the OECD s reports about the initiative to address base erosion and profit shifting (BEPS) in connection with their operations; reinforcing the alignment of their treaty positions with their business activities; and maintaining contemporaneous documentation supporting these positions. Read the article. Upcoming CPE opportunities KPMG is hosting its 27th Annual Accounting and Financial Reporting Symposium on November 30 and December 1 in Las Vegas, Nevada. The event will feature KPMG subject matter experts and external speakers discussing major accounting and financial reporting developments from the FASB and SEC as well as business issues affecting the accounting functions. Participants will earn up to 16 continuing professional education (CPE) credits. Visit KPMG Executive Education or call for available discounts and additional information about the Symposium and other available CPE opportunities. KPMG s Financial Reporting View (FRV) offers additional CPE opportunities, including registration information for upcoming CFO Financial Forum webcasts. The webcasts feature KPMG professionals discussing current and forthcoming accounting and financial reporting matters, and implementation guidance for new accounting standards. Current Developments: US September

10 Contact us Angie Storm Partner Department of Professional Practice KPMG LLP Robin Van Voorhies Senior Manager Department of Professional Practice KPMG LLP This is a publication of KPMG in the US Department of Professional Practice kpmg.com/socialmedia The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.