Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments (current through 30 September 2015)

October 2015

Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

This Third Quarter 2015 Standard Setter Update highlights significant developments in financial accounting and reporting between 1 July 2015 and 30 September 2015 except as noted. This publication also includes summaries of certain proposals presently under consideration by the Financial Accounting Standards Board (FASB), the Emerging Issues Task Force (EITF), the Private Company Council (PCC), the Securities and Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB), the Auditing Standards Board (ASB) and the Governmental Accounting Standards Board (GASB). For additional details on these developments, we refer you to related EY publications, many of which can be found on our AccountingLink website. We will continue to keep you informed about important developments as they occur.

October 2015

To our clients and other friends

Contents Financial Accounting Standards Board ...................................................................... 1 Securities and Exchange Commission ..................................................................... 13 Public Company Accounting Oversight Board .......................................................... 22 Auditing Standards Board ...................................................................................... 26 Governmental Accounting Standards Board ............................................................ 28 Effective date matrices .......................................................................................... 31

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Financial Accounting Standards Board

Final FASB guidance Business Combinations (Topic 805), Simplifying the Accounting for Measurement- Period

Adjustments (ASU 2015-16) ............................................................................................... 1 Interest — Imputation of Interest (Subtopic 835-30), Presentation and Subsequent

Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update) (ASU 2015-15) .......................................................................... 1

Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date (ASU 2015-14) ................................................................................................................... 2

Derivatives and Hedging (Topic 815), Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force) (ASU 2015-13) ..................................... 2

Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force) (ASU 2015-12) ........................................................................................................ 3

Inventory (Topic 330), Simplifying the Measurement of Inventory (ASU 2015-11) ....................... 3

Final guidance expected soon Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations

and Licensing ..................................................................................................................... 4 Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes ................................... 4 Financial Instruments — Overall (Subtopic 825-10), Recognition and Measurement of

Financial Assets and Financial Liabilities ............................................................................... 5 Leases (Topic 842), a revision of the 2010 proposed FASB Accounting Standards Update,

Leases (Topic 840) ............................................................................................................. 5

FASB exposure documents Issued this quarter

Intangibles — Goodwill and Other (Topic 350), Business Combinations (Topic 805), Consolidation (Topic 810), and Derivatives and Hedging (Topic 815), Effective Date and Transition Guidance (a proposal of the Private Company Council) .......................................... 6

Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients ............................................................................................................ 6

Notes to Financial Statements (Topic 235), Assessing Whether Disclosures Are Material ................. 7 Conceptual Framework for Financial Reporting Chapter 3, Qualitative Characteristics of

Useful Financial Information ................................................................................................ 7 Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations

(Reporting Revenue Gross versus Net) ................................................................................. 7

Pronouncements and proposals

ii Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the FASB Emerging Issues Task Force) ........ 8

Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force) ............................................................. 8

Other proposals previously issued .................................................................................................... 9

Other FASB Revenue recognition developments .......................................................................................... 10 What’s next — agenda highlights ............................................................................................... 10

Securities and Exchange Commission

SEC final rules Removal of Certain References to Credit Ratings and Amendment to the Issuer

Diversification Requirement in the Money Market Fund Rule ................................................ 13 Pay Ratio Disclosure ................................................................................................................ 13

SEC rule proposals and other releases Issued this quarter

Request for Comment on the Effectiveness of Financial Disclosures about Entities Other than the Registrant (Release No. 33-9929) ................................................................................ 15

Open-End Fund Liquidity Risk Management Programs; Swing Pricing (Release No. 33-9922) ...... 15 Possible Revisions to Audit Committee Disclosures (Release No. 33-9862)................................. 16 Listing Standards for Recovery of Erroneously Awarded Compensation

(Release No. 33-9861) ...................................................................................................... 16 Highlights of certain proposals previously issued

Investment Company Reporting Modernization (Release No. 33-9776) ...................................... 17 Pay versus Performance (Release No. 34-74835) ..................................................................... 18 Disclosure of Hedging by Employees, Officers and Directors (Release No. 33-9723) ................... 18

Other proposals previously issued .................................................................................................. 19

Other SEC New database to track rulemaking status available .................................................................... 20 SEC staff updates guidance on remediation of delinquent filings ................................................ 20 2016 financial reporting taxonomy .......................................................................................... 20 SEC Advisory Committee on Small and Emerging Companies ..................................................... 20

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Public Company Accounting Oversight Board

PCAOB final rules Rules to Implement the Reorganization of PCAOB Auditing Standards and Related

Changes to PCAOB Rules and Attestation, Quality Control, and Ethics and Independence Standards ................................................................................................... 22

PCAOB proposed standards and other projects Highlights of certain proposals previously issued

Supplemental Request for Comment: Rules to Require Disclosure of Certain Audit Participants on a New PCAOB Form (PCAOB Release No. 2015-004) .................................. 23

Concept Release on Audit Quality Indicators (PCAOB Release No. 2015-005) ............................ 23 Other proposals previously issued .................................................................................................. 24

Other PCAOB Staff consultation paper on auditor’s use of the work of specialists ............................................ 25

Auditing Standards Board

ASB exposure drafts Issued this quarter

Proposed Statement on Auditing Standards, Amendment to Statement on Auditing Standards No. 122 Section 700, Forming an Opinion and Reporting on Financial Statements .................................................................................................... 26

Proposals previously issued ........................................................................................................... 26

Governmental Accounting Standards Board

Final GASB guidance GASB Statement No. 77, Tax Abatement Disclosures ................................................................ 28

GASB exposure drafts Issued this quarter

Implementation Guide No. 20XX-X, Implementation Guidance Update — 20XX ............................ 29 Other proposals previously issued .................................................................................................. 29

Other GASB Implementation Guide No. 2015-1 ........................................................................................... 30 Preliminary views previously issued ......................................................................................... 30

iv Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective date matrices

Effective date matrix — final FASB pronouncements ................................................................. 31 Effective date matrix — final SEC pronouncements and interpretive releases ............................. 38 Effective date matrix — final PCAOB pronouncements and rules ................................................ 39 Effective date matrix — final ASB standards .............................................................................. 40 Effective date matrix — final GASB pronouncements ................................................................. 41

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Business Combinations (Topic 805), Simplifying the Accounting for Measurement- Period Adjustments (ASU 2015-16)

Date issued: 25 September 2015

Summary The guidance eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date.

Effective date The guidance is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after 15 December 2015. For all other entities, it is effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017. Early adoption is permitted.

Other resources • To the Point, FASB simplifies measurement-period adjustments in business combinations

(SCORE No. BB3052)

Interest — Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update) (ASU 2015-15)

Date issued: 18 August 2015

Summary The FASB issued this ASU to incorporate into the Accounting Standards Codification (ASC) an SEC staff announcement that the SEC staff will not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The announcement came in response to questions that arose after the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance Costs.

The standard, as issued, did not address revolving lines of credit, which may not have outstanding balances. An entity that repeatedly draws on a revolving credit facility and then repays the balance could present the cost as a deferred asset and reclassify all or a portion of it as a direct deduction from the liability whenever a balance is outstanding. However, the SEC staff’s announcement provides a less-cumbersome alternative. Either way, the cost should be amortized over the term of the arrangement.

Effective date Effective upon announcement by the SEC staff on 18 June 2015.

Other resources • To the Point, Simplifying the presentation of debt issuance costs (SCORE No. BB2963)

Financial Accounting Standards Board

Final FASB guidance

2 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date (ASU 2015-14)

Date issued: 12 August 2015

Summary The FASB deferred by one year the effective date of its new revenue recognition standard for public and nonpublic entities reporting under US GAAP.

Effective date The new revenue recognition standard will be effective for public entities for annual reporting periods beginning after 15 December 2017, including interim reporting periods within that reporting period. Nonpublic entities will be required to adopt the standard for annual reporting periods beginning after 15 December 2018, and interim reporting periods within annual reporting periods beginning after 15 December 2019.

Public and nonpublic entities will be permitted to adopt the standard as early as the original public entity effective date (i.e., annual reporting periods beginning after 15 December 2016 and interim periods therein). Early adoption prior to that date will not be permitted.

Other resources • To the Point, FASB defers the new revenue standard by one year (SCORE No. BB3032)

Derivatives and Hedging (Topic 815), Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force) (ASU 2015-13)

Date issued: 10 August 2015

Summary The use of locational marginal pricing by an independent system operator (ISO) to determine a transmission charge or credit in a nodal energy market does not constitute a net settlement of a forward contract for the purchase or sale of electricity, even when legal title to the electricity is conveyed to the ISO during transmission. As a result, these contracts could meet the physical delivery criterion in ASC 815, Derivatives and Hedging, and qualify for the normal purchases and normal sales (NPNS) exception to derivative accounting if they meet the other criteria in the guidance.

Effective date and transition The guidance is effective immediately and must be applied prospectively.

Other resources • To the Point, Applying the normal purchases normal sales exception to power contracts in nodal

energy markets (SCORE No. BB3031)

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Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force) (ASU 2015-12)

Date issued: 31 July 2015 Summary The standard eliminates requirements that employee benefit plans measure the fair value of fully benefit-responsive investment contracts (FBRICs) and provide the related fair value disclosures. As a result, FBRICs are measured, presented and disclosed only at contract value.

Also, plans will be required to disaggregate their investments measured using fair value by general type, either on the face of the financial statements or in the notes, and self-directed brokerage accounts are one general type. Plans no longer have to disclose the net appreciation/depreciation in fair value of investments by general type or individual investments equal to or greater than 5% of net assets available for benefits.

In addition, a plan with a fiscal year end that doesn’t coincide with the end of a calendar month is allowed to measure its investments and investment-related accounts using the month end closest to its fiscal year end.

Effective date and transition The new guidance for FBRICs and plan investment disclosures should be applied retrospectively. The measurement date practical expedient should be applied prospectively. The guidance is effective for fiscal years beginning after 15 December 2015. Earlier application is permitted.

Other resources • To the Point, FASB simplifies financial reporting by employee benefit plans (SCORE No. BB3026)

Inventory (Topic 330), Simplifying the Measurement of Inventory (ASU 2015-11) Date issued: 22 July 2015 Summary The guidance simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Entities will continue to apply their existing impairment models to inventories that are accounted for using last-in first-out (LIFO) and the retail inventory method (RIM). Under current guidance, net realizable value is one of several calculations an entity needs to make to measure inventory at the lower of cost or market.

Effective date and transition The guidance is effective for public business entities for fiscal years beginning after 15 December 2016, including interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017. Early adoption is permitted, and the guidance must be applied prospectively after the date of adoption.

Other resources • To the Point, FASB simplifies the subsequent measurement of inventory (SCORE No. BB3019)

4 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

The FASB has completed deliberations on these proposals and is expected to issue final guidance soon.

Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing

Date proposal issued: 12 May 2015 — comment period ended 30 June 2015

Summary The amendments would clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property (IP), which will determine whether the entity recognizes revenue over time or at a point in time. The amendments also would revise the guidance to address how entities should apply the exception for sales- and usage-based royalties to licenses of IP and recognize revenue for licenses that are not separate performance obligations.

The amendments also would clarify how entities would determine whether promised goods or services are separately identifiable, an important step in determining whether goods and services should be accounted for as separate performance obligations. In addition, the amendments would add guidance to allow entities to disregard goods or services that are immaterial in the context of a contract and provide an accounting policy election for accounting for certain shipping and handling activities.

Effective date The effective date and transition requirements would be the same as the effective date and transition requirements in ASC 606.

Other resources • To the Point, FASB votes to finalize amendments to new revenue guidance on licenses and

performance obligations (SCORE No. BB3059)

Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes

Date proposal issued: 22 January 2015 — comment period ended 29 May 2015

Summary Companies would be required to classify all deferred tax assets and liabilities as noncurrent. In addition, companies would no longer be required to allocate valuation allowances between current and noncurrent deferred tax assets because those allowances also would be classified as noncurrent.

Effective date Public business entities would be required to apply the amendments in annual reporting periods beginning after 15 December 2016, including interim reporting periods within those annual reporting periods. All other entities would be required to apply the amendments in annual reporting periods beginning after 15 December 2017, and interim reporting periods within annual reporting periods beginning after 15 December 2018. Early adoption would be permitted.

Other resources • To the Point, FASB redeliberates its proposals to simplify income tax accounting (SCORE No. BB3060)

Final guidance expected soon

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Financial Instruments — Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities

Date proposal issued: 14 February 2013 — comment period ended 15 May 2013 Summary The standard on the classification and measurement of financial instruments would significantly change practice for all entities. The targeted amendments to existing guidance are expected to include:

• Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception.

• Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income.

• Entities would make the assessment of the realizability of a deferred tax asset (DTA) related to an available-for-sale (AFS) debt security in combination with the entity's other DTAs. Under current US GAAP, entities also have the option to perform this evaluation separately from their other DTAs.

• Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities.

Effective date The effective date has not yet been determined.

Other resources • FASB Project Update: Accounting for Financial Instruments — Classification and Measurement

Leases (Topic 842), a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)

Date proposal issued: 16 May 2013 — comment period ended 13 September 2013 Summary The standard would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. While many aspects of lessor accounting would remain the same, the new standard would make some changes, such as eliminating today’s real estate-specific guidance. Lessees and lessors would be required to classify most leases using a principle generally consistent with that of IAS 17, Leases, which is similar to US GAAP but without the use of bright lines. The standard also would change what would be considered initial direct costs.

Effective date and transition The effective date has not yet been determined. The new standard’s transition provisions would be applied using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements.

Other resources • FASB Project Update: Leases — Joint Project of the FASB and the IASB • To the Point, FASB addresses issues raised during drafting of the new leases standard

(SCORE No. BB3062) • Technical Line, Final standard on leases is taking shape (SCORE No. BB2952)

6 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Intangibles — Goodwill and Other (Topic 350), Business Combinations (Topic 805), Consolidation (Topic 810), and Derivatives and Hedging (Topic 815), Effective Date and Transition Guidance (a proposal of the Private Company Council)

Date issued: 30 September 2015 — comment period ends 16 November 2015

Summary The FASB proposed amending the guidance in Private Company Council (PCC) alternatives to eliminate the effective dates and allow private companies to forgo a preferability assessment the first time they adopt each of the alternatives. The proposal also would extend the transition guidance in the alternatives indefinitely.

Effective date The amendments would be effective immediately.

Other resources • To the Point, FASB proposes allowing adoption of PCC alternatives at any time without a

preferability assessment (SCORE No. BB3061)

• To the Point, Private companies may get relief on adopting PCC alternatives after their effective dates (SCORE No. BB3017)

Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients

Date issued: 30 September 2015 — comment period ends 16 November 2015

Summary The FASB proposed amending its new revenue recognition guidance on transition, collectibility, noncash consideration and the presentation of sales and other similar taxes. The proposal would clarify that for a contract to be considered “completed” at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. The proposal also would clarify how an entity should evaluate the collectibility threshold, and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria.

Effective date The effective date and transition requirements would be the same as the effective date and transition requirements in ASC 606.

Other resources • FASB Project Update: Revenue from Contracts with Customers

• To the Point, FASB proposes narrow scope improvements and practical expedients for its revenue standard (SCORE No. BB3057)

FASB exposure documents

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Notes to Financial Statements (Topic 235), Assessing Whether Disclosures Are Material Date issued: 24 September 2015 — comment period ends 8 December 2015

Summary As part of its disclosure framework project, the FASB proposed guidance on applying materiality to disclosure requirements to promote the appropriate use of discretion by reporting entities when determining which financial statement disclosures, individually or in the aggregate, to provide.

Effective date The amendments would be effective upon issuance.

Other resources • FASB Project Update: Disclosure Framework — Entity’s Decision Process

• To the Point, FASB proposes guidance on applying materiality to disclosures (SCORE No. BB3056)

Conceptual Framework for Financial Reporting Chapter 3, Qualitative Characteristics of Useful Financial Information

Date issued: 24 September 2015 — comment period ends 8 December 2015

Summary The FASB proposed modifying the definition of materiality in Chapter 3 of FASB Concepts Statement No. 8 to indicate that materiality is a legal concept and to revise the definition.

Other resources • FASB Project Update: Disclosure Framework — Entity’s Decision Process

• To the Point, FASB proposes guidance on applying materiality to disclosures (SCORE No. BB3056)

Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

Date issued: 31 August 2015 — comment period ends 15 October 2015

Summary The proposal is intended to clarify the principal versus agent guidance in the new revenue standard. The amendments would clarify how an entity should identify the unit of accounting (i.e., the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements such as service transactions by explaining what a principal controls before the specified good or service is transferred to the customer. The proposal also would reframe the indicators in the guidance to focus on evidence of a principal relationship rather than an agency relationship, amend examples in the guidance and add new ones.

Effective date and transition The effective date and transition requirements would be the same as the effective date and transition requirements in ASC 606.

8 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Other resources • FASB Project Update: Revenue from Contracts with Customers

• To the Point, FASB proposes clarifications to principal versus agent guidance in new revenue standard (SCORE No. BB3040)

• Comment letter (SCORE No. BB3069)

Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the FASB Emerging Issues Task Force)

Date issued: 6 August 2015 — comment period ends 5 October 2015

Summary A novation of a derivative contract in a hedge accounting relationship would not, in and of itself, require dedesignation of that hedge accounting relationship. The proposal would allow a hedge accounting relationship to continue uninterrupted as long as all of the other hedge accounting criteria are met, including the expectation that the hedge will be highly effective considering the creditworthiness of the new counterparty to the derivative contract.

Effective date and transition The effective date has not yet been determined. Entities would apply the guidance prospectively only to hedge accounting relationships in which a change in counterparties to the derivative instrument occurs after the effective date.

Other resources • FASB Project Update: EITF Issue No. 15-D: Effect of Derivative Contract Novations on Existing

Hedge Accounting Relationships

• To the Point, FASB proposes allowing hedge accounting relationships to continue after novations (SCORE No. BB3029)

Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force)

Date issued: 6 August 2015 — comment period ends 5 October 2015

Summary An assessment of whether a contingent put or call option is clearly and closely related to the debt host would require only an analysis of the four-step decision sequence outlined in ASC 815-15-25-42. That is, an entity would not need to separately assess whether the contingent feature is indexed only to the interest rate or credit risk of the entity.

Effective date and transition The effective date has not yet been determined. Entities would apply the guidance using a modified retrospective transition method to existing debt instruments as of the beginning of the fiscal year, and interim periods within that fiscal year, for which the guidance would be effective.

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Other resources • FASB Project Update: EITF Issue No. 15-E: Contingent Put and Call Options in Debt Instruments

• EITF Update, June 2015 meeting highlights (SCORE No. BB3003)

Other proposals previously issued • Compensation — Stock Compensation (Topic 718), Improvements to Employee Share-Based

Payment Accounting

• Date issued: 8 June 2015 — comment period ended 14 August 2015

• Investments — Equity Method and Joint Ventures (Topic 323), Simplifying the Equity Method of Accounting

• Date issued: 5 June 2015 — comment period ended 4 August 2015

• Liabilities — Extinguishments of Liabilities (Subtopic 405-20), Recognition of Breakage for Certain Prepaid Stored-Value Cards (a consensus of the FASB Emerging Issues Task Force)

• Date issued: 30 April 2015 — comment period ended 29 June 2015

• Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954), Presentation of Financial Statements of Not-for-Profit Entities

• Date issued: 22 April 2015 — comment period ended 20 August 2015

• Income Taxes (Topic 740), Intra-Entity Asset Transfers

• Date issued: 22 January 2015 — comment period ended 29 May 2015

• Conceptual Framework for Financial Reporting, Chapter 8: Notes to Financial Statements

• Date issued: 4 March 2014 — comment period ended 14 July 2014

• Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts

• Date related proposal issued: 27 June 2013 — comment period ended 25 October 2013

• Financial Instruments — Credit Losses (Subtopic 825-15)

• Date proposal issued: 20 December 2012 — comment period ended 31 May 2013

Other resources • To the Point, FASB changes approach to updating assumptions for long-duration contracts

(SCORE No. BB3022)

• Financial reporting briefs — September 2015 (SCORE No. BB3049)

• 2014 Standard Setter Update (SCORE No. BB2918)

• Comment letter, Presentation of Financial Statements of Not-for-Profit Entities (SCORE No. BB3035)

• Comment letter, Improvements to Employee Share-Based payment Accounting (SCORE No. BB3034)

• Comment letter, Simplifying the Equity Method of Accounting (SCORE No. BB3027)

10 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Revenue recognition developments The FASB deferred the effective date of its new revenue standard by one year and issued three proposals that are intended to clarify its new guidance. The FASB has already voted to move forward with the amendments it proposed to clarify the guidance on accounting for licenses of IP and identifying performance obligations in its new revenue standard. The FASB also issued a proposal to clarify the guidance on whether an entity is a principal or an agent and should report revenue gross or net and another proposal to amend the guidance on transition, collectibility, noncash consideration and the presentation of sales and other similar taxes. The International Accounting Standards Board (IASB), which developed its new revenue standard with the FASB, has also deferred the effective date by one year and proposed certain limited amendments to its new standard on some of the topics the FASB has addressed in its proposals. The issues the Boards are trying to address with the proposals were first discussed by their Joint Transition Resource Group for Revenue Recognition (TRG). The TRG last met in July and is scheduled to meet again in November.

Other resources • To the Point, Joint Transition Resource Group for Revenue Recognition discusses additional

implementation issues (SCORE No. BB3012)

• Technical Line, Applying the new revenue recognition standard to sales of real estate (SCORE No. BB3023)

• Technical Line, Gains and losses from the derecognition of nonfinancial assets (SCORE No. BB3021)

• Technical Line, New revenue standard affects more than just revenue (SCORE No. BB2772)

• Financial Reporting Developments: Revenue from contracts with customers (ASC 606) (SCORE No. BB3043)1

What’s next — agenda highlights Financial instruments — The FASB staff continues to work on drafting final guidance for classifying and measuring financial instruments (see above). On impairment, the FASB decided to issue a standard with two impairment models. For loans, held-to-maturity debt securities, trade receivables, lease receivables, certain financial guarantee contracts and reinsurance receivables, entities would use the current expected credit loss model or CECL. Under this approach, the allowance for credit losses would reflect management's current estimate of the contractual cash flows that it does not expect to collect over the life of financial instruments. For available-for-sale debt securities, entities would use today’s other-than-temporary impairment model modified to (1) require an impairment allowance instead of direct write-downs and (2) ignore the consideration of “time to recovery.“ The FASB’s decisions on credit impairment differ significantly from the impairment model the IASB finalized as part of IFRS 9. We expect the Board to issue new guidance in the first quarter of 2016.

1 A number of industry supplements to this FRD are available.

Other FASB

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The FASB plans to make targeted improvements to the hedge accounting model based on feedback received from its stakeholders and made several tentative decisions that would make hedge accounting easier for companies to apply. The Board plans to issue an exposure draft in the fourth quarter of 2015.

FASB agenda In addition to the topics above, the FASB’s agenda includes:

• Accounting for financial instruments: hedging

• Clarifying the definition of a business

• Simplifying the balance sheet classification of debt

• Accounting for goodwill for public business entities and not-for-profit entities

• Accounting for identifiable intangible assets in a business combination for public business entities and not-for-profit entities

• Liabilities and equity: targeted improvements

• Accounting for interest income associated with the purchase of callable debt securities

• Disclosures by business entities about government assistance

• Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost

• Conceptual framework: measurement and presentation

EITF agenda At its September meeting, the Task Force discussed two issues, but did not reach any final consensuses or consensuses-for-exposure:

• Issue 15-B: The EITF considered feedback on its consensus-for-exposure that certain prepaid stored-value cards would meet the definition of a financial liability, and that breakage for these cards would be recognized.

• Issue 15-F: The EITF discussed the classification of four types of transactions in the statement of cash flows. The Task Force previously discussed four other cash flow classification issues and will discuss another issue and transition for all nine of the cash flow issues at a future meeting.

The next EITF meeting is scheduled for 12 November 2015.

PCC agenda At its September meeting, the PCC and the FASB discussed the results of the Board’s agenda prioritization survey and certain FASB projects. No decisions were made. The PCC will host a town hall meeting in Orlando on 18 November 2015 for private company stakeholders to provide input on potential projects. The PCC will meet again on 4 December 2015.

12 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Other resources • FASB Technical Agenda

• To the Point, FASB tries to make hedge accounting easier to apply and understand (SCORE No. BB3007)

• To the Point, FASB tries to simplify balance sheet classification of debt (SCORE No. BB3033)

• To the Point, FASB may change income tax disclosure requirements related to unrecognized tax benefits (SCORE No. BB3038)

• EITF Update, September 2015 meeting highlights (SCORE No. BB3048)

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Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule

Date issued: 16 September 2015

Summary The SEC adopted amendments to Rule 2a-7 of the Investment Company Act of 1940 and Form N-MFP to remove references to credit ratings and instead require that a money market fund invest in a security only if the fund determines that the security presents minimal credit risks after analyzing certain prescribed factors. This amendment was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

The amendments also will require a money market fund to comply with the 10% guarantor diversification requirement for portfolio securities subject to a guarantee by a non-controlled person unless its board of directors determines that the fund is not relying on the guarantee to determine the quality, maturity or liquidity of the security and maintains a record of this determination. Previously, Rule 2a-7 excluded such securities from the guarantor diversification requirement.

Effective date The amendments are effective 26 October 2015. The compliance date is 14 October 2016.This coincides with the compliance date for the rules adopted by the SEC last year aimed at minimizing money market funds’ exposure to rapid redemptions through the use of floating net asset values, liquidity fees and redemption gates.

Pay Ratio Disclosure

Date issued: 5 August 2015

Summary The SEC approved a final rule that requires most registrants to calculate and disclose the ratio of their principal executive officer’s total annual compensation to the total annual compensation of their median employee (the pay ratio). The rule gives companies flexibility in how they can identify their median employee (e.g., total employee population, statistical sampling) and only requires the determination to be made once every three years unless there are changes in the employee population or compensation arrangements that a company reasonably believes would result in a significant change in the pay ratio. The rule also allows affected companies to exclude from the calculation non-US employees in countries with data privacy laws or other regulations that conflict with the rule and provides a de minimis exemption for non-US employees up to 5% of total employees.

Companies would be required to briefly describe the methodology used to identify the median employee, and any material assumptions or estimates used to identify the median employee or to determine annual total compensation.

The pay ratio rule, which was mandated by the Dodd-Frank Act, does not apply to emerging growth companies, smaller reporting companies, foreign private issuers and most registered investment companies. Affected companies will have to provide the information in registration statements, annual reports and proxy statements and information statements that call for executive compensation disclosure.

Securities and Exchange Commission

SEC final rules

14 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective date The rule is effective 19 October 2015. Registrants will be required to make pay ratio disclosures for their first fiscal year beginning on or after 1 January 2017.

Other resources • To the Point, SEC finalizes ‘pay ratio’ rule (SCORE No. CC0415)

15

Issued this quarter

Request for Comment on the Effectiveness of Financial Disclosures about Entities Other than the Registrant (Release No. 33-9929)

Date issued: 25 September 2015 — comment period ends 30 November 2015

Summary The SEC issued a request for comment on how it might enhance the effectiveness of Regulation S-X requirements that registrants provide information about other entities such as acquired businesses, equity method investees, subsidiary issuers and guarantors. The request for comment seeks input on how investors use financial information about other entities and the challenges companies face in obtaining and preparing this information.

The SEC made the request as part of its disclosure effectiveness initiative, which grew out of a December 2013 study of disclosure requirements that was required by the Jumpstart Our Business Startups Act (JOBS Act).

Other resources • To the Point, SEC seeks feedback on Regulation S-X and required financial information about other

entities (SCORE No. CC0422)

Open-End Fund Liquidity Risk Management Programs; Swing Pricing (Release No. 33-9922)

Date issued: 22 September 2015 — comment period ends 13 January 2016

Summary The SEC proposed rules designed to reduce the risk that investors in exchange-traded funds (ETFs) and open-end mutual funds (except money market funds) will be unable to redeem their shares and receive their assets in a timely manner during periods of financial stress. The rules would require these funds to implement a liquidity risk management program and enhance disclosures about fund liquidity and redemption practices.

The proposal also would permit open-end funds (except for money market funds and ETFs) to use swing pricing, which is designed to protect existing shareholders from dilution associated with shareholder purchases and redemptions. When the level of net purchases or net redemptions exceeds a specified percentage of net asset value (i.e., the swing threshold), the fund would reflect in its net asset value the costs associated with satisfying requests for shareholder purchases or redemptions. The use of swing pricing would be an additional tool to help funds manage liquidity risks.

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes liquidity risk rules for mutual funds and ETFs (SCORE No. BB3054)

SEC rule proposals and other releases

16 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Possible Revisions to Audit Committee Disclosures (Release No. 33-9862)

Date issued: 1 July 2015 — comment period ended 8 September 2015

Summary The SEC issued a concept release seeking comment on possible revisions to its audit committee disclosure rules. The release explores whether audit committees should provide more qualitative disclosures about how they execute their responsibilities to oversee the audit.

Currently, the audit committee report in the annual proxy statement must affirm only that the audit committee carried out certain specific responsibilities related to communications with the external auditor. The SEC is seeking to understand whether mandating additional disclosure about the audit committee’s oversight of the audit would provide useful information that would help investors make better investment decisions and voting decisions about whether to ratify the selection of the auditor or re-elect members of the audit committee to the board.

The concept release also seeks input on whether new and existing audit committee disclosures should be required to appear in one location in the annual proxy statement, whether the disclosures also should be required in the prospectus for registered securities offerings and whether the requirements should apply to smaller reporting companies and emerging growth companies.

The concept release is part of a broader effort by the SEC and the PCAOB to increase the transparency of the audit process.

Other resources • To the Point, SEC seeks feedback on possible changes to audit committee disclosures

(SCORE No. CC0412)

• SEC and PCAOB actions to increase transparency of the audit process (SCORE No. CJ0266)

• Comment letter — Audit committee disclosures (SCORE No. CC0417)

Listing Standards for Recovery of Erroneously Awarded Compensation (Release No. 33-9861)

Date issued: 1 July 2015 — comment period ended 14 September 2015

Summary The SEC proposed rules that would require national exchanges to establish listing standards that would require companies to have policies to “claw back” incentive-based compensation from current and former executive officers in the event of a restatement. The so-called clawback rule was mandated by the Dodd-Frank Act.

The proposal generally would require companies to recover incentive compensation paid to executive officers for up to three years before a restatement, regardless of whether the executive was at fault. The proposal would create a new definition of executive officer that would be similar to Section 16 of the Exchange Act of 1934. The proposal would apply to incentive compensation based on accounting-related measures, stock price or total shareholder return.

17

All listed companies except for certain registered investment companies would be required to disclose their clawback policies and, after a restatement, information about compensation subject to clawback. Companies also would be required to make disclosures related to any decision not to pursue recovery from any officer because the direct expense would exceed the potential recovery. Companies also would be required to disclose estimates used to determine the amount of unearned compensation that was previously awarded based on stock price or total shareholder return.

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes requiring ‘clawback’ policies and disclosures (SCORE No. CC0413)

• Comment letter — Clawback disclosures (SCORE No. CC0418)

Highlights of certain proposals previously issued

Investment Company Reporting Modernization (Release No. 33-9776)

Date issued: 20 May 2015 — re-opened comment period ends 13 January 2016

Summary The SEC proposed modernizing and enhancing the reporting and disclosure of information by mutual funds and other investment companies. Under the proposal, registered funds other than money market funds would file a new monthly portfolio report and a new annual report in a structured data format. The proposal would also amend Regulation S-X to standardize and enhance disclosures about derivatives in investment company financial statements and require disclosures about securities-lending activities. The proposal also would permit mutual funds and other investment companies to deliver shareholder reports by making them accessible on a website if they meet certain conditions.

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes enhancing reporting by investment companies and investment advisers

(SCORE No. BB2993)

• Comment letter — Investment company reporting modernization (SCORE No. BB3030)

18 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Pay versus Performance (Release No. 34-74835)

Date issued: 29 April 2015 — comment period ended 6 July 2015

Summary The SEC proposed a rule that would require companies to disclose the relationship between their executive compensation and their total shareholder return (TSR). The so-called pay versus performance disclosures were mandated by the Dodd-Frank Act.

Companies would be required to disclose the following information for the most recent five years:

• The total compensation of the principal executive officer (PEO) that is already disclosed in the summary compensation table in the proxy statement, as well as the PEO’s “actual” compensation after adjustments for pensions and equity awards

• The average total compensation paid to the other named executive officers in the summary compensation table in the proxy statement, as well as their average “actual” compensation after adjustments for pensions and equity awards

• TSR of the company and its selected peer group

Companies also would be required to describe (1) the relationship between the actual executive compensation they paid and the company’s TSR and (2) the relationship between the company’s TSR and the TSR of its selected peer group. The relationships could be described in words, graphics or a combination of words and graphics.

The proposed rule would apply to all registrants, except for emerging growth companies, foreign private issuers and registered investment companies. Smaller reporting companies would have to disclose only three years of information.

The new disclosures would be required only in proxy or information statements with executive compensation disclosures under Regulation S-K Item 402, and the disclosure would not be incorporated by reference in 1933 Act registration statements. Companies also would be required to tag the new disclosures using XBRL in an exhibit to the proxy or information statement filed on EDGAR.

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes ‘pay versus performance’ disclosures (SCORE No. CC0411)

Disclosure of Hedging by Employees, Officers and Directors (Release No. 33-9723)

Date issued: 9 February 2015 — comment period ended 20 April 2015

Summary The SEC proposed amendments to its rules that would require companies to disclose whether they permit their employees, officers or directors to purchase financial instruments or engage in transactions designed to hedge or offset any decrease in the market value of the company’s equity securities or those of certain related entities. The proposal would apply to all equity securities held by

19

employees, officers and directors, directly or indirectly, not just equity securities granted as compensation. If a registrant does not permit any hedging transactions by its employees, officers and directors, or permits all hedging transactions, it could state that without further detail or description. The proposal would apply to all registrants, except for foreign private issuers and certain non-listed investment companies. The disclosures would be required in proxy or information statements related to the election of directors. The proposal was mandated by the Dodd-Frank Act.

Effective date The proposal does not suggest an effective date.

Other resources • To the Point, SEC proposes proxy disclosure of policies on hedging by employees, officers and

directors (SCORE No. CC0407)

Other proposals previously issued • Amendments to Form ADV and Investment Advisers Act Rules (Release No. IA-4091)

• Date issued: 20 May 2015 — comment period ended 11 August 2015

• Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act (Release No. 33-9693)

• Date issued: 18 December 2014 — comment period ended 2 March 2015

• Crowdfunding (Release No. 33-9470)

• Date issued: 23 October 2013 — comment period ended 3 February 2014

• Amendments to Regulation D, Form D and Rule 156 under the Securities Act (Release No. 33-9416)

• Date issued: 10 July 2013 — comment period ended 4 November 2013

• Prohibition against Conflicts of Interest in Certain Securitizations (Release No. 34-65355)

• Date issued: 19 September 2011 — comment period ended 13 February 2012

• Incentive-Based Compensation Arrangements (Release No. 34-64140)

• Date issued: 29 March 2011 — comment period ended 31 May 2011

• End-User Exception to Mandatory Clearing of Security-Based Swaps (Release No. 34-63556)

• Date issued: 15 December 2010 — comment period ended 22 July 2013

• Reporting of Proxy Votes on Executive Compensation and Other Matters (Release No. 34-63123)

• Date issued: 18 October 2010 — comment period ended 18 November 2010

Other resources • 2014 Standard Setter Update (SCORE No. BB2918)

• SEC in Focus — October 2015 (SCORE No. CC0424)

20 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

New database to track rulemaking status available Summary SEC Chair Mary Jo White recently announced the launch of a new database on the SEC’s website that will make it easier for the public to follow the SEC’s rulemaking activity. Chair White said that changing market conditions, statutory mandates and priorities have affected when, whether and how rules are finalized. The database will allow the public to track final rules as well as the development of SEC policies through the rulemaking process.

SEC staff updates guidance on remediation of delinquent filings Summary The SEC staff in the Division of Corporation Finance updated its Financial Reporting Manual to say that it will not object if a delinquent registrant files a comprehensive annual report on Form 10-K that includes the material information that would have otherwise been required in each delinquent filing (annual and quarterly reports). However, such an approach would not necessarily preclude an enforcement action by the SEC, and the registrant would not be eligible to use Form S-3 until it makes timely filings for the requisite period. Previously, the registrant had to file each delinquent report separately, unless it obtained relief from the SEC staff to file a comprehensive Form 10-K.

2016 financial reporting taxonomy Summary The FASB issued its proposed 2016 US GAAP financial reporting taxonomy and the SEC staff issued updates to sections of the taxonomy that it maintains. The comment periods for both end on 31 October 2015. The SEC must approve the new taxonomy before registrants can use it.

SEC Advisory Committee on Small and Emerging Companies Summary The SEC extended the charter of the Advisory Committee on Small and Emerging Companies (the Committee), which was established in 2011 to provide the SEC with advice and recommendations related to small and emerging companies on capital formation, trading securities, public reporting and corporate governance, for another two years.

The Committee met on 23 September 2015 to discuss and make recommendations on public company disclosure relief, intrastate crowdfunding and the use of intermediaries by small businesses to raise capital.

The Committee recommended that the SEC increase the public float threshold for smaller reporting companies (SRC) and accelerated filer status to $250 million from $75 million. The Committee also recommended that the SEC expand the financial reporting and disclosure relief for SRCs. In the Committee’s view, this relief should (1) permanently extend to SRCs some of the temporary relief provided to emerging growth companies by the JOBS Act (i.e., shareholder say-on-pay, pay for performance, private company accounting standards transition, any rules requiring mandatory audit firm rotation), (2) give more smaller companies an exemption from pay ratio disclosures, Section 404(b) auditor attestation of internal control over financial reporting and Compensation Discussion and Analysis (CD&A), (3) exempt SRCs from the requirement to file their financial information in XBRL format and (4) exempt SRCs from having to file immaterial attachments to material contracts.

Other SEC

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The Committee also discussed whether changing the interim reporting requirements (e.g., making interim reports semiannual) would reduce costs for smaller companies while providing investors with the information they need. The Committee didn’t make any recommendations to the SEC on this matter.

Other resources • Recommendation regarding the regulation of finders and other intermediaries in small business

capital formation transactions

• Recommendation about expanding simplified disclosure for smaller issuers

• Recommendation to modernize Rule 147 under the Securities Act of 1933

22 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Rules to Implement the Reorganization of PCAOB Auditing Standards and Related Changes to PCAOB Rules and Attestation, Quality Control, and Ethics and Independence Standards

Date approved by the SEC: 17 September 2015

Summary The PCAOB adopted amendments to reorganize its auditing standards. The reorganization is intended to present the standards in a logical order that generally follows the flow of the audit process to help users navigate the standards more easily.

Auditing standards the PCAOB has issued and interim standards will be reorganized by topic with a single numbering system. The standards will be grouped into the following categories: general auditing standards, audit procedures, auditor reporting, matters relating to filings under federal securities laws and other matters associated with audits.

The amendments will be effective as of 31 December 2016.

Public Company Accounting Oversight Board

PCAOB final rules

23

Highlights of certain proposals previously issued

Supplemental Request for Comment: Rules to Require Disclosure of Certain Audit Participants on a New PCAOB Form (PCAOB Release No. 2015-004)

Date issued: 30 June 2015 — comment period ended 31 August 2015

Summary The PCAOB sought comment on whether to require audit firms to name the engagement partner and provide information about other public accounting firms that participated in the audit in a new form that would be filed with the PCAOB, as an alternative to disclosing this information in the auditor’s report, as it had previously proposed. The new form generally would be filed within 30 days after the date the auditor’s report is first included in an SEC filing and would include:

• The name of the engagement partner who led the audit for the most recent period

• The names, locations and extent of participation (as a percentage of total audit hours) of other public accounting firms that participated in the audit

• Participation can be presented as a range of percentages or a single percentage.

In a change from the PCAOB’s 2013 reproposal, audit firms would not be required to disclose specialists engaged (but not employed) by the auditor and non-accounting firm participants.

Effective date The Board is considering making the requirements effective for auditor’s reports issued or reissued on or after 30 June 2016, or three months after approval of the requirements by the SEC, whichever occurs later.

Other resources • To the Point, PCAOB proposes new approach for audit transparency disclosures (SCORE No.

EE0991)

• Comment letter (SCORE No. EE1000)

Concept Release on Audit Quality Indicators (PCAOB Release No. 2015-005)

Date issued: 30 June 2015 — comment period ended 29 September 2015

Summary The PCAOB sought comment on 28 possible audit quality indicators (AQIs) and how they might be used by audit committees, audit firms, investors and regulators. The Board hopes to identify a manageable number of indicators that together can inform discussions on audit quality. The PCAOB noted that the indicators aren’t intended to be used as scores or grades for audits and would require context to be understood.

PCAOB proposed standards and other projects

24 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

The concept release also seeks comments on how AQI data should be obtained and distributed, whether auditors should be required to provide AQIs or whether providing the information should be voluntary. It also seeks comments on which audits and audit firms should be subject to AQI reporting and whether any requirements to provide AQIs should be phased in.

The concept release is part of a broader effort by the PCAOB and the SEC to make the audit process more transparent.

Other resources • To the Point, PCAOB seeks comment on audit quality indicators (SCORE No. EE0992)

• Comment letter (SCORE No. EE1007)

Other proposals previously issued • Proposed Auditing Standards, The Auditor’s Report on an Audit of Financial Statements When the

Auditor Expresses an Unqualified Opinion; The Auditor’s Responsibilities Regarding Other Information in Certain Documents Containing Audited Financial Statements and the Related Auditor’s Report; and Related Amendments to PCAOB Standards (PCAOB Release No. 2013-005)

• Date issued: 13 August 2013 — comment period ended 2 May 2014

• Concept Release on Auditor Independence and Audit Firm Rotation (PCAOB Release No. 2011-006)

• Date issued: 16 August 2011 — comment period ended 19 November 2012

• Application of the “Failure to Supervise” Provision of the Sarbanes-Oxley Act of 2002 and Solicitation of Comment on Rulemaking Concepts (PCAOB Release No. 2010-005)

• Date issued: 5 August 2010 — comment period ended 3 November 2010

• Proposed Auditing Standard, Confirmation (PCAOB Release No. 2010-003)

• Date issued: 13 July 2010 — comment period ended 13 September 2010

Other resources • 2014 Standard Setter Update (SCORE No. BB2918)

25

Staff consultation paper on auditor’s use of the work of specialists

Date issued: 28 May 2015 — comment period ended 31 July 2015

Summary

The PCAOB issued a staff consultation paper seeking input on whether it should update its rules on the auditor’s use of the work of specialists. The paper seeks comment on whether the PCAOB should develop a new standard, amend existing standards or take other steps to address inspection findings, practice issues and changes in accounting standards.

The paper notes that the use of specialists by both companies and auditors has grown in recent years, due partly to the increasing complexity of business transactions.

Other resources • Comment letter (SCORE No. EE1003)

Other PCAOB

26 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Issued this quarter

Proposed Statement on Auditing Standards, Amendment to Statement on Auditing Standards No. 122 Section 700, Forming an Opinion and Reporting on Financial Statements

Date issued: 14 August 2015 — comment period ended 30 September 2015

Summary The proposed amendment clarifies that when an auditor conducts an audit in accordance with the standards of the PCAOB and the audit is not within the jurisdiction of the PCAOB, the AICPA Code of Professional Conduct requires the auditor to also comply with GAAS in the conduct of the audit. In such situations, when the auditor plans to refer to the standards of the PCAOB in addition to GAAS in the auditor’s report, the auditor is required to use the report layout and wording specified by the auditing standards of the PCAOB, amended to indicate that the audit was also conducted in accordance with GAAS.

This situation may arise in audits of clearing agencies and futures commission merchants registered with the Commodities Futures Trading Commission (CFTC) or if a non-issuer company wants or is required by contractual agreement to obtain an audit in accordance with the standards of the PCAOB.

Effective date The proposed amendments would be effective for audits of financial statements for periods ending on or after 15 December 2015.

Other resources • Comment letter (SCORE No. EE1009)

Proposals previously issued • Proposed Statement on Standards for Attestation Engagements, Reporting on an Examination of

Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting: Clarification and Recodification

• Date issued: 18 September 2014 — comment period ended 18 December 2014

• Proposed Statement on Auditing Standards, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements

• Date issued: 10 September 2014 — comment period ended 10 December 2014

• Proposed Statement on Standards for Attestation Engagements: Subject-Matter Specific Attestation Standards — Clarification and Recodification

• Date issued: 28 January 2014 — comment period ended 27 May 2014

Auditing Standards Board

ASB exposure drafts

27

• Proposed Statement on Standards for Attestation Engagements, Attestation Standards: Clarification and Recodification

• Date issued: 24 July 2013 — comment period ended 24 October 2013

Other resources • 2014 Standard Setter Update (SCORE No. BB2918)

• Comment letter (SCORE No. EE0975)

28 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

GASB Statement No. 77, Tax Abatement Disclosures Date issued: 14 August 2015 Summary The guidance requires governments to disclose information about their own tax abatements, including the purpose of the tax abatement program, the tax being abated, provisions for recapturing abated taxes, the types of commitments made by tax abatement recipients and other commitments made by a government in tax abatement agreements, such as to build infrastructure assets.

Separate disclosures about tax abatements entered into by other governments that reduce the reporting government's tax revenue also are required. These include: the name of the government entering into the abatement agreement, the tax being abated and the dollar amount of the reporting government’s taxes abated.

Effective date and transition The statement is effective for financial statements for periods beginning after 15 December 2015. Earlier application is encouraged.

Governmental Accounting Standards Board

Final GASB guidance

29

Issued this quarter

Implementation Guide No. 20XX-X, Implementation Guidance Update — 20XX

Date issued: 30 September 2015 — comment period ends 30 November 2015

Summary The proposed implementation guide would focus on questions raised about the GASB’s new standards on pensions, retiree healthcare benefits and fair value reporting and also address practice issues on other topics brought to the GASB’s attention.

Effective date and transition The proposed implementation guide would be effective for reporting periods beginning after 15 June 2016. Earlier application is permitted.

Other proposals previously issued • Accounting and Financial Reporting for Certain External Investment Pools

• Date issued: 30 June 2015 — comment period ended 31 August 2015

• Blending Requirements for Certain Component Units, an amendment of GASB Statement No. 14

• Date issued: 30 June 2015 — comment period ends 2 October 2015

• Accounting and Financial Reporting for Irrevocable Split-Interest Agreements

• Date issued: 12 June 2015 — comment period ended 18 September 2015

Other resources • 2014 Standard setter update (SCORE No. BB2918)

GASB exposure drafts

30 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Implementation Guide No. 2015-1

Date issued: 27 August 2015

Summary In connection with the issuance of Statement 76, the GASB approved this implementation guide, which covers all implementation guidance issued to date. Upon implementation of Statement 76, the Implementation Guide will become Category B GAAP.

Effective date and transition The implementation guide is effective for reporting periods beginning after 15 June 2015. Earlier application is permitted.

Preliminary views previously issued • Preliminary Views, Financial Reporting for Fiduciary Responsibilities

• Date issued: 20 November 2014 — comment period ended 6 March 2015

• Preliminary Views, Leases

• Date issued: 20 November 2014 — comment period ended 6 March 2015

Other GASB

31

Note: Early adoption generally is permitted unless otherwise noted.

Effective in 2015 for public(2) calendar year-end entities(3) ASU 2015-15 Interest — Imputation of Interest (Subtopic 835-

30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update)

Effective upon announcement (18 June 2015).(4)

ASU 2015-13 Derivatives and Hedging (Topic 815), Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets

Effective upon issuance (10 August 2015).

ASU 2015-10 Technical Corrections and Improvements Effective upon issuance (12 June 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance: Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2015-08 Business Combinations (Topic 805), Pushdown Accounting — Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (SEC Update)

Effective upon issuance of SAB 115 (18 November 2014).(4)

ASU 2014-14 Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40), Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2014.

ASU 2014-11 Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

Effective for the first interim or annual period beginning after 15 December 2014. Earlier application is prohibited. Disclosures for transactions accounted for as secured borrowings: Effective for annual periods beginning after 15 December 2014, and for interim periods beginning after 15 March 2015.

ASU 2014-10 Development Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation

Amendments to ASC 915: Effective for annual reporting periods beginning after 15 December 2014, and interim periods therein. Amendments to ASC 810: Effective for annual reporting periods beginning after 15 December 2015, and interim periods therein.

ASU 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

Effective for annual periods beginning on or after 15 December 2014, and interim periods within those years.

ASU 2014-05 Service Concession Arrangements (Topic 853) Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2014.

2 Refer to each ASU to determine which types of entities (e.g., public business entities, not-for-profits, employee benefit plans) are subject to these effective dates. 3 The JOBS Act allows emerging growth companies to follow private company effective dates for new or revised accounting standards issued after 5 April 2012.

However, an emerging growth company must follow public company effective dates for all such standards if it has disclosed an election to do so. 4 This ASU adds or amends SEC paragraphs in the Codification that describe SEC guidance or SEC staff views that the FASB includes as a convenience to

Codification users.

Effective date matrices

Effective date matrix — final FASB pronouncements

32 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective in 2015 for public(2) calendar year-end entities(3) ASU 2014-04 Receivables — Troubled Debt Restructurings by

Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2014.

ASU 2014-01 Investments — Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects

Effective for annual periods, and interim reporting periods within those annual periods, beginning after 15 December 2014.

ASU 2013-06 Not-for-Profit Entities (Topic 958), Services Received from Personnel of an Affiliate

Effective for fiscal years beginning after 15 June 2014, and interim and annual periods thereafter.

Effective after 2015 for public(2) calendar year-end entities(3) ASU 2015-16 Business Combinations (Topic 805), Simplifying

the Accounting for Measurement-Period Adjustments

Effective for fiscal years, including interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2015-12 Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Effective for fiscal years beginning after 15 December 2015.

ASU 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory

Effective for fiscal years beginning after 15 December 2016, including interim periods within those fiscal years.

ASU 2015-09 Financial Services — Insurance (Topic 944), Disclosures about Short-Duration Contracts

Effective for annual periods beginning after 15 December 2015, and interim periods within annual periods beginning after 15 December 2016.

ASU 2015-07 Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-06 Earnings Per Share (Topic 260), Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-05 Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

Effective for annual periods, including interim periods within those annual periods, beginning after 15 December 2015.

ASU 2015-04 Compensation — Retirement Benefits (Topic 715), Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-03 Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs

Effective for fiscal years beginning after 15 December 2015, and interim periods within those fiscal years.

ASU 2015-02 Consolidation (Topic 810), Amendments to the Consolidation Analysis

Effective for fiscal years, and for interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2015-01 Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

33

Effective after 2015 for public(2) calendar year-end entities(3) ASU 2014-16 Derivatives and Hedging (Topic 815),

Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-15 Presentation of Financial Statements — Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

Effective for annual periods ending after 15 December 2016, and interim periods within annual periods beginning after 15 December 2016.

ASU 2014-13 Consolidation (Topic 810), Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

Effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2015.

ASU 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Effective for annual periods and interim periods within those annual periods, beginning after 15 December 2015.

ASU 2014-09 Revenue from Contracts with Customers (Topic 606)

Effective for annual reporting periods beginning after 15 December 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after 15 December 2016, including interim reporting periods within that reporting period.(5)

Effective prior to 2015 for public(2) calendar year-end entities(3) ASU 2014-17 Business Combinations (Topic 805), Pushdown

Accounting Effective upon issuance (18 November 2014). After the effective date, an acquired entity may elect to apply the guidance to future change-in-control events or to its most recent change-in-control event.

ASU 2014-06 Technical Corrections and Improvements Related to Glossary Terms

Effective upon issuance (14 March 2014).

ASU 2013-12 Definition of a Public Business Entity — An Addition to the Master Glossary

The term “public business entity” is being used to consider the scope of new guidance beginning in 2014.

ASU 2013-11 Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2013.

ASU 2013-08 Financial Services — Investment Companies (Topic 946), Amendments to the Scope, Measurement, and Disclosure Requirements

Effective for an entity’s interim and annual reporting periods in fiscal years that begin after 15 December 2013. Earlier application is prohibited.

ASU 2013-07 Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting

Effective for an entity that determines liquidation is imminent during annual reporting periods beginning after 15 December 2013, and interim reporting periods therein.

ASU 2013-05 Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2013.

5 ASU 2015-14. Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, provides a one-year deferral of the effective date for the

new revenue standard for public and nonpublic entities reporting under US GAAP.

34 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective prior to 2015 for public(2) calendar year-end entities(3) ASU 2013-04 Liabilities (Topic 405), Obligations Resulting

from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2013.

ASU 2012-05 Statement of Cash Flows (Topic 230), Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows

Effective for fiscal years, and interim periods within those years, beginning after 15 June 2013.

ASU 2011-06 Other Expenses (Topic 720), Fees Paid to the Federal Government by Health Insurers

Effective for calendar years beginning after 31 December 2013.

Effective in 2015 for nonpublic(6) calendar year-end entities ASU 2015-13 Derivatives and Hedging (Topic 815),

Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets

Effective upon issuance (10 August 2015).

ASU 2015-10 Technical Corrections and Improvements Effective upon issuance (12 June 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance: Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-14 Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40), Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

Effective for annual periods ending after 15 December 2015, and interim periods beginning after 15 December 2015.

ASU 2014-11 Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

Effective for annual periods beginning after 15 December 2014, and interim periods beginning after 15 December 2015. Application prior to the effective date for public business entities is prohibited.

ASU 2014-10 Development Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation

Amendments to ASC 915: Effective for annual reporting periods beginning after 15 December 2014, and for interim reporting periods beginning after 15 December 2015. Amendments to ASC 810: Effective for annual reporting periods beginning after 15 December 2016, and for interim reporting periods beginning after 15 December 2017.

ASU 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

Effective for annual periods beginning on or after 15 December 2014, and interim periods within annual periods beginning on or after 15 December 2015.

ASU 2014-07 Consolidation (Topic 810), Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-05 Service Concession Arrangements (Topic 853) Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

6 Refer to each ASU to determine which types of entities (e.g., private companies, not-for-profits, employee benefit plans) are subject to these effective dates.

35

Effective in 2015 for nonpublic(6) calendar year-end entities ASU 2014-04 Receivables — Troubled Debt Restructurings by

Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-03 Derivatives and Hedging (Topic 815), Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps — Simplified Hedge Accounting Approach

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-02 Intangibles — Goodwill and Other (Topic 350), Accounting for Goodwill

Effective for goodwill existing as of the beginning of the period of adoption and new goodwill recognized in annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2014-01 Investments — Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects

Effective for annual periods beginning after 15 December 2014, and interim periods within annual periods beginning after 15 December 2015.

ASU 2013-11 Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

Effective for fiscal years, and interim periods within those years, beginning after 15 December 2014.

ASU 2013-06 Not-for-Profit Entities (Topic 958), Services Received from Personnel of an Affiliate

Effective for fiscal years beginning after 15 June 2014, and interim and annual periods thereafter.

ASU 2013-05 Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

Effective for fiscal years beginning after 15 December 2014, and interim and annual periods thereafter.

Effective after 2015 for nonpublic(6) calendar year-end entities ASU 2015-16 Business Combinations (Topic 805), Simplifying

the Accounting for Measurement-Period Adjustments

Effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017.

ASU 2015-12 Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Effective for fiscal years beginning after 15 December 2015.

ASU 2015-11 Inventory (Topic 330), Simplifying the Measurement of Inventory

Effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017.

ASU 2015-09 Financial Services — Insurance (Topic 944), Disclosures about Short-Duration Contracts

Effective for annual periods beginning after 15 December 2016, and interim periods within annual periods beginning after 15 December 2017.

ASU 2015-07 Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

Effective for fiscal years beginning after 15 December 2016, and interim periods within those fiscal years.

ASU 2015-05 Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

Effective for annual periods beginning after 15 December 2015, and interim periods in annual periods beginning after 15 December 2016.

36 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Effective after 2015 for nonpublic(6) calendar year-end entities ASU 2015-04 Compensation — Retirement Benefits (Topic

715), Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

Effective for fiscal years beginning after 15 December 2016, and interim periods within fiscal years beginning after 15 December 2017.

ASU 2015-03 Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs

Effective for fiscal years beginning after 15 December 2015, and interim periods within fiscal years beginning after 15 December 2016.

ASU 2015-02 Consolidation (Topic 810), Amendments to the Consolidation Analysis

Effective for fiscal years beginning after 15 December 2016, and for interim periods within fiscal years beginning after 15 December 2017.

ASU 2015-01 Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Effective for fiscal years, and interim periods within those fiscal years, beginning after 15 December 2015.

ASU 2014-18 Business Combinations (Topic 805), Accounting for Identifiable Intangible Assets in a Business Combination

If the first qualifying transaction occurs in the first fiscal year beginning after 15 December 2015, effective for that fiscal year’s annual financial reporting and for interim and annual periods thereafter. If the first qualifying transaction occurs in a fiscal year beginning after 15 December 2016, effective for the interim period that includes the date of the transaction and for interim and annual periods thereafter.

ASU 2014-16 Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity

Effective for fiscal years beginning after 15 December 2015, and interim periods within fiscal years beginning after 15 December 2016.

ASU 2014-15 Presentation of Financial Statements — Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

Effective for annual periods ending after 15 December 2016, and interim periods within annual periods beginning after 15 December 2016.

ASU 2014-13 Consolidation (Topic 810), Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

Effective for annual periods ending after 15 December 2016, and interim periods beginning after 15 December 2016.

ASU 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Effective for annual periods and interim periods within those annual periods, beginning after 15 December 2015.

ASU 2014-09 Revenue from Contracts with Customers (Topic 606)

Effective for annual reporting periods beginning after 15 December 2018, and interim reporting periods within annual reporting periods beginning after 15 December 2019. Application prior to the original effective date for public entities is prohibited.(5)

Effective prior to 2015 for nonpublic(6) calendar year-end entities ASU 2014-17 Business Combinations (Topic 805), Pushdown

Accounting Effective upon issuance (18 November 2014). After the effective date, an acquired entity may elect to apply the guidance to future change-in-control events or to its most recent change-in-control event.

ASU 2014-06 Technical Corrections and Improvements Related to Glossary Terms

Effective upon issuance (14 March 2014).

ASU 2013-12 Definition of a Public Business Entity — An Addition to the Master Glossary

The term “public business entity” is being used to consider the scope of new guidance beginning in 2014.

ASU 2013-08 Financial Services — Investment Companies (Topic 946), Amendments to the Scope, Measurement, and Disclosure Requirements

Effective for an entity’s interim and annual reporting periods in fiscal years that begin after 15 December 2013. Earlier application is prohibited.

37

Effective prior to 2015 for nonpublic(6) calendar year-end entities ASU 2013-07 Presentation of Financial Statements (Topic 205),

Liquidation Basis of Accounting Effective for an entity that determines liquidation is imminent during annual reporting periods beginning after 15 December 2013, and interim reporting periods therein.

ASU 2013-04 Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date

Effective for fiscal years ending after 15 December 2014, and interim and annual periods thereafter.

ASU 2013-02 Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

Effective for fiscal years beginning after 15 December 2013, and interim and annual periods thereafter.

ASU 2012-05 Statement of Cash Flows (Topic 230), Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows

Effective for fiscal years, and interim periods within those years, beginning after 15 June 2013.

ASU 2012-04 Technical Corrections and Improvements Effective upon issuance (1 October 2012) for amendments that do not have transition guidance. Amendments that are subject to transition guidance: effective for fiscal periods beginning after 15 December 2013.

ASU 2012-01 Health Care Entities (Topic 954), Continuing Care Retirement Communities — Refundable Advance Fees

Effective for fiscal periods beginning after 15 December 2013.

ASU 2011-06 Other Expenses (Topic 720), Fees Paid to the Federal Government by Health Insurers

Effective for calendar years beginning after 31 December 2013.

38 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Title Effective date Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Funds

The amendments are effective 26 October 2015. The compliance date is 14 October 2016.

Pay Ratio Disclosure The rule is effective 19 October 2015. Registrants will be required to make pay ratio disclosures for their first fiscal year beginning on or after 1 January 2017.

Amendments for Small and Additional Issues Exemptions Under Section 3(b) of the Securities Act (‘Regulation A+’)

19 June 2015.

Credit Risk Retention The new rules are effective 24 December 2015 for residential mortgage-backed securitizations and 24 December 2016 for all other securitizations.

Asset-Backed Securities Disclosure and Registration 24 November 2014. Nationally Recognized Statistical Rating Organizations Certain amendments related to NRSRO were effective as early as

14 November 2014, and others were effective 15 June 2015. The reporting requirements related to ABS third-party due diligence reports were effective 15 June 2015. The first annual report on internal controls from NRSROs is due no later than 90 days after their fiscal year ending on or after 1 January 2015.

Money Market Fund Reform; Amendments to Form PF The rule was effective 14 October 2014. The compliance date for amendments related to fees, gates and the floating NAV is 14 October 2016. The compliance date for disclosures of significant events on a fund’s website and on new Form N-CR was 14 July 2015. The compliance date for diversification, stress testing and disclosure requirements is 14 April 2016.

Treatment of Certain Collateralized Debt Obligations Backed Primarily by Trust Preferred Securities with Regard to Prohibitions and Restrictions on Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds

1 April 2014.

Removal of Certain References to Credit Ratings Under the Securities Exchange Act of 1934

7 July 2014.

Removal of Certain References to Credit Ratings Under the Investment Company Act

7 February 2014; compliance with the new rules was required by 7 July 2014.

Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds

21July 2015, but the Federal Reserve Board gave banking entities a one-year extension (i.e., to 21 July 2016) to conform their ownership interests in and sponsorship of certain covered funds including collateralized loan obligations. The Federal Reserve Board also announced its intention to grant banking entities an additional one-year extension (i.e., to 21 July 2017) for the same covered funds next year. In the meantime, banks with significant trading operations will have to report certain quantitative information in phases, based on the size of the entity, with the largest banks reporting by 30 June 2014 and others reporting by 30 April 2016 or 31 December 2016, depending on the size of the bank’s consolidated trading assets and liabilities.

Broker-dealer reports The Form Custody reporting requirements for broker-dealers were effective for the quarter ended 31 December 2013. The requirement for broker-dealers to file either a compliance report or an exemption report was effective 1 June 2014.

Conflict minerals Issuers are required to file Form SD for each calendar year; the initial report for 2013 was due 2 June 2014 and the report for 2014 was due 1 June 2015.

Listing standards for compensation committees The proxy disclosure requirements were effective for shareholder meetings after 1 January 2013 at which directors are elected. The NYSE and NASDAQ rule changes have tiered effective dates between 1 July 2013 and 31 October 2014.

Effective date matrix — final SEC pronouncements and interpretive releases

39

Title Effective date Auditing Standard No. 18, Related Parties and Amendments to Certain PCAOB Auditing Standards Regarding Significant Unusual Transactions and Other Amendments to PCAOB Auditing Standards

Effective for audits of financial statements for fiscal years beginning on or after 15 December 2014, including reviews of interim financial information within these fiscal years.

Amendments to Conform the Board’s Rules and Forms to the Dodd-Frank Act and Make Certain Updates and Clarifications

The amendments to Forms 1, 1-WD, 3 and 4 will take effect on 1 July 2014. The amendments to Form 2 will take effect 1 April 2015.

Auditing Standard No. 17, Auditing Supplemental Information Accompanying Audited Financial Statements

Effective for reports on supplemental information that accompanies financial statements for fiscal years ending on or after 1 June 2014.

Attestation Standard No. 1, Examination Engagements Regarding Compliance Reports of Brokers and Dealers

Effective for examination engagements of fiscal years ending on or after 1 June 2014.

Attestation Standard No. 2, Review Engagements Regarding Exemption Reports of Brokers and Dealers

Effective for review engagements of fiscal years ending on or after 1 June 2014.

Auditing Standard No. 16, Communications with Audit Committees

Effective for audits of financial statements for fiscal years beginning on or after 15 December 2012.

Effective date matrix — final PCAOB pronouncements and rules

40 Third Quarter 2015 Standard Setter Update Financial reporting and accounting developments

Title Effective date SAS No. 129, Amendment to Statement on Auditing Standards No. 122 Section 920, Letters for Underwriters and Certain Other Requesting Parties, as Amended

Effective for comfort letters issued on or after 15 December 2014.

SAS No. 128, Using the Work of Internal Auditors Effective for audits of financial statements for periods ending on or after 15 December 2014.

SSARS No. 21, Statements on Standards for Accounting and Review Services: Clarification and Recodification

Effective for reviews, compilations and engagements to prepare financial statements for periods ending on or after 15 December 2015.

Effective date matrix — final ASB standards

41

Title Effective date Statement No. 77, Tax Abatement Disclosures Effective for financial statements for periods beginning after 15 December

2015. Earlier application is encouraged. Statement No. 76, the Hierarchy of Generally Accepted Accounting Principles for State and Local Governments

Effective for financial statements for periods beginning after 15 June 2015. Earlier application is permitted.

Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions

Effective for fiscal years beginning after 15 June 2017. Earlier application is encouraged.

Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans

Effective for financial statements for fiscal years beginning after 15 June 2016. Earlier application is encouraged.

Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68

Effective for financial statements for fiscal years beginning after 15 June 2016: requirements that address accounting and financial reporting by employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68. Effective for fiscal years beginning after 15 June 2015: requirements that address financial reporting for assets accumulated for purposes of providing those pensions. Effective for fiscal years beginning after 15 June 2015: requirements that amend Statements 67 and 68. Earlier application is encouraged.

Statement No. 72, Fair Value Measurement and Application

Effective for financial statements for reporting periods beginning after 15 June 2015. Earlier application is encouraged.

Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — an amendment of GASB Statement No. 68

Effective simultaneously with the provisions of Statement 68, for fiscal years beginning after 15 June 2014. Earlier application is encouraged.

Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees

Effective for financial statements for periods beginning after 15 June 2013. Earlier application is encouraged.

Statement No. 69, Government Combinations and Disposals of Government Operations

Effective for financial statements for periods beginning after 15 December 2013 with application on a prospective basis. Earlier application is encouraged.

Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27

Effective for financial statements for fiscal years beginning after 15 June 2014. Earlier application is encouraged.

Statement No. 67, Financial Reporting for Pension Plans — an amendment of GASB Statement No. 25

Effective for financial statements for fiscal years beginning after 15 June 2013. Earlier application is encouraged.

Effective date matrix — final GASB pronouncements

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