The Financial Accounting Standards Board


Aug 31: The Financial Accounting Standards Board decided to make a small delay in releasing the latest clarifications to the 2014 revenue recognition rule while they resolved some issues concerning   enhanced disclosures about the existence of partially completed contracts expected to produce future revenue. After the board resolves other disclosure topics, the board will moves to finalize a long list of relatively minor technical corrections and improvements.


Aug. 31: FASB said that the forthcoming proposal would revise accounting rules for long-term insurance contracts in areas like assumption updates, amortization of deferred acquisition costs (DAC), market risk benefits and disclosures.

Potential accounting rules on life insurance contracts would likely affect such companies as Northwestern Mutual, New York Life Insurance Co., and others in the industry.  


Aug. 31: FASB decided to pursue a relatively narrowly-drawn issue on changes to share-based payment awards. The board also voted to start an effort on accounting for service concession agreements. Regarding modifications of stock awards, FASB plans to clarify what would be subject to what is known as modification accounting in Accounting Standards Codification 718, on stock compensation. A rule change by the board earlier this year, concerning thresholds for an employer's withholding and statutory tax rates, spurred the rulemaking.


Sept.1: FASB proposed the 2017 GAAP Financial Reporting Taxonomy. Public issuers, software vendors, service providers and others can now weigh in about proposed updates.

The proposed 2017 taxonomy reflects new accounting guidance, common reporting practices, improvements and recommendations from the banking, financial services and insurance industries, according to the “release notes” version of the taxonomy. FASB is requesting comments by Oct.31, 2016.

The Securities and Exchange Commission


Aug. 30: The Securities and Exchange Commission awarded $22 million, its second-largest payout ever, to a former Monsanto Co. employee who tipped the regulator off to improper accounting. The SEC said Monsanto booked revenue without properly recognizing all of its costs.

The seedmaker agreed in February to pay $80 million to settle a case with the regulator over revenue tied to its weed-killer, Roundup. The Monsanto whistle-blower was a financial executive, according to Stuart Meissner, the ex-employee’s attorney. Meissner didn’t identify the tipster by name in a statement released Aug.30.


Aug.31: Two former executives of a now failed water-treatment concern, Basin Water Inc. are back on the hook in a SEC enforcement action over their alleged roles in a fraudulent revenue recognition scheme.

The U.S. Court of Appeals for the Ninth Circuit said that a rule requiring top executives to certify the accuracy of the company's financial statements allows the SEC to sue officials who sign off on false or misleading statements’—not just executives who don't file the required certifications.

Judge Richard Clifton also held that executives of companies that restate their financials may be required to disgorge/ return compensation under Section 304 of the Sarbanes Oxley Act, even if they weren't directly involved in the misconduct that prompted the restatement.

Governmental Accounting Standards Board


Aug. 29: The Governmental Accounting Standards Board’s proposal would allow state and local governments to use any source of funds to retire debt before it matures provided the funds are unencumbered from any other claims under a GASB proposal for extinguishing debt using only existing resources. The proposal applies to resources placed into a trust for the purpose of defeasance, a process for voiding a bond or loan when sufficient assets are set aside to service it.  Comments are requested by Oct. 28.



Aug. 29: The Ministry of Finance of the People's Republic of China has assumed a seat on the International Financial Reporting Standards Foundation Monitoring Board that oversees the operations of the International Accounting Standards Board and IASB's parent foundation.


Sept.1:The Russian Finance Ministry announced that IFRS 15, Revenue from Contracts with Customers, was approved for implementation in Russia.  IFRS 15 will apply to annual reporting periods beginning on or after 1 January 2018. This continues the Finance Ministry’s adoption of IFRS standards for the last few years.




Aug. 30: The latest batch of 38 Public Company Accounting Oversight Board inspection reports included three expanded reports on firms that didn't fix the quality control problems identified in their audit procedures within the year allowed by PCAOB rules.

The uncorrected quality-control deficiencies found in the expanded reports included failure to evaluate the business relationship transactions between the issuer and a major client; inappropriate reliance on another auditor's work; insufficient procedures to test revenue; and unqualified engagement quality reviewers.



Aug. 31:  The U.K. Financial Reporting Council fined PricewaterhouseCoopers LLP 2.3 million pound ($3 million) to settle an auditing disciplinary case involving a subprime lender.

FRC said PwC would contribute 750,000 pounds for the council's costs in the case in which PwC and former audit engagement partner Simon Bradburn issued unqualified audit opinions for the 2007 financial statements of U.K.-based Cattles plc and Welcome Financial Services Ltd.

Cattles specialized in non-standard, or subprime, lending and at the time of the audit was a member of the FTSE 250.

Welcome, which provided secured and unsecured loans to non-standard customers, had more than 500,000 customers at the end of 2007, FRC's 55-page particulars of fact and acts of misconduct document said.

Aug. 31: The U.K’s FRC closed an investigation into Tesco Plc's former Chief Financial Officer, Laurie McIlwee, saying there wasn't a “realistic prospect” that misconduct would be found in the case. It is still investigating the grocer's auditor, PricewaterhouseCoopers LLP, and other individuals involved in Tesco's accounts.


Composed and Compiled by Laura Tieger Salisbury, Accounting Policy and Practice reporter and editor


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