On March 20, 2013 the Financial Accounting Standards Board voted to revise its earlier decision on an effective date for public companies applying a revenue recognition accounting standard under US. generally accepted accounting principles, revising its earlier converged February decision with the International Accounting Standards Board that the standard be effective Jan. 1, 2017. The boards have been working together on revenue recognition since 2008. FASB decided March 20 that entities would be required to apply the standard to annual reporting periods beginning after Dec. 15, 2016, including interim periods therein.  FASB chairman Leslie Seidman said the reason for changing the effective date of Jan. 1, 2017 is to prevent companies with a year-end that falls just prior to Dec. 31, 2016 arbitrarily having an extra year for implementation.

On March 21, 2013, IASB voted to allow entities to adopt the forthcoming revenue recognition standard early, a reversal of IASB/FASB’s February tentative decision to prohibit early application. IASB Chairman Hans Hoogervorst attributed part of his decision- making to urgent requests for reconsideration from the Asian –Oceanian Standards- Setters Group.

In other significant meeting discussions on March 13, 2013, FASB voted to move ahead with drafting a pre-ballot document towards finalizing guidance for assessing whether an entity is an investment company. Before that the FASB members agreed to finish the criteria for the main accounting provisions of a proposed ASU, Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, issued October 2011.

FASB also tentatively decided March 13, 2013, in an effort to improve U.S. reporting of discontinued operations, to diverge from the definition of “discontinued operation” found in International Financial Reporting Standard 5, “for cash –generating unit,” and instead use the existing definition of “component of an entity” in U.S. generally accepted accounting principles. FASB is aiming for a late March draft Accounting Standard Update. The International Accounting Standards Board is no longer actively working on the discontinued operations project, one of the 2008 joint IASB/FASB convergence projects.

The Financial Accounting Foundation, parent organization of the FASB and the Governmental Accounting Standards Board announced March 12, 2013, that it had hired Jeffrey Rubin as its strategic and legal adviser. 

The Accounting Standards Advisory Forum, the twelve member advisory body that will provide technical advice to the International Accounting Standards Board will hold its inaugural meeting April 8-9, 2013. IASB chairman Hans Hoogervorst agreed that the reason for the haste in having the meeting is to ensure the committee’s participation in the IASB’s conceptual framework project.  The conceptual framework is intended to assist IASB as it reviews and develops IFRS in the future. IASB is aiming to update a draft discussion paper for the April board meeting with the eventual goal of completion by September 2015.

Hoogersvorst has been very clear that ASAF requires its participants to be committed to using IFRS, and has stated this will alter the current bilateral relationships with the U.S, the Japanese and with the European Financial Reporting Advisory Group.  Nominations for positions on the advisory forum closed February 28, 2013.

The International Financial Reporting Standards Foundation announced March 19, 2013, that the U.S. Financial Accounting Standards Board had secured a seat on ASAF.  Jeffrey Diermeier, chairman of the trustees of FASB's parent group, the Financial Accounting Foundation, said:

"The FAF trustees believe that the commitments made by both the IFRS Foundation and the FAF in connection with FASB's membership on the ASAF are consistent with the trustees' view of the long-term process of converging accounting standards."

Andrew Watchman, executive director of IFRS reporting with Grant Thornton in the U.K, noted that “as the end of the formal convergence draws near, it is probably equally important for IASB establish a “new normal” for its working relationship with both FASB and other national standard setters and regional bodies.”

While the stated mission of ASAF is to develop a single set of high quality, understandable, enforceable and globally accepted financial reporting standards, the IFRS Foundation also makes a formal commitment to respect the independence of ASAF members, recognizing that ASAF’s members operate under their own specific national mandates and respective jurisdictions.

In keeping with an expansive international vision, on March 21, 2013, the trustees of the International Financial Reporting Standards Foundation announced the appointment as trustee of Dr Abdulrahman Al-Humaid.  He currently serves as chairman of the Committee for Adopting International Accounting Standards of the Saudi Organization of Certified Public Accountants and is the first trustee for the IFRSF from the Middle East.

On the auditing front, the Public Company Accounting Oversight Board March 7, 2013 released expanded versions of two inspection reports detailing previously nonpublic criticisms of audit quality controls at PricewaterhouseCoopersLLP concerning audits from 2008 and 2009. The Sarbanes-Oxley Act of 2002 requires the Board to release the findings after it has given the firm time to adequately address PCAOB’s concerns.  PCAOB also released a 2008 inspection report of Deloitte & Touche LLP after their response to the inspection reports was found lacking. 

The PCAOB report said that audit teams relied too much on “CAKE”- cumulative audit knowledge and experience- from past audits rather than using new evidence and showing more professional skepticism and independence as external auditors.

This year PCAOB will design a permanent program for inspecting the audits of brokers and dealers registered with the Securities and Exchange Commission, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Approximately 4,400 brokers and dealers filed audited financial statements with the SEC in 2011. The first report released in August 2012 revealed significant deficiencies which board member Jeanette Franzel recently described as disturbing.

Compiled by Laura Tieger Salisbury, APPR Copy Editor