Both the Financial Accounting Standards Board and the International Accounting Standards Board have been active recently issuing proposals.  

FASB has just issued five Accounting Standards Update proposals.  On July 1, 2013, FASB issued three proposals that ad­dress private company stakeholder concerns, comments due August 23, 2013.

Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination (a proposal of the Private Company Council);

  Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (a proposal of the Private Company Council); and

Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps (a proposal of the Private Company Council).

FASB June 26 issued ASU, Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity's Going Concern Presumption.   FASB is proffering a prescription for management's new duties in evaluating and disclosing uncertainties about whether an enterprise can continue as a going concern, shifting responsibilities from auditors to management. Comments are due by Sept. 24.

The fresh proposal represents a benchmark in the second phase of a FASB rulemaking effort on topics related to going concern. The first phase was capped in April by the release of ASU No. 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting which addresses how assets should be cashed out and liabilities cleared when liquidation is imminent.

 FASB June 27 issued a highly anticipated proposal which would fundamentally change the accounting by insurers and other entities such as banks, guarantors and service providers that issue contracts with insurance risk. Comments are due by October25, 2013. The board is seeking comments on Insurance Contracts (Topic 834), by Oct. 25, 2013.

FASB is proposing to classify insurance contracts into two measurement models. The first is the building block approach for most life, annuity, and long-term health contracts; the second is the premium allocation approach for most property, liability, and short-term health contracts.

Although no timeline has been proposed, board discussions have indicated that a final standard is not expected to be effective before 2018.

FASB’s insurance proposal follows a week after IASB issued its long-awaited June 20 revamped proposal for accounting for insurance contracts.  IASB’s re-exposure draft builds upon proposals published in 2010, and reflects the board's view that insurance contracts combine service and financial elements to varying degrees. It proposes that insurance entities should measure those elements using a methodology that combines a current assessment of the cash inflows and cash outflows that result from those elements. Some of the most prominent changes relate to addressing the concerns for earnings volatility and represent a major change for the presentation of the statement of comprehensive income.

IASB also issued an exposure draft on June 26 detailing proposals to bring bearer biological assets within the scope of IAS 16, Property, Plants and Equipment rather than IAS 41, Agriculture.Under International Financial Reporting Standards, bearer plants are a class of biological asset that, once mature, will produce a crop. Examples of BBAs are vines, or palm trees.

The board added, however, that produce “growing on the bearer plans would remain under the fair value model in IAS 41.” Interested parties have until Oct. 28, 2013, to comment on the proposals.

On June 27 Hans Hoogervorst, chairman of IASB, unveiled a ten point action plan to revamp its disclosure standards with an eventual plan to replace the existing IFRS disclosure framework.

Also June 27 IASB said it has published a series of narrow-scope amendments to International Accounting Standard 39, Financial Instruments: Recognition and Measurement. The amendments deal with the continuation of hedge accounting following the novation—in which the rights and obligations of a derivative contract are extinguished by a new substitute contract—of a derivative instrument. In a statement, the London-based standard setter said they will allow hedge accounting to continue if an entity novates a derivative to a central clearing party.

   Compiled by Laura Tieger-Salisbury, Accounting Policy and Practice Report Copy Editor