Auditing & Accounting Update

Auditing & Accounting Update

In this section, we provide brief updates on regulatory developments in auditing and accounting that may impact Japanese companies in the United States. Further discussion of the issues can be found in KPMG's Department of Professional Practice's Defining Issues.

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Revenue TRG Discussions in its November 9, 2015 meeting
On November 9, 2015, the Joint Transition Resource Group for Revenue Recognition (TRG) had discussions which may be helpful to preparers when making the critical judgment about whether additional goods and services in a revenue contract should be treated as customer options or as variable consideration.

Defining Issues 15-49 (PDF) >

FASB Sets 2019 Effective Date for New Leases Standard
At its November 11, 2015 meeting, the FASB set the effective dates of the new leases standard and decided to permit early adoption. The FASB also discussed cost-benefit considerations and a follow-up issue related to lease classification to complete its due process.

Defining Issues 15-50 (PDF) >

SEC Permits Crowdfunding and Proposes Rules for Regional Securities Offerings
On October 30, 2015, the SEC recently adopted final rules to permit companies to offer and sell securities through crowdfunding. Selling securities through crowdfunding allows startups and small businesses to raise capital from non-accredited investors, and would alleviate some of the regulatory burden that a company faces when it raises capital by selling its securities. The SEC also voted to propose rule amendments that would facilitate intrastate and regional securities offerings.

Defining Issues 15-51 (PDF) >

FASB Proposes Disclosures about Government Assistance
On November 12, 2015, the FASB issued proposed ASU, Disclosures by Business Entities about Government Assistance, which would require business entities to disclose certain types of government assistance that they receive. The ASU would exclude transactions in which the government is solely a customer and those in which an entity receives a nondiscretionary amount of assistance solely because it met legal eligibility requirements. The proposed ASU does not affect the accounting for government assistance. The Board will determine the effective date after it considers comments received about the proposal. 

Defining Issues 15-52 (PDF) >

EITF Reaches Final Consensus on Three Issues
At its November 12, 2015 meeting, the FASB's Emerging Issues Task Force (EITF) reached final consensuses about recognizing breakage for certain prepaid stored-value cards, the effect of derivative contract novations on existing hedge accounting relationships, and contingent put and call options in debt instruments. The EITF also reached a consensus-for-exposure on certain cash-flow statement issues.

Defining Issues 15-53 (PDF) >

FASB Nears Completion of Financial Instruments Standards
At its November 11, 2015 meeting, the FASB reached decisions on the financial instruments standards related to the accounting for troubled debt restructurings, impairment of available-for-sale debt securities, and the effective dates for the impairment and classification and measurement standards.

Defining Issues 15-54 (PDF) >

FASB Changes Balance Sheet Classification of Deferred Taxes
On November 20, 2015, as part of its simplification initiative, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent.

Defining Issues 15-55 (PDF) >

FASB Proposes to Clarify the Definition of a Business
On November 23, 2015, the FASB issued proposed ASU, Clarifying the Definition of a Business, which proposes a new framework for determining whether a set of assets and activities is a business. An entity would apply the proposed, narrower definition prospectively to transactions that occur on or after the effective date. The Board will determine the effective date after it considers comments received about the proposal.

Defining Issues 15-56 (PDF) >

SEC May Consider Supplementary Reporting under IFRS in 2016
Nearly six years after the SEC last made a formal statement about achieving a single set of high-quality, global accounting standards, it will consider a staff recommendation about how to further incorporate IFRS into the U.S. financial reporting system. This may lead to a proposed rule in the first half of 2016.

Defining Issues 15-57 (PDF) >

FASB and IASB Reaffirm Amendments to Principal-Agent Guidance in Revenue Standard
The FASB and the IASB met on December 16 and redeliberated their proposed amendments to the principal versus agent guidance in their respective revenue recognition standards. The Boards instructed their staffs to draft final standards to incorporate the proposed amendments with only minor changes, and expect to issue those standards in the first quarter of 2016.

Defining Issues 15-58 (PDF) >

FAST Act Legislation Impacts SEC Filing Requirements
The Fixing America's Surface Transportation (FAST) Act finalized on December 4, 2015 requires, among other things, the SEC to amend its rules and regulations to make it easier for emerging growth companies to conduct initial public offerings and to modernize and simplify the disclosure requirements of Regulation S-K.

Defining Issues 15-59 (PDF) >

FASB Changes Accounting for Equity Investments and Financial Liabilities
On January 5, 2016, the FASB issued a new accounting standard, ASU No. 2016-1, Recognition and Measurement of Financial Assets and Liablities, that will significantly change the income statement effect of equity investments held by an entity, and the recognition of changes in fair value of financial liabilities when the fair value option is elected.

For financial statements that have not yet been issued, certain entities may immediately adopt two provisions of the standard:

  • Entities may early adopt the provisions related to the recognition of changes in fair value of financial liabilities for which the fair value option has been elected; and
  • Entities that are not public business entities may early adopt the provisions of the standard that eliminate certain previously required fair value disclosures.

Defining Issues 16-1 (PDF) >

SEC Proposes Rules for Extractive Industry Payments
On January 21, 2016, the SEC proposed rules that would require resource extraction issuers to disclose certain payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas, or minerals.

Defining Issues 16-2 (PDF) >


For more information, please contact:

Michael Maekawa | 213-955-8331 |

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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