Oil and Gas Companies May Receive Relief from Lease Standard
FASB wants to give utilities and oil-and-gas companies some relief when they switch to the board’s new lease standard. The board has unanimously agreed to float a proposal exempting companies with land easements from having to review their existing contracts to determine if they are covered by the requirements of Accounting Standards Update (ASU) 2016-02, Leases. “The type of easement that is going to fall into the bucket of a lease is a pretty narrow subset,” FASB member Christine Botosan said, “so I just can’t see making these companies go through a haystack to find the needles.” The board plans to issue the proposal with a 30-day comment period and wrap up the issue as quickly as possible, because the lease standard becomes effective for public companies in 2019.
Revenue Recognition Implementation Guidance Released for Four Industries
On July 3, the AICPA’s Financial Reporting Executive Committee (FinREC) issued four working drafts of interpretive guidance for the FASB’s revenue recognition standard for the airline, casino and gaming, healthcare, and telecommunications industries. FASB published the revenue standard in May 2014 as Accounting Standards Update (ASU) 2014-09, Revenue From Contracts With Customers, at the same time as the IASB published IFRS 15, Revenue From Contracts With Customers. The standards are the result of 12 years of work by the accounting boards to come up with a single method for all companies worldwide to calculate the top line in their income statements. The standards scrap about 180 pieces of specific financial reporting requirements in U.S. GAAP and add more substance to the revenue guidance in IFRS. The standards also establish a principles-based approach to recognizing revenue, which has been a cultural shift for U.S. companies used to many rules written for specific industries. The standards go into effect for public companies in 2018.
Members Sought for Capital Markets Advisory Committee
The IASB is seeking members for its Capital Markets Advisory Committee (CMAC), a panel that meets with the accounting board three times a year to discuss standards setting. The members mostly work in investment banking and asset management and have a background using financial statements in investment decisions. Members are appointed to three-year terms on the CMAC and can be reappointed once. The panel is currently chaired by Peter Joos, who teaches at the Insead Business School in Singapore, and Marietta Miemitz, a financial analyst focused on pharmaceuticals and health care with Primavenue Advisory Services in London.