Effort to Amend Income Tax Disclosure Guidance on Hold
FASB plans to wait for the outcome of tax reform legislation before moving to finalize a controversial proposal that would have required new information about companies’ income taxes in their financial statement footnotes. Under the proposal, released in July 2016 in response to analyst and investor complaints that current financial statements reveal too little information about income tax liabilities, businesses would be required to separate foreign and domestic taxes, describe enacted changes in tax law, and explain circumstances that cause a change in the assertion about the indefinite reinvestment of undistributed foreign earnings. “To ensure our proposed improvements to income tax disclosures remain relevant, FASB will await the outcome of income tax reform legislation in Congress prior to finalizing a standard,” a FASB spokesperson said.
2018 Financial Reporting Taxonomy Released for Comment
On September 5, FASB released its proposed 2018 financial reporting taxonomy, a list of computer-readable financial reporting labels coded in XBRL, for public comment. The taxonomy contains updates for accounting standards and other improvements to the official taxonomy, which is used by public companies filing with the SEC. The board also issued for the first time the Proposed 2018 Shared Reporting Taxonomy, which contains elements of the GAAP Financial Reporting Taxonomy used by companies and organizations that use IFRS for SEC-specific disclosure requirements. The idea behind the Shared Reporting Taxonomy is to eliminate the need for these filers to import the GAAP Financial Reporting Taxonomy, FASB said. FASB plans to hold a webcast explaining the changes on October 3. Comments on both proposals are due by October 31.
Five More Industries Covered in Draft Implementation Guidance for Revenue Standard
The AICPA’s Financial Reporting Executive Committee (FinREC) issued five working drafts of interpretive guidance for FASB’s revenue recognition standard. The draft implementation issues were produced by a task force assigned by the FinREC to develop guidance for the next edition of the Audit and Accounting Guide (AAG): Revenue Recognition. Working Draft: Broker-Dealer Revenue Recognition Implementation Issue #3-6: Soft-Dollar Revenue, discusses the application of ASC 606, Revenue From Contracts With Customers, to soft-dollar arrangements, which securities brokers often use to encourage pension funds, investment companies, and other large investors to route trades through them. The standard goes into effect for public companies in 2018.