SEC Disclosure Rules to Be Pulled Into GAAP
As part of a broader effort to simplify compliance without significantly altering the total mix of information, FASB is moving a variety of SEC disclosure rules into U.S. GAAP. The board voted on March 6 to issue a proposal about the effects of incorporating into GAAP a variety of disclosures that originate in either Regulation S-X or Regulation S-K of the SEC’s rules and regulations. Companies will have a 45-day period to comment on the changes, according to board discussions. The disclosures being added to GAAP will be subject to audit in the financial statements. “If we say ‘no,’ that doesn’t mean that this information is no longer available,” board member Marsha Hunt said. “It just means that the SEC will then take a look at its rules, and then to the extent that we’re incorporating something in the codification, they’ll be evaluating whether they need to modify their rules or their rule is still good where it is,” Hunt said.
Accounting Rule Updated for Episodic Television Series
FASB has published a final update to U.S. GAAP that aligns the accounting for the costs to make films with the accounting for the costs to make television shows and other episodic content. The accounting update better reflects today’s entertainment industry with streaming services like Netflix and Hulu that use a subscription model to generate revenue. “Stakeholders told us that the current capitalization guidance doesn’t enable organizations that use subscription-based revenue models to provide relevant information to investors,” FASB Chairman Russell Golden said in a statement. “The new standard converges the guidance for films and episodic content. This better reflects the economics of an episodic television series and improves the information provided to investors about the various types of produced and licensed content.” The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years for public companies. For all other entities, it is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is allowed.
Audit Practice News
IPSASB Publishes Five-Year Workplan
The International Public Sector Accounting Standards Board (IPSASB) has published a workplan that will shape the board’s work and priorities for the next five years. The board said its standards-setting priorities through 2023 include completing its projects on revenue, leases, public sector measurement, heritage, and infrastructure. In particular, the IPSASB said it will deliver on its goals by setting high-quality standards on public sector–specific issues, maintaining alignment with the IASB’s accounting standards IFRS for private sector entities, and developing guidance to meet users’ broader financial reporting needs. “Governments depend on the trust of their citizens and their national and international stakeholders in order to deliver their goals efficiently and effectively,” IPSASB Chair Ian Carruthers said in a statement. “The regular publication of high-quality, accrual-based financial reports helps strengthen public financial management and is a fundamental ingredient in maintaining that trust.”