assurance...During the December 2016 AICPA National Conference on Current SEC and PCAOB...

Accounting, Reporting and Assurance DevelopmentsDecember 19, 2016

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Assurance | Tax | Advisory | dhgllp.com

Q4 2016

Fourth Quarter 2016 Accounting, Reporting & Assurance Developmentsassurance

Accounting & Financial Reporting Matters ..............................................................................................4

Financial Accounting Standards Board (FASB) .......................................................................................4

U.S. Securities & Exchange Commission (SEC) ......................................................................................5

Assurance Matters .....................................................................................................................................6

American Institute of Certified Public Accountants (AICPA) ...................................................................6

Center for Audit Quality (CAQ) ................................................................................................................6

Appendix A – Effective Date Highlights for Public Business Entities ....................................................8

Appendix B – Effective Date Highlights for Private Companies ...........................................................19

Appendix C – SEC Final Rules Highlights ..............................................................................................32

Fourth Quarter 2016 Accounting, Reporting & Assurance Developments

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fourth quarter 2016 accounting & assurance update The developments included in this Accounting and Assurance (A&A) Update are intended to be a reminder of recently

issued accounting and auditing standards and other guidance that may affect our clients in the current reporting period.

This quarterly A&A Update is intended as general information and should not be relied upon as being definitive or all-

inclusive. Throughout the document we have also referenced other DHG A&A Updates and external publications, as

applicable. This quarterly A&A Update is intended as general information and should not be relied upon as being definitive

or all-inclusive. Recent quarterly A&A Updates, can be found under Assurance Alerts on the DHG Resource Center.

1.704.367.7020 | dhgllp.com

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Disclaimer: This publication has been prepared by the Dixon Hughes Goodman LLP Professional Standards Group and contains information in summary form and is therefore

intended for general guidance only; it is not intended to be a substitute for detailed research or the exercise of professional judgment. You should consult with Dixon Hughes

Goodman LLP or other professional advisors familiar with your particular factual situation for advice concerning specific audit, tax or other matters before making any decision.

https://www.dhgllp.com/resources/alerts/term/102


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Accounting & Financial Reporting Matters

Financial Accounting Standards Board (FASB)The following are Accounting Standards Updates (ASUs) recently issued by the FASB. For a summary of their effective dates, refer to Appendix A for public business entities and Appendix B for private companies.

ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash

This ASU was issued to address diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. In other words, restricted cash and restricted cash equivalents should be included with the cash and cash equivalents line item when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Given this change, transfers between cash, cash equivalents, and restricted cash and cash equivalents will not be reported as cash flow activities on the statement of cash flows.

ASU 2016-18 also requires entities to disclose information about the nature of restrictions on its cash and cash equivalents, including restricted cash and cash equivalents. Further, when cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents are presented on more than one line item on an entity’s balance sheet, a reconciliation of the totals in the statement of cash flow captions to the related captions on the balance sheet is required to be presented either on the face of the statement of cash flows or in the notes to the financial statements.

The ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted.

ASU 2016-17 – Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control

ASU 2016-17 was issued to amend the consolidation guidance on how a reporting entity that is a single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control. In 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which, among other changes, required a single decision maker of a VIE to consider indirect economic interests in the entity held through related parties on a proportional basis when determining whether the reporting entity is the primary beneficiary of the VIE. However, if the single decision maker and its related parties are under common control, the single decision maker of a VIE must consider indirect interests held through related parties under common control to be the equivalent of direct interests in their entirety. In some circumstances involving common control, this requirement in ASU 2015-02 may result in a single decision maker having to consolidate a VIE even though that single decision maker has very little or no variable interests in the VIE. ASU 2016-07 amends the consolidation guidance to prevent this possible outcome.

Specifically, ASU 2016-17 requires a single decision maker to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties under common control with the reporting entity. If, after performing that assessment, a reporting entity that is the single decision maker of a VIE concludes that it does not have the characteristics of a primary beneficiary, the amendments require that reporting entity to evaluate whether it and one or more of its related parties under common control, as a group, have the characteristics of a primary beneficiary. If the single decision maker and its related parties that are under common control, as a group, have the characteristics of a primary beneficiary, then the primary beneficiary will be determined via the related party tie-breaker test (the party within the related party group that is most closely associated with the VIE is the primary beneficiary).

The ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted.

Entities that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments in this ASU at the same time they adopt the amendments in ASU 2015-02 and should apply the same transition method elected for the application of ASU 2015-02.

Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments in this Update retrospectively to all relevant prior periods, beginning with the fiscal year in which the amendments in ASU 2015- 02 initially were applied.

viewsASU 2016-18 and ASU 2016-15 (covered in the Q3 2016 A&A Update) are both intended to address diversities in practice in the statement of cash flows. Whereas ASU 2016-18 primarily addresses the treatment and disclosure of restricted cash, ASU 2016-15 addresses the classification and presentation of certain items as well as application of the predominance principle.

As mentioned in the recent AICPA SEC Conference, errors in the classification of cash flows are a leading cause of financial statement restatements.

http://www.fasb.org/cs/ContentServer?c=Page&pagename=FASB%2FPage%2FSectionPage&cid=1176156316498


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ASU 2016-16 – Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory

This ASU requires an entity to recognize the income tax consequences of an intra-entity transfer of an assets other than inventory when the transfer occurs. Under current standards, entities do not recognize the income tax consequences of such transfers until the related asset has been sold to an outside party; a rule which has been seen by many as unnecessarily complex and a source of diversity in practice.

The ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The amendments in this ASU require a modified retrospective transition, whereby a cumulative-effect adjustment is to be recorded to retained earnings as of the beginning of the period of adoption.

U.S. Securities & Exchange Commission (SEC)

Staff Accounting Bulletin No. 74 (Topic 11-M)

During the December 2016 AICPA National Conference on Current SEC and PCAOB Developments, SEC Staff discussed the importance of disclosing both quantitative and qualitative information regarding the expected impact of adopting new accounting standards (e.g., revenue recognition, leases, credit losses).

Additionally, SEC Staff reinforced comments made at the September 2016 Emerging Issues Task Force Meeting (EITF), in which they indicated that when registrants are unable to reasonably estimate the impact of adopting the new accounting standards, registrants should consider providing additional qualitative disclosures, such as:

(a) the effect of any accounting policies that the registrant expects to select upon adopting the standards;

(b) how such policies may differ from the registrant’s current accounting policies; and

(c) the status of the registrant’s implementation process and the nature of any significant implementation matters that have not yet been addressed.

Financial Reporting Manual

The SEC updated its Financial Reporting Manual to discuss issues related to the adoption of new accounting standards, in particular:

(a) If an entity files pro forma financial information in the year it adopts the new revenue recognition standard, it is not required to disclose the effect of the new standard in the pro forma income statement for the prior year.

(b) When determining the date of initial application of the new leases standard, the date would not change if a registrant is required to provide financial statements for prior periods

when issuing retrospectively revised financial statements for a registration statement filed in the year of adoption.

(c) After adoption of ASU 2015-09, Disclosure about Short-Duration Contracts, entities are not required to disclose a consolidated 10-year loss reserve development table as specified in Industry Guide 6. (ASU 2015-09 requires similar disclosure in the financial statements.)

Other updates include the clarification of certain requirements related to emerging growth companies and smaller reporting companies.

Investment Company Swing Pricing

The SEC adopted amendments to Rule 22c-1 under the Investment Company Act to permit a registered open-end management investment company (“open-end fund” or “fund”) (except a money market fund or exchange-traded fund), under certain circumstances, to use “swing pricing”. Swing pricing is defined as the process of adjusting the fund’s net asset value (NAV) per share to effectively pass on the costs stemming from shareholder purchase or redemption activity to the shareholders associated with that activity.

Additionally, the SEC adopted amendments to Rule 31a-2 to require funds to preserve certain records related to swing pricing as well as other amendments to Form N-1A and Regulation S-X and a new item in Form N-CEN, all of which address a fund’s use of swing pricing. These rules become effective November 19, 2018.

Investment Company Reporting Modernization

The SEC adopted new rules and forms as well as amendments to its rules and forms to improve the reporting and disclosure of information by registered investment companies. The SEC adopted new Form N-PORT, which will require certain registered investment companies to report information about their monthly portfolio holdings to the SEC as well as adopted amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements.


viewsDuring the AICPA SEC Conference, several SEC staff members voiced their observations that many companies have not begun planning for implementation or are behind in the implementation process for the upcoming revenue recognition, leases, and credit losses standards.

As such, SEC Staff emphasized the importance and significance of the upcoming standards, specifically the time resources necessary to appropriately implement the standards, and urged preparers to begin the implementation process if they have not done so already.

https://www.sec.gov/news/speech/alicea-2016-aicpa.html

https://www.sec.gov/news/speech/alicea-2016-aicpa.html

http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176168580761

https://www.sec.gov/divisions/corpfin/cffinancialreportingmanual.pdf

https://www.sec.gov/rules/final/2016/33-10234.pdf



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American Institute of Certified Public Accountants (AICPA) SSARS No. 23 – Omnibus Statement on Standards for Accounting and Review Services – 2016

SSARS No. 23 was issued on October 25, 2016 and introduces a number of amendments to the AICPA review, compilation, and preparation standards. Many of these amendments are effective upon issuance. Some of the more substantive changes from the current literature are as follows:

• Amendments to the accountant’s review report and compilation report related to supplementary information that accompanies the financial statements

• Amendments to the guidance on reporting known departures from the applicable financial reporting framework in a compilation engagement

Center for Audit Quality (CAQ) Preparing for the New Revenue Recognition Standard

The CAQ released a publication, Preparing for the New Revenue Recognition Standard, which is intended to assist audit committees in assessing a company’s implementation of the new revenue recognition standard. The publication provides examples of questions audit committees may ask related to a company’s implementation efforts. The publication also provides a brief overview of the new revenue recognition standard, discusses the potential impact of the standard, and considerations when evaluating management’s implementation project plan.

Other changes include the adoption of new forms, which will require certain registered investment companies to annually report certain census-type information to the SEC in a structured data format as well as provide certain securities lending activity disclosures.

Additionally, the SEC is rescinding current Forms N-Q and N-SAR and amending certain other rules and forms. Collectively, these amendments will, among other things, improve the information that the SEC receives from investment companies. These rules are effective January 17, 2017, with certain exceptions.

EDGAR Filer Manual Updates

The SEC adopted two updates to the EDGAR Filer Manual. The first update was made primarily to support the support the submission of certain Municipal Advisor submission form types among other minor updates. The second update primarily supports new submission form types for money market mutual funds among other minor updates. These rules are effective upon publication in the Federal Register.

Other Compliance and Disclosure Interpretations (C&DIs)

Private Resales of Securities to Institutions

The SEC released Compliance and Disclosure Interpretations related to Section 138 Rule 144A – Private Resales of Securities to Institutions and the definition of a Qualified Institutional Investor.

Tender Offers

The SEC also released Compliance and Disclosure Interpretations related to Tender Offers to clarify certain disclosure requirements under Schedule 14D-9 as well as the Staff’s application of the positions expressed in the Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities no-action letter.

Pay Ratio Disclosure

The SEC has updated its Compliance and Disclosure Interpretations to provide clarifications on certain non-financial disclosure requirements under Regulation S-K. Specifically, the C&DIs address the need for registrants to utilize a “consistently applied compensation measure “(CACM) when determining the median employee compensation if annual total compensation is not calculated consistent with Item 402(c)(2)(x).

Additionally, the C&DIs clarified that registrant should not use hourly or annual rates of pay as a CACM in the determination of median employee compensation and that furloughed employees and workers whose compensation is determined by an unaffiliated third party should be included in the employee population used to determine the median employee compensation.

Assurance Matters


http://www.thecaq.org/preparing-new-revenue-recognition-standard-tool-audit-committees

http://www.thecaq.org/preparing-new-revenue-recognition-standard-tool-audit-committees



https://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm

https://www.sec.gov/divisions/corpfin/guidance/cdi-tender-offers-and-schedules.htm

https://www.sec.gov/divisions/corpfin/cf-noaction/2015/abbreviated-offers-debt-securities012315-sec14.pdf



https://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm#128c.01

https://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm#128c.01


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Non-GAAP Financial Measures: Continuing the Conversation

The CAQ published the paper, Non-GAAP Financial Measures: Continuing the Conversation (Non-GAAP Measures Report), which explores the issue of non-GAAP information and provides context on its definition and use, pertinent regulatory developments, and the current level of auditor involvement. The Non-GAAP Measures Report also notes that while auditors do not audit non-GAAP metrics, audit committees and management may consider using auditors as a sounding board when evaluating them.

In addition, the Non-GAAP Measures Report provides suggested questions for each stakeholder group to consider as it relates to their preparation or use of non-GAAP financial measures.

Non-GAAP Financial Measures also builds on the CAQ’s previous publication, Questions on Non-GAAP Measures: A Tool for Audit Committees, issued in June 2016.

Audit Committee Transparency Barometer

On November 1, 2016, the CAQ and Audit Analytics issued their third annual Audit Committee Transparency Barometer (2016 Barometer). This year’s edition of the Transparency Barometer provides year-over-year comparisons of key audit committee disclosure areas for companies of all sizes and finds a pattern of continuous improvement and greater transparency in audit committee disclosure.

Overall, the 2016 Barometer reveals double-digit percentage growth of Standard & Poor’s (S&P) 500 Index companies disclosing information on key areas of external auditor oversight, including auditor appointment and audit partner rotation, since 2014. The 2016 Barometer also includes examples of leading disclosure practices that show audit committees are tailoring disclosures specifically to the company and not using a one-size-fits-all approach.

In addition, CAQ and Audit Analytics provided a companion video that includes interviews with audit committee chairs discussing best practices related to appointment, compensation, and oversight of the work of the external auditor.

CAQ SEC Regulations Committee Meeting Highlights

The CAQ’s SEC Regulations Committee issued highlights from its September 27, 2016 meeting with the SEC Staff. The CAQ’s SEC Regulations Committee meets periodically with the SEC Staff to discuss emerging technical accounting and reporting issues relating to SEC rules and regulations. The purpose of the highlights is to summarize the issues discussed at the meeting. These highlights are not authoritative and users are urged to refer directly to applicable authoritative pronouncements for the text of the technical literature. Meeting highlights included discussions regarding:

• Non-GAAP financial measures and compliance with existing rules and regulations, including the implementation of the C&DIs issued by SEC staff in May 2016.

• Extinguishment of registered guaranteed debt after period end, but before the filing date.

• Preparing pro-forma financial statements when fiscal year ends differ by more than 93 days.

• Transition questions related to the new leases standard.

Assurance Matters

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Non-GAAP measures continued to be an area of significant focus for the SEC, specifically the concept of non-GAAP measures having undue prominence. Significant research is being conducted to determine how and why investors use alternative performance measures and whether revisions to current presentation and disclosure requirements may be warranted to suit the needs of investors. Additionally, the PCAOB is monitoring the need for greater auditor involvement with non-GAAP information created from the audited financial statements.

http://www.thecaq.org/non-gaap-financial-measures-continuing-conversation

http://www.thecaq.org/non-gaap-financial-measures-continuing-conversation

http://www.thecaq.org/questions-non-gaap-measures-tool-audit-committees

http://www.thecaq.org/questions-non-gaap-measures-tool-audit-committees

http://thecaq.org/2016-audit-committee-transparency-barometer

http://thecaq.org/2016-audit-committee-transparency-barometer

https://www.youtube.com/watch?v=BFydjgaoHgU

http://www.thecaq.org/our-committees/sec-regulations-committee


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Appendix A - Accounting Standards Affecting Public Business Entities in 2016The following table presents ASUs that become effective during 2016 for calendar year-end public business entities. Please refer to the individual ASUs in their entirety for additional guidance.

Accounting Standards Update Effective Date Public Business Entities Transition Summary

ASU 2015-16 – Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments

Fiscal years beginning after December 15, 2015, including interim periods within those

years

Prospective

The amendments in this ASU require an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments also require the acquirer to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income eff if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

ASU 2015-12 – Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965) – Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Fiscal years beginning after December 15, 2015

Part I and Part II Retrospective,

Part III Prospective

Part I. Fully Benefit Responsive Investment Contracts

The Update designates contract value as the only required measure for fully benefit-responsive investment contracts for reporting entities within the scope of Topic 962 and 965.

Part II. Plan Investment Disclosures

For reporting entities within the scope of Topics 960, 962, and 965 this amendment eliminates the requirements to disclose: a) individual investments that represent five percent or more of net assets available for benefits, and b) net appreciation or depreciation for investments by general type. The Update requires that investments of employee benefit plans be grouped only by general type when applying the disclosure requirements under Topic 820, as opposed to grouping investments on the basis of nature, characteristics, and risks. In addition, in cases where an investment is measured using the net asset value per share (or its equivalent) practical expedient, and that investment is in a fund that files a U.S. Department of Labor Form 5500, Annual Return/Report of Employee Benefit Plan, as a direct filing entity, disclosure of that investment’s strategy is no longer required.

Part III. Measurement Date Practical Expedient

This practical expedient allows plans to measure investments and investment- related accounts as of a month-end date that is closest to the plan’s fiscal year-end, when the fiscal year-end does not coincide with month-end. If elected, the plan must disclose the use of the practical expedient; the date used to measure investments and investment related amounts; and contributions, distributions, and significant events that occur between the alternative measurement date and the fiscal year-end.


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Appendix A - Accounting Standards Affecting Public Business Entities in 2016 continued


ASU 2015-09: Financial Services – Insurance (Topic 944): Disclosures about Short-Duration Contracts

Fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after

December 15, 2016

Retrospective

The amendments in this ASU apply to all insurance entities that issue short- duration contracts as defined in Topic 944, Financial Services - Insurance. The amendments do not apply to the holder (i.e., policyholder) of short- duration contracts. This ASU requires insurance entities to disclose for annual reporting periods additional information about the liability for unpaid claims and claim adjustment expenses. NOTE: While this ASU is effective for year-end 2016, it is not required for interim periods until 2017.

ASU 2015-07: Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent)

Fiscal years beginning after December 15, 2015, and

interim periods within those years

Retrospective

The amendments in this ASU apply to reporting entities that elect to measure the fair value of an investment using the net asset value per share (or its equivalent) practical expedient. The ASU removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient. The ASU also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.

ASU 2015-06: Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions


interim periods within those fiscal years

Retrospective

These amendments apply to master limited partnerships that receive net assets through a dropdown transaction. The amendments specify that for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner. In these circumstances, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required.

ASU 2015-05: Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350- 40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement



Prospective or Retrospective1

The ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets.


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ASU 2015-04: Compensation – Retirement Benefits (Topic 715): Practical Expedient for Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets



Prospective

For an entity with a fiscal year-end that does not coincide with a month- end, the amendments in this ASU provide a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans, if an entity has more than one plan. Employee benefit plans are not within the scope of the amendments. The ASU also provides guidance for accounting and disclosing contributions and significant events occurring between the month- end date used and a company’s fiscal year-end date. Further, an entity is required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations in accordance with this ASU.

ASU 2015-03: Interest – Imputation of Interest (Subtopic 835-300: Simplifying the Presentation of Debt Issuance Costs



Retrospective

The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The FASB notes within the ASU, capitalized debt issuance costs do not meet the definition of an asset and are more akin to a debt discount, thereby reducing the carrying amount of the proceeds received. Also refer to ASU 2015-15.

ASU 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis

Periods beginning after December 15, 2015 and

interim periods within

Full or Modified Retrospective

This ASU modifies the consolidation model for reporting organizations under both the variable interest model and the voting interest model. The ASU is generally expected to reduce the number of situations where consolidation is required; however, in certain circumstances, the ASU may result in companies consolidating entities previously unconsolidated.

ASU 2015-01: Income Statement— Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Periods beginning after December 15, 2015

Prospective or Retrospective

This ASU was also issued as part of the FASB’s simplification initiative, Subtopic 225-20 requires an entity to separately classify, present, and disclose extraordinary events and transactions. In response to feedback received from users and preparers the FASB issued this ASU to eliminate the concept of extraordinary items.



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ASU 2014-16: Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force)




Entities frequently raise capital through issuances of shares, which will occasionally include additional features (e.g. conversion rights, dividend payment preferences). When shares are issued with features that qualify as derivatives under GAAP those shares are referred to as hybrid financial instruments. The features within hybrid financial instruments must be evaluated as to whether they are clearly and closely related to the host contract, and if certain criteria are met the derivative would be separated from the underlying share and accounted for under Topic 815-10, Derivatives and Hedging. The evaluation of whether or not the features are clearly and closely related begins with determining if the host contract is more akin to debt or equity. Currently there is diversity in practice on how this determination is made. This Update clarifies the determination should be made by considering “all stated and implied substantive terms and features of a hybrid financial instrument” (in contrast to evaluating the instrument without consideration of the embedded derivative).

ASU 2014-15: Presentation of Financial Statements—Going Concern (Subtopic 205- 40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

Fiscal years ending after December 15, 2016, and fiscal

years and interim periods thereafter

N/A

The continuation of an entity as a going concern is presumed when preparing financial statements (unless liquidation becomes imminent); however, currently there is no guidance in U.S. GAAP about management’s responsibility to evaluate going concern uncertainties. As a result, this Update clarifies management’s responsibility to evaluate and provide related disclosures if there are any conditions or events, as a whole, that raise substantial doubt about the entity’s ability to continue as a going concern for one year after the date the financial statements are issued (or, if applicable, available to be issued).

NOTE: While this ASU is effective for year-end 2016, it is not required for interim periods until 2017.

ASU 2014-13: Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity




Currently, when an entity consolidates a collateralized financing entity under variable interest entity guidance the assets and liabilities of the consolidated entity are often measured at fair value. At times the fair value of the of the financial liabilities differs from the fair value of the financial assets in the entity being consolidated, even when the financial liabilities only have recourse to the financial assets of the collateralized financing entity. This measurement difference is not consistently accounted for, either at initial consolidation or subsequent measurement. This Update provides a measurement alternative for reporting entities to measure the financial assets and liabilities of the collateralized financing entity using the “more observable of the fair value of the financial liabilities assets and the fair value of the financial liabilities.”


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ASU 2014-12: Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period



Prospective or Modified

Retrospective

This Update requires performance targets that affect vesting and that could be achieved after the requisite service period to be treated as performance conditions. As a result, such performance targets should not be included in the grant-date fair value calculation of the award, rather compensation cost should be recorded when it is probable the performance target will be reached and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the requisite service period is not over, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.

Footnotes

1. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. For prospective transition, the only disclosure requirements at transition are the nature of and reason for the change in accounting principle, the transition method, and a qualitative description of the financial statement line items affected by the change. For retrospective transition, the disclosure requirements at transition include the requirements for prospective transition and quantitative information about the effects of the accounting change.


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Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyondThe following table presents ASUs that become effective for 2017 fiscal years and beyond. Please refer to the individual ASUs in their entirety for additional guidance.

Accounting Standards Update Effective DatePublic Business Enterprises Transition Early

Adopt Summary

ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash

Fiscal years beginning after December 15, 2017, and interim periods within those fiscal years

Retrospective √

ASU 2016-18 was issued to address diversity in practice in the classification and presentation of change in restricted cash on the statement of cash flows under Topic 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

ASU 2016-17 - Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control

Fiscal years beginning after December 15, 2016, including interim

periods within those fiscal years5

Full or Modified Retrospective - Consistent with method elected for adoption of ASU-2015-02

√

ASU 2016-17 was issued to amend the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE.

ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory

Annual reporting periods beginning after December 15, 2017, including

interim reporting periods within those annual reporting periods

Modified Retrospective √

ASU 2016-16 was issued to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The initiative is designed to reduce the complexity in accounting standards.

ASU 2016-15 – Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments

Fiscal years beginning after December 15, 2017 and interim periods within those fiscal years.


ASU 2016-05 was issued to address diversity in practice of how certain cash receipts and cash payments are currently presented and classified in the statement of cash flows.

ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

For public business entities that are SEC filers for fiscal years, and interim

periods within those fiscal years, beginning after December 15, 2019.For public business entities that are

not SEC filers, the ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within

those fiscal years.

Modified Retrospective √2

The ASU is intended to improve financial reporting by requiring timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets not recorded at fair value based on historical experience, current conditions, and reasonable and supportable forecasts.


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Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyond continued

Accounting Standards UpdateEffective Date

Public Business EnterprisesTransition

Early Adopt

Summary

ASU 2016-12 – Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients


periods within those years.

Full or Modified Retrospective √3

This ASU is intended to improve the operability and understandability of the implementation guidance on by providing the clarifications and practical expedients on the following issues: assessing collectability criterion in paragraph 606-10-25-1(e) and accounting for contracts that do not meet the criteria for step one of the revenue recognition model, presentation of sales taxes and other similar taxes collected from customers, noncash considerations, contract modifications at transition, completed contracts at transition.

ASU No. 2016-11 - Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting



Full or Modified Retrospective √

This ASU rescinds the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities— Oil and Gas, effective upon adoption of Topic 606, Revenue from Contracts with Customers. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606:

• Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2;

• Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45- S99-1;

• Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50- S99-1; and

• Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5.

ASU 2016-10 – Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing




The amendments in this ASU provide clarification to two components of Topic 606: 1) identifying performance obligations, and 2) licensing implementation guidance.


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Early Adopt

Summary

ASU 2016-09 – Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

Fiscal years beginning after December 15, 2016, and interim

periods within those years

Prospective, Modified

Retrospective, or Retrospective

√

The amendments in this ASU are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.

ASU 2016-08 – Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)




The amendments are intended to improve the implementation guidance on principal versus agent considerations by amending existing illustrative examples and adding new examples.

ASU 2016-07 – Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting


periods within those years.Prospective √

The amendments eliminate the requirement to retroactively adjust an investment upon qualifying for the equity method of accounting

ASU 2016-06 - Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments




The amendments clarify the required steps to be taken when assessing whether the economic characteristics and risks of call/put options are clearly and closely related to those of their debt hosts - which is one of the criteria for bifurcating an embedded derivative.

ASU 2016-05 - Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships




The amendments clarify that a change in the counterparty to a derivative instrument designated as a hedging instrument does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria remain the same.

ASU 2016-04 - Liabilities —Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products




The amendments, which apply to entities that offer certain prepaid stored value products, provide a narrow scope exception to the guidance in Subtopic 405-20 that requires breakage for those liabilities be accounted for consistent with the breakage guidance in Topic 606 Revenue from Contracts with Customers. There is no specific guidance for the derecognition of prepaid stored-value product liabilities.


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Early Adopt

Summary

ASU 2016-02 – Leases (Topic 842)Fiscal years beginning after

December 15, 2018, including interim periods within those years.


All leases (except for short-term leases) will be required to be recognized on the lessee's balance sheet at commencement date as a lease liability for the obligation of lease payments and a right-of-use asset for the right to use/control a specified asset for the lease term. Lessor accounting is largely unchanged.

See DHG publication Leases: Not Just For The Footnotes Anymore, issued in March 2016.

ASU 2016-01 – Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities


periods within those years.Prospective 4

This ASU amends various guidance such as requiring equity investments to be measured at fair value and any changes in fair value to be recognized in the income statement, public entities to use the exit price notion to measure the fair value of financial instruments for disclosure purposes, and separate presentation of financial assets and liabilities by measurement category and form of financial asset. It also eliminates the requirement to disclose the methods and assumptions used to estimate fair value of financial instruments measured at amortized cost.

See also, DHG publication FASB Releases New Standard on Classification & Measurement of Financial Instruments issued in January 2016.

ASU 2015-17 – Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes

Financial statements issued for fiscal years beginning after December 15,

2016, and interim periods within those years.

Prospective or Retrospective √

The amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.

https://www.dhgllp.com/resources/publications/article/1602/leases-not-just-for-the-footnotes-anymore

https://www.dhgllp.com/resources/publications/article/1602/leases-not-just-for-the-footnotes-anymore

https://www.dhgllp.com/resources/publications/article/1479/fasb-releases-new-standard-on-classification-measurement-of-financial-instrumen




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Early Adopt

Summary

ASU 2014-09: Revenue from Contracts with Customers (Topic 606) & ASU 2015-14 – Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date




On May 28, 2014, the FASB and the International Accounting Standards Board (the IASB) (collectively “the boards”) issued their sweeping revenue recognition standard, Revenue from Contracts with Customers. This multiyear joint project with the IASB received more than 1,500 comment letters throughout the process. The core principle of the new standard is that “an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The standard provides a five-step process for recognizing revenue: 1. Identify the contract with a customer, 2. Identify the performance obligations in the contract, 3. Determine the transaction price, 4. Allocate the transaction price to the performance obligations in the contract, and 5. Recognize revenue when (or as) the entity satisfies a performance obligation.

The amendments in ASU 2015-14 defer the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) for one year. For public business entities, earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities may elect to apply this guidance as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which an entity first applies the guidance in this ASU.

See DHG A&A Update FASB Issues Long-Awaited Revenue Recognition Standard, for additional information. See also, DHG publication Getting to the Bottom of the Top Line – Preparing to Adopt the New Revenue Recognition Standard issued March 18, 2016.

https://www.dhgllp.com/Portals/4/ResourceMedia/alerts/FASB%20Issues%20Revenue%20Recognition%20Standard_FINAL.pdf


http://www.dhgllp.com/Portals/4/ResourceMedia/publications/Risk-Advisory_Revenue-Recognition.pdf




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Early Adopt

Summary

ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory


periods within those yearsProspective _

This update simplifies the measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less predictable costs of completion, disposal, and transportation. The existing standards require inventory to be measured at the lower of cost or market, where market could be replacement cost, net realizable value, or net realizable value less a normal profit margin.

Footnotes

2. Early adoption is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

3. Should adopt concurrently with ASU 2014-09.

4. Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance of the following amendments in this Update are permitted as of the beginning of the fiscal year of adoption: (a) An entity should present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments or (b) Entities that are not public business entities are not required to apply the fair value of financial instruments disclosure guidance in the General Subsection of Section 825-10-50. Except for the early application guidance discussed here, early adoption of the amendments in this ASU is not permitted.

5. Entities that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments in this ASU at the same time they adopt the amendments in ASU 2015-02 and should apply the same transition method elected for the application of ASU 2015-02. Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments in this Update retrospectively to all relevant prior periods, beginning with the fiscal year in which the amendments in ASU 2015- 02 initially were applied.


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Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyondThe following table presents ASUs that become effective for 2016 fiscal years and beyond for private companies. Please refer to the individual ASUs in their entirety for additional guidance.

Accounting Standards Update Private Company Effective Date Transition Early Adopt Summary

ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash


periods within fiscal years beginning after December 15,

2019

Retrospective √

ASU 2016-18 was issued to address diversity in practice in the classification and presentation of change in restricted cash on the statement of cash flows under Topic 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

ASU 2016-17 - Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control


periods within fiscal 3 years beginning after December 15,

20175

Full or Modified Retrospective - Consistent with method elected for adoption of ASU-2015-02

√

ASU 2016-17 was issued to amend the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE.

ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory

Annual reporting periods beginning after December 15,

2018, and interim reporting periods within annual periods beginning after December 15,

2019


ASU 2016-16 was issued to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The initiative is designed to reduce the complexity in accounting standards.

ASU 2016-15 – Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments


periods within fiscal years beginning after December 15,

2019.

Retrospective √

ASU 2016-05 was issued to address diversity in practice of how certain cash receipts and cash payments are currently presented and classified in the statement of cash flows.

ASU 2016-14 – Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for- Profit Entities

Fiscal years beginning after December 15, 2017 and for

interim periods within fiscal years beginning after December 15,

2018

Retrospective √

The updates in this ASU are intended to provide more information and greater clarity in the financial statements and notes on a not-for-profit entity’s financial performance, cash flows, and liquidity.


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Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued

ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Fiscal years beginning after December 15, 2020, and for

interim periods within those fiscal years beginning after December

15, 2021.

Modified Retrospective √1

The ASU is intended to improve financial reporting by requiring timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets not recorded at fair value based on historical experience, current conditions, and reasonable and supportable forecasts.

ASU 2016-12 – Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients


periods within annual periods beginning after December 15,

2019.


This ASU is intended to improve the operability and understandability of the implementation guidance on by providing the clarifications and practical expedients on the following issues: assessing collectability criterion in paragraph 606-10-25-1(e) and accounting for contracts that do not meet the criteria for step one of the revenue recognition model, presentation of sales taxes and other similar taxes collected from customers, noncash considerations, contract modifications at transition, completed contracts at transition.

ASU No. 2016-11 - Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because ofAccounting Standards Updates 2014-09 and 2014- 16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting



2019.


This ASU rescinds the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities— Oil and Gas, effective upon adoption of Topic 606, Revenue from Contracts with Customers. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606:

• Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2;

• Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1;

• Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50- S99-1; and

• Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5.



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ASU 2016-10 – Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing



2019.


The amendments in this ASU provide clarification to two components of Topic 606: 1) identifying performance obligations, and 2) licensing implementation guidance.

ASU 2016-09 – Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting



2018.

Prospective, Modified

Retrospective, or Retrospective

√

The amendments in this ASU are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.

ASU 2016-08 – Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

Fiscal years beginning after December 15, 2018 and interim periods within annual periods beginning after December 15,

2019.


The amendments are intended to improve the implementation guidance on principal versus agent considerations by amending existing illustrative examples and adding new examples.

ASU 2016-07 – Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting

Fiscal years beginning after December 15, 2016, including

interim periods within those fiscal years.

Prospective √The amendments eliminate the requirement to retroactively adjust an investment upon qualifying for the equity method of accounting

ASU 2016-06 - Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments



2018.


The amendments clarify the required steps to be taken when assessing whether the economic characteristics and risks of call/put options are clearly and closely related to those of their debt hosts - which is one of the criteria for bifurcating an embedded derivative.

ASU 2016-05 - Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships



2018.


The amendments clarify that a change in the counterparty to a derivative instrument designated as a hedging instrument does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria remain the same.



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ASU 2016-04 - Liabilities —Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products



2019.


The amendments, which apply to entities that offer certain prepaid stored value products, provide a narrow scope exception to the guidance in Subtopic 405-20 that requires breakage for those liabilities be accounted for consistent with the breakage guidance in Topic 606 Revenue from Contracts with Customers. There is no specific guidance for the derecognition of prepaid stored-value product liabilities.

ASU 2016-03 - Intangibles —Goodwill and Other (Topic 350); Business Combinations (Topic805); Consolidation (Topic 810); Derivatives and Hedging (Topic 815): Effective Date and Transition Guidance

Issued March 2016 and effective immediately see individual ASU N/A

The amendments make the guidance in ASUs 2014-02, 2014-03, 2014-07, and 2014-18 effective immediately by removing their effective dates. They also include transition provisions so private companies are able to forgo a preferability assessment the first time they elect the accounting alternatives within the scope of this ASU. Subsequent changes to an accounting policy election requires justification under Topic 250, Accounting Changes and Error Corrections.

ASU 2016-02 – Leases (Topic 842)



2020.


All leases (except for short-term leases) will be required to be recognized on the lessee's balance sheet at commencement date as a lease liability for the obligation of lease payments and a right-of-use asset for the right to use/control a specified asset for the lease term. Lessor accounting is largely unchanged.

See DHG publication Leases: Not Just For The Footnotes Anymore, issued in March 2016.

ASU 2016-01 – Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities



2019.

Prospective 3

This ASU amends various guidance such as requiring equity investments to be measured at fair value and any changes in fair value to be recognized in the income statement, public entities to use the exit price notion to measure the fair value of financial instruments for disclosure purposes, and separate presentation of financial assets and liabilities by measurement category and form of financial asset. It also eliminates the requirement to disclose the methods and assumptions used to estimate fair value of financial instruments measured at amortized cost.

See also, DHG publication FASB Releases New Standard on Classification & Measurement of Financial Instruments issued in January 2016.


http://www.dhgllp.com/resources/publications/article/1602/leases-not-just-for-the-footnotes-anymore

http://www.dhgllp.com/resources/publications/article/1602/leases-not-just-for-the-footnotes-anymore

http://www.dhgllp.com/resources/publications/article/1479/fasb-releases-new-standard-on-classification-measurement-of-financial-instrumen




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ASU 2015-17 – Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes



2018.


The amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.

ASU 2015-16 – Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments



2017.

Prospective √

The amendments in this ASU require an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments also require the acquirer to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income eff if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.



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ASU 2014-09: Revenue from Contracts with Customers (Topic 606) & ASU 2015-14 – Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date



2019.


On May 28, 2014, the FASB and the International Accounting Standards Board (the IASB) (collectively “the boards”) issued their sweeping revenue recognition standard, Revenue from Contracts with Customers. This multiyear joint project with the IASB received more than 1,500 comment letters throughout the process. The core principle of the new standard is that “an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The standard provides a five-step process for recognizing revenue: 1. Identify the contract with a customer, 2. Identify the performance obligations in the contract, 3. Determine the transaction price, 4. Allocate the transaction price to the performance obligations in the contract, and 5. Recognize revenue when (or as) the entity satisfies a performance obligation.

The amendments in ASU 2015-14 defer the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) for one year. For public business entities, earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities may elect to apply this guidance as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which an entity first applies the guidance in this ASU.





https://www.dhgllp.com/resources/publications/article/1608/getting-to-the-bottom-of-the-top-line-preparing-to-adopt-the-new-revenue-recogn




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ASU 2015-12 – Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965) – Fully Benefit- Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient

Fiscal years beginning after December 15, 2015

Part I and Part II Retrospective,

Part III Prospective

√

Part I. Fully Benefit Responsive Investment Contracts

The Update designates contract value as the only required measure for fully benefit-responsive investment contracts for reporting entities within the scope of Topic 962 and 965.

Part II. Plan Investment Disclosures

For reporting entities within the scope of Topics 960, 962, and 965 this amendment eliminates the requirements to disclose: a) individual investments that represent five percent or more of net assets available for benefits, and b) net appreciation or depreciation for investments by general type. The Update requires that investments of employee benefit plans be grouped only by general type when applying the disclosure requirements under Topic 820, as opposed to grouping investments on the basis of nature, characteristics, and risks. In addition, in cases where an investment is measured using the net asset value per share (or its equivalent) practical expedient, and that investment is in a fund that files a

U.S. Department of Labor Form 5500, Annual Return/ Report of Employee Benefit Plan, as a direct filing entity, disclosure of that investment’s strategy is no longer required.

Part III. Measurement Date Practical Expedient

This practical expedient allows plans to measure investments and investment-related accounts as of a month-end date that is closest to the plan’s fiscal year- end, when the fiscal year-end does not coincide with month-end. If elected, the plan must disclose the use of the practical expedient; the date used to measure investments and investment related amounts; and contributions, distributions, and significant events that occur between the alternative measurement date and the fiscal year-end.



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ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory



2017.

Prospective √

This update simplifies the measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less predictable costs of completion, disposal, and transportation. The existing standards require inventory to be measured at the lower of cost or market, where market could be replacement cost, net realizable value, or net realizable value less a normal profit margin.

ASU 2015-09: Financial Services – Insurance (Topic 944): Disclosures about Short-Duration Contracts



2017.

Retrospective √

The amendments in this ASU apply to all insurance entities that issue short-duration contracts as defined in Topic 944, Financial Services - Insurance. The amendments do not apply to the holder (i.e., policyholder) of short-duration contracts. This ASU requires insurance entities to disclose for annual reporting periods additional information about the liability for unpaid claims and claim adjustment expenses.

NOTE: While this ASU is effective for year-end 2016, it is not required for interim periods until 2017.

ASU 2015-07: Fair Value Measurement (Topic 820):Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent)

Fiscal years and interim periods beginning after December 15,

2016.Retrospective √

The amendments in this ASU apply to reporting entities that elect to measure the fair value of an investment using the net asset value per share (or its equivalent) practical expedient. The ASU removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient. The ASU also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.



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ASU 2015-06: Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

Fiscal years beginning after December 15, 2015, and interim periods within those fiscal years

Retrospective √

These amendments apply to master limited partnerships that receive net assets through a dropdown transaction. The amendments specify that for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner. In these circumstances, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required.

ASU 2015-05: Intangibles – Goodwill and Other– Internal Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement



2016.

Prospective or Retrospective 4 √

The ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets.


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ASU 2015-04: Compensation – Retirement Benefits (Topic 715): Practical Expedient for Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets



2017.

Prospective √

For an entity with a fiscal year-end that does not coincide with a month-end, the amendments in this ASU provide a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans, if an entity has more than one plan. Employee benefit plans are not within the scope of the amendments. The ASU also provides guidance for accounting and disclosing contributions and significant events occurring between the month- end date used and a Company’s fiscal year-end date. Further, an entity is required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations in accordance with this ASU.

ASU 2015-03: Interest – Imputation of Interest (Subtopic 835-300: Simplifying the Presentation of Debt Issuance Costs



2016.

Retrospective √

The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The FASB notes within the ASU, capitalized debt issuance costs do not meet the definition of an asset and are more akin to a debt discount, thereby reducing the carrying amount of the proceeds received. Also refer to ASU 2015-15.

ASU 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis

Fiscal years beginning after December 15, 2016 and interim

periods within


This ASU modifies the consolidation model for reporting organizations under both the variable interest model and the voting interest model. The ASU is generally expected to reduce the number of situations where consolidation is required; however, in certain circumstances, the ASU may result in companies consolidating entities previously unconsolidated.

ASU 2015-01: Income Statement— Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Periods beginning after December 15, 2015


This ASU was also issued as part of the FASB’s simplification initiative, Subtopic 225-20 requires an entity to separately classify, present, and disclose extraordinary events and transactions. In response to feedback received from users and preparers the FASB issued this ASU to eliminate the concept of extraordinary items.


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ASU 2014-16: Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force)



2016.


Entities frequently raise capital through issuances of shares, which will occasionally include additional features (e.g. conversion rights, dividend payment preferences). When shares are issued with features that qualify as derivatives under GAAP those shares are referred to as hybrid financial instruments. The features within hybrid financial instruments must be evaluated as to whether they are clearly and closely related to the host contract, and if certain criteria are met the derivative would be separated from the underlying share and accounted for under Topic 815-10, Derivatives and Hedging. The evaluation of whether or not the features are clearly and closely related begins with determining if the host contract is more akin to debt or equity. Currently there is diversity in practice on how this determination is made. This Update clarifies the determination should be made by considering “all stated and implied substantive terms and features of a hybrid financial instrument” (in contrast to evaluating the instrument without consideration of the embedded derivative).

ASU 2014-15: Presentation of Financial Statements—Going Concern (Subtopic 205- 40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

Fiscal years ending after December 15, 2016, and fiscal

years and interim periods thereafter

N/A √

The continuation of an entity as a going concern is presumed when preparing financial statements (unless liquidation becomes imminent); however, currently there is no guidance in U.S. GAAP about management’s responsibility to evaluate going concern uncertainties. As a result, this Update clarifies management’s responsibility to evaluate and provide related disclosures if there are any conditions or events, as a whole, that raise substantial doubt about the entity’s ability to continue as a going concern for one year after the date the financial statements are issued (or, if applicable, available to be issued).


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ASU 2014-13: Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

Fiscal years ending after December 15, 2016, and interim


2016.


Currently, when an entity consolidates a collateralized financing entity under variable interest entity guidance the assets and liabilities of the consolidated entity are often measured at fair value. At times the fair value of the of the financial liabilities differs from the fair value of the financial assets in the entity being consolidated, even when the financial liabilities only have recourse to the financial assets of the collateralized financing entity. This measurement difference is not consistently accounted for, either at initial consolidation or subsequent measurement. This Update provides a measurement alternative for reporting entities to measure the financial assets and liabilities of the collateralized financing entity using the “more observable of the fair value of the financial liabilities assets and the fair value of the financial liabilities.”

ASU 2014-12: Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of anAward Provide That a Performance Target Could Be Achieved after the Requisite Service Period


periods within those years

Prospective or Modified

Retrospective√

This Update requires performance targets that affect vesting and that could be achieved after the requisite service period to be treated as performance conditions. As a result, such performance targets should not be included in the grant-date fair value calculation of the award, rather compensation cost should be recorded when it is probable the performance target will be reached and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the requisite service period is not over, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.


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ASU 2014-09: Revenue from Contracts with Customers (Topic 606)

See ASU 2015-14 for revised effective date information.


On May 28, 2014, the FASB and the International Accounting Standards Board (the IASB) (collectively “the boards”) issued their sweeping revenue recognition standard, Revenue from Contracts with Customers. This multiyear joint project with the IASB received more than 1,500 comment letters throughout the process. The core principle of the new standard is that “an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The standard provides a five-step process for recognizing revenue: 1. Identify the contract with a customer, 2. Identify the performance obligations in the contract, 3. Determine the transaction price, 4. Allocate the transaction price to the performance obligations in the contract, and 5. Recognize revenue when (or as) the entity satisfies a performance obligation. See Dixon Hughes Goodman A&A Update FASB Issues Long-Awaited Revenue Recognition Standard, for additional information.


Footnotes

1. Early adoption is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

2. Should adopt concurrently with ASU 2014-09.

3. Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance of the following amendments in this Update are permitted as of the beginning of the fiscal year of adoption: (a) An entity should present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments or (b) Entities that are not public business entities are not required to apply the fair value of financial instruments disclosure guidance in the General Subsection of Section 825-10-50. Except for the early application guidance discussed here, early adoption of the amendments in this ASU is not permitted.

4. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. For prospective transition, the only disclosure requirements at transition are the nature of and reason for the change in accounting principle, the transition method, and a qualitative description of the financial statement line items affected by the change. For retrospective transition, the disclosure requirements at transition include the requirements for prospective transition and quantitative information about the effects of the accounting change.

5. Entities that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments in this ASU at the same time they adopt the amendments in ASU 2015-02 and should apply the same transition method elected for the application of ASU 2015-02. Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments in this Update retrospectively to all relevant prior periods, beginning with the fiscal year in which the amendments in ASU 2015- 02 initially were applied.







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Appendix C - SEC Final RulesThe following table presents SEC Rules with effective and compliance dates during 2016 and beyond. Please refer to the individual SEC rules in their entirety for additional guidance.

SEC - Final Rules Summary

Release 33-10265, Adoption of Updated Edgar Filer Manual

The updates are being made primarily to support the support the submission of certain Municipal Advisor submission form types among other minor updates. This rule is effective upon publication in the Federal Register.

Release 33-10238, Exemptions to Facilitate Intrastate and Regional Securities Offerings

The SEC is adopting final rules that update how companies can raise money through intrastate and small offerings while maintaining investor protections. The final rules amend Securities Act Rule 147 to improve the safe harbor under Section 3(a)(11) of the Securities Act, such that issuers may continue to use state law exemptions. The final rules also establish a new intrastate offering exemption, Securities Act Rule 147A, that further accommodates offers accessible to out-of-state residents and companies that are incorporated or organized out-of-state. These rules will be effective April 20, 2017.

Additionally, to improve the capital accessibility through regional offerings, the final rules amend Rule 504 of Regulation D under the Securities Act to increase the aggregate amount of securities that may be offered and sold from $1 million to $5 million. Included in the amendment are bad actor disqualifications to Rule 504 offerings in an effort to provide additional investor protection. These rules will become effective January 20, 2017.

Finally, in light of the changes to Rule 504, the SEC repealed Rule 505 of Regulation D and will be effective May 22, 2017.

Release 33-10234, Investment Company Swing Pricing

The SEC is adopting amendments to rule 22c-1 under the Investment Company Act to permit a registered open-end management investment company (“open-end fund” or “fund”) (except a money market fund or exchange-traded fund), under certain circumstances, to use “swing pricing”. “Swing pricing” is defined as the process of adjusting the fund’s net asset value (“NAV”) per share to effectively pass on the costs stemming from shareholder purchase or redemption activity to the shareholders associated with that activity.

Additionally, the Commission adopted amendments to rule 31a-2 to require funds to preserve certain records related to swing pricing as well as other amendments to Form N-1A and Regulation S-X and a new item in Form N-CEN, all of which address a fund’s use of swing pricing. This rule becomes effective November 19, 2018

Release 33-10233, Investment Company Liquidity Risk Management Programs

The Securities and Exchange Commission is adopting new rules, a new form and amendments to a rule and forms intended to encourage effective liquidity risk management in the open-end investment company industry. The rules are designed to reduce the risk that funds will be unable to meet their redemption obligations and mitigate dilution of the interests of fund shareholders.

Under the new rules and amendments, the Commission now requires each registered open-end management investment company, including open-end exchange-traded funds (“ETFs”) but not including money market funds, to establish a liquidity risk management program and requires principle underwriters and depositors of unit investment trusts to engage in a limited liquidity review. Additionally, the Commission is also adopting amendments to Form N-1A regarding fund policy disclosures on the redemption of fund shares and new rule 30b1-10, amendments to Forms N-PORT and N-CEN, and Form N-LIQUID which will require a fund to confidentially notify the Commission of certain liquidity measures and liquidity risk management practices.

This rule is effective January 17, 2017 except for the amendments to Form N-CEN which are effective June 1, 2018.


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Appendix C - SEC Final Rules continued


Release 33-10231, Investment Company Reporting Modernization

The Securities and Exchange Commission is adopting new rules and forms as well as amendments to its rules and forms to improve the reporting and disclosure of information by registered investment companies. The Commission is adopting new Form N-PORT, which will require certain registered investment companies to report information about their monthly portfolio holdings to the as well as adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements. Other changes include the adoption of new forms which will require certain registered investment companies to annually report certain census-type information to the Commission in a structured data format and certain securities lending activity disclosures.

Additionally, the Commission is rescinding current Forms N-Q and N-SAR and amending certain other rules and forms. Collectively, these amendments will, among other things, improve the information that the Commission receives from investment companies.

This rule is effective January 17, 2017, with certain exceptions.

Release 34-78961, Standards for Covered Clearing Agencies

The SEC voted to adopt new rules to form improved standards for the operation and governance of SEC-registered securities clearing agencies that have been designated as systemically important by the Financial Stability Oversight Council or that are involved in more complex transactions. Securities clearing agencies covered by the new rules will be subject to new requirements regarding, among other things, their financial risk management, governance, recovery planning, operations, and disclosures to market participants and the public. The rules are effective as of December 12, 2016.

Release 33-10217, Adoption of Updated EDGAR Filer Manual

The updates are being made primarily to support new submission form types for money market mutual funds among other minor updates. This rule is effective September 30, 2016.

Release 34-78716, Access to Data Obtained by Security-Based Swap Data Repositories

Pursuant to section 763(i) of Title VII (“Title VII”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC is adopting amendments to rule 13n-4 under the Securities Exchange Act of 1934 (“Exchange Act”) related to regulatory access to security-based swap data held by security-based swap data repositories. The rule amendments would implement the conditional Exchange Act requirement that security-based swap data repositories make data available to certain regulators and other authorities. This rule is effective as of November 1, 2016.

Release IA-4509, Form ADV and Investment Advisers Act Rules

The SEC adopted amendments to Form ADV which provide additional information regarding investment advisers. The amendments also incorporate a method for private fund adviser entities operating a single advisory business to register using a single Form ADV as well as other clarifying and technical changes. This rule is effective as of October 31, 2016.

Release 34-78321, Regulation SBSR— Reporting and Dissemination of Security-Based Swap Information

This final rule includes certain amendments to Regulation SBSR-Reporting and Dissemination of Security-Based Swap Information (“Regulation SBSR”). Specifically, new Rule 901(a)(1) of Regulation SBSR requires a national securities exchange or security-based swap execution facility to report a security-based swap that will be submitted to clearing. Additionally, new Rule 901(a)(2)(i) of Regulation SBSR requires a registered clearing agency to report any security-based swap to which it is a counterparty. The final rule also includes certain other amendments to Rule 901(a) and 908(a). The SEC is offering guidance regarding the application of Regulation SBSR to prime brokerage transactions and to the allocation of cleared security-based swaps. The final rule is effective October 11, 2016. The rules also establish a compliance schedule for the portions of Regulation SBSR for which the Commission has not previously specified compliance dates. Compliance with these portions of Regulation SBSR will be phased in over a period of months, beginning on the first Monday that is the later of: six months after the date on which the first SDR that can accept transaction reports in an asset class registers with the Commission; or one month after security-based swap dealers and major security-based swap participants are required to register with the Commission.


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Release 34-78167, Disclosure of Payments by Resource Extraction Issuers

These rules require an issuer to disclose payments made to the U.S. federal government or to a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals, and is required to file annual reports with the SEC under the Securities Exchange Act. The issuer must also disclose payments made by a subsidiary or entity controlled by the issuer. Specifically, resource extraction issuers must disclose payments that are made to further the commercial development of oil, natural gas, or minerals (as defined in the rules), are not de minimis (i.e., either equal to or exceed $100,000 in either a single payment or in a series of payments), and include payments related to taxes; royalties; fees (including license fees); production entitlements; bonuses; dividends; infrastructure improvements; and if required by law or contract, community and social responsibility payments. Resource extraction issuers are required to comply with the rules starting for their fiscal years ending on or after September 30, 2018.

Release 33-10075, Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act

The SEC is amending the Exchange Act Registration requirements to reflect changes made by Title V and Title VI of the Jumpstart Our Business Startups Act (the "JOBS Act") and Title LXXXV of the Fixing America's Surface Transportation Act (the "FAST Act").The amendments revise our rules to reflect the new, higher thresholds for registration, termination of registration and suspension of reporting that were set forth in the JOBS Act and the FAST Act. In addition, the amendments revise the definition of “held of record” in Rule 12g5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), in accordance with the JOBS Act, to exclude certain securities held by persons who received them pursuant to employee compensation plans and establish a non-exclusive safe harbor for determining whether securities are “held of record” for purposes of registration under Exchange Act Section 12(g). The effective date of this final rule is June 9, 2016.


The SEC is adopting revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual and related rules to reflect updates to the EDGAR system. The updates are being made to support the 2016 XBRL taxonomies, add new submission types, and other changes. The EDGAR system was upgraded to support the new 2016 XBRL taxonomies on March 7, 2016. The EDGAR system is scheduled to be upgraded to support the other functionalities on April 25, 2016. This rule is effective as of May 19, 2016.

Release 34-77617, Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants

The SEC has voted to adopt final rules implementing a comprehensive set of business conduct standards and chief compliance officer requirements for security-based swap dealers and major security-based swap participants (security- based swap entities). The final rules were adopted under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rules require security-based swap entities to comply with a range of provisions designed to enhance transparency, facilitate informed customer decision-making, and heighten standards of professional conduct. The final rules are effective June 12, 2016.


The SEC is adopting revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual and related rules to reflect updates to the EDGAR system. The updates are being made to add various submission form types for broker-dealer annual reports in electronic format and Regulation Crowdfunding among other changes. The EDGAR system is scheduled to be upgraded to support this functionality on December 14, 2015. On January 25, 2016, EDGAR will be updated to add a new “Funding Portal” applicant type for filers to select when completing the process to apply for EDGAR access. This rule is effective as of January 4, 2016.

Release Nos. 33-9974;

34-76324, Regulation Crowdfunding

The final rules permit individuals to invest in securities-based crowdfunding transactions subject to certain investment limits. The rules also limit the amount of money an issuer can raise using the crowdfunding exemption, impose disclosure requirements on issuers for certain information about their business and securities offering, and create a regulatory framework for the broker-dealers and funding portals that facilitate the crowdfunding transactions. The new crowdfunding rules and forms will be effective May 16, 2016. The forms enabling funding portals to register with the SEC will be effective January 29, 2016.


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Release 33-9877, Pay Ratio Disclosure

Requires certain public companies to disclose the ratio of the annual total compensation of its principle executive officer to the median of the total annual compensation of its employees. The pay ratio rule allows companies the flexibility to use various methods and estimates to identify its median employee and calculate that median employee’s total annual compensation. The pay ratio rule does not apply to certain registrants including emerging growth companies, smaller reporting companies, and foreign private issuers. The disclosures under this rule will be required for the first fiscal year beginning on or after January 1, 2017.

Release 34-74244, Regulation SBSR- Reporting and Dissemination of Security- Based Swap Information and Release 34-74246, Security- Based Swap Data Repository Registration, Duties, and Core Principles

The SEC issued final rules regarding Regulation SBSR to establish reporting guidelines for security-based swap information on registered security- based swap data repositories. Policies and procedures have been provided for the repositories to ensure security-based swap dealers and major participants comply with the reporting requirements. These repositories will be required to register with the SEC as a securities information processor. Rules are effective May 18, 2015. The compliance date for Release 34-74246 is March 18, 2016. The compliance date for rules 900, 907, and 909 of Release 34-74244 is May 18, 2015. The compliance date for Rules 901, 902, 903, 904, 905, 906, and 908 of Regulation SBSR are proposed in release 34-74245.

Release 33-9638, Asset- Backed Securities Disclosure and Registration

This final rule significantly revises rules governing the asset-backed securities’ (ABS) offering process by increasing the disclosure requirements. Asset-level information (for ABS backed by assets related to certain types of assets such as real estate, auto, or debt securities) regarding each of the assets in a pool is required under these revisions in XML format. Additional time to review the offering document is provided to investors in the revised rule. Revised forms designed specifically for ABS will be provided as well. Finally, new shelf eligibility criteria have been established while removing credit rating references in the existing criteria. The rule is effective November 24, 2014. The compliance dates are:

• Offerings on Forms SF-1 and SF-3: Registrants must comply with new rules, forms, and disclosures no later than November 23, 2015.

• Asset Level Disclosures: Offerings of asset-backed securities backed by residential mortgages, commercial mortgages, auto loans, auto leases, and debt securities (including resecuritizations) must comply with asset-level disclosure requirements no later than November 23, 2016.

• Forms 10-D and 10-K: Any Form 10-D or Form 10-K that is filed after November 23, 2015 must comply with new rules and disclosures, except asset-level disclosures.

Release 34-77104, Security-Based Swap Transactions Connected with a Non-U.S. Person's Dealing Activity That Are Arranged, Negotiated, or Executed By Personnel Located in a U.S. Branch or Office or in a U.S. Branch or Office of an Agent; Security-Based Swap Dealer De Minimis Exception

This rule governs the cross-border application of the de minimis exception from designation as a security-based swap dealer. Under the final rule, a non-U.S. person will be required to include, in its calculations of whether it qualifies for such 'de minimi' exception, security-based swaps that are arranged, negotiated or executed by personnel (or personnel of an agent) located in a U.S branch or office. Final rule is effective April 19, 2016 and compliance is required the later of February 21, 2017 or the SBS entity counting date as defined in Section VII.

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