According to this article from the Washington Post with Bloomberg, in February, House Financial Services Committee Chair Jeb Hensarling and three other House members (Scott Garrett of New Jersey, Bill Huizenga of Michigan, and Ed Royce of California) sent a letter to SEC Chair Mary Jo White urging that the SEC end its appeal of the conflict minerals case, National Association of Manufacturers, Inc. v. SEC, currently pending in the DC Circuit. Whether the pressure will have any impact remains to be seen. Hensarling asked for a report on the amount of funds and time spent defending the rule.
Meanwhile, see this Keith Bishop blog entitled “Oxfam America Argues SEC Has “Unlawfully Withheld And Unreasonably Delayed” Resource Extraction Rule.” And the transcript from our recent webcast – “Conflict Minerals: Tackling Your Next Form SD” – continues to draw many eyeballs…
“Accredited Investors”: Meeting of Advisory Committee on Small & Emerging Companies
This MoFo blog and SIFMA recap covers the latest committee meeting that dealt with the hot button topics for smaller companies – & this discussion draft on the “accredited investor” definition is worth reading…
FASB Eliminates Extraordinary Items Reporting
Here’s a blog from Linda Griggs, Rani Doyle & Sean Donahue of Morgan Lewis:
In January, the FASB adopted a final Accounting Standards Update that eliminates the requirement that preparers report events that meet the criteria for extraordinary classification separately in an income statement, net of tax and after income from continuing operations. Not only was the classification of an event as extraordinary time consuming and somewhat complex for preparers, but users advised the FASB that the extraordinary item classification was rare and not very useful. The FASB’s action was part of its Simplification Initiative, which is intended to reduce costs and complexity while “maintaining or improving the usefulness” of financial information to users. Through this action, the FASB eliminated an inconsistency with International Financial Reporting Standards’ IAS 1, “Presentation of Financial Statements,” which prohibits the presentation and disclosure of extraordinary items on an income statement.
The existing accounting standards define an extraordinary event as one that meets both of the following criteria and is material when compared to income before extraordinary items, the trend of annual earnings before extraordinary items, or some other appropriate criteria:
1. Unusual nature. The underlying event or transaction should possess a high degree of abnormality and be clearly unrelated to, or only incidentally related to, an entity’s ordinary and typical activities taking into account the environment in which the entity operates.
2. Infrequency of occurrence. The underlying event or transaction should be of a type that would not reasonably be expected to recur in the foreseeable future, taking into account the environment in which the entity operates.
The existing standard excludes various gains and losses, such as the write-down or write-off of receivables, inventories, and other intangible assets; foreign currency gains and losses; gains or losses from the disposal of a component of an entity or the sale or abandonment of property, plant, or equipment; and gains and losses from the effects of a strike, including those against competitors and major suppliers. Examples of events that meet the current standard are gains or losses that are a direct result of a major casualty, such as an earthquake or an expropriation.
The elimination of the extraordinary item classification will not reduce information about events that would have been classified as extraordinary. Preparers of financial statements will need to report separately in the income statement as a part of income from continuing operations, or, alternatively, report in the notes to the financial statements events that previously would have met the definition of an extraordinary item. This requirement is consistent with the requirement in existing GAAP for preparers to report the nature and financial effects of material events that are “unusual in nature” or of a type that indicates “infrequency of occurrence,” as each of those terms is explained in the current definition of an extraordinary item noted above.
Accounting Standards Update No. 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A preparer may adopt the standard early, as long as the preparer adopts the standard from the beginning of its fiscal year. In addition, a preparer may adopt the standard on a retrospective basis.
SCOTUS Interprets Sarbanes-Oxley Evidence Destruction Provisions
This blog by Steve Quinlivan covers a Supreme Court case that makes it clear that Sarbanes-Oxley doesn’t apply to fish…
– Broc Romanek