assurance

Q2
2016

Accounting, Reporting and Auditing Developments

July 5, 2016

Assurance | Tax | Advisory | dhgllp.com

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

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

Financial Instruments...........................................................................................................................4

Revenue Recognition..........................................................................................................................4

U.S. Securities & Exchange Commission (SEC).......................................................................................6

Assurance Matters......................................................................................................................................8

Public Company Accounting Oversight Board (PCAOB).........................................................................8

American Institute of CPAs (AICPA)..........................................................................................................9

Appendix A Effective Date Highlights for Public Business Entities...................................................10

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

Appendix C SEC Final Rules Highlights...............................................................................................30

2
assurance Second Quarter 2016 Accounting, Reporting & Auditing Developments
second quarter 2016 accounting & auditing 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
2016 by Dixon Hughes Goodman LLP. All rights reserved. Permission is granted to view, store, print, reproduce and distribute any pages of this Newsletter provided that (a)
no page is modified and (b) this page is included with any distribution.
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.

3
assurance Second Quarter 2016 Accounting, Reporting & Auditing Developments
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.
Financial Instruments
ASU 2016-13 Financial Instruments Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments
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.
Assets Measured at Amortized Cost
Financial assets (or a group of financial assets) measured on an
amortized cost basis shall be presented at the net amount expected
to be collected through the use of a credit loss valuation account
that is deducted from the amortized cost basis of the financial
assets. The income statement will include the measurement of
credit losses for newly recognized financial assets as well as
the expected increases or decreases of expected credit losses
that were deemed to have taken place during the period. The
measurement of expected credit losses is to be based on historical
experience, current conditions, and reasonable and supportable
forward looking information.
The allowance for credit losses for purchased financial assets
with a more-than insignificant amount of credit deterioration since
origination (PCD assets) that are measured at amortized cost basis
is determined in a similar manner to other financial assets measured
at amortized cost basis; however, the initial allowance for credit
losses is added to the purchase price rather than being reported as
a credit loss expense. Only subsequent changes in the allowance
for credit losses are recorded as a credit loss expense for these
assets. Interest income for PCD assets should be recognized based
on the effective interest rate, excluding the discount embedded in
the purchase price that is attributable to the acquirers assessment
of credit losses at acquisition.
views
ASU 2016-13 represents a shift in focus from an incurred
loss model to one that recognizes losses expected to occur
over the life of an asset. Further, this guidance applies to
all industries, not just financial services. The new standard
applies to all companies that hold financial assets that are not
accounted for at fair value, including trade receivables, debt
securities, loans and net investments in leases.
4
assurance
Available-for-Sale Debt Securities
Credit losses relating to available-for-sale debt securities should
be recorded through an allowance for credit losses. Although the
new ASU focuses on the expected loss model for determining
impairments, the FASB recognizes that available-for-sale
accounting is based on the concept that the investment could be
sold at fair-value. As such, the new ASU limits the allowance for
credit losses for available-for-sale securities to the amount which
fair value is less than amortized cost.
The allowance for credit losses for purchased available-for-
sale securities with a more-than-insignificant amount of credit
deterioration since origination is determined in a similar manner to
other available-for-sale debt securities; however, the initial allowance
for credit losses is added to the purchase price rather than reported
as a credit loss expense. Only subsequent changes in the allowance
for credit losses are recorded in credit loss expense. Interest income
should be recognized based on the effective interest rate, excluding
the discount embedded in the purchase price that is attributable to
the acquirers assessment of credit losses at acquisition.
Transition and Effective Dates
This ASU will be required to be implemented through a cumulative-
effect adjustment to retained earnings as of the beginning of the
first reporting period in which the amendments are effective.
The ASU is effective 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. For all other organizations, the ASU on credit losses will take
effect for fiscal years beginning after December 15, 2020, and for
interim periods within fiscal years beginning after December 15,
2021.
Revenue Recognition
During the second quarter of 2016, the FASB released three ASUs
for the purpose of providing additional guidance and clarifications
related to the implementation of the new revenue recognition
guidance, Revenue from Contracts with Customers (Topic 606).
These ASUs do not change the core principle of the revenue
recognition guidance in Topic 606, which 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. As a reminder, Topic 606 provides a five-step
process for recognizing revenue:
1. Identify the contract with a customer
2. Identify the performance obligation
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations
in the contract
5. Recognize revenue when (or as) the entity satisfies a
performance obligation
Additional information regarding the effective dates of Topic 606,
including guidance on early adoption of the standard is included in
Appendixes A and B to this document.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Accounting & Financial Reporting Matters
ASU 2016-12 Revenue from Contracts with Customers (Topic
606): Narrow-Scope Improvements and Practical Expedients
This ASU is intended to improve the operability and understandability
of the implementation guidance by providing the following
clarifications and practical expedients:
Assessing the collectibility criterion in paragraph 606-10-
25-1(e) and accounting for contracts that do not meet the
criteria for step one. A contract with a customer must meet
several criteria in order to be accounted for as a contract with
a customer under Topic 606. The amendments are intended
to clarify the objective of the collectibility criterion in step one.
The objective of this assessment is to determine whether the
contract is valid and represents a substantive transaction on
the basis of whether a customer has the ability and intention to
pay the promised consideration in exchange for the goods or
services that will be transferred to the customer.
The amendments also add a new criterion to clarify when
revenue would be recognized for a contract that fails to meet the
criteria in step one. That criterion allows an entity to recognize
revenue in the amount of consideration received when the entity
has transferred control of the goods or services, the entity has
stopped transferring goods or services (if applicable) and has
no obligation under the contract to transfer additional goods or
services, and the consideration received from the customer is
nonrefundable.
Presentation of Sales Taxes and Other Similar Taxes
Collected from Customers. These amendments permit an
entity, as an accounting policy election, to exclude amounts
collected from customers for all sales (and other similar) taxes
from the transaction price.
Noncash Consideration. The amendments specify that the
measurement date for noncash consideration is contract
inception. The amendments also clarify that the variable
consideration guidance applies only to variability resulting from
reasons other than the form of the consideration.
Contract Modifications at Transition.The amendments
provide a practical expedient that permits an entity to reflect
the aggregate effect of all modifications that occur before the
beginning of the earliest period presented when identifying the
satisfied and unsatisfied performance obligations, determining
the transaction price, and allocating the transaction price to the
satisfied and unsatisfied performance obligations.
Completed Contracts at Transition.The amendments clarify
that a completed contract for purposes of transition is a contract
for which all (or substantially all) of the revenue was recognized
under legacy GAAP before the date of initial application. In
addition, the amendments permit an entity to apply the modified
retrospective transition method either to all contracts or only to
contracts that are not completed contracts.
Technical Correction.The amendments clarify that an entity
that retrospectively applies the guidance in Topic 606 to each
prior reporting period is not required to disclose the effect of
the accounting change for the period of adoption. However, an
entity is still required to disclose the effect of the changes on any
prior periods retrospectively adjusted.
5
assurance
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
This ASU rescinds SEC paragraphs in the FASB codification
pursuant to two SEC Staff Announcements at the March 3, 2016
Emerging Issues Task Force (EITF) meeting.
SEC Staff Announcement, Rescission of Certain SEC Staff
Observer Comments upon Adoption of Topic 606, Revenue from
Contracts with Customers, was announced at the March 3, 2016,
EITF meeting. The SEC Staff is rescinding the following SEC Staff
Observer comments that are codified in Topic 605,Revenue
Recognition,and Topic 932,Extractive ActivitiesOil 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 Vendors 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.
1. Identifying Performance Obligations
Before an entity can identify its performance obligations in
a contract with a customer, the entity must first identify the
promised goods or services in the contract. The amendments
add the following guidance:
An entity is not required to assess whether promised
goods or services are performance obligations if they are
immaterial in the context of the contract with the customer.
An entity is permitted, as an accounting policy election, to
account for shipping and handling activities that occur after
the customer has obtained control of a good as an activity
to fulfill the promise to transfer the good rather than as an
additional promised service.
To identify performance obligations in a contract, an entity
evaluates whether promised goods and services are distinct.
The evaluation of whether goods or services are distinct
includes two criteria to be assessed, one of which is that the
promises are separately identifiable. The amendments improve
the guidance this criterion by:
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Accounting & Financial Reporting Matters
Better articulating the principle for determining whether
promises to transfer goods or services to a customer
are separately identifiable by emphasizing that an entity
determines whether the nature of its promise in the contract
is to transfer each of the goods or services or whether the
promise is to transfer a combined item (or items) to which
the promised goods and/or services are inputs.
Revising the related factors and examples to align with the
improved articulation of the separately identifiable principle.
2. Licensing Implementation Guidance
Topic 606 includes implementation guidance on determining
whether an entitys promise to grant a license provides a
customer with either a right to use the entitys intellectual
property (which is satisfied at a point in time) or a right to access
the entitys intellectual property (which is satisfied over time).
The amendments are intended to improve the operability and
understandability of the licensing implementation guidance by
clarifying the following:
An entitys promise to grant a customer a license to
intellectual property that has significant standalone
functionality (e.g., the ability to process a transaction,
perform a function or task, or be played or aired) does not
include supporting or maintaining that intellectual property
during the license period.
An entitys promise to grant a customer a license to
symbolic intellectual property (that is, intellectual property
that does not have significant standalone functionality)
includes supporting or maintaining that intellectual property
during the license period.
An entity considers the nature of its promise in granting
a license, regardless of whether the license is distinct,
in order to apply the other guidance in Topic 606 to a
single performance obligation that includes a license and
other goods or services (in particular, the guidance on
determining whether a performance obligation is satisfied
over time or at a point in time and the guidance on how
best to measure progress toward the complete satisfaction
of a performance obligation satisfied over time).
U.S. Securities & Exchange Commission (SEC)
Non-GAAP Financial Measures
The SECs Division of Corporation Finance has updated its
compliance and disclosure interpretations (CD&I) related to Non-
GAAP Measures. Updates to the CD&Is include new Q&As on when
the use of certain non-GAAP measures may be misleading.
As noted within the CD&Is, while the use of Non-GAAP measures is
permitted, they should:
6
assurance
Not be more prominent than GAAP measures. Examples
provided by the SEC staff of Non-GAAP measures being more
prominent than GAAP measures include:
Presenting a full income statement of non-GAAP measures
or presenting a full non-GAAP income statement when
reconciling non-GAAP measures to the most directly
comparable GAAP measures
Omitting comparable GAAP measures from an earnings
release headline or caption that includes non-GAAP
measures
Presenting a non-GAAP measure using a style of
presentation (e.g., bold, larger font) that emphasizes the
non-GAAP measure over the comparable GAAP measure
A non-GAAP measure that precedes the most directly
comparable GAAP measure (including in an earnings release
headline or caption)
Describing a non-GAAP measure as, for example, record
performance or exceptional without at least an equally
prominent descriptive characterization of the comparable
GAAP measure
Providing tabular disclosure of non-GAAP financial
measures without preceding it with an equally prominent
tabular disclosure of the comparable GAAP measures or
including the comparable GAAP measures in the same table
Excluding a quantitative reconciliation with respect to a
forward-looking non-GAAP measure in reliance on the
unreasonable efforts exception in Item 10(e)(1)(i)(B) without
disclosing that fact and identifying the information that is
unavailable and its probable significance in a location of
equal or greater prominence
Providing discussion and analysis of a non-GAAP measure
without a similar discussion and analysis of the comparable
GAAP measure in a location with equal or greater prominence
views
There have been numerous recent articles and public
statements regarding the use of Non-GAAP measures in
financial reporting. In particular, the SECs Chair Mary Jo
White and Chief Accountant, James Schnurr, have expressed
concerns in recent public speeches over the nature and extent
of the use of non-GAAP measures. We also have seen an
increase in the number of SEC comments to preparers on the
topic.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Accounting & Financial Reporting Matters
Be clearly noted as a non-GAAP measure and not titled in any
word or phrase that already has a definition under GAAP.
Include a definition of how the non-GAAP measure was
calculated, and explain why it is important to the company and
useful to the readers of the financial statements. For instance, a
reconciliation to the most directly comparable GAAP measure is
required in most circumstances.
Not be misleading in any way or confusing to users of the
financial statements.
The SECs Final Rule: Conditions for Use of Non-GAAP Financial
Measures also provides guidance around the use of non-GAAP
measures.
SEC Staff Publishes New Compliance and Disclosure
Interpretation on FAST Act
During the quarter, the SEC approved an Interim Final Rule that allows
Form 10-K filers to provide a summary of business and financial
information contained in its Annual Report. The rule implements a
provision of the Fixing Americas Surface Transportation (FAST) Act.
The FAST Act was adopted in December 2015 and includes several
amendments to the federal securities laws, including provisions
related to improving access to capital for emerging growth
companies, disclosure modernization and simplification, and small
company simple registration requirements.
Business Conduct Standards for Security-Based Swap Entities
The SEC adopted finalrules 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 27, 2016.
Regulation S-K Concept Release
The SEC issued on April 13, 2016, Concept Release, Business and
Financial Disclosure Required by Regulation S-K (Concept Release)
seeking public comment on modernizing certain business and
financial disclosure requirements in Regulation S-K. The Concept
Release is part of the Division of Corporation Finances Disclosure
Effectiveness Initiative and intends to evaluate the usefulness and
effectiveness of the disclosure requirements in Regulation S-K. The
deadline for submitting comments is July 21, 2016.
Regulation Crowdfunding
During the second quarter of 2016, the SEC staff released
Regulation Crowdfunding: A Small Entity Compliance Guide for
Issuers which provides an outline to the compliance requirements
of Regulation Crowdfunding.
7
assurance
Under the Securities Act of 1933 (the Exchange Act), the offer
and sale of securities must be registered unless an exemption from
registration is available. Title III of the Jumpstart Our Business
Startups (JOBS) Act of 2012 added Securities Act Section 4(a)
(6) that provides an exemption from registration for certain
crowdfunding transactions. In 2015, the SEC adopted Regulation
Crowdfunding to implement the requirements of Title III. Under
the rules, eligible companies will be allowed to raise capital using
Regulation Crowdfunding starting May 16, 2016.
In order to be eligible to raise funds under Regulation Crowdfunding,
the capital raise is subject to maximum capital raise limitations
and maximum investor investment limitations during a 12 month
period. Additionally, Regulation Crowdfunding offerings must use
an online platform operated by a broker-dealer or funding portal
that is registered with the SEC and FINRA. Certain companies such
as non-U.S. Companies and companies that are already Exchange
Act reporting companies are not eligible to raise capital under
Regulation Crowdfunding.
views
There has been interest in Crowdfunding given the ability to
quickly raise public capital with less compliance cost versus
becoming a traditional SEC Registered Company.
Although the reduced cost and complexity of compliance
under Regulation Crowdfunding is attractive, we encourage
those interested in raising capital under this new regulation to
consider the condition of their readiness for a review or audit
if the amount of capital raised is such that would require it.
Maintaining books and records sufficient for a review or audit
may pose some additional and potentially unanticipated costs
and effort.
An issuer conducting a Regulation Crowdfunding offering must
file a Form C with the SEC through the Electronic Data Gathering,
Analysis and Retrieval (EDGAR) system. Form C requires the
issuer to disclose key information about the business, its officers
and directors, intended use of proceeds, and certain related party
transactions among other items. In addition, Form C requires
principal executive certified, independent public accountant
reviewed, or independent public accountant audited issuer financial
statements depending on the amount of capital offered and sold
during the preceding 12 month period in reliance on Regulation
Crowdfunding. In all cases, if issuer financial statements with a
higher level of assurance than what is required are available, these
must be provided in lieu of the minimum requirement.
An issuer that sold securities in a Regulation Crowdfunding offering
is required to provide an annual report on Form C-AR no later
than 120 days after the end of its fiscal year. The report must be
filed on EDGAR and posted on the issuers website. The annual
report requires information similar to what is required in the offering
statement, although neither an audit nor a review of the financial
statements is required.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Accounting & Financial Reporting Matters
Finally, the SEC has outlined limitations on advertising, sales after
original offering, other exemptions and bad actor disqualifications.
The SEC staff issued a C&DI clarifying Rules 100, 201, 204, and
205 on crowdfunding exemption and requirements, disclosure
requirements, advertising, and promoter compensation,
respectively.
Assurance Matters
Public Company Accounting Oversight Board
(PCAOB)
PCAOB Re-proposes Changes to the Auditors Report
During the quarter, the PCAOB re-proposed changes to the
auditors report that would require auditors to disclose matters that
were communicated or required to be communicated to the audit
committee that relate to material accounts or disclosures involving
complex subject matter or significant auditor judgement. In
addition, the re-proposal would require auditors to disclose auditor
tenure and independence in the audit report. Comments are due
August 15, 2016.
SEC Approves PCAOB Standard on Engagement Partner
Disclosure
On May 9, 2016, the SEC approved new rules adopted by the
PCAOB that will require audit firms to file with the PCAOB a form
disclosing the name of the lead audit engagement partner as well
as the names of other audit firms that participated in each audit.
The disclosure requirement for the engagement partner is effective
for auditors reports issued on or after January 31, 2017. For the
disclosure of information about other audit firms participating in
the audit, the requirement is effective for auditors reports issued
on or after June 30, 2017. For more information, including specific
disclosure requirements, please refer to our Fourth Quarter 2015
A&A Update.
PCAOB Issues Report on Auditing Standard No. 16,
Communications with Audit Committee (AS16) Implementation
and Compliance
The PCAOB issued a report on audit firms and audit engagement
teams implementation of and compliance with, AS 16, also known
as AS 1301 under the Boards reorganized standards, and other
applicable PCAOB rules and standards. The report is based on
the Boards 2014 and preliminary 2015 domestic and non-U.S.
registered firms inspection results. The inspections indicated
that most firms inspected in 2014 (and preliminarily in 2015) had
incorporated the requirements of the standard into their audit
methodologies, introduced relevant practice aids, and provided
training to their partners and staff.
views
Although the report concludes that the majority of firms have
appropriately implemented and applied the requirements
of AS 16, all registered firms should review the report and
determine whether the deficiencies that were noted by the
Inspections staff could be present in their practices and if so,
take appropriate corrective action.
8
assurance
Other Matters
The SEC adopted the Updated EDGAR Manual in June of 2016. 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.
PCAOB Staff Alert Identifies Improper Alteration of Audit
Documentation
On April 21, 2016, the PCAOB staff published the Staff Audit
Practice Alert No. 14, Improper Alteration of Audit Documentation.
The alert details recent oversight activities that indicate instances
of improper alteration of audit documentation in a range of firms in
connection with PCAOB inspections or investigations. The PCAOB
emphasized that improper alteration of audit documentation is
inconsistent with an auditors professional duty to act with integrity
and can result in severe disciplinary actions.
PCAOB Proposes to Increase Requirements for Supervision of
Other Auditors
The PCAOB on April 12, 2016 proposed amendments to certain
existing standards to increase the current requirements and impose
a more consistent approach to the lead auditors supervision of
other auditors. The proposed amendments are as follows:
The proposal would amend AS 1201 to provide additional
direction to the lead auditor on how to apply the principles-
based provisions of the supervision of other auditors as well as
prescribe certain procedures to be performed.
The proposal includes a number of amendments to AS
2101. In general, these amendments incorporate and update
requirements from AS 1205 (which is proposed to be superseded
and is noted below), and amend existing requirements to specify
that they be performed by the lead auditor. For example, the
proposal would incorporate and revise the requirements in AS
1205 for determining the firms sufficiency of participation in an
audit that involves other auditors.
The proposal would amend AS 1215 to require that the
documentation of the office of the firm issuing the auditors
report contain a specified list of other auditors working papers
reviewed by the lead auditor but not retained by the lead auditor.
The proposal includes an amendment to AS 1220, which would
specifically require the engagement quality reviewer, in an audit
involving other auditors or referred-to auditors, to evaluate
the engagement partners determination of his or her firms
sufficiency of participation in the audit.
The proposal would supersede AS 1205 and thus eliminate the
ability of auditors to use the work and reports of other auditors
under the requirements of that standard. Thus, if the proposal
were adopted, the lead auditor would be required to supervise
other auditors under AS 1201 (as it would be amended), the
risk-based auditing standard on supervision, when the lead
auditor assumes responsibility for the other auditors work.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Assurance Matters
The PCAOB also proposed a new auditing standard for
circumstances in which the lead auditor shares responsibility for
the audit with another firm. The new standard would supersede AS
1205 (formerly AU sec. 543) and retain, with modifications, many of
the existing requirements of AS 1205. In addition to the requirements
of AS 1205, the new standard would require the following:
A representation from the referred-to auditor that they are
licensed to practice under the laws of the jurisdiction that apply
to the work of the referred-to auditor
If the referred-to auditor would play a substantial role in the
preparation or furnishing of the lead auditors report, determining
whether the referred-to auditor is registered pursuant to the
rules of the PCAOB
A disclosure of the name of the referred-to auditor in the lead
auditors report.
The deadline for submitting comments is July 29, 2016.
PCAOB Inspection Briefs
On April 19, 2016, the PCAOB published two staff inspection briefs,
which preview results of the 2015 inspections of issuers and broker-
dealer audits:
Preview of Observations from 2015 Inspections of Auditors
of Issuers Indicated an improvement in the number of audit
deficiencies identified from 2014, but continued to note frequent
audit deficiencies in the following three areas:
Internal control over financial reporting, including
management review controls
Assessing and responding to risks of material misstatement
Auditing accounting estimates, including fair value
measurements
Preview of Observations from 2015 Inspections of Auditors
of Brokers and Dealers Indicated fewer independence
impairments than in prior years, but noted the 2015 inspection
cycle focused on, and identified deficiencies related to:
Auditor independence
Financial statement audit procedures
Audit procedures on the supplemental schedules to the
financial statements
The examination of compliance reports and the review of
exemption reports under newly applicable PCAOB standards
The engagement quality review
9
assurance
American Institute of CPAs (AICPA)
AU-C Section 9700,Forming an Opinion and Reporting on
Financial Statements - Auditing Interpretations of Section 700
The Audit Standard Board (ASB) has issued Interpretation No. 3,
Reporting on Audits Conducted in Accordance With Auditing
Standards Generally Accepted in the United States of America
(GAAS) and International Standards on Auditing, of AU-C section
700,Forming an Opinion and Reporting on Financial Statements.
This interpretation was issued to provide guidance for situations in
an auditor may want to refer to more than one standard in the audit
reoprt. For instance, an auditor may have conducted an audit under
GAAS and also conducted the audit in accordance with another
set of auditing standards (for example, the IAASBs International
Standards on Auditing (ISAs), the standards of the PCAOB, or
Government Auditing Standards).
In January 2015, the IAASB issued new standards relating to
auditor reporting, which among other matters, made revisions to the
auditors report layout and wording. Interpretation No. 3 addresses
the implications for the auditors report when reporting on an audit
conducted in accordance with both GAAS and the new and revised
ISAs when the auditor intends to refer to both sets of standards.
Interpretation No. 3 provides that the auditors report may refer
to the ISAs in addition to the national auditing standards, but the
auditor should do so only if:
There is no conflict between the requirements in the national
auditing standards [i.e., GAAS] and those in the ISAs, subject to
certain requirements; and
The auditors report includes, at a minimum, each of the
elements set out in ISA 700 (Revised), paragraph 50(a)(o),
when the auditor uses the layout or wording specified by the
national auditing standards.
Auditing interpretations issued by the ASB are intended to be
recommendations for the application of GAAS in particular
circumstances. Such interpretations are not components of the
auditing standards, but are included in the Statements on Auditing
Standards codification adjacent to the relevant AU-C Section.
Auditing interpretations are classified as interpretive guidance
to be used by the auditor in planning and conducting a financial
statement audit in accordance with U.S. GAAS.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2016
The 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
Fiscal years beginning after
ASU 2015-16 Business Combinations
December 15, 2015, including
(Topic 805): Simplifying the Accounting for
interim periods within those
Measurement-Period Adjustments
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
ASU 2015-09: Financial Services Insurance
(Topic 944): Disclosures about Short-
Duration Contracts
assurance
Effective Date
Public Business Entities
years
Part I and Part II
Retrospective,
Fiscal years beginning after
December 15, 2015
Fiscal years beginning
after December 15, 2015,
and interim periods within
fiscal years beginning after
December 15, 2016
Transition Summary
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
Prospective amendments also require the acquirer to record, in the same periods financial
statements, the effect on earnings of changes in depreciation, amortization,
or other income if any, as a result of the change to the provisional amounts,
calculated as if the accounting had been completed at the acquisition date.
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,
Part III and risks. In addition, in cases where an investment is measured using the
Prospective 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 investments 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 plans 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.
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
Retrospective 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.
10
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2016 continued
Accounting Standards Update
ASU 2015-07: Fair Value Measurement (Topic
820): Disclosures for Investments in Certain
Entities that Calculate Net Asset Value per
Share (or Its Equivalent)
ASU 2015-06: Earnings Per Share (Topic
260): Effects on Historical Earnings per Unit
of Master Limited Partnership Dropdown
Transactions
ASU 2015-05: Intangibles Goodwill and
Other Internal Use Software (Subtopic 350-
40): Customers Accounting for Fees Paid in
a Cloud Computing Arrangement
ASU 2015-04: Compensation Retirement
Benefits (Topic 715): Practical Expedient for
Measurement Date of an Employers Defined
Benefit Obligation and Plan Assets
assurance
Effective Date
Transition Summary
Public Business Entities
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
Fiscal years beginning after categorize within the fair value hierarchy investments for which fair value is
December 15, 2015, and measured using the net asset value per share practical expedient. The ASU
Retrospective
interim periods within those also removes the requirement to make certain disclosures for all investments
years 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.
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
Fiscal years beginning after
a dropdown transaction should be allocated entirely to the general partner.
December 15, 2015, and
Retrospective In these circumstances, the previously reported earnings per unit of the
interim periods within those
limited partners (which is typically the earnings per unit measure presented
fiscal years
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.
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
Fiscal years beginning after software license element of the arrangement consistent with the acquisition
December 15, 2015, and Prospective or of other software licenses. If a cloud computing arrangement does not
interim periods within those Retrospective1 include a software license, the customer should account for the arrangement
years as a service contract. The amendments do not change the accounting for a
customers 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.
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 entitys fiscal year-end and apply that
Fiscal years beginning after practical expedient consistently from year to year. The practical expedient
December 15, 2015, and should be applied consistently to all plans, if an entity has more than one
Prospective
interim periods within those plan. Employee benefit plans are not within the scope of the amendments.
years The ASU also provides guidance for accounting and disclosing contributions
and significant events occurring between the month- end date used and a
companys 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.
11
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2016 continued
Accounting Standards Update
ASU 2015-03: Interest Imputation of
Interest (Subtopic 835-300: Simplifying the
Presentation of Debt Issuance Costs
ASU 2015-02: Consolidation (Topic 810):
Amendments to the Consolidation Analysis
ASU 2015-01: Income Statement
Extraordinary and Unusual Items (Subtopic
225-20): Simplifying Income Statement
Presentation by Eliminating the Concept of
Extraordinary Items
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)
assurance
Effective Date
Transition Summary
Public Business Entities
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
Fiscal years beginning after
deduction from the carrying amount of that debt liability, consistent with debt
December 15, 2015, and
Retrospective discounts. The FASB notes within the ASU, capitalized debt issuance costs
interim periods within those
do not meet the definition of an asset and are more akin to a debt discount,
years
thereby reducing the carrying amount of the proceeds received. Also refer to
ASU 2015-15.
This ASU modifies the consolidation model for reporting organizations under
both the variable interest model and the voting interest model. The ASU is
Periods beginning after Full or Modified
generally expected to reduce the number of situations where consolidation is
December 15, 2015 Retrospective
required; however, in certain circumstances, the ASU may result in companies
consolidating entities previously unconsolidated.
This ASU was also issued as part of the FASBs simplification initiative,
Subtopic 225-20 requires an entity to separately classify, present, and
Periods beginning after Prospective or
disclose extraordinary events and transactions. In response to feedback
December 15, 2015 Retrospective
received from users and preparers the FASB issued this ASU to eliminate the
concept of extraordinary items.
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
Fiscal years beginning after
contract, and if certain criteria are met the derivative would be separated from
December 15, 2015, and Full or Modified
the underlying share and accounted for under Topic 815-10, Derivatives and
interim periods within those Retrospective
Hedging. The evaluation of whether or not the features are clearly and closely
years
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).
12
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2016 continued
Accounting Standards Update
ASU 2014-15: Presentation of Financial
StatementsGoing Concern (Subtopic
205- 40): Disclosure of Uncertainties about
an Entitys Ability to Continue as a Going
Concern
ASU 2014-13: Consolidation (Topic 810):
Measuring the Financial Assets and the
Financial Liabilities of a Consolidated
Collateralized Financing Entity
ASU 2014-12: CompensationStock
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
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.
assurance
Effective Date
Public Business Entities
Fiscal years ending after
December 15, 2016, and
interim periods within
fiscal years beginning after
December 15, 2016
Fiscal years beginning after
December 15, 2015, and
interim periods within those
years
Fiscal years beginning after
December 15, 2015, and
interim periods within those
years
Transition Summary
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 managements
responsibility to evaluate going concern uncertainties. As a result, this
Update clarifies managements responsibility to evaluate and provide related
N/A disclosures if there are any conditions or events, as a whole, that raise
substantial doubt about the entitys 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.
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
Full or Modified
the financial assets of the collateralized financing entity. This measurement
Retrospective
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.
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
Prospective the grant-date fair value calculation of the award, rather compensation cost
or Modified should be recorded when it is probable the performance target will be reached
Retrospective 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.
13
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyond
The 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
ASU 2016-13 Financial Instruments Credit
Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments
ASU 2016-12 Revenue from Contracts
with Customers (Topic 606): Narrow-Scope
Improvements and Practical Expedients
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
assurance
Effective Date Early
Transition Summary
Public Business Enterprises Adopt
For public business entities that are
The ASU is intended to improve financial reporting by
SEC filers for fiscal years, and interim
requiring timely recording of credit losses on loans
periods within those fiscal years,
and other financial instruments held by financial
beginning after December 15, 2019.
Modified institutions and other organizations. The ASU
For public business entities that are 2
Retrospective requires the measurement of all expected credit
not SEC filers, the ASU is effective for
losses for financial assets not recorded at fair value
fiscal years beginning after December
based on historical experience, current conditions,
15, 2020, and interim periods within
and reasonable and supportable forecasts.
those fiscal years.
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
Fiscal years beginning after collectibility criterion in paragraph 606-10-25-1(e)
Full or Modified
December 15, 2017, including interim and accounting for contracts that do not meet the
Retrospective
periods within those years. 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.
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
Fiscal years beginning after
Full or Modified 605-20-S99-2;
December 15, 2017, including interim
Retrospective
periods within those years. 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 Vendors
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.
14
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyond continued
Accounting Standards Update
ASU 2016-10 Revenue from Contracts with
Customers (Topic 606): Identifying Performance
Obligations and Licensing
ASU 2016-09 Compensation Stock
Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting
ASU 2016-08 Revenue from Contracts with
Customers (Topic 606): Principal versus Agent
Considerations (Reporting Revenue Gross versus
Net)
ASU 2016-07 Investments - Equity Method
and Joint Ventures (Topic 323): Simplifying the
Transition to the Equity Method of Accounting
ASU 2016-06 - Derivatives and Hedging (Topic
815): Contingent Put and Call Options in Debt
Instruments
ASU 2016-05 - Derivatives and Hedging (Topic
815): Effect of Derivative Contract Novations on
Existing Hedge Accounting Relationships
ASU 2016-04 - Liabilities Extinguishments
of Liabilities (Subtopic 405-20): Recognition
of Breakage for Certain Prepaid Stored-Value
Products
assurance
Effective Date Early
Transition Summary
Public Business Enterprises Adopt
The amendments in this ASU provide clarification
Fiscal years beginning after
Full or Modified to two components of Topic 606: 1) identifying
December 15, 2017, including interim
Retrospective performance obligations, and 2) licensing
periods within those years.
implementation guidance.
The amendments in this ASU are intended to improve
the accounting for employee share-based payments
and affect all organizations that issue share-based
Prospective,
Fiscal years beginning after payment awards to their employees. Several aspects
Modified
December 15, 2016, and interim of the accounting for share-based payment award
Retrospective, or
periods within those years transactions are simplified, including: (a) income
Retrospective
tax consequences; (b) classification of awards as
either equity or liabilities; and (c) classification on the
statement of cash flows.
The amendments are intended to improve the
Fiscal years beginning after
Full or Modified implementation guidance on principal versus agent
December 15, 2017, including interim
Retrospective considerations by amending existing illustrative
periods within those years.
examples and adding new examples.
Fiscal years beginning after The amendments eliminate the requirement to
December 15, 2016, including interim Prospective retroactively adjust an investment upon qualifying for
periods within those years. the equity method of accounting
The amendments clarify the required steps to be taken
Fiscal years beginning after when assessing whether the economic characteristics
Modified
December 15, 2016, including interim and risks of call/put options are clearly and closely
Retrospective
periods within those years. related to those of their debt hosts - which is one of
the criteria for bifurcating an embedded derivative.
The amendments clarify that a change in the
Fiscal years beginning after counterparty to a derivative instrument designated as
Full or Modified
December 15, 2016, including interim a hedging instrument does not, in and of itself, require
Retrospective
periods within those years. designation of that hedging relationship provided that
all other hedge accounting criteria remain the same.
The amendments, which apply to entities that offer
certain prepaid stored value products, provide a
narrow scope exception to the guidance in Subtopic
Fiscal years beginning after
Full or Modified 405-20 that requires breakage for those liabilities be
December 15, 2017, including interim
Retrospective accounted for consistent with the breakage guidance
periods within those years.
in Topic 606 Revenue from Contracts with Customers.
There is no specific guidance for the derecognition of
prepaid stored-value product liabilities.
15
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyond continued

Effective Date Early

Accounting Standards Update
ASU 2016-02 Leases (Topic 842)
Transition
Public Business Enterprises
Fiscal years beginning after
Modified
December 15, 2018, including interim
Retrospective
periods within those years.
Summary
Adopt
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

ASU 2016-01 Financial InstrumentsOverall
(Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities
ASU 2015-17 Income Taxes (Topic 740): Balance
Sheet Classification of Deferred Taxes
Fiscal years beginning after
December 15, 2017, including interim
periods within those years.
Financial statements issued for fiscal
years beginning after December 15,
2016, and interim periods within
those years.
Footnotes Anymore, issued in March 2016.
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
Prospective 3 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.
The amendments in this ASU require that deferred tax
Prospective or
liabilities and assets be classified as noncurrent in a
Retrospective
classified statement of financial position.

16
assurance Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyond continued

Effective Date Early

Accounting Standards Update Transition Summary
Public Business Enterprises Adopt
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
ASU 2014-09: Revenue from Contracts with
Fiscal years beginning after the transaction price, 4. Allocate the transaction price
Customers (Topic 606) & ASU 2015-14 Full or Modified
December 15, 2017, including interim to the performance obligations in the contract, and 5.
Revenue From Contracts With Customers (Topic Retrospective
periods within those years. Recognize revenue when (or as) the entity satisfies a
606): Deferral of the Effective Date
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.

17
assurance Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Enterprise in 2017 and beyond continued

Effective Date Early

Accounting Standards Update
Public Business Enterprises
Fiscal years beginning after
ASU 2015-11, Inventory (Topic 330): Simplifying
December 15, 2016, including interim
the Measurement of Inventory
periods within those years
Transition Summary
Adopt
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,
Prospective
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. Early adoption is on (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.

18
assurance Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond
The 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
ASU 2016-13 Financial Instruments Credit
Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments
ASU 2016-12 Revenue from Contracts
with Customers (Topic 606): Narrow-Scope
Improvements and Practical Expedients
ASU 2016-10 Revenue from Contracts with
Customers (Topic 606): Identifying Performance
Obligations and Licensing
ASU 2016-09 Compensation Stock
Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting
ASU 2016-08 Revenue from Contracts with
Customers (Topic 606): Principal versus Agent
Considerations (Reporting Revenue Gross versus
Net)
assurance
Early
Private Company Effective Date Transition Summary
Adopt
The ASU is intended to improve financial reporting by
requiring timely recording of credit losses on loans
Fiscal years beginning after and other financial instruments held by financial
December 15, 2020, and for
Modified institutions and other organizations. The ASU requires
interim periods within those fiscal 4
Retrospective the measurement of all expected credit losses for
years beginning after December
15, 2021. financial assets not recorded at fair value based
on historical experience, current conditions, and
reasonable and supportable forecasts.
This ASU is intended to improve the operability and
understandability of the implementation guidance on
by providing the clarifications and practical expedients
Fiscal years beginning after on the following issues: assessing collectibility
December 15, 2018, and interim criterion in paragraph 606-10-25-1(e) and accounting
Full or Modified
periods within annual periods for contracts that do not meet the criteria for step
Retrospective
beginning after December 15, one of the revenue recognition model, presentation
2019. of sales taxes and other similar taxes collected
from customers, noncash considerations, contract
modifications at transition, completed contracts at
transition.
Fiscal years beginning after
December 15, 2018, and interim The amendments in this ASU provide clarification to two
Full or Modified
periods within annual periods components of Topic 606: 1) identifying performance
Retrospective
beginning after December 15, obligations, and 2) licensing implementation guidance.
2019.
The amendments in this ASU are intended to improve
the accounting for employee share-based payments
Fiscal years beginning after and affect all organizations that issue share-based
Prospective, payment awards to their employees. Several aspects
December 15, 2017, and interim
Modified
periods within annual periods of the accounting for share-based payment award
Retrospective, or
beginning after December 15, transactions are simplified, including: (a) income
Retrospective
2018. tax consequences; (b) classification of awards as
either equity or liabilities; and (c) classification on the
statement of cash flows.
Fiscal years beginning after The amendments are intended to improve the
December 15, 2018 and interim implementation guidance on principal versus agent
Full or Modified
periods within annual periods
Retrospective considerations by amending existing illustrative
beginning after December 15,
examples and adding new examples.
2019.
19
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
ASU 2016-07 Investments - Equity Method
and Joint Ventures (Topic 323): Simplifying the
Transition to the Equity Method of Accounting
ASU 2016-06 - Derivatives and Hedging (Topic
815): Contingent Put and Call Options in Debt
Instruments
ASU 2016-05 - Derivatives and Hedging (Topic
815): Effect of Derivative Contract Novations on
Existing Hedge Accounting Relationships
ASU 2016-04 - Liabilities Extinguishments
of Liabilities (Subtopic 405-20): Recognition
of Breakage for Certain Prepaid Stored-Value
Products
ASU 2016-03 - Intangibles Goodwill and Other
(Topic 350); Business Combinations (Topic
805); Consolidation (Topic 810); Derivatives
and Hedging (Topic 815): Effective Date and
Transition Guidance
ASU 2016-02 Leases (Topic 842)
assurance
Early
Private Company Effective Date Transition Summary
Adopt
Fiscal years beginning after The amendments eliminate the requirement to
December 15, 2016, including
Prospective retroactively adjust an investment upon qualifying for
interim periods within those fiscal
the equity method of accounting
years.
Fiscal years beginning after The amendments clarify the required steps to be taken
December 15, 2017, and interim when assessing whether the economic characteristics
Modified
periods within annual periods and risks of call/put options are clearly and closely
Retrospective
beginning after December 15, related to those of their debt hosts - which is one of
2018. the criteria for bifurcating an embedded derivative.
Fiscal years beginning after The amendments clarify that a change in the
December 15, 2017, and interim counterparty to a derivative instrument designated as
Full or Modified
periods within annual periods a hedging instrument does not, in and of itself, require
Retrospective
beginning after December 15, designation of that hedging relationship provided that
2018. all other hedge accounting criteria remain the same.
The amendments, which apply to entities that offer
certain prepaid stored value products, provide a
Fiscal years beginning after narrow scope exception to the guidance in Subtopic
December 15, 2018, and interim 405-20 that requires breakage for those liabilities be
Full or Modified
periods within annual periods
Retrospective accounted for consistent with the breakage guidance
beginning after December 15,
in Topic 606 Revenue from Contracts with Customers.
2019.
There is no specific guidance for the derecognition of
prepaid stored-value product liabilities.
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
Issued March 2016 and effective
see individual ASU N/A to forgo a preferability assessment the first time they
immediately.
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.
All leases (except for short-term leases) will be
required to be recognized on the lessee's balance
Fiscal years beginning after sheet at commencement date as a lease liability for the
December 15, 2018, and interim obligation of lease payments and a right-of-use asset
Modified
periods within annual periods for the right to use/control a specified asset for the
Retrospective
beginning after December 15, lease term. Lessor accounting is largely unchanged.
2019.
See DHG publication Leases: Not Just For The
Footnotes Anymore, issued in March 2016.
20
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
ASU 2016-01 Financial Instruments Overall
(Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities
ASU 2015-17 Income Taxes (Topic 740): Balance
Sheet Classification of Deferred Taxes
ASU 2015-16 Business Combinations (Topic 805):
Simplifying the Accounting for Measurement-Period
Adjustments
assurance
Private Company Effective Date
Fiscal years beginning after
December 15, 2018, and interim
periods within annual periods
beginning after December 15,
2019.
Fiscal years beginning after
December 15, 2017, and interim
Prospective or
periods within annual periods
Retrospective
beginning after December 15,
2018.
Fiscal years beginning after
December 15, 2016, and interim
periods within annual periods
beginning after December 15,
2017.
21
Early
Transition Summary
Adopt
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
Prospective 6 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.
The amendments in this ASU require that deferred tax
liabilities and assets be classified as noncurrent in a
classified statement of financial position.
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
Prospective to record, in the same periods financial statements,
the effect on earnings of changes in depreciation,
amortization, or other income if any, as a result of the
change to the provisional amounts, calculated as if
the accounting had been completed at the acquisition
date.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
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
assurance
Private Company Effective Date
Fiscal years beginning after
December 15, 2018, and interim
Full or Modified
periods within annual periods
Retrospective
beginning after December 15,
2019.
22
Early
Transition Summary
Adopt
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.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
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
assurance
Private Company Effective Date
Part I and Part II
Retrospective,
Fiscal years beginning after
December 15, 2015.
Prospective
23
Early
Transition Summary
Adopt
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,
Part III 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 investments
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 plans 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.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
ASU 2015-11, Inventory (Topic 330): Simplifying the
Measurement of Inventory
ASU 2015-09: Financial Services Insurance (Topic
944): Disclosures about Short-Duration Contracts
ASU 2015-07: Fair Value Measurement (Topic 820):
Disclosures for Investments in Certain Entities
that Calculate Net Asset Value per Share (or Its
Equivalent)
assurance
Private Company Effective Date
Fiscal years beginning after
December 15, 2016, and interim
periods within annual periods
beginning after December 15,
2017.
Fiscal years beginning after
December 15, 2016, and interim
periods within annual periods
beginning after December 15,
2017.
Fiscal years and interim periods
beginning after December 15,
2016.
24
Early
Transition Summary
Adopt
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,
Prospective
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.
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
Retrospective
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.
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
Retrospective
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.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
ASU 2015-06: Earnings Per Share (Topic 260):
Effects on Historical Earnings per Unit of Master
Limited Partnership Dropdown Transactions
ASU 2015-05: Intangibles Goodwill and Other
Internal Use Software (Subtopic 350-40):
Customers Accounting for Fees Paid in a Cloud
Computing Arrangement
assurance
Private Company Effective Date
Fiscal years beginning after
December 15, 2015, and interim
Retrospective
periods within those fiscal
years.
Fiscal years beginning after
December 15, 2015, and interim
Prospective or
periods within annual periods
Retrospective5
beginning after December 15,
2016.
25
Early
Transition Summary
Adopt
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.
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 customers 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.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
ASU 2015-04: Compensation Retirement Benefits
(Topic 715): Practical Expedient for Measurement
Date of an Employers Defined Benefit Obligation
and Plan Assets
ASU 2015-03: Interest Imputation of Interest
(Subtopic 835-300: Simplifying the Presentation
of Debt Issuance Costs
ASU 2015-02: Consolidation (Topic 810):
Amendments to the Consolidation Analysis
ASU 2015-01: Income Statement Extraordinary
and Unusual Items (Subtopic 225-20):
Simplifying Income Statement Presentation by
Eliminating the Concept of Extraordinary Items
assurance
Private Company Effective Date
Fiscal years beginning after
December 15, 2016, and interim
periods within annual periods
beginning after December 15,
2017.
Fiscal years beginning after
December 15, 2015, and interim
periods within annual periods
beginning after December 15,
2016.
Fiscal years beginning after
December 15, 2016
Periods beginning after
December 15, 2015.
26
Early
Transition Summary
Adopt
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 entitys fiscal year-end and apply that practical
expedient consistently from year to year. The practical
expedient should be applied consistently to all plans,
Prospective 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
Companys 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.
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,
Retrospective 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.
This ASU modifies the consolidation model for
reporting organizations under both the variable interest
model and the voting interest model. The ASU is
Full or Modified
generally expected to reduce the number of situations
Retrospective
where consolidation is required; however, in certain
circumstances, the ASU may result in companies
consolidating entities previously unconsolidated.
This ASU was also issued as part of the FASBs
simplification initiative, Subtopic 225-20 requires an
entity to separately classify, present, and disclose
Prospective or
extraordinary events and transactions. In response
Retrospective
to feedback received from users and preparers the
FASB issued this ASU to eliminate the concept of
extraordinary items.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
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)
ASU 2014-15: Presentation of Financial
StatementsGoing Concern (Subtopic 205- 40):
Disclosure of Uncertainties about an Entitys
Ability to Continue as a Going Concern
assurance
Private Company Effective Date
Fiscal years beginning after
December 15, 2015, and interim
Full or Modified
periods within annual periods
Retrospective
beginning after December 15,
2016.
Fiscal years beginning after
December 15, 2015, and interim
periods within fiscal years
beginning after December 15,
2016.
27
Early
Transition Summary
Adopt
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).
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
managements responsibility to evaluate going
concern uncertainties. As a result, this Update clarifies
N/A
managements responsibility to evaluate and provide
related disclosures if there are any conditions or
events, as a whole, that raise substantial doubt about
the entitys 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).
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued
Accounting Standards Update
ASU 2014-13: Consolidation (Topic 810):
Measuring the Financial Assets and the
Financial Liabilities of a Consolidated
Collateralized Financing Entity
ASU 2014-12: CompensationStock
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
assurance
Private Company Effective Date
Fiscal years ending after
December 15, 2016, and interim
periods within annual periods
beginning after December 15,
2016.
Fiscal years beginning after
December 15, 2015, and interim
periods within those years.
28
Early
Transition Summary
Adopt
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
Full or Modified to the financial assets of the collateralized financing
Retrospective 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.
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
Prospective award, rather compensation cost should be recorded
or Modified when it is probable the performance target will be
Retrospective 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.
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2016 and beyond continued

Early
Accounting Standards Update Private Company Effective Date Transition Summary
Adopt
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
ASU 2014-09: Revenue from Contracts with See ASU 2015-14 for revised Full or Modified
in an amount that reflects the consideration to which
Customers (Topic 606) effective date information. Retrospective
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.

Footnotes
4. Early adoption is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
5. 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.
6. Early adoption is on (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.

29
assurance Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix C - SEC Final Rules
The 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
Release 33-10075, Changes to Exchange Act
Registration Requirements to Implement Title V
and Title VI of the JOBS Act
Release 34-77617, Business Conduct Standards
for Security-Based Swap Dealers and Major
Security-Based Swap Participants
Release Nos. 33-9974;
34-76324, Regulation Crowdfunding
Release 33-9877, Pay Ratio Disclosure
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
assurance
Summary
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 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 27, 2016.
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.
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 employees 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.
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.
30
Second Quarter 2016 Accounting, Reporting & Auditing Developments
Appendix C - SEC Final Rules continued
SEC - Final Rules
Release 33-9638, Asset- Backed Securities
Disclosure and Registration
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
assurance
Summary
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.
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.
31
Second Quarter 2016 Accounting, Reporting & Auditing Developments