FASB, SEC, PCAOB Update

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Yesterday (April 14) was the comment deadline on the FASB-IASB Discussion Paper entitled Preliminary Views on Financial Statement Presentation. A Discussion Paper is presursor to a formal proposed standard, and is a means by which FASB and the IASB seek preliminary views on a matter, generally indicating the direction the boards are headed in terms of a future proposal.

FEI's Committee on Corporate Reporting (CCR) filed its comment letter on the FASB-IASB Discussion Paper this evening (see FEI CCR comment letter). (Note: FEI CCR also filed a preliminary comment letter on this project in February, with more detailed comments in the letter filed today.) As of 5pm EDT today (April 15)165 comment letters have been posted on FASB's website, and more are in the process of being posted. Read more about the Discussion Paper here.

SEC Releases SAB 111 on OTTI
Yesterday, the SEC released Staff Accounting Bulletin No. 111 (SAB 111), which amends SAB Topic 5-M on Other Than Temporary Impairment [OTTI] of Certain Investments in Debt and Equity Securities. I heard about this development first via an alert from Securities Mosaic.

SAB 111 notes that FASB Staff Position (FSP) No. 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP 115-2”), issued last week, was scoped to debt securities only, and the FSP referred readers to SEC SAB Topic 5-M for factors to consider with respect to OTTI for equity securities.

SAB 111 states the SEC staff's view that when FASB chose to use the words "other than temporary impairment" in FAS 115, that FASB did not intend for that term to mean 'permanent' impairment. The SAB goes on to state that numerous factors should be considered in evaluating if there has been OTTI of an equity security that is classfied as Available for Sale, for which a write-down would be required, and provides some suggested factors to consider (not an exhaustive list).

PCAOB Seeks Comment On Concept Release on Audit Confirms; Names Baumann Chief Auditor
April 14 was a busy day for regulators! In addition to the above developments, the PCAOB board unanimously voted to issue a Concept Release on the Audit Confirmation process. Nine issues on which the PCAOB seeks comment are detailed here. See the PCAOB's press release which provides a link to the Concept Release and to board member statements; the comment period will end May 29.

Separately, the PCAOB announced on April 14 that Martin Baumann, Director of PCAOB's Office of Research and Analysis, will become Chief Auditor. Read PCAOB's press release.

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