assurance

Q2
2017

Accounting, Reporting and Auditing Developments

June 28, 2017

Assurance | Tax | Advisory | dhgllp.com

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

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

U.S. Securities & Exchange Commission (SEC).......................................................................................4

Assurance Matters......................................................................................................................................5

Public Company Accounting Oversight Board (PCAOB).........................................................................5

American Institute of CPAs (AICPA)..........................................................................................................6

Center for Audit Quality (CAQ).................................................................................................................7

Appendix A Effective Date Highlights for Public Business Entities.....................................................9

Appendix B Effective Date Highlights for Private Companies............................................................21

Appendix C SEC Final Rules Highlights...............................................................................................37

assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments

second quarter 2017 accounting & assurance update
The developments included in this Accounting and Assurance (A&A) Update are intended to be a reminder of recently
issued accounting and auditing standards and other guidance that may affect our clients in the current reporting period.
This quarterly A&A Update is intended as general information and should not be relied upon as being definitive or all-
inclusive. Throughout the document we have also referenced other DHG A&A Updates and external publications, as
applicable. Recent quarterly A&A Updates can be found under Assurance Alerts on the DHG Resource Center.

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Disclaimer: This publication has been prepared by the Dixon Hughes Goodman LLP Professional Standards Group and contains information in summary form and is therefore
intended for general guidance only; it is not intended to be a substitute for detailed research or the exercise of professional judgment. You should consult with Dixon Hughes
Goodman LLP or other professional advisors familiar with your particular factual situation for advice concerning specific audit, tax or other matters before making any decision.

3
assurance Second Quarter 2017 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 Ap-
pendix B for private companies.
ASU 2017-10 Service Concession Arrangements (Topic
853): Determining the Customer of the Operation Services
ASU 2017-10 was issued in response to diversity in practice in
how an operating entity determines the customer of the operation
services for transactions within the scope of Topic 853, Service
Concession Arrangements. A service concession arrangement
is an arrangement between a grantor and an operating
entity whereby the operating entity will operate the grantors
infrastructure for a specified period of time. The operating entity
may also maintain the infrastructure, and it also may be required
to provide periodic capital-intensive maintenance to enhance
or extend the life of the infrastructure. Topic 853 provides
guidance for operating entities when they enter into a service
concession agreement with a public-sector grantor who both:
1) controls or has the ability to modify or approve the services
that the operating entity must provide with the infrastructure, to
whom it must provide them, and at what price; and 2) controls,
through ownership, beneficial entitlement, or otherwise, any
residual interest in the infrastructure at the end of the term of the
arrangements. In a service concession arrangement within the
scope of Topic 853, the operating entity should not account for
the infrastructure as a lease or as property, plant, and equipment.
An operating entity should refer to other topics to account for
various aspects of a service concession arrangement.
For an entity that has not adopted Topic 606, the effective date
and transition requirements for the amendments in this update
are generally the same as the effective date and transition
requirements for Topic 606 and should be adopted concurrently
with the adoption of Topic 606. Early adoption is permitted
and should be applied using either 1) a modified retrospective
approach or 2) a retrospective approach.
For an entity that has already adopted Topic 606, the effective
date of these amendments is: 1) fiscal years beginning after
December 15, 2017, including interim periods within those fiscal
years for public business entity, a not-for-profit that has issued,
or is a conduit bond obligor for, securities that are traded, listed,
or quoted on an exchange or an over-the-counter market, and an
employee benefit plan that files or furnishes financial statements
with or to the SEC, the amendments in this update are effective
for; and 2) fiscal years beginning after December 15, 2018, and
interim periods within fiscal years beginning after December 15,
2019 for all other entities.
ASU 2017-09 Compensation Stock Compensation (Topic
718): Scope of Modification Accounting
ASU 2017-09 was issued in response to diversity in practice
when applying the guidance in Topic 718, Compensation-Stock
Compensation, to a change to the terms or conditions of a
share-based payment award. The update provides guidance
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assurance
about which changes to the terms or conditions of a share-
based payment award require an entity to apply modification
accounting under Topic 718. The amendments require an entity
to account for the effects of a modification unless all of the
following conditions are met:
The fair value (or intrinsic or calculated value if elected) of
the modified award is the same as the value of the original
award immediately before the original award was modified.
The vesting conditions of the modified award are the same
as the vesting conditions of the original award immediately
before the original award is modified.
The classification of the modified award as an equity
instrument or a liability instrument is the same as the
classification of the original award immediately before the
original award is modified.
The ASU is effective for all entities for annual periods, and interim
periods within those annual periods, beginning after December
15, 2017. Early adoption is permitted, including adoption in
any interim period, for 1) public business entities for reporting
periods for which financial statements have not yet been issued
and 2) all other entities for reporting periods for which financial
statements have not yet been made available for issuance. The
amendments in this ASU should be applied prospectively to an
award modified on or after the adoption date.
U.S. Securities & Exchange Commission (SEC)
SEC Adopts Rule on Standard Settlement Cycles
In an effort to reduce credit, market and liquidity risk, the SEC
adopted a final rule that will shorten the standard settlement
cycle from T+3 to T+2. This rule will amend the Settlement
Cycle Rule (Rule 15c6-1(a)) under the Securities Exchange Act
of 1934. The effective date of this final Rule is May 30, 2017 and
the compliance date is September 5, 2017.
Intrastate Offerings Exemptions: Small-Entity Compliance
Guide for Issuers
In April, the SEC issued a small-entity compliance guide that
provides guidance on the SECs October 2016 final rules
that modernize how issuers can raise money to fund their
businesses through intrastate offerings while maintaining investor
protections. Topics covered in the guide include requirements of
Rules 147 and 147A, restrictions on resales, filing requirements
and relationship with state securities laws, and integration.
Release No. 33-10321: Request for Comment on Possible
Changes to Industry Guide 3
Recognizing that current disclosure guidance in Industry Guide
3, Statistical Disclosure by Bank Holding Companies may not
in all cases reflect recent bank holding industry developments
or changes in accounting standards related to financial and
other reporting requirements, the Commission has published a
request for comment to seek public input as to the disclosures
called for by the Guide 3. Comments should be received on or
before July 7, 2017.
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Accounting & Financial Reporting Matters
Updated Statement on the Effect of the Court of Appeals
Decision on the Conflict Minerals Rule
On April 3, 2017 the U.S. District Court for the District of
Columbia entered a final judgment in the case concerning the
constitutionality of certain of the provisions of the SECs conflicts
minerals rules, and remanded the case to the SEC. The SECs
Division of Corporation Finance issued an updated statement
regarding the conflicts minerals rule on April 7, (the Updated
Statement) indicating The courts remand has now presented
significant issues for the Commission to address. At the direction
of the Acting Chairman, we have considered those issues. In
light of the uncertainty regarding how the Commission will
resolve those issues and related issues raised by commenters,
the Division of Corporation Finance has determined that it
will not recommend enforcement action to the Commission if
companies, including those that are subject to paragraph (c) of
Assurance Matters
Public Company Accounting Oversight Board (PCAOB)
Auditors Reporting Model
The PCAOB adopted the auditing standard, The Auditors
Report on an Audit of Financial Statements When the Auditor
Expresses an Unqualified Opinion, which is designed to enhance
the relevance and usefulness of the auditors report by providing
additional and important information to investors. The adopted
auditing standard retains the pass/fail model of the existing
auditors opinion, but requires auditors to include in the auditors
report a discussion of the critical audit matters (CAMs).
Under the adopted auditing standard, a CAM is defined as a
matter that was communicated or required to be communicated
to the audit committee and that is:
Related to accounts or disclosures that are material to the
financial statements, and
Involved especially challenging, subjective, or complex
auditor judgment.
views
DHG is supportive of the PCAOBs efforts to modernize the
auditors report to provide information that is of critical need
to stakeholders, while maintaining the value of the pass-
fail opinion. The enhancements within the adopted auditing
standard generally align with those of the International Auditing
and Assurance Standards Board (IAASB); in particular, the
concept of Critical Audit Matters (CAM) generally aligns with
the IAASBs concept of Key Audit Matters.
When determining whether a matter involved especially
challenging, subjective, or complex auditor judgment, the auditor
would take into account certain factors, including the auditors
assessment of the risks of material misstatement.
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Item 1.01 of Form SD, only file disclosure under the provisions
of paragraphs (a) and (b) of Item 1.01 of Form SD. The Updated
Statement also indicated the statement is subject to any further
action that may be taken by the Commission, expresses the
Divisions position on enforcement action only, and does not
express any legal conclusion on the rule.
Compliance and Disclosure Interpretations (C&DIs):
Regulation A
The SEC staff of the Division of Corporation Finance have
updated the C&DIs on the filing requirements under Regulation A.
Regulation A allows an issuer to market and sell certain amounts
of securities during a one-year period without having to comply
with the Securities Act of 1933 or the Securities Exchange Act
of 1934.
The auditors report also will disclose the audit firms tenure,
specifically, the year in which the firm began serving consecutively
as the companys auditor. Other changes to the auditors report
include:
The addition of a statement that the auditor is required to
be independent;
New standardized language, including adding the phrase
whether due to error or fraud in discussing the auditors
responsibility to obtain reasonable assurance that financial
statements are free of material misstatements; and
A more standardized format, with the opinion in the first
section, and new section titles.
Subject to SEC approval, the adopted auditing standard would
have a phased effective date approach:
Changes other than communication of CAMs (e.g., new
auditors report format, tenure, and other information):
audits for fiscal years ending on or after December 15,
2017
Communication of CAMs for audits of large accelerated
filers: audits for fiscal years ending on or after June 30,
2019
Communication of CAMs for audits of all other companies:
audits for fiscal years ending on or after December 15,
2020
Auditors may also elect to comply before the effective dates, at
any point after SEC approval of the final standard.
The adopted auditing standard would apply to all audits
conducted under PCAOB standards. However, communication
of CAMs would not be required for audits of emerging growth
companies (EGC); brokers and dealers; investment companies
other than business development companies; and employee
stock purchase, savings, and similar plans.
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Assurance Matters
Accounting Estimates, Including Fair Value Measurements
The PCAOB issued for public comment a proposed auditing
standard intended to enhance the requirements that apply
when auditing accounting estimates, including fair value
measurements. The proposal emphasizes that auditors need to
apply professional skepticism and devote greater attention to
potential management bias when auditing accounting estimates,
and would replace Auditing Accounting Estimates (AS 2501);
Auditing Fair Value Measurements and Disclosures (AS 2502);
and Auditing Derivative Instruments, Hedging Activities, and
Investments in Securities (AS 2503). The proposed single
standard builds on the common approaches in AS 2501, AS
2502, and AS 2503 and strengthens existing requirements by:
Prompting auditors to devote greater attention to
addressing potential management bias in accounting
estimates, while reinforcing the need for professional
skepticism;
Extending certain key requirements in the existing standard
on auditing fair value measurements the newest and
most comprehensive of the existing standards on auditing
accounting estimates and fair value measurements to
all accounting estimates to reflect a uniform approach to
substantive testing;
Focusing auditors on estimates with greater risk of material
misstatement;
Providing specific requirements and direction to address
certain aspects unique to auditing the fair value of financial
instruments, including the use of information from pricing
sources; and,
Making other updates to the requirements for auditing
accounting estimates to address particular aspects of
auditing estimates.
The comment letter deadline is August 30, 2017.
Use of Specialist
The PCAOB also issued for public comment a proposed auditing
standard intended to strengthen requirements for evaluating the
work of a specialist employed or engaged by the company and
applying a risk-based approach to supervising and evaluating
the work of a specialist employed or engaged by the auditor. The
proposed auditing standard would amend two existing auditing
standards, Audit Evidence (AS 1105) and Supervision of the Audit
Engagement (AS 1201). The proposal also would replace Using
the Work of a Specialist (AS 1210) and retitle it, Using the Work
of an Auditor-Engaged Specialist (AS 1210). Specific changes to
existing requirements would include:
For use of the work of a companys specialist:
++ Supplement current requirements in AS 1105 to
address circumstances when the auditor uses the work
of a company specialist as audit evidence;
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assurance
++ Align requirements with those in the companion
proposal on auditing accounting estimates, including
fair value measurements; and,
++ Remove from the scope of AS 1210 requirements
for using the work of a companys specialist as audit
evidence.
For use of the work of an auditors specialist:
++ Enhance the requirements for applying a risk-based
supervisory approach to auditor-employed specialists,
and extend those requirements to auditor-engaged
specialists;
++ Add requirements for informing the auditors specialist
of the work to be performed and for reviewing and
evaluating that specialists work;
++ Amend the requirements for assessing the knowledge,
skill, and ability of an auditors specialist; and,
++ Amend the requirements for assessing the objectivity of
an auditor-engaged specialist to describe objectivity as
the ability to exercise impartial judgment on all issues
encompassed by the specialists work in the audit.
The deadline for submitting comments is August 30, 2017.
views
It is our belief that certain amendments outlined in the
proposed auditing standard could strengthen audit evidence
in the auditors use of the work of specialists; however, we
have reservations regarding some of the revisions that we
believe may significantly increase the efforts (and costs) of an
auditors use of the work of specialists without a commensurate
reduction in audit risk. We encourage stakeholders to read the
proposed auditing standard and consider providing comments
to the PCAOB.
American Institute of Certified Public Accountants (AICPA)
Cybersecurity Risk Management Reporting Framework
As part of the growing need to address cybersecurity risks, the
AICPA has introduced a market-driven, flexible and voluntary
cybersecurity risk management reporting framework. The
framework is designed to empower organizations to take a
proactive approach to cybersecurity risk management. In
addition, the framework is a key component of a new System
and Organization Controls (SOC) for Cybersecurity engagement,
through which a CPA reports on an organizations enterprise-
wide cybersecurity risk management program.
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Assurance Matters
The framework contains three resources:
Description criteria Used by management in explaining
its cybersecurity risk management program and by CPAs
to report on managements description
Controls Criteria Used by CPAs providing advisory
or attestation services to evaluate and report on the
effectiveness of the controls within a clients cybersecurity
risk program
Attest Guide Designed to assist practitioners engaged
to examine and report on an entitys cybersecurity risk
management program
views
As part of SSAE 18, the AICPA codified AT-C sections 105,
Concepts Common to All Attestation Engagements and
205, Examination Engagements. These sections establish
the requirements and application guidance for performing
and reporting on an entitys cybersecurity risk management
program.
SOC for cybersecurity is an examination engagement performed
in accordance with the AICPAs clarified attestation standards
on an entitys cybersecurity risk management program. In a
cybersecurity risk management examination, the practitioner
opines on managements description of the entitys cybersecurity
risk management program and the effectiveness of controls within
that program to achieve the entitys cybersecurity objectives.
A cybersecurity risk management examination results in the
issuance of a general use cybersecurity report designed to meet
the needs of a variety of potential users.
Proposed New ERISA Auditing Standards
The Auditing Standards Board of the AICPA has proposed for
public comment a Proposed Statement on Auditing Standards
(SAS), Forming an Opinion and Reporting on Financial Statements
of Employee Benefit Plans Subject to ERISA, for financial
statement audits of employee benefit plans that are subject to
the Employee Retirement Income Security Act (ERISA).
This Proposed SAS is intended to address the auditors
responsibilities to form an opinion and report on the financial
statements of ERISA plan financial statements, and the form and
content of such reporting, including reporting on specific plan
provisions relating to the ERISA plan financial statements and
reporting when management imposes a limitation on the scope
of the audit in accordance with ERISA section 103(a)(3)(C).
The proposed SAS would be effective for audits of financial
statements for periods ending on or after December 15, 2018.
Comments are due by August 21, 2017.
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assurance
AT-C Section 9105: Concepts Common to All Attestation
Engagements Attestation Interpretations of Section 105
In response to questions received on Section 105 of the
attestation standards, the AICPA has issued AT-C Section 9105:
Concepts Common to All Attestation Engagements Attestation
Interpretations of Section 105. The interpretations cover the
following topics:
Responding to requests for reports on matters relating to
solvency;
Applicability of attestation standards to litigation services;
Providing access to or copies of engagement
documentation to a regulator; and
Performing and reporting on an attestation engagement
under two sets of attestation standards.
AICPA Technical Questions and Answers
In April, the AICPA released new Technical Questions and
Answers guidance under Section 8200, Internal Control:
8200.17, Obtaining an Understanding of Business
Processes Relevant to Financial Reporting and
Communication;
8200.18, Obtaining an Understanding of Internal Control
Relevant to the Audit;
8200.19, Obtaining an Understanding of the Controls
Relevant to the Audit;
8200.20, Control Activities That Are Always Relevant to the
Audit; and
8200.21, Control Activities That May Be Relevant to the
Audit.
Technical questions and answers are not authoritative principles,
but constitute implementation guidance on selected practice
matters accounting, auditing and relevant industry issues.
Center for Audit Quality (CAQ)
External Auditor Assessment Tool
The CAQ, in partnership with the Audit Committee Collaboration,
released an updated version of its External Auditor Assessment
Tool. This tool was designed to assist audit committees in
carrying out their responsibilities of appointing, overseeing, and
determining compensation for the external auditor, and contains
sample questions to help audit committees in three areas:
Quality of services and sufficiency of resources provided
by the auditor;
Quality of communication and interaction with the auditor;
and
Auditors independence, objectivity and professional
skepticism.
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Assurance Matters
The tool also includes a sample form and rating scale for Form AP Audit Committee Tool
obtaining input from company personnel about the external The CAQ published a tool to aid audit committee members in
auditor, as well as additional resources that can benefit audit their understanding of new auditor disclosure requirements from
committees and others charged with governance. the Public Company Accounting Oversight Board regarding
audit participants. Form AP Auditor Reporting of Certain Audit
Audit Planning Alert for Auditors of Brokers and Dealers Participants: A Tool for Audit Committees is intended to: (1) assist
The CAQ published Audit Planning Alert for Auditors of Brokers audit committees in discussing the role of audit participants with
and Dealers (Planning Alert), which presents questions for their engagement partner and company management; and (2)
auditors of brokers and dealers to consider as they plan both their help prepare audit committee members to anticipate potential
audit and attestation engagements. It also presents common questions that may arise as a result of these new disclosures.
examples of audit deficiencies the PCAOB has described in its The tool also provides a summary of Form AP disclosure
Annual Report on the Interim Inspection Program Related to requirements, as well as suggested questions regarding
Audits of Brokers and Dealers. disclosure of the engagement partner and participation of other
accounting firms.
The questions included in the Planning Alert are a mixture of (1)
questions applicable to all audits of brokers and dealers and (2)
questions that may require further action if certain circumstances
are present at the broker or dealer. While auditors should
consider every question presented, the list of questions should
not be relied upon as definitive guidance or all-inclusive. The
appendices to the alert provide auditors of brokers and dealers
with additional reminders and resources that may be useful as
they plan their audits.

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Appendix A - Accounting Standards Affecting Public Business Entities in 2017
The following table presents ASUs that become effective during 2017 for calendar year-end public business entities. Please refer to the individual ASUs in their entirety for additional guidance.
Accounting Standards Update
ASU 2017-03 - Accounting Changes
and Error Corrections (Topic 250) and
Investments - Equity Method and Joint
Ventures (Topic 323): Amendments
to SEC Paragraphs Pursuant to Staff
Announcements at the September 22,
2016 and November 17, 2016 EITF
Meetings
ASU 2016-19 - Technical Corrections
and Improvements
ASU 2016-17 - Consolidation (Topic
810): Interests Held through Related
Parties That Are under Common
Control
assurance
Effective Date Public
Business Entities
Immediately
Amendments under ASC 350
- Intangibles - Goodwill and
Other are effective for annual
reporting periods beginning
after December 15, 2016,
including interim periods
transition guidance
within those annual periods.
Amendments under ASC 820
- Fair Value Measurements
are effective for fiscal years
transition guidance.
beginning after December 15,
2016, including interim periods
within those fiscal years
Fiscal years beginning after
December 15, 2016, including
interim periods within those
fiscal years1
Transition Summary
ASU 2017-03 was issued in order to address disclosure of the impact
that recently issued accounting standards will have on the financial
statements of a registrant when such standards are adopted in a future
period. The SEC Staff expects robust disclosures in accordance with
Staff Accounting Bulletin (SAB) Topic 11.M for current year Form 10-K
Prospectively
filings and upcoming quarterly filings. This ASU specifically addresses
ASU 2014-09, Revenue from Contracts with Customers (Topic 606);
ASU 2016-02, Leases (Topic 842); and ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments and subsequent amendments.
ASU 2016-19 was issued to provide incremental improvements to
GAAP through clarifying the Accounting Standards Codification. The
amendments generally fall into one of the types of categories listed
below.
1. Amendments related to differences between original guidance
Most of the
(e.g., FASB Statements, EITF issues, etc.) and the Codification.
amendments
do not require 2. Guidance clarification and reference corrections that provide
clarification through updating wording, correcting references, or a
and are effective combination of both.
immediately. See
3. Simplification amendments that streamline or simplify the
ASU for individual
Codification through minor structural changes to headings or
minor edits of text to improve the usefulness and understandability
of the Codification.
4. Minor improvements to the guidance that are not expected to
have a significant effect on current accounting practice or create a
significant administrative cost to most.
Full or Modified
ASU 2016-17 was issued to amend the consolidation guidance on
Retrospective -
how a reporting entity that is the single decision maker of a VIE should
Consistent with
treat indirect interests in the entity held through related parties that
method elected for
are under common control with the reporting entity when determining
adoption of ASU-
whether it is the primary beneficiary of that VIE.
2015-02
9
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2017
Accounting Standards Update
ASU 2016-09 Compensation
Stock Compensation (Topic 718):
Improvements to Employee Share-
Based Payment Accounting
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 2015-17 Income Taxes (Topic
740): Balance Sheet Classification of
Deferred Taxes
ASU 2015-11, Inventory (Topic 330):
Simplifying the Measurement of
Inventory
assurance
Effective Date Public
Business Entities
Fiscal years beginning after
December 15, 2016, and
interim periods within those
years
Fiscal years beginning after
December 15, 2016, including
interim periods within those
years
Fiscal years beginning after
December 15, 2016, including
interim periods within those
years
Fiscal years beginning after
December 15, 2016, including
interim periods within those
years
Financial statements issued
for fiscal years beginning
after December 15, 2016, and
interim periods within those
years
Fiscal years beginning after
December 15, 2016, including
interim periods within those
years
Transition Summary
The amendments in this ASU are intended to improve the accounting
for employee share-based payments and affect all organizations that
Prospective,
issue share-based payment awards to their employees. Several aspects
Modified
of the accounting for share-based payment award transactions are
Retrospective, or
simplified, including: (a) income tax consequences; (b) classification
Retrospective
of awards as either equity or liabilities; and (c) classification on the
statement of cash flows.
The amendments eliminate the requirement to retroactively adjust an
Prospective
investment upon qualifying for the equity method of accounting.
The amendments clarify the required steps to be taken when assessing
Modified whether the economic characteristics and risks of call/put options are
Retrospective clearly and closely 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 counterparty to a
Full or Modified derivative instrument designated as a hedging instrument does not,
Retrospective in and of itself, require de-designation of that hedging relationship
provided that all other hedge accounting criteria remain the same.
The amendments in this ASU require that deferred tax liabilities and
Prospective or
assets be classified as noncurrent in a classified statement of financial
Retrospective
position.
This update simplifies the measurement of inventory by requiring
inventory to be measured at the lower of cost and net realizable value.
Net realizable value is the estimated selling prices in the ordinary
course of business, less predictable costs of completion, disposal,
Prospective
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.
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Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
The following table presents ASUs that become effective for 2018 fiscal years and beyond. Please refer to the individual ASUs in their entirety for additional guidance.

Effective Date Early

Accounting Standards Update Transition Summary
Public Business Entities Adopt

Fiscal years beginning after

December 15, 2017, including
interim periods within those
years
This ASU was issued to provide guidance on how an
If the entity is a not-for-profit
operating entity determines the customer of the operation
that has issued, or is a conduit
services for transactions within the scope of Topic 853,
bond obligor for, securities
Service Concession Arrangements. A service concession
ASU 2017-10 - Service Concession that are traded, listed, or
Full or Modified arrangement is an arrangement between a grantor and an
Arrangements (Topic 853): Determining quoted on an exchange or a
Retrospective operating entity whereby the operating entity will operate
the Customer of the Operation Services an over-the-counter market,
the grantors infrastructure for a specified period of time. The
and an employee benefit plan
operating entity also may maintain the infrastructure, and it
that files or furnishes financial
also may be required to provide periodic capital-intensive
statements with the SEC, the
maintenance to enhance or extend the life of the infrastructure.
amendments in this update
are effective for fiscal year
beginning after December 15,
2017 including interim periods
within those fiscal years

Annual periods beginning after
ASU 2017-09 - Compensation - Stock
December 15, 2017, including
Compensation (Subtopic 718): Scope
interim periods within annual
of Modification Accounting
periods
This ASU was issued to provide guidance about what
changes to the terms or conditions of a share-based payment
Prospectively a
award require an entity to apply modification accounting in
Topic 718.

This ASU was issued in order to shorten the amortization

ASU 2017-08 - Receivables -
Fiscal years beginning after period for certain callable debt securities held at a premium.
Nonrefundable Fees and Other
December 15, 2018, including Modified Specifically, the amendments require the premium to be
Costs (Subtopic 310-20): Premium a
interim periods within those Retrospective amortized to the earliest call date. The amendments do not
Amortization on Purchased Callable
years require an accounting change for securities held at a discount;
Debt Securities
the discount continues to be amortized to maturity.

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Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Accounting Standards Update
ASU 2017-07 - Compensation -
Retirement Benefits (Topic 715):
Improving the Presentation of Net
Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost
ASU 2017-06 - Plan Accounting:
Defined Benefit Pension Plans (Topic
960); Defined Contribution Pension
Plans (Topic 962); Health and Welfare
Benefit Plans (Topic 965): Employee
Benefit Plan Master Trust Reporting
assurance
Effective Date Early
Transition Summary
Public Business Entities Adopt
This ASU was issued to improve the presentation of net
periodic pension cost and net periodic postretirement benefit
cost. The amendments require that an employer report the
service cost component in the same line item or items as
other compensation costs arising from services rendered
by the pertinent employees during the period. The other
components of net benefit cost are required to be presented
in the income statement separately from the service cost
Annual reporting periods
component and outside a subtotal of income from operations,
beginning after December
Prospective and if one is presented. If a separate line item or items are used
15, 2017, including interim a
Retrospective2 to present the other components of net benefit costs, that line
reporting periods within those
item or items must be appropriately described. If a separate
annual reporting periods
line item or items are not used, the line item or items used in
the income statement to present the other components of net
benefit cost must be disclosed.
The amendments also allow only the service cost component
to be eligible for capitalization when applicable (e.g., as a cost
of internally manufactured inventory or a self-constructed
asset).
This ASU was issued to improve the usefulness of the
information reported to users of employee benefit plan
financial statements and to provide clarity to preparers and
auditors.
The amendments in this ASU require a plan's interest in that
master trust and any changes in that interest to be presented
in separate line items in the statement of net assets available
for benefits and in the statement of changes in net assets
available for benefits, respectively.
Fiscal years beginning after
Retrospective a The amendments also remove the requirement to disclose the
December 15, 2018
percentage interest in the master trust for plans with divided
interests and require that all plans disclose the dollar amount
of their interest in each of those general types of investments.
The amendments require all plans to disclose: (a) their master
trust's other asset and liability balances; and (b) the dollar
amount of the plan's interest in each of those balances.
Lastly, the amendments eliminate redundant investment
disclosures (e.g., those required by Topic 815 and 820)
relating to 401(h) account assets.
12
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Accounting Standards Update
ASU 2017-05 - Other Income - Gains
and Losses from the Derecognition
of Nonfinancial Assets (Subtopic
610-20): Clarifying the Scope of
Asset Derecognition Guidance
and Accounting for Partial Sales of
Nonfinancial Assets
assurance
Effective Date Early
Transition Summary
Public Business Entities Adopt
This ASU was issued to clarify that a financial asset is within
the scope of Subtopic 610-20 if it meets the definition of an in
substance nonfinancial asset. The amendments also define
the term "in substance financial asset." The amendments
clarify that nonfinancial assets within the scope of Subtopic
610-20 may include nonfinancial assets transferred within
a legal entity to a counterparty. For example, a parent
Annual reporting periods
may transfer control of nonfinancial assets by transferring
beginning after December
Full or Modified ownership interests in a consolidated subsidiary. A contract
15, 2017, including interim a5
Retrospective that includes the transfer of ownership interests in one or more
reporting periods within those
consolidated subsidiaries is within the scope of Subtopic
annual reporting periods
610-20 if substantially all of the fair value of the assets that are
promised to the counterparty in a contract is concentrated
in nonfinancial assets. The amendments also clarify that an
entity should identify each distinct nonfinancial asset or in
substance nonfinancial asset promised to a counterparty and
derecognize each asset when a counterparty obtains control
of that asset.
13
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Accounting Standards Update
ASU 2017-04 - Intangibles - Goodwill
and Other (Topic 350): Simplifying the
Test for Goodwill Impairment
assurance
Effective Date
Public Business Entities
For public business entities that
are SEC filers for annual or any
interim goodwill impairment
tests in fiscal years beginning
after December 15, 2019
For public business entities
that are not SEC filers, the ASU
should be adopted for their
annual or any interim goodwill
impairment tests in fiscal years
beginning after December 15,
2020
Early
Transition Summary
Adopt
This ASU was issued in order to simplify the subsequent
measurement of goodwill by eliminating the Step 2 goodwill
impairment test. Under the amendments in this ASU, an entity
should perform its annual or interim goodwill impairment test
by comparing the fair value of a reporting unit with its carrying
amount. An entity will then recognize an impairment charge
for the amount by which the carrying amount exceeds the
reporting units fair value; however the loss recognized should
not exceed the total amount of goodwill allocated to that
reporting unit. Additionally, an entity should consider income
tax effects from any tax deductible goodwill on the carrying
amount of the reporting unit when measuring the goodwill
Prospective a3 impairment loss, if applicable.
The amendments in this ASU also eliminated the requirements
for any reporting unit with a zero or negative carrying amount
to perform a qualitative assessment and therefore, the same
impairment assessment now applies to all reporting units. An
entity is required to disclose the amount of goodwill allocated
to each reporting unit with a zero or negative carrying amount
of net assets.
The ASU did not affect the option to perform the qualitative
assessment (Step 0) for a reporting unit to determine if the
quantitative impairment test is necessary.
14
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Effective Date
Accounting Standards Update
Public Business Entities
Annual reporting periods
ASU 2017-01 - Business Combinations beginning after December
(Topic 805): Clarifying the Definition of 15, 2017, including interim
a Business reporting periods within those
annual reporting periods
Annual reporting periods
ASU 2016-20 - Technical Corrections
beginning after December
and Improvements to Topic 606,
15, 2017, including interim
Revenue from Contracts with
reporting periods within those
Customers
annual reporting periods
Fiscal years beginning after
ASU 2016-18 - Statement of Cash December 15, 2017, and
Flows (Topic 230): Restricted Cash interim periods within those
fiscal years
assurance
Early
Transition Summary
Adopt
ASU 2017-01 was issued to clarify the definition of a business
in order to assist entities with evaluating whether transactions
should be accounted for as acquisitions (or disposals) of
assets or businesses. This ASU provides a screen whereby
a transaction will be accounted for as an asset purchase (or
disposal) if substantially all of the fair value of the gross assets
acquired (disposed) is concentrated in a single identifiable
Prospective a4 asset or a group of similar identifiable assets. If the screen
is not met, the entity will evaluate whether it is a business
acquisition under revised criteria. The amendments in this
ASU are expected to cause fewer transactions to be identified
as businesses. While this ASU will apply to all entities and
industries, it is expected to particularly impact the real estate
and pharmaceutical/biotech industries.
This ASU is intended to improve the operability and
understandability of the implementation guidance by
providing clarifications and practical expedients on the
following issues: loan guarantee fees, contract costs,
provisions for losses on construction-type and production-
Full or Modified
a5 type contracts, scope of topic 606, and disclosure of
Retrospective
remaining performance obligations. Disclosure of prior period
performance obligations, contract modifications, contract
asset versus receivable, refund liability, advertising costs,
fixed odds wagering contracts in the casino industry and cost
capitalization for advisors to private and public funds.
ASU 2016-18 was issued to address diversity in practice in
the classification and presentation of change in restricted
cash on the statement of cash flows under Topic 230. The
amendments in this Update require that a statement of cash
flows explain the change during the period in the total of
cash, cash equivalents, and amounts generally described
Retrospective a
as restricted cash or restricted cash equivalents. Therefore,
amounts generally described as restricted cash and restricted
cash equivalents should be included with cash and cash
equivalents when reconciling the beginning-of-period and
end-of-period total amounts shown on the statement of cash
flows.
15
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Accounting Standards Update
ASU 2016-16 - Income Taxes (Topic
740): Intra-Entity Transfers of Assets
Other Than Inventory
ASU 2016-15 Statement of Cash
Flows (Topic 230): Classification of
Certain Cash Receipts and Cash
Payments
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
assurance
Effective Date
Public Business Entities
Annual reporting periods
beginning after December
15, 2017, including interim
reporting periods within those
annual reporting periods
Fiscal years beginning after
December 15, 2017 and interim
periods within those fiscal
years
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
Annual reporting periods
beginning after December
15, 2017, including interim
reporting periods within those
annual reporting periods
Early
Transition Summary
Adopt
ASU 2016-16 was issued to improve the accounting for the
Modified income tax consequences of intra-entity transfers of assets
a
Retrospective other than inventory. The initiative is designed to reduce the
complexity in accounting standards.
ASU 2016-05 was issued to address diversity in practice of
Modified
a how certain cash receipts and cash payments are currently
Retrospective
presented and classified in the statement of cash flows.
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
Modified
a6 organizations. The ASU requires the measurement of all
Retrospective
expected credit losses for 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 by providing
clarifications and practical expedients on the following issues:
assessing collectability criterion in paragraph 606-10-25-1(e)
Full or Modified
a5 and accounting for contracts that do not meet the criteria for
Retrospective
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.
16
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Accounting Standards Update
ASU 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
ASU 2016-10 Revenue from Contracts
with Customers (Topic 606): Identifying
Performance Obligations and Licensing
assurance
Effective Date
Public Business Entities
Fiscal years beginning after
December 15, 2017, including
interim periods within those
years
Annual reporting periods
beginning after December
15, 2017, including interim
reporting periods within those
annual reporting periods
Early
Transition Summary
Adopt
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
Full or Modified Process, which is codified in paragraph 605-20-S99-2;
a
Retrospective
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.
The amendments in this ASU provide clarification to
Full or Modified
a5 two components of Topic 606: 1) identifying performance
Retrospective
obligations, and 2) licensing implementation guidance.
17
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Accounting Standards Update
ASU 2016-08 Revenue from Contracts
with Customers (Topic 606): Principal
versus Agent Considerations (Reporting
Revenue Gross versus Net)
ASU 2016-04 Liabilities
Extinguishments of Liabilities (Subtopic
405-20): Recognition of Breakage for
Certain Prepaid Stored-Value Products
ASU 2016-02 Leases (Topic 842)
ASU 2016-01 Financial Instruments
Overall (Subtopic 825-10): Recognition
and Measurement of Financial Assets
and Financial Liabilities
assurance
Effective Date
Public Business Entities
Annual reporting periods
beginning after December
15, 2017, including interim
reporting periods within those
annual reporting periods
Fiscal years beginning after
December 15, 2017, including
interim periods within those
years
Fiscal years beginning after
December 15, 2018, including
interim periods within those
years
Fiscal years beginning after
December 15, 2017, including
interim periods within those
years
Early
Transition Summary
Adopt
The amendments are intended to improve the implementation
Full or Modified guidance on principal versus agent considerations by
a5
Retrospective amending existing illustrative examples and adding new
examples.
The amendments, which apply to entities that offer certain
prepaid stored value products, provide a narrow scope
exception to the guidance in Subtopic 405-20 that requires
Full or Modified
a breakage for those liabilities be accounted for consistent
Retrospective
with the breakage guidance in Topic 606 Revenue from
Contracts with Customers. There is no specific guidance for
the derecognition of prepaid stored-value product liabilities.
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
Modified and a right-of-use asset for the right to use/control a specified
a asset for the lease term. Lessor accounting is largely
Retrospective
unchanged.
See DHG publication Leases:NotJustForThe
FootnotesAnymore, 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 instruments for disclosure purposes, and separate
presentation of financial assets and liabilities by measurement
category and form of financial asset. It also eliminates the
Prospective a7
requirement to disclose the methods and assumptions used
to estimate fair value of financial instruments measured at
amortized cost.
See also, DHG publication FASBReleasesNew
StandardonClassification&Measurementof
FinancialInstrumentsissued in January 2016.
18
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Effective Date
Accounting Standards Update Transition
Public Business Entities
ASU 2014-09 Revenue from Contracts
Fiscal years beginning after
with Customers (Topic 606) & ASU
December 15, 2017, including Full or Modified
2015-14 Revenue From Contracts
interim periods within those Retrospective
With Customers (Topic 606): Deferral of
years
the Effective Date
19
assurance
Early
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 multi-year 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.
a
The amendments in ASU 2015-14 defer the effective date
of ASU 2014-09, Revenue from Contracts with Customers
(Topic 606) for one year. For public business entities, earlier
application is permitted only as of annual reporting periods
beginning after December 15, 2016, including interim
reporting periods within that reporting period. All other entities
may elect to apply this guidance as of annual reporting
periods beginning after December 15, 2016, including interim
reporting periods within annual reporting periods beginning
one year after the annual reporting period in which an entity
first applies the guidance in this ASU.
See DHG A&A Update FASBIssuesLong-Awaited
RevenueRecognitionStandard, for additional
information. See also, DHG publication Gettingto
theBottomoftheTopLinePreparingtoAdoptthe
NewRevenueRecognitionStandardissued March 18, 2016.
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix A - Accounting Standards Affecting Public Business Entities in 2018 and beyond
Footnotes
1. Entities that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments in this ASU at the same time they adopt the amendments in ASU 2015-02 and should ap-
ply the same transition method elected for the application of ASU 2015-02. Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments in this Update
retrospectively to all relevant prior periods, beginning with the fiscal year in which the amendments in ASU 2015- 02 initially were applied.
2. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postre-
tirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic
postretirement benefit in assets. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the
prior comparative periods as the estimation basis for applying the retrospective presentation requirements. Disclosure that the practical expedient was used is required.
3. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
4. Early application of the amendments in this Update is allowed as follows: (a) For transactions for which the acquisition date occurs before the issuance date or effective date of the amendments,
only when the transaction has not been reported in financial statements that have been issued or made available for issuance. (b) For transactions in which a subsidiary is deconsolidated or a group
of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or
made available for issuance.
5. Should adopt concurrently with ASU 2014-09.
6. Early adoption is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
7. Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for
issuance of the following amendments in this Update are permitted as of the beginning of the fiscal year of adoption: (a) An entity should present separately in other comprehensive income the por-
tion 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.

20
assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
The following table presents ASUs that become effective for 2017 fiscal years and beyond for private companies. Please refer to the individual ASUs in their entirety for additional guidance.
Private Company Effective Early
Accounting Standards Update Transition Summary
Date Adopt
Fiscal years beginning
after December 15, 2018,
and interim periods within
fiscal years beginning after
December 15, 2019
This ASU was issued to provide guidance on how an
If the entity is a not-for-profit operating entity determines the customer of the operation
that has issued, or is a conduit services for transactions within the scope of Topic 853,
bond obligor for, securities Service Concession Arrangements. A service concession
ASU 2017-10 - Service Concession
that are traded, listed, or Full or Modified arrangement is an arrangement between a grantor and an
Arrangements (Topic 853): Determining a
quoted on an exchange or Retrospective operating entity whereby the operating entity will operate
the Customer of the Operation Services
an over-the-counter market, the grantors infrastructure for a specified period of time. The
and an employee benefit plan operating entity also may maintain the infrastructure, and it
that files or furnishes financial also may be required to provide periodic capital-intensive
statements with the SEC, the maintenance to enhance or extend the life of the infrastructure.
amendments in this update
are effective for fiscal year
beginning after December 15,
2017 including interim periods
within those fiscal years

Annual periods beginning after
ASU 2017-09 - Compensation - Stock
December 15, 2017, including
Compensation (Subtopic 718): Scope
interim periods within those
of Modification Accounting
annual periods
This ASU was issued to provide guidance about what
changes to the terms or conditions of a share-based payment
Prospectively a
award require an entity to apply modification accounting in
Topic 718.

This ASU was issued in order to shorten the amortization

ASU 2017-08 - Receivables - Annual periods beginning
period for certain callable debt securities held at a premium.
Nonrefundable Fees and Other after December 15, 2019,
Modified Specifically, the amendments require the premium to be
Costs (Subtopic 310-20): Premium and interim periods within a
Retrospective amortized to the earliest call date. The amendments do not
Amortization on Purchased Callable annual periods beginning after
require an accounting change for securities held at a discount;
Debt Securities December 15, 2020
the discount continues to be amortized to maturity.

21
assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Accounting Standards Update
ASU 2017-07 - Compensation -
Retirement Benefits (Topic 715):
Improving the Presentation of Net
Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost
ASU 2017-06 - Plan Accounting:
Defined Benefit Pension Plans (Topic
960); Defined Contribution Pension
Plans (Topic 962); Health and Welfare
Benefit Plans (Topic 965): Employee
Benefit Plan Master Trust Reporting
assurance
Private Company Effective Early
Transition Summary
Date Adopt
This ASU was issued to improve the presentation of net
periodic pension cost and net periodic postretirement benefit
cost. The amendments require that an employer report the
service cost component in the same line item or items as
other compensation costs arising from services rendered
by the pertinent employees during the period. The other
components of net benefit cost are required to be presented
Annual periods beginning in the income statement separately from the service cost
after December 15, 2018, component and outside a subtotal of income from operations,
Prospective and if one is presented. If a separate line item or items are used
and interim periods within a
Retrospective1 to present the other components of net benefit costs, that line
annual periods beginning after
December 15, 2019 item or items must be appropriately described. If a separate
line item or items are not used, the line item or items used in
the income statement to present the other components of net
benefit cost must be disclosed.
The amendments also allow only the service cost component
to be eligible for capitalization when applicable (e.g., as a cost
of internally manufactured inventory or a self-constructed
asset).
This ASU was issued to improve the usefulness of the
information reported to users of employee benefit plan
financial statements and to provide clarity to preparers and
auditors.
The amendments in this ASU require a plan's interest in that
master trust and any changes in that interest to be presented
in separate line items in the statement of net assets available
for benefits and in the statement of changes in net assets
available for benefits, respectively.
Fiscal years beginning after
Retrospective a The amendments also remove the requirement to disclose the
December 15, 2018
percentage interest in the master trust for plans with divided
interests and require that all plans disclose the dollar amount
of their interest in each of those general types of investments.
The amendments require all plans to disclose: (a) their master
trust's other asset and liability balances; and (b) the dollar
amount of the plan's interest in each of those balances.
Lastly, the amendments eliminate redundant investment
disclosures (e.g., those required by Topic 815 and 820)
relating to 401(h) account assets.
22
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Private Company Effective Early
Accounting Standards Update Transition Summary
Date Adopt

This ASU was issued to clarify that a financial asset is within

the scope of Subtopic 610-20 if it meets the definition of an in
substance nonfinancial asset. The amendments also define
the term "in substance financial asset." The amendments
clarify that nonfinancial assets within the scope of Subtopic
610-20 may include nonfinancial assets transferred within
ASU 2017-05 - Other Income - Gains
Annual reporting periods a legal entity to a counterparty. For example, a parent
and Losses from the Derecognition
beginning after December 15, may transfer control of nonfinancial assets by transferring
of Nonfinancial Assets (Subtopic
2018, and interim reporting Full or Modified ownership interests in a consolidated subsidiary. A contract
610-20): Clarifying the Scope of a2
periods within annual periods Retrospective that includes the transfer of ownership interests in one or more
Asset Derecognition Guidance
beginning after December 15, consolidated subsidiaries is within the scope of Subtopic
and Accounting for Partial Sales of
2019 610-20 if substantially all of the fair value of the assets that are
Nonfinancial Assets
promised to the counterparty in a contract is concentrated
in nonfinancial assets. The amendments also clarify that an
entity should identify each distinct nonfinancial asset or in
substance nonfinancial asset promised to a counterparty and
derecognize each asset when a counterparty obtains control
of that asset.

23
assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Private Company Effective
Accounting Standards Update
Date
All other entities, including Not-
for-Profit entities, should adopt
ASU 2017-04 - Intangibles - Goodwill
for their annual or any interim
and Other (Topic 350): Simplifying the
goodwill impairment tests in
Test for Goodwill Impairment
fiscal years beginning after
December 15, 2021
ASU 2017-02 - Not-for-Profit-Entities
Not-for-Profits for fiscal years
- Consolidation (Subtopic 958-810):
beginning after December
Clarifying When a Not-for-Profit Entity
15, 2016, and interim periods
That is a General Partner or a Limited
within fiscal years beginning
Partner Should Consolidate a For-Profit
after December 15, 2017 4
Limited Partnership or Similar Entity
assurance
Early
Transition Summary
Adopt
This ASU was issued in order to simplify the subsequent
measurement of goodwill by eliminating the Step 2 goodwill
impairment test. Under the amendments in this ASU, an entity
should perform its annual or interim goodwill impairment test
by comparing the fair value of a reporting unit with its carrying
amount. An entity will then recognize an impairment charge
for the amount by which the carrying amount exceeds the
reporting units fair value; however the loss recognized should
not exceed the total amount of goodwill allocated to that
reporting unit. Additionally, an entity should consider income
tax effects from any tax deductible goodwill on the carrying
amount of the reporting unit when measuring the goodwill
impairment loss, if applicable.
Prospective a3
The amendments in this ASU also eliminated the requirements
for any reporting unit with a zero or negative carrying amount
to perform a qualitative assessment and therefore the same
impairment assessment now applies to all reporting units. An
entity is required to disclose the amount of goodwill allocated
to each reporting unit with a zero or negative carrying amount
of net assets.
The ASU did not affect the option to perform the qualitative
assessment (Step 0) for a reporting unit to determine if
the quantitative impairment test is necessary and private
companies will still have the option to elect the PCC alternative
on goodwill.
ASU 2017-02 was issued in order to clarify when a Not-for-
Profit entity that is a general partner or limited partner should
consolidate a for-profit limited partnership or similar legal
entity once the amendments in ASU 2015-02, Consolidation
(Topic 810): Amendments to the Consolidation Analysis,
Full or Modified
become effective.
Retrospective -
Consistent with The amendments maintain how Not-for-Profit general partners
a
method elected currently apply the consolidation guidance in Subtopic 810-
for adoption of 20 by including that guidance within Subtopic 958-810. The
ASU-2015-02 amendments also add to Subtopic 958-810 the general
guidance in Subtopic 810-10 on when not-for-profit limited
partners should consolidate a limited partnership.
This ASU primarily affects affordable housing and real estate
entities.
24
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Private Company Effective
Accounting Standards Update
Date
Annual reporting periods
beginning after December 15,
ASU 2017-01 - Business Combinations
2018, and interim reporting
(Topic 805): Clarifying the Definition of
periods within annual periods
a Business
beginning after December 15,
2019
Annual reporting periods
ASU 2016-20 - Technical Corrections beginning after December 15,
and Improvements to Topic 606, 2018, and interim reporting
Revenue from Contracts with periods within annual periods
Customers beginning after December 15,
2019
assurance
Early
Transition Summary
Adopt
ASU 2017-01 was issued to clarify the definition of a business
in order to assist entities with evaluating whether transactions
should be accounted for as acquisitions (or disposals) of
assets or businesses. This ASU provides a screen whereby
a transaction will be accounted for as an asset purchase (or
disposal) if substantially all of the fair value of the gross assets
acquired (disposed) is concentrated in a single identifiable
Prospective a5
asset or a group of similar identifiable assets. If the screen
is not met, the entity will evaluate whether it is a business
acquisition under revised criteria. The amendments in this
ASU are expected to cause fewer transactions to be identified
as businesses. While this ASU will apply to all entities and
industries, it is expected to particularly impact the real estate
and pharmaceutical/biotech industries.
This ASU is intended to improve the operability and
understandability of the implementation guidance by
providing clarifications and practical expedients on the
following issues: loan guarantee fees, contract costs,
provisions for losses on construction-type and production-
Full or Modified
a type contracts, scope of topic 606, and disclosure of
Retrospective
remaining performance obligations. Disclosure of prior period
performance obligations, contract modifications, contract
asset versus receivable, refund liability, advertising costs,
fixed odds wagering contracts in the casino industry and cost
capitalization for advisors to private and public funds.
25
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Private Company Effective
Accounting Standards Update
Date
Amendments under ASC 350
- Intangibles - Goodwill and
Other are effective for annual
reporting periods beginning
after December 15, 2017,
including interim periods
ASU 2016-19 - Technical Corrections
within those annual periods.
and Improvements
Amendments under ASC 820
- Fair Value Measurements
are effective for fiscal years
beginning after December 15,
2017, including interim periods
within those fiscal years.
Fiscal years beginning
after December 15, 2018,
ASU 2016-18 - Statement of Cash
and interim periods within
Flows (Topic 230): Restricted Cash
fiscal years beginning after
December 15, 2019
Fiscal years beginning
ASU 2016-17 - Consolidation (Topic
after December 15, 2016,
810): Interests Held through Related
and interim periods within
Parties That Are under Common
fiscal years beginning after
Control
December 15, 20176
assurance
Early
Transition Summary
Adopt
ASU 2016-19 was issued to provide incremental
improvements to GAAP through clarifying the Accounting
Standards Codification. The amendments generally fall into
one of the types of categories listed below.
Most of the
1. Amendments related to differences between original
amendments
guidance (e.g., FASB Statements, EITF issues, etc.) and
do not require
the Codification.
transition
guidance and 2. Guidance clarification and reference corrections that
are effective a provide clarification through updating wording, correcting
immediately. references, or a combination of both.
See ASU for 3. Simplification amendments that streamline or simplify the
individual Codification through minor structural changes to headings
transition or minor edits of text to improve the usefulness and
guidance. understandability of the Codification.
4. Minor improvements to the guidance that are not expected
to have a significant effect on current accounting practice
or create a significant administrative cost to most.
ASU 2016-18 was issued to address diversity in practice in
the classification and presentation of change in restricted
cash on the statement of cash flows under Topic 230. The
amendments in this Update require that a statement of cash
flows explain the change during the period in the total of
cash, cash equivalents, and amounts generally described
Retrospective a
as restricted cash or restricted cash equivalents. Therefore,
amounts generally described as restricted cash and restricted
cash equivalents should be included with cash and cash
equivalents when reconciling the beginning-of-period and
end-of-period total amounts shown on the statement of cash
flows.
Full or Modified ASU 2016-17 was issued to amend the consolidation
Retrospective - guidance on how a reporting entity that is the single decision
Consistent with maker of a VIE should treat indirect interests in the entity held
a
method elected through related parties that are under common control with
for adoption of the reporting entity when determining whether it is the primary
ASU-2015-02 beneficiary of that VIE.
26
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Accounting Standards Update
ASU 2016-16 - Income Taxes (Topic
740): Intra-Entity Transfers of Assets
Other Than Inventory
ASU 2016-15 Statement of Cash
Flows (Topic 230): Classification of
Certain Cash Receipts and Cash
Payments
ASU 2016-14 Not-for-Profit Entities
(Topic 958): Presentation of Financial
Statements of Not-for- Profit Entities
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
assurance
Private Company Effective
Date
Annual reporting periods
beginning after December 15,
2018, and interim reporting
periods within annual periods
beginning after December 15,
2019
Fiscal years beginning
after December 15, 2018,
and interim periods within
fiscal years beginning after
December 15, 2019
Fiscal years beginning after
December 15, 2017 and
for interim periods within
fiscal years beginning after
December 15, 2018
Fiscal years beginning after
December 15, 2020, and for
interim periods within those
fiscal years beginning after
December 15, 2021
Annual reporting periods
beginning after December 15,
2018, and interim reporting
periods within annual periods
beginning after December 15,
2019
Early
Transition Summary
Adopt
ASU 2016-16 was issued to improve the accounting for the
Modified income tax consequences of intra-entity transfers of assets
a
Retrospective other than inventory. The initiative is designed to reduce the
complexity in accounting standards.
ASU 2016-05 was issued to address diversity in practice of
Retrospective a how certain cash receipts and cash payments are currently
presented and classified in the statement of cash flows.
The updates in this ASU are intended to provide more
information and greater clarity in the financial statements and
Retrospective a notes on a not-for-profit entitys financial performance, cash
flows, and liquidity.
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
Modified
a7 organizations. The ASU requires the measurement of all
Retrospective
expected credit losses for 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 on
the following issues: assessing collectability criterion in
Full or Modified
a2 paragraph 606-10-25-1(e) and accounting for contracts that
Retrospective
do not meet the criteria for step one of the revenue recognition
model, presentation of sales taxes and other similar taxes
collected from customers, noncash considerations, contract
modifications at transition, completed contracts at transition.
27
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Accounting Standards Update
ASU 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
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
Private Company Effective
Date
Fiscal years beginning after
December 15, 2018, and
interim periods within annual
periods beginning after
December 15, 2019
Annual reporting periods
beginning after December 15,
2018, and interim reporting
periods within annual periods
beginning after December 15,
2019.
Fiscal years beginning after
December 15, 2017, and
interim periods within annual
periods beginning after
December 15, 2018
Annual reporting periods
beginning after December 15,
2018, and interim reporting
periods within annual periods
beginning after December 15,
2019
Early
Transition Summary
Adopt
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
Full or Modified Process, which is codified in paragraph 605-20-S99-2;
a
Retrospective
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.
The amendments in this ASU provide clarification to
Full or Modified
a2 two components of Topic 606: 1) identifying performance
Retrospective
obligations, and 2) licensing implementation guidance.
The amendments in this ASU are intended to improve the
accounting for employee share-based payments and affect
Prospective, all organizations that issue share-based payment awards to
Modified their employees. Several aspects of the accounting for share-
a
Retrospective, based payment award transactions are simplified, including:
or Retrospective (a) income 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 implementation
Full or Modified guidance on principal versus agent considerations by
Retrospective a 2
amending existing illustrative examples and adding new
examples.
28
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
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
assurance
Private Company Effective
Date
Fiscal years beginning after
December 15, 2016, including
interim periods within those
fiscal years
Fiscal years beginning after
December 15, 2017, and
interim periods within annual
Retrospective
periods beginning after
December 15, 2018
Fiscal years beginning after
December 15, 2017, and
Full or Modified
interim periods within annual
periods beginning after
December 15, 2018
Fiscal years beginning after
December 15, 2018, and
Full or Modified
interim periods within annual
periods beginning after
December 15, 2019
Issued March 2016 and
effective immediately
Early
Transition Summary
Adopt
The amendments eliminate the requirement to retroactively
Prospective a adjust an investment upon qualifying for the equity method
of accounting.
The amendments clarify the required steps to be taken when
assessing whether the economic characteristics and risks
Modified
a of call/put options are clearly and closely related to those of
their debt hosts - which is one of the criteria for bifurcating an
embedded derivative.
The amendments clarify that a change in the counterparty to
a derivative instrument designated as a hedging instrument
a does not, in and of itself, require de-designation of that
Retrospective
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 405-20 that requires
a breakage for those liabilities be accounted for consistent
Retrospective
with the breakage guidance in Topic 606 Revenue from
Contracts with Customers. There is no specific guidance for
the derecognition of prepaid stored-value product liabilities.
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
see individual private companies are able to forgo a preferability assessment
N/A
ASU the first time they elect the accounting alternatives within the
scope of this ASU. Subsequent changes to an accounting
policy election requires justification under Topic 250,
Accounting Changes and Error Corrections.
29
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Accounting Standards Update
ASU 2016-02 Leases (Topic 842)
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, 2019, and
interim periods within annual
Retrospective
periods beginning after
December 15, 2020
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
Prospective or
interim periods within annual
Retrospective
periods beginning after
December 15, 2018
Fiscal years beginning after
December 15, 2016, and
interim periods within annual
periods beginning after
December 15, 2017
Early
Transition 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
Modified and a right-of-use asset for the right to use/control a specified
a
asset for the lease term. Lessor accounting is largely
unchanged.
See DHG publication Leases:NotJustForThe
FootnotesAnymore, 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 instruments for disclosure purposes, and separate
presentation of financial assets and liabilities by measurement
Prospective a8 category and form of financial asset. It also eliminates the
requirement to disclose the methods and assumptions used
to estimate fair value of financial instruments measured at
amortized cost.
See also, DHG publication FASBReleasesNew
StandardonClassification&MeasurementofFinancial
Instrumentsissued in January 2016.
The amendments in this ASU require that deferred tax
a 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
Prospective a require the acquirer to record, in the same periods financial
statements, the effect on earnings of changes in depreciation,
amortization, or other income eff if any, as a result of the
change to the provisional amounts, calculated as if the
accounting had been completed at the acquisition date.
30
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
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 Early
Transition Summary
Date 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 multi-year 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
Fiscal years beginning after
revenue when (or as) the entity satisfies a performance
December 15, 2018, and
Full or Modified obligation.
interim periods within annual a
Retrospective
periods beginning after The amendments in ASU 2015-14 defer the effective date
December 15, 2019 of ASU 2014-09, Revenue from Contracts with Customers
(Topic 606) for one year. For public business entities, earlier
application is permitted only as of annual reporting periods
beginning after December 15, 2016, including interim
reporting periods within that reporting period. All other entities
may elect to apply this guidance as of annual reporting
periods beginning after December 15, 2016, including interim
reporting periods within annual reporting periods beginning
one year after the annual reporting period in which an entity
first applies the guidance in this ASU.
See DHG A&A Update FASBIssuesLong-Awaited
RevenueRecognitionStandard, for additional
information. See also, DHG publication Gettingto
theBottomoftheTopLinePreparingtoAdoptthe
NewRevenueRecognitionStandardissued March 18, 2016.
31
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
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
Fiscal years and interim periods
(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
beginning after December 15,
2016
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
Prospective a costs of completion, disposal, and transportation. The
existing standards require inventory to be measured at the
lower of cost or market, where market could be replacement
cost, net realizable value, or net realizable value less a normal
profit margin.
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.
Retrospective a This ASU requires insurance entities to disclose for annual
reporting periods additional information about the liability for
unpaid claims and claim adjustment expenses.
NOTE: While this ASU is effective for year-end 2016, it is not
required for interim periods until 2017.
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
Retrospective a
expedient. The ASU also removes the requirement to make
certain disclosures for all investments that are eligible to be
measured at fair value using the net asset value per share
practical expedient. Rather, those disclosures are limited to
investments for which the entity has elected to measure the
fair value using that practical expedient.
32
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Accounting Standards Update
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
ASU 2015-03: Interest Imputation of
Interest (Subtopic 835-300: Simplifying
the Presentation of Debt Issuance
Costs
assurance
Private Company Effective
Date
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, 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
Early
Transition Summary
Adopt
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
Prospective or
a arrangement does not include a software license, the
Retrospective9
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.
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, if an
Prospective a 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, consistent with debt discounts.
Retrospective a
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.
33
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Private Company Effective Early
Accounting Standards Update Transition Summary
Date Adopt

This ASU modifies the consolidation model for reporting

ASU 2015-02: Consolidation (Topic
810): Amendments to the Consolidation
Analysis
Fiscal years beginning after
December 15, 2016 and interim
Full or Modified
periods within fiscal years
Retrospective
beginning after December 15,
2017
organizations under both the variable interest model and
the voting interest model. The ASU is generally expected
a to reduce the number of situations where consolidation
is required; however, in certain circumstances, the ASU
may result in companies consolidating entities previously
unconsolidated.

Entities frequently raise capital through issuances of shares,

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)
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
Fiscal years beginning after
related to the host contract, and if certain criteria are met the
December 15, 2015, and
Full or Modified derivative would be separated from the underlying share and
interim periods within annual a
Retrospective accounted for under Topic 815-10, Derivatives and Hedging.
periods beginning after
The evaluation of whether or not the features are clearly and
December 15, 2016
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

ASU 2014-15: Presentation of Financial
StatementsGoing Concern (Subtopic
205- 40): Disclosure of Uncertainties
about an Entitys Ability to Continue as
a Going Concern
Fiscal years beginning
after December 15, 2016,
and interim periods within
fiscal years beginning after
December 15, 2016
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 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).

34
assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Accounting Standards Update
ASU 2014-13: Consolidation (Topic
810): Measuring the Financial Assets
and the Financial Liabilities of a
Consolidated Collateralized Financing
Entity
assurance
Private Company Effective Early
Transition Summary
Date 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
Fiscal years ending after assets in the entity being consolidated, even when the
December 15, 2016, and financial liabilities only have recourse to the financial assets
Full or Modified
interim periods within annual a of the collateralized financing entity. This measurement
Retrospective
periods beginning after difference is not consistently accounted for, either at initial
December 15, 2016 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.
35
Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix B - Accounting Standards Affecting Private Companies in 2017 and beyond
Footnotes
1. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postre-
tirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic
postretirement benefit in assets. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the
prior comparative periods as the estimation basis for applying the retrospective presentation requirements. Disclosure that the practical expedient was used is required.
2. Should adopt concurrently with ASU 2014-09.
3. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
4. NFPs that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments in ASU 2017-02 at the same time they adopt the amendments in ASU 2015-02 and should
apply the same transition method elected for the application of ASU 2015-02. NFPs that have already adopted the amendments in ASU 2015-02 are required to adopt the amendments in ASU
2017-02 retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 were initially adopted.
5. Early application of the amendments in this Update is allowed as follows: (a) For transactions for which the acquisition date occurs before the issuance date or effective date of the amendments,
only when the transaction has not been reported in financial statements that have been issued or made available for issuance. (b) For transactions in which a subsidiary is deconsolidated or a group
of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or
made available for issuance.
6. Entities that have not yet adopted the amendments in ASU 2015-02 are required to adopt the amendments in this ASU at the same time they adopt the amendments in ASU 2015-02 and should ap-
ply the same transition method elected for the application of ASU 2015-02. Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments in this Update
retrospectively to all relevant prior periods, beginning with the fiscal year in which the amendments in ASU 2015- 02 initially were applied.
7. Early adoption is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
8. Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for
issuance of the following amendments in this Update are permitted as of the beginning of the fiscal year of adoption: (a) An entity should present separately in other comprehensive income the por-
tion 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.
9. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. For prospective transition,
the only disclosure requirements at transition are the nature of and reason for the change in accounting principle, the transition method, and a qualitative description of the financial statement line
items affected by the change. For retrospective transition, the disclosure requirements at transition include the requirements for prospective transition and quantitative information about the effects
of the accounting change.

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assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix C - SEC Final Rules
The following table presents SEC Rules with effective and compliance dates during 2017 and beyond. Please refer to the individual SEC rules in their entirety for additional guidance.

SEC - Final Rules Summary

The Securities and Exchange Commission (the Commission or SEC) is making technical amendments to Form ADV
under the Investment Advisers Act of 1940 (Advisers Act) to reflect the enactment of a Wyoming state law regulating
Release IA-4698, Technical Amendments to Form
investment advisers. Form ADV is the form advisers use to register with the Commission and the state securities regulatory
ADV and Form ADV-W
authorities. The Commission is also making similar amendments to Form ADV-W, the form advisers use to withdraw from
registration with the Commission or the states. These amendments are effective July 1, 2017.

The SEC is adopting technical amendments to conform several rules and forms to amendments made to the Securities
Act of 1933 (Securities Act) and the Securities Exchange Act of 1934 (Exchange Act) by Title I of the Jumpstart Our
Release 33-10332, Inflation Adjustments and Other
Business Startups (JOBS) Act. These amendments effectuate inflation adjustments required under Title I and Title III of
Technical Amendments Under Titles I and III of the
the JOBS Act, and adopting new rules that include an inflation-adjusted threshold in the definition of the term emerging
Jobs Act
growth company as well as amendments to adjust the dollar amounts in Regulation Crowdfunding. This rule was
effective April 12, 2017.

The SEC is adopting an amendment to the Settlement Cycle Rule (Rule 15c6-1(a)) under the Securities Exchange Act of
Release 34-80295, Amendment to Securities 1934 (Exchange Act) to shorten the standard settlement cycle for most broker-dealer transactions from three business
Transaction Settlement Cycle days after the trade date (T+3) to two business days after the trade date (T+2). This rule was effective May 30, 2017
with a compliance date of September 5, 2017.

The SEC is adopting revisions to the EDGAR Filer Manual and related rules to reflect updates to the EDGAR system. The
updates are being made primarily to support the new online version of the Transfer Agent submission form types; provide
for the ability for filers to submit duplicate filings for submission form type 10-D; and provide for the ability for filers
Release 33-10324, Adoption of Updated EDGAR
to upload the notarized authentication document and the power of attorney as separate CORRESP documents when
Filer Manual
submitting a request to manually update their EDGAR filing passphrase. The EDGAR system was upgraded to support
the US GAAP 2017 Taxonomy on March 6, 2016. The EDGAR system was scheduled to be upgraded to support the other
functionalities on March 13, 2017.

The SEC is adopting amendments that will require registrants that file registration statements and reports subject to the
exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each
Release 33-10322, Exhibit Hyperlinks and HTML
exhibit listed in the exhibit index of these filings. To enable the inclusion of such hyperlinks, the amendments also require
Format
that registrants submit all such filings in HyperText Markup Language (HTML) format. This rule will be effective on
September 1, 2017.

The SEC is adopting revisions to the EDGAR Filer Manual and related rules to reflect updates to the EDGAR system.
Release 33-10295, Adoption of Updated EDGAR The updates are being made primarily to support an upgrade to the passphrase authentication process; and update the
Filer Manual recommended Internet browser language for all EDGAR websites. The EDGAR system was scheduled to be upgraded to
support the functionalities on January 30, 2017

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Appendix C - SEC Final Rules

SEC - Final Rules Summary

The SEC is adopting a final rule to implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act
of 2015 (the 2015 Act), which amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Inflation
Adjustment Act), as previously amended by the Debt Collection Improvement Act of 1996 (the DCIA). The 2015 Act
requires all agencies to annually adjust for inflation the civil monetary penalties that can be imposed under the statutes
administered by the agency. Pursuant to this requirement, this final rule performs the first annual adjustment for inflation
Release 33-10276, Adjustments to Civil Monetary
of the maximum amount of civil monetary penalties administered by the Commission under the Securities Act of 1933,
Penalty Amounts
the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and
certain penalties under the Sarbanes-Oxley Act of 2002. This adjustment will apply to all penalties imposed after the
effective date of this final rule for violations after November 2, 2015. For violations that occurred on or before November
2, 2015, the Commission is reinstating the penalty amounts in the Commissions prior penalty adjustments performed
under the DCIA. This rule was effective on January 18, 2017.

This document makes technical corrections to a rule that was published in the Federal Register on May 10, 2016 (81 FR
Release 33-10075A, Technical Correction: Changes
28689). The Commission adopted revisions to Rule 12g-1 under the Securities Exchange Act of 1934 (Exchange Act)
to Exchange Act Registration Requirements to
in light of the statutory changes made by Title V and Title VI of the Jumpstart Our Business Startups Act and Title LXXXV
Implement Title V and Title VI Title VI of the JOBS
of the Fixing Americas Surface Transportation Act. This document is being published to correct language in that rule to
Act
more precisely reflect the holder of record threshold established by Exchange Act Section 12(g)(1).

Release 33-10265, Adoption of Updated Edgar The updates are being made primarily to support the submission of certain Municipal Advisor submission form types
Filer Manual among other minor updates. This rule is effective upon publication in the Federal Register.

The SEC is adopting final rules that update how companies can raise money through intrastate and small offerings while
maintaining investor protections. The final rules amend Securities Act Rule 147 to improve the safe harbor under Section
3(a)(11) of the Securities Act, such that issuers may continue to use state law exemptions. The final rules also establish a
new intrastate offering exemption, Securities Act Rule 147A, that further accommodates offers accessible to out-of-state
residents and companies that are incorporated or organized out-of-state. These rules will be effective April 20, 2017.
Release 33-10238, Exemptions to Facilitate
Additionally, to improve the capital accessibility through regional offerings, the final rules amend Rule 504 of Regulation D
Intrastate and Regional Securities Offerings
under the Securities Act to increase the aggregate amount of securities that may be offered and sold from $1 million to $5
million. Included in the amendment are bad actor disqualifications to Rule 504 offerings in an effort to provide additional
investor protection. These rules will become effective January 20, 2017.

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

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Appendix C - SEC Final Rules

SEC - Final Rules Summary

The SEC is adopting amendments to rule 22c-1 under the Investment Company Act to permit a registered open-end
management investment company (open-end fund or fund) (except a money market fund or exchange-traded fund),
under certain circumstances, to use swing pricing. Swing pricing is defined as the process of adjusting the funds net
asset value (NAV) per share to effectively pass on the costs stemming from shareholder purchase or redemption activity
Release 33-10234, Investment Company Swing
to the shareholders associated with that activity.
Pricing
Additionally, the Commission adopted amendments to rule 31a-2 to require funds to preserve certain records related to
swing pricing as well as other amendments to Form N-1A and Regulation S-X and a new item in Form N-CEN, all of which
address a funds use of swing pricing. This rule becomes effective November 19, 2018.

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

Release 33-10233, Investment Company Liquidity
Risk Management Programs
Under the new rules and amendments, the Commission now requires each registered open-end management investment
company, including open-end exchange-traded funds (ETFs) but not including money market funds, to establish a
liquidity risk management program and requires principle underwriters and depositors of unit investment trusts to engage
in a limited liquidity review. Additionally, the Commission is also adopting amendments to Form N-1A regarding fund
policy disclosures on the redemption of fund shares and new rule 30b1-10, amendments to Forms N-PORT and N-CEN,
and Form N-LIQUID which will require a fund to confidentially notify the Commission of certain liquidity measures and
liquidity risk management practices.

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

The Securities and Exchange Commission is adopting new rules and forms as well as amendments to its rules and forms
to improve the reporting and disclosure of information by registered investment companies. The Commission is adopting
new Form N-PORT, which will require certain registered investment companies to report information about their monthly
portfolio holdings to the as well as adopting amendments to Regulation S-X, which will require standardized, enhanced
disclosure about derivatives in investment company financial statements. Other changes include the adoption of new
forms which will require certain registered investment companies to annually report certain census-type information to
Release 33-10231, Investment Company Reporting
the Commission in a structured data format and certain securities lending activity disclosures.
Modernization
Additionally, the Commission is rescinding current Forms N-Q and N-SAR and amending certain other rules and forms.
Collectively, these amendments will, among other things, improve the information that the Commission receives from
investment companies.

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

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assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments
Appendix C - SEC Final Rules

SEC - Final Rules Summary

These rules require an issuer to disclose payments made to the U.S. federal government or to a foreign government if
the issuer engages in the commercial development of oil, natural gas, or minerals, and is required to file annual reports
with the SEC under the Securities Exchange Act. The issuer must also disclose payments made by a subsidiary or entity
controlled by the issuer. Specifically, resource extraction issuers must disclose payments that are made to further the
Release 34-78167, Disclosure of Payments by
commercial development of oil, natural gas, or minerals (as defined in the rules), are not de minimis (i.e., either equal to or
Resource Extraction Issuers
exceed $100,000 in either a single payment or in a series of payments), and include payments related to taxes; royalties;
fees (including license fees); production entitlements; bonuses; dividends; infrastructure improvements; and if required
by law or contract, community and social responsibility payments. Resource extraction issuers are required to comply
with the rules starting for their fiscal years ending on or after September 30, 2018.

This rule 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
Release 33-9877, Pay Ratio Disclosure
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 are required for the first fiscal year
beginning on or after January 1, 2017.

Release 34-77104, Security-Based Swap

This rule governs the cross-border application of the de minimis exception from designation as a security-based swap
Transactions Connected with a Non-U.S. Person's
dealer. Under the final rule, a non-U.S. person will be required to include, in its calculations of whether it qualifies for such
Dealing Activity That Are Arranged, Negotiated, or
'de minimis' exception, security-based swaps that are arranged, negotiated or executed by personnel (or personnel of
Executed By Personnel Located in a U.S. Branch
an agent) located in a U.S branch or office. Final rule was effective April 19, 2016 and compliance is required the later of
or Office or in a U.S. Branch or Office of an Agent;
February 21, 2017 or the SBS entity counting date as defined in Section VII.
Security-Based Swap Dealer De Minimis Exception

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assurance Second Quarter 2017 Accounting, Reporting & Auditing Developments