FASB proposed an Accounting Standards Update (ASU) with the intention to improve guidance for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in own equity of an entity. The comment period on the proposed ASU ends on October 14, 2019. The proposed ASU would reduce the number of accounting models for convertible debt instruments and convertible preferred stock. It would revise the derivatives scope exception guidance to reduce form-over-substance-based accounting conclusions driven by remote contingent events. The proposed ASU also would improve and amend the related disclosure and earnings-per-share guidance.
FASB, in 2017, took on a project to address complexity associated with applying the generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. Stakeholders noted that complexity in this area contributes to a high number of financial statement restatements. Investors and other financial statement users have also cited its complexity when attempting to understand the results of applying the guidance. The amendments in the proposed ASU aim to improve those troublesome areas of the current guidance, specifically the guidance related to both convertible instruments and the derivatives scope exception for contracts in the own equity of an entity.
Comment Due Date: October 14, 2019
Keywords: Americas, US, Banking, Securities, Financial Instruments, Liabilities and Equity, GAAP, Convertible Instruments, Derivatives and Hedging, Derivatives Scope Exception, Accounting Standards Update, IFRS 9, FASB
Previous ArticleEBA Publishes Updated Package for 2020 Internal Model Benchmarking
In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.
The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.