Search within this section
Select a section below and enter your search term, or to search all click Regulations Committee Minutes
Favorited Content
Highlights of the September 12, 2018 SEC Regulations Committee meeting
us SEC - Regulations Committee Highlights
SEC Regulations Committee
September 12, 2018 - Joint Meeting with SEC Staff
SEC Offices – Washington, DC
September 12, 2018 - Joint Meeting with SEC Staff
SEC Offices – Washington, DC
HIGHLIGHTS
NOTICE: The Center for Audit Quality (CAQ) SEC Regulations Committee meets periodically with the staff of the SEC to discuss emerging financial reporting issues relating to SEC rules and regulations. The purpose of the following highlights is to summarize the issues discussed at the meetings. These highlights have not been considered or acted on by senior technical committees of the AICPA and do not represent an official position of the AICPA or the CAQ. As with all other documents issued by the CAQ, these highlights are not authoritative and users are urged to refer directly to applicable authoritative pronouncements for the text of the technical literature. These highlights do not purport to be applicable or sufficient to the circumstances of any work performed by practitioners. They are not intended to be a substitute for professional judgment applied by practitioners.
These highlights were prepared by a representative of CAQ who attended the meeting and do not purport to be a transcript of the matters discussed. The views attributed to the SEC staff are informal views of one or more of the staff members present, do not constitute an official statement of the views of the Commission or of the staff of the Commission and should not be relied upon as authoritative.
As available on this website, highlights of Joint Meetings of the SEC Regulations Committee and the SEC staff are not updated for the subsequent issuance of technical pronouncements or positions taken by the SEC staff, nor are they deleted when they are superseded by the issuance of subsequent highlights or authoritative accounting or auditing literature. As a result, the information, commentary or guidance contained herein may not be current or accurate and the CAQ is under no obligation to update such information. Readers are therefore urged to refer to current authoritative or source material.
I. ATTENDANCE
SEC Regulations Committee
| Securities and Exchange Commission
| Observers and Guests
|
Christine Davine, Chair
Steven Jacobs, Vice-Chair
Jason Cuomo
Brad Davidson
Liz Gantnier
Jon Guthart
Kendra Decker
John May
Ravi Raghunathan
Terry Spidell
Jake Vossen
Greg Wright
| Division of Corporation Finance (Division)
Kyle Moffatt, Chief Accountant
Patrick Gilmore, Deputy Chief Accountant
Lindsay McCord, Deputy Chief Accountant
Craig Olinger, Senior Advisor to the Chief Accountant
Shelly Luisi, Associate Director - Chief Risk Officer
Christy Adams, Associate Chief Accountant
Tricia Armelin, Associate Chief Accountant
Catherine Brown, Deputy Chief Risk Officer
Jaime John, Associate Chief Accountant
Ryan Milne, Associate Chief Accountant
Mark Green, Senior Special Counsel
Mark Rakip, Staff Accountant
Jarrett Torno, Assistant Chief Accountant
Office of Chief Accountant
Sheri York, Professional Accounting Fellow
| Chris Alabi, CAQ Observer
Rick Condon, RSM
Paula Hamric, BDO
Annette Schumacher Barr, CAQ Observer
|
II. CURRENT FINANCIAL REPORTING MATTERS
A. New Revenue Recognition Disclosures under ASC 606
The Committee and staff discussed observations on the new disclosures required by ASC 606, Revenue from Contracts with Customers, which were consistent with those discussed at the July 12, 2018 SEC Regulations Committee Meeting.
B. Impact of Retrospective Application of New Accounting Standards on the Fourth and Fifth Year of Selected Financial Data table (e.g., new standard on long-duration insurance contracts)
The Committee and the staff discussed the impact of the retrospective application of new accounting standards on the fourth and fifth year of selected financial data (S-K Item 301). The staff indicated that its views, as described in FRM 1610.1, have not changed. The staff generally expects all periods in selected financial data to be presented on a basis consistent with the annual financial statements. The staff indicated that registrants could discuss their individual facts and circumstances with the Assistant Director group responsible for reviewing their filings.
C. Emerging Growth Company (EGC) Transition Issues
The Committee and staff followed up on a prior meeting discussion related to a company that loses EGC status in the year public companies are required to adopt new accounting standards when they have elected to use non-public business entity adoption dates. The staff indicated these inquiries will be addressed in future public communications.
The Committee and the staff also discussed:
- The impact of ASC 606 when an EGC using non-public business entity adoption dates loses EGC status in the year of adoption applicable to non-public business entities (i.e., 2019 for a calendar year entity) or after the period in which the registrant has adopted the standard using the non-public business entity dates (e.g., 2020 for a calendar year entity); and
The staff indicated they are considering both these issues.
D. Financial statement requirements in an S-4 and/or merger proxy for an operating company merging with a SPAC
The Committee and the staff discussed transactions in a Form S-4 and/or merger proxy for which public Special Purpose Acquisition Companies (SPACs) are consummating mergers with private operating companies. In particular, they discussed the audit requirements for the private operating company in the Form S-4/merger proxy prior to consummation of the transaction.
Given that the operating company is considered the predecessor requiring a PCAOB opinion in the "Super Form 8-K" to be filed within four days of the consummation, the staff noted that the operating company financial statements should also be audited in accordance with PCAOB standards for the Form S-4/merger proxy. If a registrant is unable to provide a PCAOB opinion for the operating company in the Form S-4/merger proxy (for example because of an auditor independence issue or other timing issue), the registrant should discuss their facts and circumstances with the staff prior to the filing.
The staff also noted that the financial statements of the operating company should be presented as if it were the private operating company's initial registration statement. Therefore, the financial statements of the operating company would need to comply with public company GAAP disclosures (e.g., segments, earnings per share, etc.). In addition, the operating company would need to evaluate its probable and consummated acquisitions following Rule 3-05 and Regulation S-X.).
E. Leases (ASC 842) - Impact on Article 11 conclusions for Master Limited Partnership (MLP) drop-down transactions previously accounted for as common control business combinations under ASC 805 and now accounted for as failed sale-leaseback transactions under ASC 842
Subsequent to the adoption of ASC 842, an MLP might be required to account for a drop- down transaction as a failed sale-leaseback transaction. Rather than accounting for the drop down as a common control business combination, the MLP will record a financing receivable on its balance sheet and recognize interest income rather than recording the assets on its balance sheet and the related revenues and costs on its income statement.
The Committee and staff discussed whether the transactions described above represent the acquisition of an asset or a business for purposes of Item 2.01 of Form 8-K, which informs whether historical financial statements and Article 11 pro forma financial information is required. The staff indicated they are considering this issue.
Copyright by Center for Audit Quality
Link copied
