NYSSCPA Comments on FASB Technical Corrections Proposals

By:
Chris Gaetano
Published Date:
Jun 28, 2016
MegaphoneThe NYSSCPA commented on a pair of proposals from the Financial Accounting Standards Board, both of which were focused mainly on narrowly focused technical corrections and clarifications.

The first comment letter, released yesterday, was written in response to a proposal from the Financial Accounting Standards Board (FASB) that provides focused technical corrections and clarifications to the revenue recognition standard. The proposal, which was issued in May, is meant to address points brought up by stakeholders after the initial standard was formally approved in 2014. If implemented, it would make amendments related to preproduction costs related to long-term supply arrangements; impairment testing in calculating contract costs; how the standard interacts with other impairment testing guidance; provisions for losses on construction-type and production-type projects; the scope of the Topic 606; disclosure of remaining performance obligations; examples of contract modifications; and fixed-odds wagering contracts in the casino industry. 

The Society, in its comment letter, largely agreed with the proposed changes. However, in response to an exposure draft question as to whether entities should disclose the amounts of variable and fixed consideration recognized in current-period revenue contracts in the event that it applies one or more practical expedients, it had a much more mixed response. If the practical expedient involves royalty arrangements, the Society said it would be proper to disclose. However, in the case of unsatisfied performance obligations, the Society said it would be too costly to assemble all the information for all contracts, and would outweigh any benefits that might emerge. 

Technical Corrections to the ​Accounting Standards Codification 

The Society also issued another comment letter on June 23 in response to a FASB proposal for technical corrections and improvements to the Accounting Standards Codification. 

The NYSSCPA, in a comment letter, largely agreed with proposed changes, which are aimed at importing certain standards int the Accounting Standards Codification with technical corrections and clarifications.

The proposal doesn't seem to make any major changes to accounting standards but, rather, takes literature such as FASB Statements and Emerging Issues Task Force Issues and changes the wording and format so they can be formally incorporated into the Accounting Standards Codification. While there are many proposed amendments, they can be fit into one of four different categories: 

1) Amendments relating to differences between current guidance and the Accounting Standards Codification; 
2) Guidance clarifications and reference corrections; 
3) Simplification taking the form of things like "minor structural changes to headings or minor editing of text to improve usefulness and understanding;" and 
4) Minor improvements not expected to have a significant impact on current accounting practice. 

The proposal is part of what the FASB calls a "'perpetual project" that is meant to facilitate Accounting Standards Codification updates for technical corrections, clarifications and minor improvements without having to go through periodic agenda requests for narrow and incremental items. 

The Society, in its comment letter, agreed with the proposal. It said it did not expect any of the proposed amendments to result in substantive changes to the application of existing guidance, and could not think of any other changes related to the proposed standard, either directly or indirectly. It also felt there didn't need to be any special considerations for nonpublic companies in this proposal. 

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