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September 2015  »  Tax & Accounting Update

Tax & Accounting Update

Tax & Accounting Update is provided by Thomson Reuters and based on material published on Checkpoint, its online news and research platform. The Update is a quick-reference guide to the most pressing issues coming down the regulatory and administrative pipeline. Visit https://tax.thomsonreuters.com/daily-newsstand/ for further information and daily updates.

Tax News

IRS provides insight on Cadillac tax.

The IRS has issued a second notice that describes potential approaches to a tax on unusually expensive health plans, often referred to as “the Cadillac tax.” For tax years beginning after December 31, 2017, insurers will be subject to a nondeductible excise tax if the aggregate value of employer-sponsored health insurance coverage for an employee is equal to 40% of the aggregate value of the health insurance coverage. This notice invites comments on these issues, after which the IRS intends to issue proposed regulations.

SEC News

Registration rules established for swaps market.

The SEC agreed to rules requiring dealers and traders in financial swaps to register with the agency. The measure is one of the reforms of the derivatives market stemming from the Dodd-Frank Act. Dealer registration is “the fundamental tool by which the commission obtains the comprehensive information necessary to regulate dealers and supervise their business operations,” said SEC Chair Mary Jo White, in remarks prior to the vote, which passed 5–0.

Pay-ratio disclosure rule approved despite opposition.

On August 5, the SEC (by a 3–2 vote) backed a final rule that calls for companies to disclose the ratio of their CEO's compensation to the median pay of other employees. Commissioner Luis Aguilar called the rule a step toward promoting “corporate accountability.” Commissioner Kara Stein said the disclosure “will provide valuable information to investors about how a company manages human capital.”

FASB News

Planned disclosure rules dropped for investment company holdings.

On August 5, FASB scrapped a plan to require disclosures about an investment company's investments in other investment companies. Board members realized they were asking for information that was relatively accessible through other channels, and thus they concluded that the cost of gathering it for purposes of the financial statement notes would not be worth the benefit to investors and analysts. “In a perfect world, where all investors picked up all financials and read everything, we could justify the cost-benefit,” FASB board member Harold Schroeder said. “This is not enough and not timely enough for the really big-time, sophisticated investor or, at the other end, the one that hired the manager.”

EITF proposals for hedge accounting released for public comment.

FASB released two minor clarifications to hedge accounting that originated with its Emerging Issues Task Force (EITF). The first proposal is an effort to clarify that a change in the trading partner in some derivatives trades will not void the contract's eligibility for hedge accounting. The second proposal attempts to clear up conflicting views about whether certain types of embedded derivatives must be accounted for separately from their host contracts.

PCAOB News

Chamber of Commerce lobbies to delay work on specialist guidance.

In a recent comment letter, the U.S. Chamber of Commerce urged the PCAOB to do more work before changing the auditing standards governing the use of appraisers, actuaries, and other specialists. The Chamber of Commerce argued that the PCAOB does not grasp the issues auditors face when they rely on these specialists while they review a client's financial statements. Investors said they support the board's effort to strengthen the standards, given their reliance on audited financial statements. “As it stands, the consultation paper gives the impression that academic research, based on a limited number of studies, rather than practice, has had more influence on the PCAOB's thinking to date in regards to the issues,” wrote Tom Quaadman, the chamber's vice president for the center for capital markets competitiveness, on July 31. The chamber “strongly encourages the PCAOB to complete this work before reaching any decision on whether or how to proceed.”

IASB News

Proposal calls for deferral of narrow amendment to guidance for sales of joint venture investments.

On August 10, the IASB released a proposal to indefinitely defer the effective date of a narrow amendment to IFRS, which the board published in September 2014. The board wants to determine whether the issues would better be addressed in the board's separate research project to simplify the equity method of accounting. The September update amended two standards to address sales or contributions of assets between investors and associates or joint ventures. Comments are due by October 9.

GASB News

Government debt disclosures may be updated.

GASB Chairman David Vaudt said the standards-setting board will consider whether to add a project associated with its reexamination of the basic financial reporting model for state and local governments to its technical agenda. Specifically, the board may consider updating the debt disclosure rules, as originally issued under GASB Statement 34.

 
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