- Recently Issued Accounting Standards - The SEC’s View on Disclosure
- October 20, 2016
- Law Firm: Greenberg Traurig LLP - New York Office
The SEC staff recently addressed best practices for financial statement disclosure in periods leading up to the adoption of recently issued accounting standard updates, or ASUs. In particular, the SEC staff commented on the application of Staff Accounting Bulletin (SAB) Topic 11.M “Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period,” to three significant ASUs to be implemented over the next few years:
- ASU 2014-0, Revenue from Contracts with Customers,
- ASU 2016-2, Leases (Topic 842), and
- ASU 2016-13, Measurement of Credit Losses on Financial Instruments.
In the staff’s view, such disclosure should include:
- a description of the effect of the accounting policies that the company expects to apply, if determined,
- a comparison with current accounting policies, and
- the company’s progress in implementing the new standards and any significant implementation matters that it still needs to address.
The SEC staff stated that the objective in making the announcement in September was to give companies sufficient time to consider the announcement before their year-end financial reporting, and that companies are encouraged but not expected to include these disclosures in financial statements for earlier periods. The SEC staff announcement will be available in the EITF meeting minutes once they are published.