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Defining Issues

Defining Issues is our ongoing article series providing insights, updates and resources on topics of importance to accounting and financial reporting professionals.

Defining Issues team

Defining Issues team

News for financial reporting professionals, KPMG US

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Reference rate reform scope refinement
KPMG reports on FASB ASU 21-01, which permits entities to apply optional expedients in ASC 848 to derivative instruments modified because of discounting transition.
FASB proposes business combination amendments
The proposed amendments will require an acquirer to recognize and measure contract assets and contract liabilities in acquired revenue contracts based on the guidance of ASC 606 rather than fair value.
FASB proposes new leases standard amendments
Updated: FASB proposes targeted amendments to ASC 842 and adds narrow-scope projects to its technical agenda.
FASB defers effective date for long-duration insurance contracts
KPMG reports on ASU 2020-11, Financial Services—Insurance (ASC 944): Effective Date and Early Application, which was issued on November 5, 2020.
SEC adopts amendments to update certain auditor independence requirements
The SEC’s amendments will more effectively focus the independence analysis on those relationships or services that are most likely to threaten an auditor’s objectivity and impartiality.
FASB enhances presentation and disclosure requirements for NFP gifts-in-kind
ASU 2020-07 addresses stakeholders’ concerns regarding lack of transparency about how certain gifts-in-kind are valued and used in an NFP’s programs and activities.

Previous Defining Issues

EITF reaches consensus-for-exposure on accounting for modifications of equity classified derivatives
KPMG reports that the EITF reached a consensus-for-exposure that will require an entity that modifies equity classified derivatives to apply a principles-based framework to determine the accounting treatment that best reflects the economic substance of the transaction
FASB proposes a practical expedient for valuing nonpublic entity share option awards
KPMG reports on proposed ASU which provides a practical expedient for nonpublic entities to determine the fair value of their share option awards.
FASB simplifies accounting for convertible instruments and contracts in an entity’s own equity
ASU 2020-06 reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification.
FASB to propose new leases standard amendments
KPMG reports on the FASB’s July 29, 2020 meeting at which the Board decided to (1) propose targeted amendments to ASC 842 and (2) add narrow-scope projects to its technical agenda.
Effective date for long-duration insurance contracts may be delayed
KPMG reports that the FASB tentatively decided to defer the effective date for long-duration insurance contracts and align both the adoption and early adoption transition dates.
SEC adopts amendments to financial disclosures about acquisitions and dispositions of businesses
The amendments are intended to assist registrants in making more meaningful determinations of whether an acquired or disposed business is significant and to improve information that investors receive about acquisitions and dispositions of businesses.
SEC rule provides smaller companies relief by amending filer definitions
The SEC has amended the accelerated filer and large accelerated filer definitions to exclude ‘smaller reporting company’ issuers with less than $100 million in annual revenue.
FASB discusses and responds to COVID-19
FASB votes to affirm and expand its proposal to defer the effective dates of the leases and revenue standards for certain entities as a result of COVID-19.
SEC rules affect financial disclosures of certain registered debt instruments
SEC adopts rule amendments to streamline disclosure and encourage issuers to conduct registered debt offerings.
FASB provides relief to companies for reference rate reform
FASB provides optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates such as LIBOR that are expected to be discontinued.
FASB issues simplifications to accounting for income taxes
KPMG reports on new guidance that simplifies income tax accounting; changes the accounting for certain transactions.
FASB defers effective dates for long-duration insurance, credit losses, derivatives and leases
KPMG reports on ASUs 2019-09 and 2019-10, which defer the effective dates for several major accounting standards.
FASB affirms decisions on accounting for share-based consideration payable to a customer
KPMG reports on ASU 2019-08 on accounting for share-based consideration payable to a customer.
EITF reaches final consensus on accounting for certain equity method investments
Consensus on accounting for equity method investments, discussion on licensing contract modifications
Effective dates for long-duration insurance, derivatives, CECL and leaes may be delayed
KPMG reports that the FASB tentatively decided to defer the effective dates for several major accounting standards.
Federal banking agencies issue proposed policy statement on the allowances for credit losses
Federal banking agencies have proposed a policy statement on CECL, explaining what they would be looking for.
PCAOB issues new guidance for auditors and audit committees
KPMG reports that the PCAOB issued new guidance for communications with audit committees. The guidance applies when an auditor has identified a violation of the independence rules.
SEC amends the Loan Provision of its auditor independence rules
The SEC’s amendments refocus the analysis on debtor-creditor relationships that pose a threat to auditor independence
SEC proposes to redefine filer definitions
KPMG reports on the SEC’s proposal that would exempt more companies from internal control audits
FASB extends private company alternatives to not-for-profits
ASU 2019-06 changes the accounting for goodwill and certain intangible assets for not-for-profit entities.
SEC proposes changes to disclosures about acquired and disposed businesses
KPMG reports on the SEC’s amendments to improve financial information for business acquisitions and dispositions.
Fanie Mae, Freddie Mac Single Security Initiative
KPMG’s Defining Issues discusses a Fannie Mae and Freddie Mac initiative resulting in a single mortgage-backed security, known as the uniform mortgage-backed security or UMBS. Investors will be allowed to exchange certain existing securities for newly issued securities.
FASB provides guidance on recoveries and extension options under credit losses standard
The FASB has proposed targeted transition relief related to the fair value option.
SEC amends Regulation S-K disclosures
The SEC’s amendments to modernize and simplify certain disclosure requirements to reduce the costs and burdens on public companies, investment advisers and investment companies.
FASB re-proposes changes to income tax disclosures
KPMG reports on the proposed ASU that seeks to simplify and improve the effectiveness income tax disclosures.
FASB updates the definition of collections
ASU 2019-03 expands the US GAAP definition of collections
FASB issues ASU changing lessor accounting
ASU 2019-01 makes targeted changes to lessor accounting and clarifies interim transition disclosure requirements.

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