Our Financial Reporting Update highlights key developments and issues that are relevant to finance and accounting personnel.


Financial Accounting Standards Board

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to amend guidance on leases with variable payments. Under the new lease standard, lessors who entered into sales-type leases with variable payments were forced to recognize a loss at lease commencement even if the lease was expected to be profitable over time. This ASU allows lessors to treat as an operating lease any lease that 1) is a sales-type or direct financing lease and 2) would result in a loss at lease commencement. The FASB believes that this treatment will more faithfully represent the economics of the lease transaction.

Securities and Exchange Commission

The Securities and Exchange Commission (SEC) has entered into a substituted compliance determination order with entities governed by the French Republic. Firms that follow the rules of the French Republic and are registered as security-based swap participants with the SEC will be able to satisfy portions of the Securities Exchange Act of 1934 by following similar French and European Union requirements. This order is an important step by the SEC to maintain comparability abroad.

For the first time, the SEC and the European Central Bank (ECB) signed a Memorandum of Understanding (MOU). This MOU signifies both organizations’ dedication to collaborating on the oversight of entities that fall under both the SEC and the ECB. The MOU will help the SEC in the supervision of SEC-registered entities in the European Union and firms that participate in compliance determination orders.

The SEC is improving public company data disclosures by implementing Application Programming Interfaces (APIs) into the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. The APIs, which are updated in real-time by the SEC, will increase data accessibility and transparency. Those who are interested in using the APIs can find more information and instructions on the SEC website.