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QuarterlyOutlookMarch 2015kpmg.com


Companies began to consider in the first quarterthe new guidance on discontinued operationsas well as other new, but more narrowly scoped,standards. The FASB also issued an ASU thatchanges consolidation guidance, which is expectedto result in less consolidation by general partnersand asset managers.In addition, companies continue to analyze the newrevenue standard while the FASB prepares to proposeclarifying guidance and contemplates deferring theeffective date.Our Quarterly Outlook summarizes these and otheraccounting and financial reporting developmentspotentially affecting you in the current period or near term.


Contents01. Current Quarter Financial Reporting Matters........................................................................... 022015 Financial Reporting Changes.................................................................................................................................... 02SEC Staff Focus Areas...................................................................................................................................................... 02Other SEC Activities......................................................................................................................................................... 03Cybersecurity Developments........................................................................................................................................... 04Foreign Currency Reminder.............................................................................................................................................. 04Changes to Pension Mortality Tables................................................................................................................................ 05Transitioning to COSO 2013.............................................................................................................................................. 0502. Upcoming Financial Reporting Matters................................................................................... 06Revenue Standard Updates.............................................................................................................................................. 06Changes to Consolidation Guidance................................................................................................................................. 06Private Company Accounting for Identifiable Intangible Assets in a Business Combination.............................................. 07Elimination of Extraordinary Items.................................................................................................................................... 0703. Looking Ahead........................................................................................................................... 08Major Board Projects........................................................................................................................................................ 08FASB Simplification Initiative............................................................................................................................................ 09Disclosures about Hybrid Financial Instruments with Bifurcated Embedded Derivatives................................................. 10Other Ongoing FASB Activities......................................................................................................................................... 10Private Company Matters..................................................................................................................................................11Emerging Issues Task Force (EITF) Activities.................................................................................................................... 12Disclosure of Hedging Activities for Employees, Officers, and Directors ......................................................................... 12PCAOB Developments..................................................................................................................................................... 12IFRS in the United States.................................................................................................................................................. 1204. Recommended Reading and CPE Opportunities..................................................................... 14KPMG’s 2015 Global Audit Committee Survey.................................................................................................................. 14Five for 15: Five Tax Legislative Issues to Watch in 2015.................................................................................................... 14Putting Customers at the Heart of Your Data and Analytics Strategy................................................................................. 14Forensic Focus: Combating Spear Phishing Attacks......................................................................................................... 14Upcoming CPE Opportunities........................................................................................................................................... 14Appendix – Recent Accounting Standards..................................................................................... 16Accounting Standards Affecting Public Companies in 2015.............................................................................................. 17Accounting Standards Affecting Public Companies in 2016 and Beyond........................................................................... 18Accounting Standards Affecting Private Companies in 2014............................................................................................. 18Accounting Standards Affecting Private Companies in 2015 and Beyond.......................................................................... 19


01Current Quarter FinancialReporting Matters2015 Financial Reporting ChangesIn the first quarter of 2015, calendar year-end public companieswill adopt the new standard on accounting for discontinuedoperations, as well as several other, more narrowly scoped,standards. The Appendix – Recent Accounting Standards lists theFASB standards that public companies need to adopt in 2015 andin the future and those that private companies needed to adopt in2014 and beyond.Changes to Discontinued OperationsThis accounting standard defines discontinued operationsas disposed components (or components held for sale)representing a strategic shift that has (or will have) a major effecton operations and financial results. The FASB also eliminatedthe requirement to evaluate continuing involvement with thedisposed component to conclude on discontinued operationspresentation. The new standard expands the disclosures aboutdiscontinued operations and introduces new disclosures aboutdisposals of individually significant components that do not qualifyas discontinued operations.The changes to the discontinued operations definition areexpected to reduce the number of dispositions resulting indiscontinued operations presentation for some industries.These changes are expected to substantially converge U.S. GAAPguidance on discontinued operations reporting with IFRS.For More Information: FASB ASU, Defining Issues 14-20, andPodcastNew Option for Pushdown AccountingThis new standard allows, but does not require, an acquiredentity to apply pushdown accounting to change-in-control events.The decision about whether to apply pushdown accountingmay be made independently for each change-in-control event.The election is irrevocable once pushdown accounting is appliedto a particular change-in-control event.The new guidance became effective November 18, 2014.Acquired companies electing to apply the guidance must do soprospectively for transactions in which the acquirer has obtainedcontrol after November 18, 2014. An entity can also elect toapply pushdown accounting retrospectively to its most recentchange-in-control event, if the financial statements for the periodincluding the acquisition date have not been issued or madeavailable to be issued. If the financial statements for the periodincluding the most recent change-in-control event have beenissued or made available to be issued, the acquired company stillmay be able to retrospectively apply the new guidance. However,application would prompt a change in accounting principle andtherefore would be subject to a preferability analysis. Entities arenot allowed to retrospectively eliminate pushdown accountingapplied to prior transactions.To facilitate transition to the new standard, the SEC staffrescinded its guidance on pushdown accounting, which providedbright lines for when an SEC registrant is required (or allowed)to apply pushdown accounting. The SEC recently updatedits Financial Reporting Manual to reflect Staff AccountingBulletin No. 115, which revised public company requirements forpushdown accounting to be consistent with the new standard.Both SEC registrants and non-registrants are subject to thenew FASB guidance.For More Information: FASB ASU, SEC Staff Financial ReportingManual, Issues In-Depth: Pushdown Accounting, Webcast, andPodcastSEC Staff Focus AreasDuring the 2014 AICPA National Conference on Current SEC andPCAOB Developments, the SEC staff encouraged preparersto simplify their disclosures in regulatory filings. The staff alsoemphasized its continuing focus on management’s assessmentof internal control over financial reporting and highlighted areas offocus and frequent comment in the filing review process.Disclosure EffectivenessStaff of the SEC’s Division of Corporation Finance (DCF)discussed its initiative to evaluate the effectiveness ofdisclosures required under Regulations S-X and S-K.Initially, the review is focusing on the business and financial2 | Quarterly Outlook March 2015


Current Quarter Financial Reporting MattersInvestor Analysis Pilot ProgramThe SEC recently launched a pilot program to facilitate investoranalysis and comparisons of public company financial statementdata. The SEC will combine, organize, and post to its Web site datafrom public company filings for use by investors and academics.For More Information: SEC Press ReleaseApplying SEC Custody Rule to Investment Structures ThatInclude REITsThe SEC staff recently raised questions during the examinationof certain registered investment advisors about their compliancewith the Custody Rules of the Investment Advisers Act of 1940.The questions focused on whether advisors for investmentstructures that include Real Estate Investment Trusts (REITs) haveobtained and distributed the REIT’s audited financial statements toshareholders (or obtained surprise security counts for the REIT’sinvestments).The SEC staff concluded that, in certain circumstances, theREIT’s preferred shareholders are advisory clients. The SEC staffcited Investment Management Guidance Update No. 2014-07,which was issued by the Division of Investment Management, tosupport its conclusion. Although the Update uses the term specialpurpose vehicle, the SEC staff has referred to this guidance in itsevaluation of REITs for certain investment structures.Compliance with the custody rules (including determiningwhether the REIT investors are investment advisory clients) is alegal matter. Registered investment advisors with REITs withintheir investment structures should consult with their legal counselto determine whether they are complying with the custody rules.For More Information: IM Guidance Update No. 2014-07Cybersecurity DevelopmentsRegulators and law enforcement agencies recently releasedmaterials that discuss the increased risk of cyber threats andinclude best practices to help companies minimize their risk.SEC Publications about Cybersecurity at Brokerage andAdvisory FirmsThe SEC recently released two publications that addresscybersecurity at brokerage and advisory firms and suggestways for investors to protect their online investment accounts.A Risk Alert from the SEC’s Office of Compliance Inspections andExaminations (OCIE) contains SEC staff observations based onexaminations of more than 100 broker-dealers and investmentadvisers. An Investor Bulletin, issued by the SEC’s Office ofInvestor Education and Advocacy (OIEA), provides tips about howinvestors can safeguard their online investment accounts.For More Information: OCIE Risk Alert and OIEA Investor BulletinCOSO Publishes Report about Cyber RisksThe Committee of Sponsoring Organizations of the TreadwayCommission (COSO) recently published a research report,which provides direction about how an organization may usethe 2013 COSO Internal Control-Integrated Framework andCOSO’s Enterprise Risk Management-Integrated Framework(2004) to effectively evaluate and manage cyber risks. The newreport provides direction about identifying and implementinginternal control components and principles. This should includedemonstrating commitment to integrity and ethical values, riskanalysis, and evaluating and communicating deficiencies.For More Information: COSO News Release and COSO ReportWire Transfer ScamsThe FBI recently issued a public service announcement aboutwhat it dubbed the Business E-mail Compromise (BEC), whichis “a sophisticated scam targeting businesses working withforeign suppliers and/or businesses that regularly performwire transfer payments.” Ineffective internal controls over theauthorization of wire transfers enable criminals to transferfunds from the targeted company and frequently result infinancial loss. The FBI has received BEC complaint data fromvictims in every U.S. state and 45 countries. The FBI believes,with high confidence, that the number of affected companiesand total dollar loss will continue to increase.For More Information: FBI PSAForeign Currency ReminderIn February 2015, the Venezuelan government announced changesto its currency exchange mechanisms, resulting in the merger ofits SICAD 1 and SICAD 2 exchange mechanisms and the creationof a new Foreign Exchange Marginal System (SIMADI) exchangemechanism. As a result, Venezuela now has three exchangemechanisms:• CENCOEX – official rate of 6.3 Venezuelan Bolivars (BSF) to1 U.S. dollar (USD);• SICAD – periodic auction mechanism with a rate ofapproximately 12 BSF to 1 USD; and• SIMADI – daily auction mechanism with a rate that fluctuates(the initial SIMADI rate was approximately 172 BSF to 1 USD).Companies should consider these exchange-rate changes (as wellas any additional changes that may occur on or before the balancesheet date) when determining the appropriate rates to use whenremeasuring BSF-denominated items to the USD at the balancesheet date. Generally, a company should consider which rate(s)it legally may access and the rate it intends to use to transact.Companies may conclude the appropriate rate for the currentperiod differs from what was used in the prior period.Companies with significant operations in Venezuela shoulddisclose the aggregate transaction gain or loss resulting fromthe remeasurement of BSF-denominated assets and liabilitiesincluded in determining net income for the period. They shouldconsider disclosing the following (as recommended by the SEC):• A general discussion of the exchange rate mechanisms inVenezuela and the various government actions relating tothose exchange rates;• Disaggregated financial information about the Venezuelanoperations (e.g., balance sheets, income statements, andcash flow statements);4 | Quarterly Outlook March 2015


Current Quarter Financial Reporting Matters• Exchange rates used for remeasurement purposes as wellas an explanation for any changes in the rate used from theprior period;• The net monetary assets and liabilities that are exposed toexchange rate changes; and• The amount of BSF pending government approval/paymentat the CENCOEX or SICAD rate and the length of time suchpayment has been pending.Changes to Pension Mortality TablesThe AICPA recently released a new Technical Question andAnswer that addresses how and when nongovernmentalemployee benefit plans and nongovernmental sponsoringentities should consider updated mortality tables if they have notissued financial statements when the updated mortality tablesare published. Specifically, the Q&A indicates that U.S. GAAPrequires a mortality assumption that reflects the best estimateof the plan’s future experience to estimate the plan’s obligationas of the current measurement date. This requires an entity toevaluate all available information through the date the financialstatements are available to be issued to determine whether thatinformation provides additional evidence about the conditionsthat existed at the balance sheet date.The Society of Actuaries updated its mortality tables and mortalityimprovement scale in October 2014, which reflect increasing lifeexpectancies in the United States. U.S. plans and plan sponsorsshould consider these reports when selecting the mortalityassumptions used to measure pension and other postretirementbenefit obligations for interim remeasurements or annualmeasurements.For More Information: AICPA Technical Q&A 3700.01, DefiningIssues 14-42, and Defining Issues 14-48Transitioning to COSO 2013In May 2013, the Committee of Sponsoring Organizations of theTreadway Commission (COSO) released its updated InternalControl – Integrated Framework (2013 Framework). At that time,the COSO Board announced that the COSO 1992 Frameworkwould be superseded as of December 15, 2014.While many calendar year-end SEC registrants made the transitionto the 2013 Framework in connection with their 2014 assessmentsof the effectiveness of internal control over financial reporting,some registrants chose to delay their transition to the updated2013 Framework. Representatives from both the SEC’s Office ofthe Chief Accountant and the Division of Corporation Finance havepublicly stated that the SEC staff is more likely to question the useof an outdated framework with the passage of time.For More Information: COSO Web site, Defining Issues 13-26,Defining Issues 13-36, and KPMG’s CFO Financial Forum WebcastCOSO 2013 SeriesQuarterly Outlook March 2015 | 5


02Upcoming FinancialReporting MattersRevenue Standard UpdatesThe Joint Transition Resource Group for Revenue Recognition(TRG) met for the third time in January and discussed severalissues related to the new revenue recognition standard.The FASB and IASB also held joint meetings in Februaryand March and agreed to propose amendments to the newstandard, although their proposals are expected to differ incertain respects. In addition, both Boards plan to considerearly in the second quarter of 2015 whether to defer theeffective date of the new standard. Absent a deferral ofthe effective date, first quarter 2015 would be the firstperiod presented under the new standard for calendaryearSEC registrants choosing retrospective transition onJanuary 1, 2017, for the quarter ended March 31, 2017.January TRG MeetingTopics discussed included the following:• Noncash consideration;• Collectability;• Variable consideration;• Transition for contract modifications;• Identifying promised goods or services;• Stand-ready obligations; and• Incremental costs to obtain a contract.Topics that may be considered for further discussion orstandard setting also were briefly discussed. Board membersnoted that the Boards are considering standard setting toprovide a practical expedient for sales taxes (see below).The next TRG meeting will be March 30 and they plan todiscuss, among other topics, warranties, variable discounts,and series of distinct goods and services.February and March Joint Board MeetingsThe Boards agreed to propose amendments to the newrevenue standard to clarify the guidance on accounting for:• Licenses of intellectual property;• Identifying performance obligations;• Noncash consideration; and• Collectibility.In addition, the Boards agreed to propose amendments to theirrespective standards to provide additional practical expedientsfor transition. The FASB also will propose a practical expedientto allow companies to present sales taxes on a net basis asan accounting policy. While the FASB intends to make moreextensive changes than the IASB, the Boards’ intent is that theproposed amendments will clarify the new standard ratherthan alter its underlying principles.The FASB intends to issue two exposure drafts covering thoseclarifications in the near term with the objective of narrowingpotential diversity in practice based on feedback received fromconstituents, including the TRG. The IASB said it would waituntil substantially all the issues have been discussed beforeissuing an exposure draft to amend its standard.For More Information: Latest on Revenue RecognitionChanges to Consolidation GuidanceThe FASB recently issued an ASU to reduce the number ofconsolidation models and simplify their application. The ASUchanges the evaluation of whether limited partnerships(and similar legal entities) are variable interest entities (VIEs)and eliminates the presumption that a general partner shouldconsolidate a limited partnership that is a voting interest entity.The new guidance also alters the analysis for determiningwhen fees paid to a decision maker or service providerrepresent a variable interest in a VIE and how interests ofrelated parties affect the primary beneficiary determination.The new guidance eliminates the indefinite deferral of theconsolidation requirements in ASU 2009-17 for reportingenterprises with interests in certain investment companies.However, the FASB decided to exempt from the consolidationrequirements investment companies that are required tocomply with Rule 2a-7 of the Investment Company Act of 1940or that operate under similar requirements. Those entities willnot be consolidated by their sponsors, their investors, or otherparties that have interests in them.The new standard is effective for public companies infiscal years, and interim periods within those fiscal years,beginning after December 15, 2015. For private companies,the new standard is effective for fiscal years beginning after6 | Quarterly Outlook March 2015


Upcoming Financial Reporting MattersDecember 15, 2016, and for interim periods within fiscalyears beginning after December 15, 2017. The standard allowsearly adoption, including early adoption in an interim period.At the effective date, companies must reconsider all previousconsolidation analyses and revise their documentation.For More Information: FASB ASU and Defining Issues 15-6Private Company Accounting for IdentifiableIntangible Assets in a Business CombinationIn December 2014, the FASB issued guidance giving privatecompanies an alternative to include certain identifiableintangible assets in goodwill when applying purchaseaccounting in business combinations. Specifically, a privatecompany electing the alternative will not separately recognizein purchase accounting (and in other limited circumstanceswhen a new-basis event occurs) certain customer-relatedintangible assets and noncompetition agreements.The election also requires the private company to amortizegoodwill under the previously issued goodwill alternative.All companies other than public business entities,not-for-profits, and certain employee benefit plans can electthe alternative. The new standard is effective prospectivelyfor in-scope transactions occurring in the first fiscal yearbeginning after December 15, 2015, and interim periodswithin annual periods beginning after December 15, 2016.Early adoption is permitted.For More Information: FASB ASU and Defining Issues 15-1Elimination of Extraordinary ItemsThe FASB recently issued a new standard that simplifiesincome statement presentation by eliminating the conceptof extraordinary items from U.S. GAAP. However, the newguidance does not affect current presentation and disclosurerequirements for material events or transactions that areunusual in nature or infrequent in occurrence. Companies alsowill continue to evaluate whether items are unusual in nature orinfrequent in occurrence when estimating the annual effectivetax rate for interim reporting purposes. This is the first standardto be issued as part of the FASB’s simplification initiative andmore closely aligns U.S. GAAP with IFRS.The new standard applies to all companies for fiscal years,and interim periods within those fiscal years, beginning afterDecember 15, 2015. Companies have the option to adoptthe new guidance prospectively or retrospectively and mayearly adopt.For More Information: FASB ASU and Defining Issues 15-2Quarterly Outlook March 2015 | 7


03Looking AheadMajor Board ProjectsLeasesThe FASB and IASB have concluded their joint redeliberations oftheir 2013 exposure drafts. The Boards met jointly in January todiscuss lessee disclosure requirements, but have sincemet separately to discuss transition and other topics (e.g.,reassessment of variable lease payments that depend on anindex or rate and build-to-suit lease arrangements). The Boards’decision to finalize redeliberations in separate meetings couldlead to further divergence in their final standards.The Boards reaffirmed that the objective of lessee disclosuresis to enable users to understand the amount, timing, anduncertainty of cash flows arising from leases. However, theBoards reached different decisions about both the qualitativeand quantitative information lessees should provide to achievethe objective. Some of these differences are due to earlierdivergence in the Boards’ lessee accounting models. The IASBdecided to require lessees to provide quantitative disclosuresin a tabular format (unless another format is more appropriate)and to present all lessee disclosures in a single note orseparate section in the financial statements. The FASB decidednot to require the same presentation.At its February meeting, the FASB decided to require bothlessees and lessors to apply the new standard using amodified retrospective transition approach. Under thisapproach, lessees and lessors would restate all comparativeperiods presented, but not revise the accounting for leasesthat expired prior to the date of initial application. In addition,the FASB decided to prohibit full retrospective adoption.The FASB also decided to permit lessors and lessees to electspecified transition reliefs as a package (all or none) for allleases. Companies that are both a lessee and lessor wouldapply all or none of the specified reliefs to all lessee andlessor leases. In addition, companies would be permittedto use hindsight in evaluating the likelihood of exercise oflease renewal and purchase options for existing leases.The use of hindsight would be permitted whether or not theother specified reliefs are applied, but only for all or none of acompany’s leases.The IASB also met in February and March to discuss transition,but made different decisions than the FASB. The IASBreaffirmed its decision to include in its final standard anexemption for small-ticket leases, which may create furtherdivergence from U.S. GAAP balance sheet presentation.Both Boards directed their staffs to begin drafting finalstandards. Later in the drafting process, the Boards willdiscuss effective date, benefits, and costs of the newstandard, and any issues that arise during drafting of the finalstandards. Both Boards appear committed to issuing finalstandards in the second half of 2015.For More Information: Latest on LeasesFinancial InstrumentsThe FASB recently concluded its redeliberations onclassification and measurement and decided to substantiallyretain the existing guidance for investments in debt securitiesand loans. The Board continues to discuss its proposalson impairment, but is nearing the end of redeliberations.The Board recently began to discuss hedge accounting, buthas not made any technical decisions. The Board expects toissue its final standards on classification and measurement inthe second quarter of 2015 and impairment later in 2015.While financial instruments began as a joint project,the FASB and IASB will not converge on classification andmeasurement or impairment.Classification and Measurement. The FASB recentlydiscussed (1) disclosures about core deposit liabilities andhybrid financial instruments containing bifurcated embeddedderivatives, (2) the benefits, costs, and complexity of thedecisions reached to date, and (3) transition method.On transition to the final classification and measurementstandard, a company would apply the guidance to alloutstanding instruments and record a cumulative-effectadjustment to beginning retained earnings as of the beginningof the first reporting period in which it becomes effective.However, the new disclosure requirements and the guidanceon the practical expedient for nonmarketable equity securitieswould be effective prospectively. The Board will decide on theeffective date after the final standard has been drafted.8 | Quarterly Outlook March 2015


Looking AheadThe Board decided not to affirm the proposed disclosuresabout core deposit liabilities. In addition, the Board decided toexpose (separately from its classification and measurementstandard) its proposed disclosures on hybrid financialinstruments containing bifurcated embedded derivatives forpublic comment. Comments are due April 30 (see additionaldiscussion in the Disclosures about Hybrid FinancialInstruments with Bifurcated Embedded Derivatives section).Impairment. The FASB’s proposals would significantly changehow entities measure and recognize credit impairment for mostfinancial assets. Today’s incurred loss model would be replacedwith the current expected credit loss model (CECL), whichwould require management to recognize lifetime expectedcredit losses rather than incurred losses. In addition, the FASBdecided not to apply its CECL model to available-for-salesecurities and to instead make changes to the existingother-than-temporary impairment model.More recently, the FASB discussed disclosures, transitionmethods, and transition disclosures. For disclosures, the Boarddecided to:• Retain the disclosure requirements in current GAAP foravailable-for-sale debt securities (updated for the generalprinciples on disclosing credit risk);• Not require a period-to-period roll-forward disclosure of anentity’s portfolio of loans and debt securities measured atamortized cost and debt securities measured at fair valuethrough other comprehensive income;• Require a period-to-period roll-forward of an entity’sallowance for expected credit losses for financial assetsmeasured at amortized cost and fair value through othercomprehensive income; and• Require that credit quality indicators for all classes of financingreceivables (excluding revolving lines of credit) that aredisclosed under current GAAP be disaggregated by year ofthe asset’s origination (i.e., vintage year), limited to no morethan five annual reporting periods and the balance prior to thefifth annual reporting period shown in the aggregate.For transition method and transition disclosures,the Board decided:• For other-than-temporarily impaired debt securities, an entitywould adopt the new guidance prospectively as of theeffective date;• Loans and debt securities acquired with credit deterioration thatwere accounted for under Subtopic 310-30, Receivables – Loansand Debt Securities, (formerly SOP 03-3) would be classified aspurchased credit-impaired at the date of adoption; and• For purchased credit-impaired assets, at the date of adoption,an entity would gross-up the allowance for expected creditlosses and continue to recognize interest income based onthe yield as of the adoption date.The Board also affirmed the proposed transition disclosuresand the proposed transition. An entity would record acumulative-effect adjustment to beginning retained earningsas of the beginning of the first reporting period in which itbecomes effective. The FASB staff will begin drafting theASU and will perform outreach to preparers and users onspecific disclosures.For More Information: Latest on Financial InstrumentsFASB Simplification InitiativeThe FASB recently issued its first standard as part of itssimplification initiative to eliminate the concept of extraordinaryitems and expects to issue a new standard to simplify themeasurement date of plan assets in the near term. The Boardcontinues to discuss its other projects on this initiative, whichis intended to address unnecessary complexity in accountingstandards. However, the Board’s simplification projects thus farhave been narrowly scoped and have not attempted to addressbroader systemic causes of complexity in financial reporting orin existing standards.More recently, the Board issued two proposed standardsabout changes to income tax accounting and met toredeliberate changes to its proposed standard about debtissuance cost. The Board also discussed its simplificationprojects about share-based payment arrangements and balancesheet classification of debt. The Board is expected to continueits redeliberations about the subsequent measurement ofinventory in the near term.Changes to Income Tax AccountingThe FASB recently issued two proposed standards that wouldrequire companies to recognize immediately the income taxconsequences of intercompany asset transfers and to classifyall deferred tax assets and liabilities as noncurrent in a classifiedstatement of financial position. Approval of these proposalswould result in convergence with IFRS.• Intercompany Asset Transfers would require companies torecognize the income tax consequences of intercompanyasset transfers in the period of transfer. This proposalis intended to result in a more faithful depiction of thetax consequences of an intercompany asset transfer.However, if tax rates differ in the seller’s and the buyer’s taxjurisdictions, there would be an immediate, and potentiallysignificant, effect on earnings. This change would be appliedat the beginning of the period of adoption with a cumulativeeffectadjustment to beginning retained earnings.• Presentation of Deferred Taxes would require companiesto offset all deferred tax assets and liabilities (and anyvaluation allowance) for each tax-paying jurisdiction withineach tax-paying component and present that net deferred taxasset or liability as a single noncurrent amount. The proposalis expected to reduce the cost of tracking deferred tax itemsbased on the nature of the underlying account. It also wouldreduce complexity by eliminating the requirement to allocatethe valuation allowance on a pro-rata basis. This changewould be applied prospectively.Quarterly Outlook March 2015 | 9


Looking AheadIf finalized as proposed, the proposals would be effectivefor public companies for annual and interim periods in fiscalyears beginning after December 15, 2016, with no earlyadoption allowed. For private companies, the guidance wouldbe effective for annual periods in fiscal years beginningafter December 15, 2017, and interim periods in fiscalyears beginning after December 15, 2018. Early adoptionwould be allowed for private companies but not beforeDecember 15, 2016, and only if both ASUs are adopted atthe same time.For More Information: Proposals on Income Taxes andDefining Issues 15-3Debt Issuance CostThe Board generally reaffirmed its proposals and discussedeffective dates. Public companies would apply the changein annual periods, and interim periods within those annualperiods, beginning after December 15, 2015. Private companieswould apply the change in annual periods beginning afterDecember 15, 2015, and interim periods within annual periodsbeginning after December 15, 2016. Early adoption wouldbe allowed.The new guidance would require that debt issuance costs bepresented in the balance sheet as a reduction from the relateddebt liability, consistent with debt discounts and premiums.The costs would continue to be amortized to interest expenseusing the effective interest method.For More Information: Proposed ASU and Defining Issues 14-45Share-Based Payment Accounting ImprovementsIn December 2014, the FASB continued its discussions tosimplify accounting for employee share-based paymentarrangements. The FASB decided to:• Modify the current exception to liability classificationwhen an employer uses a net-settlement feature towithhold shares to meet an employee’s minimum statutorywithholding requirements;• Require an employer to classify the cash paid when directlywithholding shares to meet minimum statutory withholdingrequirements as a financing activity on the statement ofcash flows;• Modify the requirement to estimate the number of awardsthat will ultimately vest when determining the amount ofcompensation cost to recognize over the vesting period;• Require an employer to recognize within the incomestatement all excess tax benefits and tax deficiencies; and• Remove the requirement that employers present realizedexcess tax benefits as a cash inflow from financing activitiesand cash outflow from operating activities.In February 2015, the FASB continued its deliberations, whichprimarily focused on methods of transition and disclosuresrelated to its previous decisions.The FASB expects to release its proposed standard in thesecond quarter of 2015. The Board decided not to include aneffective date and will instead seek feedback from stakeholdersabout the time required to implement the proposed changes.Balance Sheet Classification of DebtThe Board’s proposals would require a company to classify adebt as noncurrent if at least one of the following is met:• The liability is contractually due to be settled more than12 months (or operating cycle, if longer) after the balancesheet date; or• The entity has the contractual right to defer settlement of theliability for at least 12 months (or operating cycle, if longer)after the balance sheet date.The Board plans to discuss disclosures and transition at afuture meeting.Disclosures about Hybrid Financial Instrumentswith Bifurcated Embedded DerivativesThe FASB recently released a proposed ASU to increase thetransparency and usefulness of the information provided inthe notes to the financial statements about hybrid financialinstruments that contain bifurcated embedded derivatives.The proposed amendments would require a company todisclose (in both interim and annual reporting periods) thecarrying amount, the measurement attribute, and the balancesheet and the income statement line items in which eachbifurcated embedded derivative and its related host contract arepresented. This information is expected to provide users withdecision-useful information that reflects the overall economicsand cash flows for the entire hybrid financial instrument.The proposed amendments would be applied on a prospectivebasis to instruments that existed as of the beginning of thefiscal year for which the proposed amendments are effective.After considering stakeholder feedback, the Board willdetermine the effective date and whether early adoption will bepermitted. The comment period ends April 30.For More Information: Proposed ASU and Defining Issues 15-7Other Ongoing FASB ActivitiesDisclosure Framework ProjectIn early 2014, the FASB issued a proposed framework forthe Board’s decision process when determining disclosurerequirements. While the framework would be nonauthoritative,it is intended to help the FASB develop disclosure requirementsthat result in more useful and relevant information forusers and promote disclosure consistency across new andexisting standards.Both the Board and the entity’s decision processes are beingused to consider potential revisions to the existing disclosurerequirements for (1) fair value measurement, (2) defined benefitplans, (3) income taxes, and (4) inventory. The Board also isconsidering potential modifications to the disclosure requirements10 | Quarterly Outlook March 2015


Looking Aheadfor interim reporting. The Board’s intent is to improve the currentrequirements by considering the concepts in the Board’s decisionprocess and promoting preparers’ discretion.More recently, the Board met to discuss fair valuemeasurement disclosures and decided to remove andmodify certain requirements. The Board also decided to add arequirement for public companies to disclose the changes inunrealized gains and losses included in other comprehensiveincome and earnings for all instruments held at period end thatare measured at fair value on a recurring basis.For More Information: FASB Concepts No. 8, Defining Issues14-16, Defining Issues 14-52, and Podcast.InsuranceIn 2014, the FASB decided to cease joint deliberations with theIASB on accounting for insurance contracts. The FASB limitedits insurance project’s scope to targeted improvements tothe accounting for long-duration contracts and disclosures forshort-duration contracts by insurance companies. The FASBalso decided not to develop additional accounting guidance forreinsurance contracts.Long-duration Contracts. The FASB recently discussedsimplifying the amortization of deferred acquisition costs(DAC) for long-duration insurance contracts and decided tochange to a consistent method to amortize DAC, resultingin amortization over the expected life of a book of contractsin proportion to the balance of insurance in-force. If theinsurance in-force is variable and cannot be reliably predictedor otherwise not readily determinable, the amortization wouldoccur in proportion to the number of contracts outstanding.To estimate the expected life, insurance companies wouldconsider morbidity, mortality, and persistency assumptions.No interest would accrue to the undiscounted balance of DAC.The FASB staff will consider whether the effect of changes inassumptions on DAC amortization and contract liabilities shouldbe accounted for on a prospective or retrospective basis.At future meetings, the Board will continue to deliberateother targeted improvements to the accounting forlong-duration contracts.Short-duration Contracts. The FASB recently discussedfeedback received from external reviewers on its draft ASU anddecided that certain disclosures should be presented assupplementary information rather than in the notes to the financialstatements. The Board also modified its disclosures about claimsfrequency and incurred but not reported liabilities. Earlier decisionsabout other required disclosures were not changed.The new guidance would require retrospective application andbe effective for public companies for annual reporting periodsbeginning after December 15, 2015, and interim reportingperiods within annual reporting periods beginning afterDecember 15, 2016. All other entities would have a one-yeardelay. Early adoption would be permitted. The FASB directedthe staff to proceed to written ballot for the final standard.Customer’s Accounting for Fees in a Cloud ComputingArrangementThe FASB recently met to redeliberate changes to itsproposed standard about customer’s accounting for feesin a cloud computing arrangement. The FASB decided notto expand the scope of the final standard to include theaccounting for upfront costs incurred in such arrangements.It also decided that the final standard would supersedecurrent guidance so that customers will no longer analogizeto the leases guidance in determining the nature of theasset acquired in software licensing arrangements. Rather,customers will account for acquired software licenses in thesame manner as other acquired intangible assets. All otherproposals were reaffirmed.The new guidance would clarify that if a cloud computingarrangement includes a software license, the customerwould account for the license consistently with othersoftware licenses. If the arrangement does not includea software license, the customer would account for thearrangement as a service contract.The FASB expects to issue a final standard in the secondquarter of 2015.For More Information: Proposed ASU and Defining Issues 14-39Private Company MattersIn February 2015, the Private Company Council (PCC) discussedthe following projects.• Definition of a Public Business Entity (Phase 2). The PCCdecided not to amend the existing definitions of a nonpublicentity. The prior definitions will be retained unless the FASBdecides to amend them. The new definition of a publicbusiness entity will continue to be used for future accountingand reporting guidance.• FASB Simplification Projects. The PCC expressed concernsabout the FASB’s simplification projects on Simplifying thePresentation of Debt Issuance Cost and Balance SheetClassification of Debt. The PCC encouraged the FASB toconduct further outreach to stakeholders on the latter.• Share-Based Payment Awards. The PCC specificallydiscussed the FASB’s research on an accounting alternativethat would allow private companies to classify allshare-based payment awards as liabilities and measure themusing an approach similar to intrinsic value. The PCC askedthe staff to conduct further research.In addition, the PCC added a project to its agenda to considerallowing elective adoption after the effective date for existingPCC accounting alternatives.For More Information: Latest on Private CompanyFinancial ReportingFor More Information: Latest on InsuranceQuarterly Outlook March 2015 | 11


Looking AheadEmerging Issues Task Force (EITF) ActivitiesThe FASB’s EITF discussed five issues at its March meetingand reached two final consensuses and three consensusesfor-exposure.The FASB must ratify the EITF’s decisions before finalstandards are issued or become authoritative. The FASB willconsider the decisions at its April 7 meeting.Effects on Historical Earnings per Unit of Master LimitedPartnership Dropdown Transactions (Issue 14-A)The EITF reached a final consensus related to presentingearnings per unit (EPU) of a master limited partnership (MLP)for comparable periods before the date of a common-controldropdown transaction. In this situation, the MLP would berequired to allocate the prior period net income (loss) of thetransferred business entirely to the general partner whencomputing EPU for those periods.The final consensus would require an MLP to disclose theeffect of the dropdown transaction on EPU for the periodsbefore and after the dropdown transaction occurred. The newguidance would require retrospective transition with noadditional transition disclosure other than what is currentlyrequired for adoption of a new accounting principle.The effective date would be for annual and interim periods in fiscalyears beginning after December 15, 2015, and interim periodswithin those fiscal years. Early adoption would be permitted.Disclosures for Investments in Certain Entities That CalculateNet Asset Value per Share (or Its Equivalent) (Issue 14-B)The EITF reached a final consensus that would remove therequirement to categorize within the fair value hierarchyinvestments whose fair values are measured at net asset value(NAV) under the practical expedient in ASC Topic 820. Reportingentities would be required to disclose the amount of investmentsmeasured at NAV under the practical expedient to allow usersto reconcile total investments in the fair value hierarchy to totalinvestments measured at fair value in the statement of financialposition. The final consensus also would limit the scope of currentNAV disclosure requirements to investments in which the practicalexpedient is applied, instead of all eligible investments.The new guidance would require retrospective adoption.The effective date for public business entities would be forannual periods beginning after December 15, 2015, and interimperiods within those annual periods. The effective date for allother entities would be deferred by one year. Early adoptionwould be permitted for all entities.Application of Normal Purchases and Normal Sales ScopeException to Certain Electricity Contracts within NodalEnergy Markets (Issue 15-A)The EITF reached a consensus-for-exposure to explicitly allowentities to apply the normal purchases and normal sales(NPNS) scope exception to forward contracts for the physicaldelivery of electricity within nodal energy markets. The NPNSscope exception allows entities to avoid derivative accountingfor instruments that meet the definition of a derivative butfor which certain criteria are met. The proposed exception isexpected to reduce diversity in practice. In addition, extendingthe NPNS scope exception to such contracts is consistentwith the FASB’s intent to exempt from derivative accountingcontracts for the physical delivery of nonfinancial assets.The consensus-for-exposure would propose prospectivetransition with no additional transition disclosure other than whatis currently required for adoption of a new accounting principle.Recognition of Breakage for Prepaid Stored-Value Cards(Issue 15-B)The EITF discussed if an entity should derecognize a prepaidstored-value card (prepaid card) liability when it is remote thatthe prepaid card will be redeemed and if so, how. The EITFreached a consensus-for-exposure that would clarify that suchliabilities meet the definition of a financial liability. The EITFalso agreed to propose a narrow-scope exception to thefinancial liability derecognition guidance to require recognitionof breakage if an entity expects to be entitled to a breakageamount. The breakage guidance would be similar to thebreakage guidance in the new revenue recognition standard.The consensus-for-exposure would require a modifiedretrospective transition approach, with a cumulative-effectadjustment to beginning retained earnings in the initial periodof adoption.Employee Benefit Plan Simplifications (Issue 15-C)The EITF reached a consensus-for-exposure on certain issuesthat would simplify disclosure and reporting requirements inthe financial statements of employee benefit plans:• Fully Benefit Responsive Investment Contracts (FBRICs).The consensus-for-exposure would allow employee benefitplans to measure FBRICs at contract value and exempt themfrom all fair value disclosure requirements.• Topic 820 and Plan Accounting Topic Disclosures forPlan Assets. The consensus-for-exposure would simplifyand eliminate certain Topic 820 and Plan Accounting Topicdisclosure requirements required for plan assets.For More Information: Defining Issues 15-10 and WebcastDisclosure of Hedging Activities by Employees,Officers, and DirectorsThe SEC recently proposed rules that would require a publiccompany to disclose whether its directors, officers, and otheremployees are permitted to hedge or offset a decrease in themarket value of equity securities that are granted by the companyas compensation or held, directly or indirectly, by employees ordirectors. The proposed disclosures would be required in proxyand information statements for the election of directors, andwould apply to companies subject to the federal proxy rules.For More Information: SEC Proposed Rule12 | Quarterly Outlook March 2015


Looking AheadPCAOB DevelopmentsNewly Effective PCAOB Auditing Standard on RelatedParties and Related AmendmentsIn 2014, the PCAOB adopted a new auditing standard and madeamendments to other related auditing standards to expandauditor performance requirements in three critical areas thatrepresent increased risks of material misstatement in thefinancial statements: (1) related party transactions, (2) significantunusual transactions, and (3) a company’s financial relationshipsand transactions with its executive officers.The new auditing standard and related amendments, which theSEC approved, are effective for audits of financial statementsfor fiscal years beginning on or after December 15, 2014,including reviews of interim financial information within thesefiscal years.IFRS in the United StatesAt the 2014 AICPA National Conference on Current SEC andPCAOB Developments, the SEC’s recently appointedChief Accountant updated attendees on the SEC staff’sconsideration of the incorporation of IFRS into the financialreporting system for domestic issuers. The SEC staff previouslyconsidered various alternatives but is now exploring a newalternative that would give domestic registrants an optionto provide supplemental IFRS-based financial informationin addition to the U.S. GAAP financial information currentlyrequired. The SEC staff currently is conducting outreachon whether and how to further incorporate IFRS into theU.S. financial reporting system and plans to provide arecommendation to the SEC in the near term.For More Information: PCAOB Rule Making Docket andFact SheetOngoing PCAOB ProjectsThe PCAOB has ongoing projects that may affect audits andaudit reports, including these listed below:TopicFor More InformationProposed Changes to the Auditor’s Report PCAOB Release 2013-005Improving Transparency Through Disclosure of EngagementPartner and Certain Other Participants in AuditsDefining Issues 13-40PCAOB Release 2013-009Defining Issues 13-55Auditing Accounting Estimates, Including Fair ValueMeasurements and Related DisclosuresGoing ConcernThe comment period on the PCAOB Staff Consultation Paperended in November 2014, and the staff is currently analyzingcomments.The staff is currently developing a consultation paper seekingpublic comment on potential approaches to improving theperformance and reporting requirements of the existing standard.Quarterly Outlook March 2015 | 13


04Recommended Readingand CPE OpportunitiesKPMG’s 2015 Global Audit Committee SurveyTo help identify the key challenges and concerns facing auditcommittees, boards, and their companies today, KPMG’s AuditCommittee Institute surveyed some 1,500 audit committeemembers in more than 36 countries around the world ona range of timely issues, including the audit committee’sworkload and agenda, risk and information quality, oversight ofauditors, and audit committee effectiveness and mechanics.As directors help guide their companies forward in the monthsahead, our survey findings offer insights into current practicesand emerging risks, and spark conversations about how auditcommittees and boards are strengthening their oversight andkeeping pace in an uncertain and, at times, volatile businessenvironment. Read the article.Five for 15: Five Tax Legislative Issues to Watch in 2015What does 2015 hold in store in terms of federal tax legislation?Although it’s impossible to know for sure, this report highlightsfive issues worth watching in the coming year and somepractical takeaways for tax executives and practitioners.“Five for 15: Five Tax Legislative Issues to Watch in 2015”by the Federal Legislative and Regulatory Services Group ofKPMG LLP’s Washington National Tax practice examines thefollowing issues:• Tax reform;• Macroeconomic revenue scoring;• Expiring provisions;• Medical device excise tax; and• Gasoline tax increase.Read the article.Putting Customers at the Heart of Your Data andAnalytics StrategyAs competitive pressures mount, organizations of all types andsizes are starting to think about how they might better leveragetheir data to drive growth. Senior executives increasinglyview data and analytics (D&A) as a top business priority andcrucially important to their growth strategy. The organizationsthat are able to connect their internal and external data toachieve a single view of their customers will enjoy significantcompetitive advantage in the future.This report summarizes findings of a KPMG commissionedsurvey of more than 210 senior executives from acrossAustralia, China, Indonesia, Singapore, and the Philippines.Included are valuable insights and practical tips fromKPMG D&A professionals. Read the article.Forensic Focus: Combating Spear Phishing AttacksThe need for sound security practices and controls isimperative to help protect against a growing swell ofsophisticated cyber threats. Targeted attacks, including thoseperpetrated via e-mail, such as spear phishing, have becomecommonplace. In fact, spear phishing attacks now accountfor 91 percent of all modern attacks. Additionally, it is almostcertain that these attacks will increase in frequency andsophistication as companies expand the use of digital assetsand unstructured data.Businesses stand to lose far more than their intellectualproperty in the aftermath of a spear phishing attack. Damageto reputation and brand can be just as devastating as theft ofproperty and secrets. The media has been replete with reportsof cyber attacks against organizations across all industries,ranging from government institutions; small, medium, andlarge businesses; academia; the entertainment media; andeven the news itself. Read the article.Upcoming CPE OpportunitiesKPMG Learning | Executive Education provides a broad range ofaccounting and finance continuing professional education (CPE)programs in a variety of formats, including public seminars,customized on-site instructor-led classes, Web-based self-studyprograms and live topical Webcasts. Upcoming live trainingincludes COSO 2013: The Framework for Internal Control, FASBAccounting Update, SEC Reporting & Compliance, and RevenueRecognition of the Future.For more information, contact the KPMG Learning Team viae-mail at us-kpmglearning@kpmg.com or 201-505-6062.14 | Quarterly Outlook March 2015


Recommended Reading and CPE OpportunitiesQuarterly Outlook March 2015 | 15


Appendix – RecentAccounting Standards16 | Quarterly Outlook March 2015


Appendix – Recent Accounting StandardsAccounting Standards Affecting Public Companies in 2015Calendar year-end public companies will apply the following accounting standards for the first time in 2015.Topic Effective Date for Public Companies For More InformationNot-for-Profit Services Fiscal years beginning after 6/15/2014, and FASB ASU 2013-06Received from Personnel interim and annual periods thereafterDefining Issues 13-17of an AffiliatePodcastAffordable Housing Tax Annual periods, and interim reporting periods FASB ASU 2014-01Creditswithin those annual periods, beginning afterDefining Issues 14-312/15/2014PodcastResidential Real Estate Annual periods, and interim periods within FASB ASU 2014-04Loan Reclassification those annual periods, beginning afterDefining Issues 13-4912/15/2014PodcastService Concession Annual periods, and interim periods within FASB ASU 2014-05Arrangementsthose annual periods, beginning afterDefining Issues 13-4912/15/2014PodcastDiscontinued Operations For disposals (or classifications asFASB ASU 2014-08held-for-sale) that occur within annual periodsDefining Issues 14-20beginning on or after 12/15/2014, and interimperiods within those annual periodsPodcastDevelopment Stage The presentation and disclosure changes are FASB ASU 2014-10Entitieseffective for annual periods beginning after12/15/2014, and interim periods within thoseDefining Issues 14-30annual periods.The elimination of the specified consolidationexception is effective for annual periodsbeginning after 12/15/2015, and interimperiods within those annual periods.Repurchase AgreementsAccounting for the Effectof a Federal HousingAdministration GuaranteeThe accounting changes and certaindisclosure requirements are effective for thefirst interim or annual period beginning after12/15/2014. Other disclosure requirementsare effective for annual periods beginningafter 12/15/2014, and for interim periodsbeginning after 3/15/2015Annual periods, and interim periods withinthose annual periods, beginning after12/15/2014FASB ASU 2014-11Defining Issues 14-31FASB ASU 2014-14Defining Issues 14-27Pushdown Accounting Effective upon issuance (November 2014) FASB ASU 2014-17Issues In-Depth: PushdownAccountingWebcastPodcastQuarterly Outlook March 2015 | 17


Appendix – Recent Accounting StandardsAccounting Standards Affecting Public Companies in 2016 and BeyondCalendar year-end public companies will apply these accounting standards for the first time in 2016 or laterand may need to disclose their potential effects in 2015.Topic Effective Date for Public Companies For More InformationAccounting forAnnual periods, and interim periods within FASB ASU 2014-12Share-Basedthose annual periods, beginning afterDefining Issues 14-15Payments with Certain 12/15/2015Performance TargetsPodcastConsolidatedAnnual periods, and interim periods within FASB ASU 2014-13Collateralized Financing those annual periods, beginning afterEntity Liabilities12/15/2015Defining Issues 14-27Hybrid FinancialInstrumentsFiscal years, and interim periods within thosefiscal years, beginning after 12/15/2015FASB ASU 2014-16Defining Issues 14-44PodcastEliminating the Conceptof Extraordinary ItemsFiscal years, and interim periods within thosefiscal years, beginning after 12/15/2015FASB ASU 2015-01Defining Issues 15-2ConsolidationFiscal years, and interim periods within thosefiscal years, beginning after 12/15/2015FASB ASU 2015-02Defining Issues 15-6Going ConcernAnnual periods ending after 12/15/2016, andinterim and annual periods thereafterFASB ASU 2014-15Defining Issues 14-40WebcastRevenue Recognition Annual periods beginning after 12/15/2016,and interim periods within thoseannual periodsFASB ASU 2014-09Latest on Revenue RecognitionAccounting Standards Affecting Private Companies in 2014Calendar year-end private companies will apply the following accounting standards for the first time in their2014 annual financial statements.Topic Effective Date for Private Companies For More InformationFederal Government Calendar years beginning after 12/31/2013, FASB ASU 2011-06Fees Paid by HealthInsurerswhen the fee initially becomes effectiveContinuing CareFiscal periods beginning after 12/15/2013 FASB ASU 2012-01Retirement Communities –Refundable Advance FeesReporting of AmountsReclassified Out ofAccumulated OtherComprehensive IncomeReporting periods beginning after 12/15/2013 FASB ASU 2013-02Defining Issues 13-9Liquidation Basis ofAccountingInvestment CompaniesAmendmentsJoint and Several LiabilityArrangementsFor companies that determine liquidation isimminent during annual reporting periods,and interim periods within those years,beginning after 12/15/2013Fiscal years, and interim periods within thoseyears, beginning after 12/15/2013Fiscal years ending after 12/15/2014, andinterim and annual periods thereafterFASB ASU 2013-07Defining Issues 13-23PodcastFASB ASU 2013-08Defining Issues 13-31PodcastFASB ASU 2013-04Defining Issues 13-5Podcast18 | Quarterly Outlook March 2015


Appendix – Recent Accounting StandardsTopic Effective Date for Private Companies For More InformationDefinition of PublicBusiness EntityEffective when used by the FASB in otheraccounting standardsFASB ASU 2013-12Defining Issues 14-7FASB In FocusPodcastTechnical Corrections to Effective upon issuance FASB ASU 2014-06the Master GlossaryPushdown Accounting Effective upon issuance (November 2014) FASB ASU 2014-17Issues In-Depth: PushdownAccountingWebcastPodcastAccounting Standards Affecting Private Companies in 2015 and BeyondCalendar year-end private companies will apply the following accounting standards for the first time in 2015 or later.Topic Effective Date for Private Companies For More InformationNot-for-Profit Services Fiscal years beginning after 6/15/2014, and FASB ASU 2013-06Received from Personnel interim and annual periods thereafterDefining Issues 13-17of an AffiliatePodcastRelease of Cumulative First annual period beginning afterFASB ASU 2013-05Translation Adjustment 12/15/2014, and interim and annual periodsDefining Issues 13-5for Certain Derecognition thereafterEventsPodcastPresentation of Certain Fiscal years, and interim periods within those FASB ASU 2013-11Unrecognized Tax years, beginning after 12/15/2014Defining Issues 13-29BenefitsPodcastAffordable Housing Tax Annual periods beginning after 12/15/2014, FASB ASU 2014-01Creditsand interim periods within annual periodsDefining Issues 14-3beginning after 12/15/2015PodcastAccounting for Goodwill Annual periods beginning after 12/15/2014, FASB ASU 2014-02and interim periods within annual periodsDefining Issues 14-7beginning after 12/15/2015PodcastSimplified Hedge Annual periods beginning after 12/15/2014, FASB ASU 2014-03Accounting Approach and interim periods within annual periodsbeginning after 12/15/2015Defining Issues 14-7Residential Real EstateLoan ReclassificationService ConcessionArrangementsCommon Control LeasingArrangementsDiscontinued OperationsAnnual periods beginning after 12/15/2014,and interim periods within annual periodsbeginning after 12/15/2015Annual periods beginning after 12/15/2014,and interim periods within annual periodsbeginning after 12/15/2015Annual periods beginning after 12/15/2014,and interim periods within annual periodsbeginning after 12/15/2015For disposals (or classifications asheld-for-sale) that occur within annual periodsbeginning on or after 12/15/2014, and interimperiods thereafterFASB ASU 2014-04Defining Issues 13-49PodcastFASB ASU 2014-05Defining Issues 13-49PodcastFASB ASU 2014-07FASB ASU 2014-08Defining Issues 14-20PodcastQuarterly Outlook March 2015 | 19


Appendix – Recent Accounting StandardsTopic Effective Date for Private Companies For More InformationDevelopment Stage The presentation and disclosure changes are FASB ASU 2014-10Entitieseffective for annual periods beginning after12/15/2014, and interim periods within annualDefining Issues 14-30periods beginning after 12/15/2015The elimination of the specified consolidationexception is effective for annual periodsbeginning after 12/15/2016, and interimperiods within annual periods beginning after12/15/2017Repurchase Agreements Annual periods beginning after 12/15/2014,and interim periods within annual periodsbeginning after 12/15/2015FASB ASU 2014-11Defining Issues 14-31Accounting forAnnual periods, and interim periods within FASB ASU 2014-12Share-Basedthose annual periods, beginning afterDefining Issues 14-15Payments with Certain 12/15/2015Performance TargetsPodcastAccounting for the Effect Annual periods ending after 12/15/2015, FASB ASU 2014-14of a Federal Housing and interim periods within annual periodsAdministration Guarantee beginning after 12/15/2015Defining Issues 14-27Hybrid FinancialFiscal years beginning after 12/15/2015, and FASB ASU 2014-16Instrumentsinterim periods within fiscal years beginningDefining Issues 14-44after 12/15/2016PodcastAccounting Alternative Prospectively for in-scope transactions in the FASB ASU 2014-18for Identifiable Intangible first annual period beginning after 12/15/2015,Assetsand interim periods within annual periodsDefining Issues 15-1beginning after 12/15/2016Eliminating the Conceptof Extraordinary ItemsFiscal years, and interim periods within thosefiscal years, beginning after 12/15/2015FASB ASU 2015-01Defining Issues 15-2ConsolidatedAnnual periods ending after 12/15/2016, FASB ASU 2014-13Collateralized Financing and interim periods within annual periodsEntity Liabilitiesbeginning after 12/15/2016Defining Issues 14-27Going ConcernAnnual periods ending after 12/15/2016, andinterim and annual periods thereafterFASB ASU 2014-15Defining Issues 14-40WebcastConsolidation Fiscal years beginning after 12/15/2016,and for interim periods within fiscal yearsbeginning after 12/15/2017FASB ASU 2015-02Defining Issues 15-6Revenue Recognition Annual periods beginning after 12/15/2017,and interim periods thereafterFASB ASU 2014-09Latest on Revenue Recognition20 | Quarterly Outlook March 2015


Appendix – Recent Accounting StandardsQuarterly Outlook March 2015 | 21


Contact usThis is a publication of KPMG’sDepartment of Professional Practice212-909-5600Contributing authors:Angela B. Stormastorm@kpmg.comRobin E. Van Voorhiesredunn@kpmg.comMore information is available at:http://www.kpmg-institutes.comkpmg.com© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firmsaffiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMGname, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 356841

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