The document summarizes regulatory activities in the first quarter of 2014 that may impact financial reporting, including the issuance of three final accounting standards by the FASB related to private companies. It provides an overview of standard updates on topics such as amortization of goodwill, simplified hedge accounting, common control leasing arrangements, and development stage entities. Additionally, it discusses ongoing projects from the FASB, IASB, EITF, and PCAOB related to insurance contracts, leasing, financial instruments, and auditor oversight.

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MHMMessenger
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The first quarter of 2014 saw a number of activities
by the governing regulatory bodies in the accounting
profession. Several significant final standards were
released that may impact financial reporting for
private companies. Mayer Hoffman McCann experts
presented a summary of this information in our CBIZ &
MHM Executive Education Series webinar. This MHM
Messenger provides a brief recap of the first quarter
activities. For more detailed information, please see
the respective publication issued on each topic.
Private Companies
There was significant activity related to the Private
Company Council’s (PCC) proposed accounting
alternatives for qualifying private companies during
the first quarter of 2014. These activities included the
issuance of three final accounting standards and the
removal of a project from their agenda as described
below.
Amortization of Goodwill
ASU 2014-02 Intangibles – Goodwill and Other was
issued and permits qualifying entities to amortize
goodwill over a 10 year period, or less if it can be
justified.SeeMHMMessenger2014-03andSubstance
of the Standard 2014-01 for more information.
April 2014
First Quarter Accounting and Financial Reporting Issues Update
Simplified-Hedge Accounting
The Financial Accounting Standards Board (FASB)
issued the final standard (ASU 2014-03) permitting
private companies with receive-variable, pay-fixed
interest rate swaps meeting certain criteria to adopt a
simplified-hedge accounting method that reduces the
documentation requirements to qualify for hedging,
permits documentation to occur up until the financial
statements are made available for issuance and
permits the use of settlement value. MHM Messenger
2014-04 and Substance of the Standard 2014-02
discuss this standard in more detail.
Certain Common Control Leasing Arrangements
As discussed in MHM Messenger 2014-06 and
Substance of the Standard 2014-03, the FASB
endorsed and issued PCC Issue 13-02 Applying
Variable Interest Entities Guidance to Common
Control Leasing Arrangements as ASU 2014-07. This
standard permits qualifying private companies to
elect to not apply the variable interest entity guidance
to certain commonly controlled lessor entities that the
private company has a qualifying lease arrangement
with.
Combined Instruments Approach
The PCC was working on a project to permit certain
swap arrangements to be combined with the related
variable interest rate debt obligation as if the combined
financial instruments were a fixed rate debt obligation.
This project has been removed from the PCC’s agenda
and no further work on this projected is expected.

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Emerging Issues Task Force (EITF)
The FASB ratified three consensuses reached by the
EITF:
• ASU 2014-01 Accounting for Investments in
Qualified Affordable Housing Projects
• ASU 2014-04 Reclassification of Residential Real
Estate Collateralized Consumer Mortgage Loans
upon Foreclosure
• ASU 2014-05 Service Concession Arrangements
In addition, the FASB issued an exposure draft on
EITF Issue 13-F Classification of Certain Government
– Guaranteed Residential Mortgage Loans Upon
Foreclosure with comments due April 30, 2014.
Each EITF issue is narrow in scope, impacting a
limited number of entities with applicable transactions.
Please contact your professional service advisor for
more information.
Other FASB Activities
Development Stage Entities
As discussed in MHM Messenger 2014-08, the FASB
voted to remove the guidance on development stage
entities from U.S. GAAP. In addition to impacting the
presentation and disclosure for entities that previously
qualified as development stage, the removal impacts
any reporting entity that evaluates a development
stage entity for potential consolidation or disclosure
under the variable interest entity model.
Streamlining Disclosures
As a result of the FASB’s ongoing disclosure project
they issued an exposure draft on the conceptual
framework for disclosures of financial statements.
Comments are due July 14, 2014. An overview of this
project is provided in MHM Messenger 2014-09.
Insurance
The FASB decided to limit the scope of its insurance
contracts project to insurance entities as applied in
existing U.S. GAAP. As noted in MHM Messenger
2014-07 the FASB may decide to add additional
contracts in the future.
Leasing
The IASB and FASB held several meetings discussing
their leasing project and continue to research and
discuss the issue. The boards appear to be moving
away from having a fully converged standard as
discussed in MHM Messenger 2014-12, however we
will continue to monitor for further developments.
Financial Instruments
Several decisions were reached on the FASB’s
financial instruments projects that may result in
differences between the IASB and FASB’s accounting
models when the convergence project is completed.
Revenue Recognition
A final standard is expected during the second quarter
of 2014. Look for additional information about this
standard when it is issued.
Public Company Accounting Oversight Board
The PCAOB continues its projects to improve various
aspects of auditing and attestation. During the first
quarter the following standards were issued:
• Attestation Standard No. 1: Examination
Engagements Regarding Compliance Reports of
Brokers and Dealers
• Attestation Standard No. 2: Review Engagements
Regarding Exemption Reports of Brokers and
Dealers
• Auditing Standard No. 17: Auditing Supplemental
Information Accompanying Audited Financial
Statements

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The information in this MHM Messenger is a brief summary and may not include all the details relevant to your situation.
Please contact your MHM auditor to further discuss the impact on your audit or audit report.
In addition, the comment period on the PCAOB’s
transparency project exposure draft, which if adopted
would require disclosure of the engagement partner
with the audit report and the names of participants
in the audit that are not employees of the audit firm,
were due on March 17, 2014.
The PCAOB also removed from its agenda its project
on mandatory auditor rotation.
Additional Information
For those unable to attend our broadcast, a recording
is available on our website.
You can also join us for our Second Quarter Accounting
and Financial Issues Update webinar on June 26 or
July 24. For email notices of this course, please sign
up to receive the CBIZ & MHM Weekly Digest.