Baruch College
14th Annual Financial Reporting Conference
Current Developments at the SEC
May 7, 2015
Shelly C. Luisi
Senior Associate Chief Accountant
Office of the Chief Accountant
U.S. Securities and Exchange Commission
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Disclaimer
The Securities and Exchange Commission, as a
matter of policy, disclaims responsibility for any
private publication or statement by any of its
employees. Therefore, the views expressed today
are my own, and do not necessarily reflect the views
of the Commission or the other members of the staff
of the Commission.
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Topics
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New revenue standard – implementation efforts
Gross revenue vs. net revenue
Segments
Venezuelan subsidiaries
Discontinued operations
SAB Topic 5.Z.7.
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Revenue Recognition Implementation
• Final standard issued in May 2014
• SEC staff has been actively monitoring implementation
efforts
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Transition Resource Group
AICPA industry expert panels
Audit firms
Registrants
• Where are we one year after issuance?
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Gross Revenue vs. Net Revenue
• Diversity in application of guidance
• Challenges
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Identification of deliverables
Primary obligor determination
Inventory risk determination
Concept of margin/economic risk
Relative strength of pricing latitude indicator
• Words of advice
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Back to basics
Companies know their businesses best
Tie risks to indicators
Seek help with complex assessments
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Segments
• Active area of consultations
• Identifying Chief Operating Decision Maker (CODM)
– Allocates resources and assess operating performance
– Chief Operating Officer
• Identifying operating segments
– CODM report
– Organization chart
– Internal controls
• Aggregating into reportable segments
– Modified management approach
– Similarity from whose perspective?
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Venezuela
• Accounting implications of recent government actions
in Venezuela
• Background
– Highly inflationary since 2010
– Until recently, three legal rates: official rate, SICAD I and SICAD II
– In February 2015, SICAD II eliminated; SIMADI rate introduced
• Staff views
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Judgment required based on facts and circumstances
No rebuttable presumption
Expect consistency in how appropriate rate determined
Multiple rates may be appropriate
Evaluate for deconsolidation
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Discontinued Operations
• ASU 2014-08 effective
• Strategic shift w/major effect
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Major line of business
Major geographical area
Major equity method investment
Other major part of an entity
• Judgment required
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No bright lines
No one metric determinative
Historical presentation of results to users
Consult if need help
SAB Topic 5.Z.4
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SAB Topic 5.Z.7
Accounting for the Spin-Off of a Subsidiary
• Background
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Issued in 1993
Limited circumstances
Restrictive criteria rarely met
Information gap resolved by included unaudited pro forma
financial statements in registration statement
• Would investors benefit if change in reporting entity
presentation was more common?
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Questions?
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