Current Developments:

USMarch 2016

kpmg.ca

In February, the FASB issued its final lease accounting standard, which requires lessees to

account for most leases on-balance sheet – a significant change from current U.S. GAAP.

While the standard is not effective until 2019 for U.S. public companies with a calendar year-end,

all companies may adopt the new leases standard immediately. This allows companies to adopt the

new lease accounting standard before they adopt the new revenue standard.

The FASB expects to issue three additional standards about revenue within the next few months. These new

standards are expected to be the last amendments to the new revenue recognition model before it becomes

effective January 1, 2018, for U.S. public companies with a calendar year-end.

Meanwhile, public companies also are considering the implications of new standards that become effective in

the first quarter of 2016, including new guidance about consolidation, presentation of debt issuance costs, and

accounting for cloud computing arrangements.

Our Quarterly Outlook summarizes these and other accounting and financial reporting developments potentially affecting you in

the current period or near term.

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 1

Contents01. Current Quarter Financial Reporting Matters ............................................................................ 2

SEC Staff Focus Areas ....................................................................................................................................................... 2

Center for Audit Quality (CAQ) Developments ................................................................................................................... 2

Other SEC Activities .......................................................................................................................................................... 3

Accounting for the Appropriations Act ............................................................................................................................... 3

Accounting Standards Effective for 2016 ........................................................................................................................... 3

Venezuela Reminders ........................................................................................................................................................ 4

02. Upcoming Financial Reporting Matters .................................................................................... 6Putting Leases onto the Balance Sheet ............................................................................................................................. 6

Preparing for the New Revenue Standard .......................................................................................................................... 7

New Accounting for Equity Investments and Financial Liabilities ....................................................................................... 8

FASB Finalizes Several New Standards .............................................................................................................................. 9

03. Looking Ahead............................................................................................................................10Further Changes for Financial Instruments ...................................................................................................................... 10

FASB Disclosure Framework ........................................................................................................................................... 10

FASB Projects on Business Combinations ........................................................................................................................11

Presentation of Net Periodic Pension and Postretirement Benefit Costs ..........................................................................11

Proposed Changes for the Statement of Cash Flows .......................................................................................................11

04. Recommended Reading and CPE Opportunities .................................................................... 12CFO Outlook 2016 - Tax Reform Here & Abroad ............................................................................................................... 12

The Sooner Finance ERP Moves to the Cloud, the Better ............................................................................................... 12

Guarding Against Fraud in the Age of Social Sharing ........................................................................................................ 12

The Business of Bots and the Realities of Enterprise Automation ................................................................................... 12

Upcoming CPE Opportunities .......................................................................................................................................... 12

Appendix – Recent Accounting Standards .................................................................................... 14Accounting Standards Affecting Public Companies in 2016 ............................................................................................. 15

Accounting Standards Affecting Public Companies in 2017 and Beyond .......................................................................... 16

Accounting Standards Affecting Private Companies in 2015 ........................................................................................... 17

Accounting Standards Affecting Private Companies in 2016 and Beyond ......................................................................... 18

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 2

01 Current Quarter Financial Reporting Matters

SEC staff focus areas

At the AICPA National Conference on Current SEC and PCAOB Developments in December 2015, the SEC Chair emphasized that management’s ability to fulfill its financial reporting responsibilities significantly depends on the design and effectiveness of internal control over financial reporting (ICOFR). The SEC staff continues to comment on individual aspects of a registrant’s ICOFR, including:

• Description of control failures were inadequate, includinginsufficient detail and inadequate description of (1) thenature of the material weaknesses and their effect onfinancial reporting and internal control and (2) management’sremediation plans;

• Material changes in ICOFR were not disclosed in Item 9a ofForm 10-K or Item 4 of Form 10-Q;

• Immaterial error corrections disclosed in the financialstatements without a corresponding disclosure about theeffect on ICOFR;

• Inconsistent conclusions that disclosure controls andprocedures were ineffective but ICOFR was effective, andvice versa;

• Disclosure of detailed remediation plans and theremediation status of previously disclosed materialweaknesses was inadequate; and

• Administrative or clerical deficiencies (e.g., failure todisclose framework used, incorrect assessment date,missing reports and disclosures, non-conformingmanagement’s certifications or definitions, and disclosingchanges in internal controls that addressed the year-to-dateperiod instead of the required quarterly period).

The SEC staff also recently highlighted areas of focus and frequent comment in the filing review process:

• Non-GAAP financial measures;

• Segment identification and disclosure;

• Income tax disclosure;

• Fair value disclosure, including fair value disclosures byinsurers;

• Oil and gas price declines;

• Predecessor financial statements; and

• International reporting matters, including loss of foreignprivate issuer status and Venezuelan operations (i.e.,consistent use of appropriate exchange rates anddeconsolidation evaluations). See additional discussion inthe Venezuela Reminders section.

For More Information: Issues In-Depth

Center for Audit Quality (CAQ) Developments

The CAQ SEC Regulations Committee met in October 2015 and discussed:

• Interaction between pushdown accounting and other SECguidance;

• Shelf take downs and greater than 50 percent completedand probable business acquisitions; and

• SEC guidance for retrospective adoption of the new revenuestandard.

The CAQ also recently issued a report that highlights insights from roundtables with audit committee members and other stakeholders about a potential set of audit quality indicators (AQIs). In its outreach, the CAQ found that the critical factor to understanding audit quality is a continuous dialogue between the auditor and the audit committee. The AQIs could be helpful to initiate or enhance that dialogue. The PCAOB issued a concept release about AQIs in 2015.

For More Information: KPMG Observations on SEC Related Matters, Audit Quality Indicators: The Journey and Path Ahead, and PCAOB Concept Release

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Current Developments: US / March 2016 | 3

Other SEC activities

FAST Act LegislationThe SEC recently adopted final interim rules as required by the Fixing America’s Surface Transportation (FAST) Act. Under the new rules, a company that meets the definition of an emerging growth company (EGC) may omit certain historical financial information from its initial registration statement if it reasonably believes that the information will not be required at the time of the related offering. The new rules permit smaller reporting companies to incorporate financial statements by reference after the effective date of the registration statement. The interim rules became effective January 19, 2016.

Under the FAST Act, an EGC may (1) keep its status for up to one year while the SEC staff reviews the initial registration statement, even if it no longer meets the definition of an EGC and (2) begin its roadshow 15 days after it files its initial registration statement.

For More Information: Interim Final SEC Rules and Defining Issues 15-59

SEC Proposals for Extractive Industry Payments and Financial ServicesThe SEC recently proposed rules that would require resource extraction issuers to disclose annual payments of $100,000 or more made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas, or minerals. The disclosure must include details about the type and total amount of payments made to each government and for each project, including the related type of natural resource. Resource extraction issuers would be able to ask the SEC for an exemption from disclosure requirements when disclosure is prohibited by local law. The SEC plans to vote on the proposed rules in June 2016.

The SEC also proposed two rules that could affect financial services companies. One rule would limit use of derivatives by funds (e.g., mutual funds and exchange-traded funds) and require them to put risk management measures in place to better protect investors. The other rule would specify the form and manner in which security-based swap data repositories would be required to make security-based swap data available to the SEC.

For More Information: Proposed SEC Rules for Extractive Industry Payments, Funds, and Swap Data Repositories and Defining Issues 16-2

Accounting for the Appropriations Act

The Consolidated Appropriations Act, 2016 was signed into law on December 18, 2015. The law made permanent certain provisions in the IRS Code that recently expired or that were scheduled to expire, including the research credit and the exception under Subpart F for active financing income. The law also extended other expired provisions, including certain energy provisions.

While the current and deferred effects of tax law changes are recognized in the financial statements in the period in which the change is enacted (i.e., the period containing December 18, 2015), the provisions extended through at least December 31, 2016, have continuing relevance in fiscal 2016 when estimating the 2016 annual effective tax rate.

For More Information: Legislative Update: President Obama Signs Year-end Tax Legislation

Accounting Standards effective for 2016

Public companies must adopt several new standards in 2016, including standards about consolidation, presentation of debt issuance costs, cloud computing arrangements, hybrid financial instruments, and certain share-based payments. See Appendix – Recent Accounting Standards for a list of all standards that companies must adopt in 2016.

New consolidation guidance The new consolidation guidance:

• Changes how a company evaluates whether limitedpartnerships (and similar legal entities) are variable interestentities (VIEs);

• Eliminates the presumption that the general partner of alimited partnership that is not a VIE should consolidate thatpartnership; and

• Changes the analysis for determining when fees paid to adecision maker (or service provider) represent a variableinterest in a VIE and how interests of related parties affectthe primary beneficiary determination.

Companies generally will need to reconsider and re-document their previous consolidation conclusions because the bases for those conclusions are likely to change, even if the conclusions do not (which also may affect disclosure requirements). Companies are encouraged to work closely with their advisors and auditors to discuss the interpretive issues associated with the standard.

The SEC staff recently expressed its view that an interest in an entity held by a party under common control with a decision maker generally should not affect the determination of whether the decision maker’s fee is a variable interest if the decision maker does not hold an economic interest in the party under common control. This SEC staff view is different from practice. Under this staff interpretation, it is less likely that a decision maker would be required to consolidate a VIE that it manages. In response, the FASB decided to propose a technical correction to its new consolidation guidance to conform to the SEC’s view.

For More Information: FASB ASU 2015-02, Defining Issues 15-6, Webcast, and Issues In-Depth

Current Quarter Financial Reporting Matters

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Current Developments: US / March 2016 | 4

Customer’s Accounting for Fees in a Cloud Computing Arrangement The new guidance for cloud computing arrangements requires a customer to account for a cloud computing arrangement that includes a software license consistently with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract.

For More Information: FASB ASU 2015-05, Defining Issues 15-15, and Podcast

Presentation of Debt Issuance CostsAs of first quarter 2016, companies are required to present debt issuance costs as a reduction from the related debt liability, similar to the presentation of debt discounts. Companies will continue to amortize these costs to interest expense using the effective interest method.

For more information: FASB ASU 2015-03, Defining Issues 15-14, and Podcast

Venezuela reminders

On February 17, 2016, the Venezuelan government announced that it eliminated the intermediate exchange rate (i.e., SICAD), which changed the country’s three-tier exchange rate system (CENCOEX or the official rate, SICAD, and SIMADI) to a dual-rate system (official rate and SIMADI). The Venezuelan government also devalued its currency by changing the official rate to approximately 10 bolivars per U.S. dollar from the

previous rate of 6.3. Additionally, the government announced that beginning February 18, 2016, the SIMADI exchange rate will be allowed to float freely beginning at a rate of approximately 203 bolivars to the U.S. dollar.

The new currency exchange system will require companies with operations in Venezuela to reconsider the exchange rates they use to remeasure their Venezuelan bolivar-denominated monetary assets and liabilities and related revenues and expenses, and to assess impairment of nonfinancial assets. Reporting entities that have calendar year-ends, have significant operations in Venezuela, and have not yet issued their 2015 financial statements will need to disclose in those 2015 financial statements the effect of the changes in the Venezuelan currency rate environment as unrecognized subsequent events under U.S. GAAP.

Companies should consider disclosing information about the Venezuelan exchange rates, including available exchange mechanisms, transaction gains and losses, the rates used for remeasurement, monetary asset and liability exposure to exchange rate changes, and the amount of intercompany monetary assets and liabilities that could affect earnings if a Venezuelan subsidiary were deconsolidated.

Companies also should consider disclosing the details of their evaluation and conclusions with respect to consolidating their Venezuelan operations. A few companies have deconsolidated their Venezuelan operations based on their facts and circumstances.

Current Quarter Financial Reporting Matters

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Current Developments: US / March 2016 | 5

Current Quarter Financial Reporting Matters

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Current Developments: US / March 2016 | 6

02 Upcoming Financial Reporting Matters

Putting Leases onto the Balance Sheet

U.S. GAAPIn February 2016, the FASB issued its new lease accounting standard, which requires lessees to recognize most leases, including operating leases, on-balance sheet via a right of use asset and lease liability. Lessees are allowed to account for short-term leases (i.e., leases with a term of 12 months or less) off-balance sheet, consistent with current operating lease accounting. The new standard also makes other changes to lessee accounting including:

• Requiring lessees to reassess, and potentially revise,assumptions associated with their lease accounting (e.g.,assessments of the lease term, lessee purchase options,and lease classification) during the lease term and remeasurelease assets and lease liabilities in circumstances other thanwhen a lease is modified;

• Expanding qualitative and quantitative disclosurerequirements;

• Substantially changing the accounting guidance for sale-leaseback transactions; and

• Replacing current build-to-suit lease accounting with newguidance that stipulates that a lessee is the accountingowner of an asset under construction when it controls thatasset before the lease commencement date.

Changes to the lessee accounting model may change key balance sheet measures and ratios, potentially affecting analyst expectations and compliance with financial covenants. Companies also may be required to upgrade or modify their IT systems to capture all lease activity and the lease data necessary to apply the new standard. Additionally, companies may need to revise their accounting processes and internal controls to ensure timely identification of events requiring revisions to lease accounting.

In contrast to lessee accounting, the new standard does not make extensive changes to lessor accounting. However, the Board changed certain aspects of the lessor accounting guidance that lessors should be mindful of (e.g., changes to the definition of initial direct costs and accounting for collectibility uncertainties in a lease). Those changes were made principally to align with changes made to the lessee accounting guidance (e.g., the definition of a lease and the definition of lease payments) and to align key aspects of the lessor accounting guidance with the new revenue standard (e.g., to align the guidance about allocating consideration in a multi-element arrangement). In addition, the new standard prospectively eliminates leveraged lease accounting.

The new standard is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for public companies with a calendar year-end). All other entities are required to apply the new standard in annual periods beginning after December 15, 2019, and interim periods in fiscal years beginning after December 15, 2020. All companies may adopt the new standard immediately.

The new standard requires a modified retrospective transition, which means that both lessees and lessors will apply the new guidance at the beginning of the earliest period presented in the financial statements. However, lessees and lessors may elect to apply certain practical expedients on transition. An entity that elects to apply all of the practical expedients generally will continue to account for leases that commence before the effective date based on current U.S. GAAP unless the lease is modified (or remeasured) on or after the effective date. However, lessees will recognize operating leases on-balance sheet each reporting period (including retrospectively) at the present value of the remaining minimum rental payments (as that term is applied in current U.S. GAAP). The new standard provides specific transition guidance for sale-leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized for leases in business combinations.

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Current Developments: US / March 2016| 7

IFRSIn January, the IASB issued its new lease accounting standard, which introduces a single, on-balance sheet accounting model that is similar to the current accounting under IFRS for finance leases. Lessor accounting under IFRS will remain similar to current practice, (i.e., lessors will continue to classify leases as finance and operating leases).

The IASB’s new lease accounting standard is effective for annual periods beginning on or after January 1, 2019. A company may early adopt the new standard only if it concurrently adopts (or previously adopted) the new revenue standard.

Although some key aspects of the FASB’s and IASB’s standards are converged (e.g., the definition of a lease and on-balance sheet accounting for most leases for lessees), many aspects of the two standards are not. The key areas of divergence include:

• Lessee accounting model, including reassessmentrequirements for variable lease payments that depend on anindex or rate;

• Lessor profit recognition for some leases;

• Recognition and measurement exemption for leases of low-value assets (IFRS only);

• Classification of subleases by the sublessor;

• Accounting for leases between related parties;

• Gain recognition on sale-leaseback transactions; and

• Transition requirements and alternatives.

For More Information: Latest on Leases

Preparing for the New Revenue Standard

In 2015, accounting standard setters, regulators, financial statement preparers, auditors, and investors continued to discuss application questions about the new revenue standard. Despite those activities, preparers’ overall progress on developing an implementation plan has been slower than some had originally anticipated. A recent KPMG poll indicated that only 29 percent of the respondents had a clear implementation plan for the new standard, and only 12 percent have completed (or are nearly finished with) assessing the effect of the new standard.

Expectations for Preparers At the AICPA National Conference in December 2015, the Deputy Chief Accountant of the SEC’s Office of the Chief Account (OCA) stressed that the implementation efforts by companies may be lagging. Understanding the accounting changes by undergoing a gap analysis is only the beginning of the implementation assessment. In addition to identifying the accounting changes, the new standard requires additional judgments and estimates and significantly expanded disclosures. Many companies will need to develop revised accounting policies; reorganize accounting and business processes; potentially reconfigure IT systems; and implement new internal controls. As discussed in the SEC Staff Focus Areas section, during the AICPA National Conference, the SEC Chair stated that management’s ability to fulfill its financial reporting responsibilities significantly depends on the design and effectiveness of ICOFR. Therefore, it is critical that companies consider the internal control implications early in the process when developing an implementation plan for the new standard.

Companies should make it a high priority to develop a change-management strategy that involves detailed implementation plans and impact assessments that they can discuss with audit committees, executive management, and auditors. Companies also should allocate sufficient, qualified resources to complete the work on a timely basis.

SAB 74 DisclosuresThe Deputy Chief Accountant of the OCA stated that companies should provide more detailed disclosures about the expected effect of the revenue standard on the company’s financial statements. If the effect is unknown, preparers should communicate that fact and the expected completion date of their assessments. The Division of Corporation Finance staff reiterated that it expects disclosures to evolve and become more refined as companies begin to implement the new standard.

Upcoming Financial Reporting Matters

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Current Developments: US / March 2016| 8

FASB ProgressThe FASB recently issued a final standard that addresses principal/agent considerations by clarifying that the assessment is based on the control principle in the standard. Within the next few months, the FASB expects to issue three additional final standards that will amend and clarify the new revenue standard. Once finalized, these amendments and clarifications are expected to be the last amendments to the new revenue recognition model before it becomes effective. The amendments and clarifications are expected to address:

• Licenses of intellectual property, including the performanceobligations satisfied over time versus at a point in time,and the application of the sales- and usage-based royaltiesexception.

• Determining when goods or services are distinct and,therefore, constitute performance obligations.

• Areas about which stakeholders expressed concern andcertain practical expedients, including (1) the measurementdate for noncash consideration, (2) a practical expedient forreporting sales taxes, (3) additional practical expedients fortransition, and (4) an additional alternative recognition modelfor cash received.

• Technical corrections related to the revenue standard,including corrections to the preproduction deferredcost guidance; clarification for the onerous contract testfor construction- and production-type contracts; andclarifications to the scope of the revenue standard withrespect to insurance contracts and fixed-odds wageringcontracts.

For More Information: Latest on Revenue Recognition

New Accounting for Equity Investments and Financial Liabilities

The FASB recently issued the first of three standards related to accounting for financial instruments. The new standard will significantly change the income statement effect of equity investments and the recognition of changes in fair value of financial liabilities when the fair value option is elected. The changes include:

• Measuring equity investments with readily determinable fairvalues at fair value and recognizing changes in fair value innet income.

• Choosing whether to measure equity investments withoutreadily determinable fair values at (1) fair value or (2) costadjusted for changes in observable prices minus impairment.Changes in measurement under either alternative must berecognized in net income.

• Recognizing changes in fair value related to instrument-specific credit risk in other comprehensive income if the fairvalue option for financial liabilities is elected.

• Assessing valuation allowances for deferred tax assetsrelated to available-for-sale debt securities in combinationwith their other deferred tax assets.

The standard is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods in those fiscal years (i.e., January 1, 2018, for public companies with a calendar year-end). For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2019. Entities that are not public business entities may adopt the standard in fiscal years beginning after December 15, 2017, including interim periods in those fiscal years.

Entities may early adopt the provisions related to the recognition of changes in fair value of financial liabilities. In addition, entities that are not public business entities may early adopt the provisions that eliminate certain previously required disclosures.

For More Information: FASB ASU 2016-01 and Defining Issues 16-1

Upcoming Financial Reporting Matters

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Current Developments: US / March 2016 | 9

FASB finalizes several new standards

FASB eliminates effective dates for private company alternativesThe FASB recently eliminated the effective dates of private company accounting alternatives related to:

• Goodwill amortization;

• Certain receive-variable, pay-fixed interest rate swaps(simplified hedge accounting);

• VIE guidance about common-control leasing arrangements;and

• Identifiable intangible assets in a business combination.

The new guidance allows private companies to elect any of the private company alternatives at the beginning of any annual reporting period without assessing preferability, which U.S. GAAP otherwise requires. The new guidance also provides specialized transition provisions for adopting the goodwill amortization and simplified hedge accounting alternatives, regardless of when the alternatives are elected. The new guidance was effective on issuance (March 7).

For More Information: FASB ASU 2016-03 and Defining Issues 16-8

Recognition of breakage for certain prepaid stored-value products The FASB recently issued a narrow scope exception to the financial liability guidance that allows entities to recognize breakage on prepaid stored-value products consistent with how breakage is recognized under the new revenue standard. The exception applies to prepaid stored-value products in physical or digital form, with stored monetary values that are redeemable for goods and services, including those that can be redeemed for cash. Examples include prepaid gift cards issued on specific payment networks and redeemable at network-accepting merchant locations, prepaid telecommunications cards, and travelers’ checks. The scope exception does not apply to products that can be redeemed only for cash, are subject to escheatment laws, are attached to a segregated bank account (e.g., debit cards), or are associated with customer loyalty points.

The new guidance is effective for public companies, certain not-for-profit entities, and certain employee benefit plans in fiscal years beginning after December 15, 2017, and interim periods in those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period.

For More Information: FASB ASU 2016-04, Defining Issues 15-53, and Webcast

Effect of derivative contract novations on existing hedge accounting relationshipsThe FASB recently issued a new standard, which clarifies that a change in one of the parties to a derivative contract (through novation) that is part of a hedge accounting relationship does not, by itself, require de-designation of that relationship, as long as all other hedge accounting criteria continue to be met.

The new guidance is effective for public companies in fiscal years beginning after December 15, 2016, and interim periods in those years. For all other entities, it is effective for fiscal years beginning after December 15, 2017, and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period.

For More Information: FASB ASU 2016-05, Defining Issues 15-53, and Webcast

Contingent put and call options in debt instrumentsThe FASB recently issued a new standard, which clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment of the four-step decision sequence outlined in FASB ASC paragraph 815-15-25-24. Additionally, entities are not required to separately assess whether the contingency itself is clearly and closely related.

The new guidance is effective for public business entities in interim and annual periods in fiscal years beginning after December 15, 2016. For all other entities, it is effective for fiscal years beginning after December 15, 2017, and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in any interim period for which the entity’s financial statements have not been issued but would be retroactively applied to the beginning of the year that includes that interim period.

For More Information: FASB ASU 2016-06, Defining Issues 15-53, and Webcast

Simplifying the transition to Equity Method AccountingThe FASB recently issued a new standard as part of its simplification initiative, which eliminates the requirement for an investor to retroactively apply the equity method when its increase in ownership interest (or degree of influence) in an investee triggers equity method accounting.

The new guidance is effective for all entities in annual and interim periods in fiscal years beginning after December 15, 2016. Early adoption is permitted.

For More Information: FASB ASU 2016-07 and Defining Issues 16-9

Upcoming Financial Reporting Matters

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Current Developments: US / March 2016 | 10

03 Looking Ahead

Further changes for Financial Instruments

The FASB is completing work on its impairment project and expects to issue the final standard in the second quarter of 2016. The forthcoming standard will significantly change how entities measure and recognize credit impairment for most financial assets. The new current expected credit loss model will require companies to recognize lifetime expected credit losses rather than incurred losses. In addition, the FASB is making targeted changes to the existing other-than-temporary impairment model for available-for-sale securities.

The Board is addressing certain matters that arose while drafting the impairment standard including the accounting for purchased financial assets with credit deterioration (PCD assets) and how companies should consider premiums and discounts when measuring credit losses.

The forthcoming standard will be effective for public business entities that are SEC filers for fiscal years beginning after December 15, 2018, including interim periods in those fiscal years. It will be effective for public business entities that are not SEC filers for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years; and for all other entities, for fiscal years beginning after December 15, 2019, and interim periods in fiscal years beginning after December 15, 2020.

The Board also completed its initial deliberations on the hedge accounting model and expects its tentative decisions to broaden the use of hedge accounting and decrease operational difficulty. The Board expects to issue an exposure draft on hedge accounting in the second quarter of 2016.

For More Information: Latest on Financial Instruments

FASB disclosure framework

In 2014, the FASB proposed a framework for its decision process when determining disclosure requirements. While the Board continues to deliberate its proposed framework, it has started to test the effectiveness of the framework in its proposed modifications to defined benefit plan and fair value measurement disclosure requirements. Additionally, in late 2015, the FASB issued two proposals about materiality that would replace the existing definition of materiality with a reference to the U.S. legal definition of materiality and clarify that omission of immaterial disclosures is not an accounting error. Other ongoing disclosure framework projects include improving the disclosure requirements for income taxes, inventory, and interim reporting.

Defined Benefit and Postretirement Plans. The FASB recently issued a proposal to remove certain defined benefit pension and postretirement plan disclosure requirements that do not align with the guidance in its proposed disclosure framework. The proposal also would require new disclosures, including:

• Descriptions of plan assets;

• Reasons for significant gains and losses that affect benefitobligations or plan assets;

• The weighted-average interest-crediting rate for cash balanceand similar plans that have a promised interest credit; and

• Disclosures required by the fair value measurement guidancerelated to net asset value when using the practical expedient.

The proposal would require disaggregated disclosures about domestic and foreign plans, regardless of whether they use the same or similar assumptions. The comment period ends April 25.

Fair Value Measurement. The Board also recently issued a proposal about fair value measurement disclosures including:

• Removing the requirement to disclose the internal valuationprocesses for Level 3 measurements and the amount andreasons for transfers between Level 1 and Level 2;

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Current Developments: US / March 2016 | 11

• Modifying the disclosures about the uncertainty inherent inLevel 3 measurements; and

• Adding a disclosure for public companies related to thechanges in unrealized gains and losses for recurringmeasurements held at the end of the period.

For more information: Proposed ASU Defined Benefit Plans, Proposed ASU Fair Value Measurement, and Defining Issues 16-3

FASB projects on business combinations

The FASB has several current projects that would affect the initial and subsequent accounting for business combinations.

Accounting for Goodwill Impairment. In Phase 1 of its project about goodwill impairment, the Board decided to simplify the goodwill impairment test by removing step 2 of the current impairment model (i.e., companies no longer would be required to perform a hypothetical purchase price allocation when the carrying amount of a reporting unit exceeds its fair value).

The Board recently decided that reporting units with a zero or negative carrying amount should use the same impairment model as reporting units with positive carrying amounts (i.e., by comparing the fair value of the reporting unit to its carrying amount). This reverses the Board’s previous decision to require companies to write off goodwill allocated to reporting units with zero or negative carrying amounts.

The Board expects to issue an exposure draft for Phase 1 in the first half of 2016.

In Phase 2, the Board will consider whether to revise other aspects of subsequent goodwill accounting for public companies and not-for-profits.

Definition of a business. The Board issued an exposure draft for the first phase of its project about definition of a business. If finalized as proposed, the new guidance would modify how an entity determines whether an acquisition is accounted for as an asset purchase or a business combination. In addition, the Board reached tentative conclusions on the second phase of the project related to partial sales of nonfinancial assets.

Accounting for Identifiable Intangible Assets by Public Companies and Not-for-Profits. For public companies and not-for-profits, the FASB is considering whether to require that certain identifiable intangible assets be included in goodwill (similar to the alternative provided to private companies).

For More Information: Proposed ASU and Defining Issues 15-56

Presentation of Net Periodic Pension and Postretirement Benefit Costs

The FASB recently issued a proposal that would require an employer to separate the service cost component from the other components of net periodic benefit cost. The proposal also would provide explicit guidance about how to present the service cost component and other components of net periodic benefit cost in the income statement, and would allow only the service cost component of net periodic benefit cost to be eligible for capitalization. The comment period ends April 25.

For More Information: Proposed ASU and Defining Issues 16-4

Proposed changes for the statement of cash flows

At its March meeting, the FASB Emerging Issues Task Force (EITF) discussed presentation of restricted cash (Issue 16-A), and reached a consensus-for-exposure, which would require cash and cash equivalents that have restrictions on withdrawal or use to be included in total cash and cash equivalents on the statement of cash flows. For each period presented, companies would reconcile the total cash, cash equivalents, and restricted cash on the statement of cash flows to the related captions in the statement of financial position either on the face of the statement of cash flows or in the notes to the financial statements. The consensus-for-exposure also would require all companies to disclose the nature of their restricted cash balances, which would not be a change for SEC registrants. The EITF also decided not to define restricted cash and cash equivalents.

In addition, the FASB recently issued a proposal that addresses the eight other statement of cash flows classification issues that were previously discussed by the EITF:

1. Debt prepayment or debt extinguishment costs;

2. Settlement of zero-coupon bonds;

3. Contingent consideration payments made after a businesscombination;

4. Proceeds from the settlement of insurance claims;

5. Proceeds from the settlement of corporate-owned lifeinsurance policies, including bank-owned life insurancepolicies;

6. Distributions received from equity method investees;

7. Beneficial interests in securitization transactions; and

8. Separately identifiable cash flows and application of thepredominance principle.

The comment period ended March 29.

For more information: Proposed ASU, Defining

Issues 15-53, Defining Issues 16-7, and Webcast

Looking Ahead

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Current Developments: US / March 2016 | 12

04 Recommended Reading and CPE Opportunities

CFO Outlook 2016 – tax reform here and abroad

CFOs face change and challenge during 2016, as CFO.com’s CFO Outlook 2016 highlights. KPMG’s Vice Chairman-Tax Jeff LeSage highlights key tax issues that could hold opportunity and risks for business leaders over the next 12 months. Read the article.

The sooner finance ERP moves to the cloud, the better

The wave of cloud adoption is lapping at the door of finance as organizations begin to move their enterprise systems out of the company premises and into the cloud. The potential obstacles are the very reasons why CFOs should make the move in the first place. KPMG Financial Management Partner Patrick Fenton provides guidance to companies on how they can benefit from a new generation of ERP systems. Read the article.

Guarding against fraud in the age of social sharing

CIOs need to be aware of how their executives use social media and wearables as bad actors are using the information learned from these channels to create sophisticated fraud schemes. KPMG Cyber U.S. Leader Greg Bell writes on the topic for CIO Magazine. Read the article.

The business of bots and the realities of enterprise automation

The emerging set of capabilities and associated technologies enabling the automation of knowledge work through Robotic Process Automation (RPA) represents a tremendous opportunity for the IT function to provide considerable new value to the business—an opportunity that the CIO cannot afford to ignore.

KPMG U.S. Head of Innovation and Global Head of Innovation & Investments Steven Hill provides insight on enterprise automation. Read the article.

Upcoming CPE opportunities

KPMG Executive Education provides a broad range of accounting and finance continuing professional education (CPE) programs in a variety of formats, including public seminars, customized on-site instructor-led classes, Web-based self-study programs, and live Webcasts. Upcoming live training includes IFRS – Practical Application and Comparison to U.S. GAAP, FASB Accounting Update, SEC Reporting & Compliance, and Revenue Recognition of the Future.

For more information, contact the KPMG Executive Education Team at us-kpmglearning@kpmg.com or 201-505-6062.

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 13

Recommended Reading and CPE Opportunities

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 14

Appendix – Recent Accounting Standards

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 15

Accounting standards affecting public companies in 2016

Calendar year-end public companies will apply these accounting standards for the first time in 2016.

Topic

Accounting for Share-based Payments with Certain Performance Targets

Effective Date for public companies

Fiscal years, and interim periods within those years, beginning after 12/15/2015

For more information

FASB ASU 2014-12

Defining Issues 14-15

Podcast

Consolidated Collateralized Financing Entity Liabilities

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2014-13

Defining Issues 14-27

Podcast

Hybrid Financial Instruments

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2014-16

Defining Issues 14-44

Podcast

Eliminating the Concept of Extraordinary Items

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-01

Defining Issues 15-2

Podcast

Consolidation Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-02

Defining Issues 15-6

Webcast

Presentation of Debt Issuance Costs

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-03

Defining Issues 15-14

Podcast

Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-04

Defining Issues 15-17

Customer's Accounting for Fees Paid in a Cloud Computing Arrangement

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-05

Defining Issues 15-15

Podcast

Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-06

Defining Issues 15-10

Podcast

Eliminating Certain Investments from the Fair Value Hierarchy Table

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-07

Defining Issues 15-20

Podcast

Simplifying Measurement-Period Adjustments

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-16

Defining Issues 15-43

Podcast

Appendix – Recent Accounting Standards

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Current Developments: US / March 2016 | 16

Topic

Going Concern

Effective Date for public companies

Fiscal years ending after 12/15/2016, and interim and annual periods thereafter

For more information

FASB ASU 2014-15

Defining Issues 14-40

Podcast

Disclosures about Short-Duration Insurance Contracts

Fiscal years beginning after 12/15/2015, and interim periods within fiscal years beginning after 12/15/2016

FASB ASU 2015-09

Issues and Trends in Insurance 15-4

Simplifications for Employee Benefit Plans

Fiscal years beginning after 12/15/2015 FASB ASU 2015-12

Defining Issues 15-36

Podcast

Accounting standards affecting public companies in 2017 and beyond

Calendar year-end public companies will apply these accounting standards for the first time in 2017 or later and may need to disclose their potential effects in 2016.

Topic

Simplifying the Measurement of Inventory

Effective Date for public companies

Fiscal years, and interim periods within

those years, beginning after 12/15/2016

For more information

FASB ASU 2015-11

Defining Issues 15-33

Presentation of Deferred Taxes as Noncurrent

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2015-17

Defining Issues 15-55

Podcast

Effects of Derivative Contract Novations on Existing Hedge Accounting Relationships

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2016-05

Defining Issues 15-53

Webcast

Contingent Put and Call Options in Debt Instruments

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2016-06

Defining Issues 15-53

Webcast

Simplifying the Transition to the Equity Method of Accounting

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2016-07

Defining Issues 16-9

Revenue Recognition Fiscal years, and interim periods within those years, beginning after 12/15/2017

FASB ASU 2014-09

FASB ASU 2015-14

FASB ASU 2016-08

Latest on Revenue Recognition

Recognition and Measurement of Financial Assets and Financial Liabilities

Fiscal years, and interim periods within those years, beginning after 12/15/2017

FASB ASU 2016-01

Latest on Financial Instruments

Recognition of Breakage for Certain Prepaid Stored-value Products

Fiscal years, and interim periods within those years, beginning after 12/15/2017

FASB ASU 2016-04

Defining Issues 15-53

Webcast

Appendix – Recent Accounting Standards

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Current Developments: US / March 2016 | 17

Topic

Leases

Effective Date for public companies

Fiscal years, and interim periods within

those years, beginning after 12/15/2018

For more information

FASB ASU 2016-02

Latest on Leases

Accounting standards affecting private companies in 2015 Calendar year-end private companies will apply these accounting standards for the first time no later than their 2015

annual financial statements.

Topic Effective Date for private companies For more information

Pushdown Accounting Effective on issuance (November 2014) FASB ASU 2014-17

Issues In-Depth: Pushdown Accounting

Podcast

Not-for-Profit Services Received from Personnel of an Affiliate

Fiscal years beginning after 6/15/2014, and interim and annual periods thereafter

FASB ASU 2013-06

Defining Issues 13-17

Podcast

Release of Cumulative Translation Adjustment for Certain Derecognition Events

Fiscal years beginning after 12/15/2014, and interim and annual periods thereafter

FASB ASU 2013-05

Defining Issues 13-5

Podcast

Presentation of Certain Unrecognized Tax Benefits

Fiscal years, and interim periods within those years, beginning after 12/15/2014

FASB ASU 2013-11

Defining Issues 13-29

Podcast

Affordable Housing Tax Credits

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-01

Defining Issues 14-3

Webcast

Podcast

Accounting for Goodwill

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-02

Defining Issues 14-7

Podcast

Simplified Hedge Accounting Approach

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-03

Defining Issues 14-7

Podcast

Residential Real Estate Loan Reclassification

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-04

Defining Issues 13-49

Podcast

Service Concession Arrangements

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-05

Defining Issues 13-49

Podcast

Common Control Leasing Arrangements

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-07

Appendix – Recent Accounting Standards

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Current Developments: US / March 2016 | 18

Topic Effective Date for private Companies For more information

Discontinued Operations

For disposals (or classifications as held-for-sale) that occur within fiscal years beginning on or after 12/15/2014, and interim periods within fiscal years beginning on or after 12/15/2015

FASB ASU 2014-08

Defining Issues 14-20

Podcast

Development Stage Entities

The presentation and disclosure changes are effective for fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015.

The elimination of the specified consolidation exception is effective for fiscal years beginning after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2017.

FASB ASU 2014-10

Defining Issues 14-30

Repurchase Agreements

Fiscal years beginning after 12/15/2014, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-11

Defining Issues 14-31

Accounting for the Effect of a Federal Housing Administration Guarantee

Fiscal years ending after 12/15/2015, and interim periods within fiscal years beginning after 12/15/2015

FASB ASU 2014-14

Defining Issues 14-27

Podcast

Technical Corrections (June 2015)

Most amendments are effective on issuance (June 2015). Certain amendments that require transition guidance are effective for fiscal years, and interim periods within those years, beginning after 12/15/2015.

FASB ASU 2015-10

Normal Purchase and Normal Sale Exception for Certain Nodal Electricity Contracts

Effective on issuance (8/10/2015) FASB ASU 2015-13

Defining Issues 15-26

Accounting standards affecting private companies in 2016 and beyond

Calendar year-end private companies will apply these accounting standards for the first time in 2016 or later.

Topic Effective Date for private companies For more information

Effective Dates and Transition Guidance

On issuance (March 2016) FASB ASU 2016-03

Defining Issues 16-8

Accounting for Share-Based Payments with Certain Performance Targets

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2014-12

Defining Issues 14-15

Podcast

Eliminating the Concept of Extraordinary Items

Fiscal years, and interim periods within those years, beginning after 12/15/2015

FASB ASU 2015-01

Defining Issues 15-2

Podcast

Appendix – Recent Accounting Standards

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 19

Appendix – Recent Accounting Standards

Topic Effective Date for private Companies For more information

Hybrid Financial Instruments

Fiscal years beginning after 12/15/2015, and interim periods within fiscal years beginning after 12/15/2016

FASB ASU 2014-16

Defining Issues 14-44

Podcast

Accounting Alternative for Identifiable Intangible Assets

Prospectively for in-scope transactions in the first fiscal year beginning after 12/15/2015, and interim periods within fiscal years beginning after 12/15/2016

FASB ASU 2014-18

Defining Issues 15-1

Webcast

Podcast

Presentation of Debt Issuance Costs

Fiscal years beginning after 12/15/2015, and interim periods within fiscal years beginning after 12/15/2016

FASB ASU 2015-03

Defining Issues 15-14

Podcast

Customer's Accounting for Fees Paid in a Cloud Computing Arrangement

Fiscal years beginning after 12/15/2015, and interim periods within fiscal years beginning after 12/15/2016

FASB ASU 2015-05

Defining Issues 15-15

Podcast

Simplifications for Employee Benefit Plans

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2015-12

Defining Issues 15-36

Podcast

Consolidated Collateralized Financing Entity Liabilities

Fiscal years ending after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2016

FASB ASU 2014-13

Defining Issues 14-27

Podcast

Going Concern Fiscal years ending after 12/15/2016, and interim and annual periods thereafter

FASB ASU 2014-15

Defining Issues 14-40

Podcast

Eliminating Certain Investments from the Fair Value Hierarchy Table

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2015-07

Defining Issues 15-20

Podcast

Simplifying the Transition to the Equity Method of Accounting

Fiscal years, and interim periods within those years, beginning after 12/15/2016

FASB ASU 2016-07

Defining Issues 16-9

Consolidation Fiscal years beginning after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2017

FASB ASU 2015-02

Defining Issues 15-6

Webcast

Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets

Fiscal years beginning after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2017

FASB ASU 2015-04

Defining Issues 15-17

Disclosures about Short-Duration Insurance Contracts

Fiscal years beginning after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2017

FASB ASU 2015-09

Issues and Trends in Insurance 15-4

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Current Developments: US / March 2016 | 20

Topic Effective Date for private companies For more information

Simplifying the Measurement of Inventory

Fiscal years beginning after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2017

FASB ASU 2015-11

Defining Issues 15-33

Simplifying Measurement-Period Adjustments

Fiscal years beginning after 12/15/2016, and interim periods within fiscal years beginning after 12/15/2017

FASB ASU 2015-16

Defining Issues 15-43

Podcast

Presentation of Deferred Taxes as Noncurrent

Fiscal years beginning after 12/15/2017, and interim periods within fiscal years beginning after 12/15/2018

FASB ASU 2015-17

Defining Issues 15-55

Podcast

Effects of Derivative Contract Novations on Existing Hedge Accounting Relationships

Fiscal years beginning after 12/15/2017, and interim periods within fiscal years beginning after 12/15/2018

FASB ASU 2016-05

Defining Issues 15-53

Webcast

Contingent Put and Call Options in Debt Instruments

Fiscal years beginning after 12/15/2017, and interim periods within fiscal years beginning after 12/15/2018

FASB ASU 2016-06

Defining Issues 15-53

Webcast

Revenue Recognition Fiscal years beginning after 12/15/2018, and interim periods within fiscal years beginning after 12/15/2019

FASB ASU 2014-09

FASB ASU 2015-14

FASB ASU 2016-08

Latest on Revenue Recognition

Recognition and Measurement of Financial Assets and Financial Liabilities

Fiscal years beginning after 12/15/2018, and interim periods within fiscal years beginning after 12/15/2019

FASB ASU 2016-01

Latest on Financial Instruments

Recognition of Breakage for Certain Prepaid Stored-value Products

Fiscal years beginning after 12/15/2018, and interim periods within fiscal years beginning after 12/15/2019

FASB ASU 2016-04

Defining Issues 15-53

Webcast

Leases Fiscal years beginning after 12/15/2019, and interim periods within fiscal years beginning after 12/15/2020

FASB ASU 2016-02

Latest on Leases

Appendix – Recent Accounting Standards

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual orentity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate asof the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriateprofessional advice after a thorough examination of the particular situation.

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 11544

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Contact us:

This is a publication of KPMG’s Department of Professional Practice 212-909-5600

Contributing authors:

Angela B. Stormastorm@kpmg.com

Robin E. Van Voorhiesredunn@kpmg.com

Jennifer A. Yrumajyruma@kpmg.com

More information is available at: kpmg.ca