The NASPP Blog

For today’s installment in my series on the FASB’s ASC 718 simplification project, I explain what the next steps are in this process.

Is the update final now?

Not quite yet. For the most part, we know what the final update is going to look like because the FASB’s decisions with respect to each issue in the exposure draft are public.  But the FASB staff still has to draft the actual amendment to ASC 718 and the FASB has to vote to adopt the amendment.

In addition, there are a few technical details in the exposure draft that were commented on and that we expect the staff to clean up, but we won’t know for sure until the amendment is issued.  The FASB didn’t vote on these details because they don’t change the board’s overall position; it is merely a matter of clarifying what the board’s decision means with respect to some aspects of practical implementation.  For example, the language of the proposed amendment relating to share withholding seemed to imply something different than the FASB’s explanation of what this change would be. I am assuming the staff will modify this language but we won’t know for sure until the final amendment is issued.

When will the FASB adopt the amendment?

According to the FASB’s Technical Agenda, this project is expected to be finalized in Q1 2016. Anyone who’s been in the industry for a more than a couple years knows, however, that these things tend to slip a bit. In my 20 years in this industry, I can’t think of a single regulation, rule, amendment, etc. that, when targeted for issuance during a specific time frame, came out earlier than the very last week or so in that time frame.  (10 pts to anyone who can prove me wrong on this—I started in the industry in 1994, so stuff before that doesn’t count.)  The FASB is no exception, so I’m guessing that we are looking at the end of March or maybe even Q2 2016.

When will companies be required to comply with the new guidance?

Public companies will have to adopt the update by their first fiscal year beginning after December 15, 2016 (and in the interim periods for that year). Private companies have a year longer to adopt for their annual period and two years longer for interim periods.

Will the standard now be called ASC 718(R)?

No.  For people like me who write about accounting, that would be handy because it would make it easy to distinguish when I’m talking about the pre-amendment vs. the post-amendment ASC 718.  Now I’ll have to use some sort of unwieldy clarification, like “ASC 718, as amended in 2016.”  But under the FASB’s codification system, the existing standard is simply updated to incorporate the amendments.  The name of the standard will stay the same.

If the Codification system didn’t exist, maybe we would call it FAS 123(R)(R). Or would it be FAS 123(R)²?

– Barbara