Alternative Investment Industry Technical Update: SEC, FASB, CFTC, BVI, and Brexit

We are pleased to share this Technical Update on recent changes impacting the alternative investment industry. This month you will find a brief summary of the following:

SEC:
  • Approves Rules to Ease Investor Access to Exhibits in Company Filings
    • New rules and amendments make it easier for investors and other market participants to find and access exhibits in registration statements and periodic reports that were originally provided in previous filings. Final rules will take effect on September 1, 2017.
    • Click here to read this press release.
  • Proposes Rule Amendments to Improve Municipal Securities Disclosures
    • Improves investor protection and enhances transparency in the municipal securities market.
    • The proposed amendments would provide timely access to important information regarding certain financial obligations incurred by issuers and obligated persons that could impact such entities’ liquidity and overall creditworthiness.
    • Click here to read the proposed amendments.
  • Issues a Final Rule on Inflation Adjustments related to the JOBS Act
  • Adopts T+2 Settlement Cycle for Securities Transactions
    • Adopts an amendment to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions.
    • The amended rule is designed to enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle.
    • Click here to read about the new settlement guidance.
FASB:
  • 2017-07 Compensation – Retirement Benefits
    • This update primarily intends to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. This will require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period.
    • Allows only the service cost component to be eligible for capitalization when applicable.
    • This amendment applies to all employers, including non-for-profit entities, that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation – Retirement Benefits.
    • Click here to read this update.
  • 2017-08 Receivables – Nonrefundable Fees and Other Costs
    • This amends the amortization period for certain purchased callable debt securities held at premium. The Board is shortening the amortization period for the premium to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.
    • This affects all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date.
    • Click here to read more about this FASB update.
CFTC:
  • DMO Issues Conditional Extension of No-Action Relief Regarding Masking of Certain Identifying Information
British Virgin Islands Government:
  • Relaxes enforcement of the Common Reporting Standard (CRS) notification and reporting deadlines for 2017

    • For 2017 portal registration: financial institutions are required to notify the International Tax Authority of their first annual report under CRS by June 30, 2017 (previously April 30, 2017).
    • For the 2017 reporting obligation, regarding 2016 calendar year data: financial institutions are required to submit reports by July 31, 2017 (previously May 31,  2017).
    • Click here to read the press release from the British Virgin Islands government.
Brexit:
  • Income Tax Accounting Implications
    • On March 29, the UK government gave formal notice of its intention to leave the EU. Various tax reliefs and exemptions that apply to transactions between EU Member States under existing tax laws will likely cease to apply to transactions between the UK and EU Member States when the UK ultimately withdraws from the EU.
    • US GAAP requires entities to recognize the effect of a change in tax law or rate on deferred taxes at the date of enactment.
    • Click here to read more about these implications.

We welcome your suggestions for future topics that you would like to see included in this Technical Update. Also, for further information regarding these updates and how you may be affected by these changes, please contact your Arthur Bell representative at 855-787-0001 or via email at contactus@arthurbellcpas.com.

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