!@#

Accounting update ............... 2 Regulatory developments ..... 7 Other considerations............ 9 Effective date highlights ..... 11 Reference library ............... 12

March 2012

Financial reporting briefs Life sciences

What you need to know about this quarter’s accounting, financial reporting and other developments

2 Financial reporting briefs Life sciences March 2012

Spotlight on fair value disclosures Beginning with the first quarter, public life sciences companies with calendar year-ends need to disclose more about their most complex and subjective fair value judgments for items such as equity instruments treated as liabilities and contingent consideration resulting from business combinations.

These companies now have to describe their processes for valuing items categorized as Level 3 in the fair value hierarchy, provide quantitative information about the significant unobservable inputs they use to make these measurements and, in certain cases, explain how sensitive the measurements are to changes in these inputs. They also must disclose the hierarchy classification for items whose fair value they disclose only in the footnotes and the amounts of any transfers between Levels 1 and 2 for recurring fair value measurements. Calendar-year private life sciences companies will have to make many of these disclosures beginning at year-end.

For many life sciences companies, the new disclosures will be the most significant change resulting from the guidance in Accounting Standards Update (ASU) 2011-04.1 To eliminate certain differences with IFRS, the FASB also made the following changes to the measurement guidance in US GAAP:

• Prohibited the inclusion of block discounts in all fair value measurements, not just Level 1 measurements

• Added guidance on when to include other premiums and discounts in fair value measurements

• Clarified that the concepts of “highest and best use” and “valuation premise” apply only when measuring the fair value of nonfinancial assets

• Added an exception that allows companies to measure a group of financial assets and liabilities with offsetting risks (e.g., a portfolio of derivatives contracts) at their net exposure to a particular risk if certain criteria are met

Comprehensive income gets a new look Public life sciences companies with calendar year-ends may need to change their presentation of total comprehensive income beginning with the first quarter. New guidance2 requires companies to present a total for comprehensive income in a single continuous statement or two consecutive statements in interim periods. This will be a change in practice for life sciences companies that have reported a total for comprehensive income in the notes to their interim financial statements.

Annual financial statements are likely to change too. Life sciences companies will have to report components of net income and other comprehensive income (OCI) and a total for comprehensive income in a single continuous statement or two consecutive statements. They will no longer have the option of presenting OCI solely in the statement of shareholders’ equity. Life sciences companies will also need to present changes in accumulated other comprehensive income by component in either the statement of shareholders’ equity or the footnotes. Private life sciences companies with calendar year-ends have to change their presentation beginning with their 2012 year-end financial statements. Early adoption is permitted.

1 ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs 2 ASU 2011-05, Presentation of Comprehensive Income, and ASU 2011-12, Deferral of the Effective Date for Amendments to the

Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05

Welcome to the March 2012 Financial

reporting briefs — Life sciences.

This edition describes several new accounting

standards updates that are effective this

quarter, including updates related to fair

value measurements and disclosures and the

presentation of comprehensive income.

We also bring you up to speed on the latest

developments in the joint projects of the

Financial Accounting Standards Board (FASB)

and the International Accounting Standards

Board (IASB) (collectively, the Boards).

The regulatory developments section updates

you on the status of recent capital formation

initiatives in Washington. We also highlight an

SEC focus area, proxy statement disclosures,

to help life sciences companies prepare for

proxy season.

The reference library lists our recent

publications that provide additional details on

the items discussed in this edition.

Accounting update

Accounting update

Financial reporting briefs Life sciences March 2012 3

Screening goodwill and indefinite-lived intangibles for impairment Calendar year-end life sciences companies that have not yet adopted ASU 2011-083 now have the option to

perform a qualitative assessment to determine whether goodwill of a reporting unit is potentially impaired.

Companies can skip the two-step goodwill impairment test if they determine that it is not more likely than not

that the fair value of a reporting unit is less than its carrying amount.

In response to suggestions from constituents, the FASB recently proposed giving companies the option to

perform a similar qualitative screen to test indefinite-lived intangible assets, such as in-process research and

development (IPR&D) for impairment. Like the new goodwill impairment guidance, the proposal is intended to

reduce the cost and complexity of performing annual impairment tests. The FASB acknowledged that applying

the proposal to assets subject to regulatory approval, results of research and development and other significant

uncertainties outside of a company’s control may be challenging. Comments are due by 24 April 2012. The

FASB expects to issue final guidance that would be effective for fiscal years beginning after 15 June 2012,

with early adoption permitted.

Other goodwill impairment testing considerations for private companies

The goodwill impairment testing guidance in ASU 2010-284 went into effect for public companies last year and

is now effective for calendar year-end private companies. The guidance clarifies that Step 2 of the goodwill

impairment test is required if a reporting unit has a carrying amount of zero or less and qualitative factors

indicate that it is more likely than not that the goodwill is impaired. Previously, companies may have concluded

Step 2 was not required because the reporting unit’s fair value was not less than its carrying amount under

Step 1, despite qualitative factors that indicated impairment.

Tax extenders have expired — again

Congress has once again allowed a package of more than 60 tax provisions, known as “tax extenders” because

they expire annually and must be extended, to expire on 31 December 2011. This doesn’t necessarily mean

they will disappear. Congress has reenacted them retroactively in the past. But for interim reporting, life

sciences companies need to exclude the benefits of the expired provisions from their estimated annual

effective tax rates, regardless of whether they expect the provisions to be reinstated.

The reinstatement of an expired provision, even if retroactive, would require companies to wait until the date

of enactment to account for the effects of the legislation. Today’s political climate adds to the uncertainty this

time around. Some of the more significant tax extenders for life sciences companies include the research and

development (R&D) tax credit and the controlled foreign corporation look-through exception for Subpart F.

3 ASU 2011-08, Testing Goodwill for Impairment 4 ASU 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts

Accounting update

4 Financial reporting briefs Life sciences March 2012

Life sciences companies should evaluate whether any of the expired provisions are significant and ensure that

the expiration is accounted for appropriately. Life sciences companies also should monitor the situation so

they can recognize any reinstatements in the appropriate interim and annual periods.

The buzz on revenue recognition: good progress, but more work needed

In comment letters on the joint revenue recognition proposal, respondents generally agree that the Boards

have made significant progress on their proposal to replace essentially all existing revenue guidance in

US GAAP and IFRS. However, respondents generally say the proposal needs more implementation guidance

to prevent diversity in practice.

In particular, life sciences respondents want more clarity on accounting for variable consideration, determining

whether a counterparty in a collaboration agreement is a customer and determining when it is appropriate to

recognize revenue over time rather than at a point in time. They also expressed concern that the costs of

complying with the proposed disclosure requirements would outweigh the benefits and the disclosures could

result in information overload. In addition, many believe retrospective adoption would be too burdensome.

We expect the Boards to redeliberate certain aspects of the proposal before issuing a final standard.

Boards weighing effects of putting leases on the balance sheet

The Boards remain committed to putting leases on the balance sheet but continue to struggle with how to

recognize related lease revenue and expense. They are now considering ways to mitigate the front-loading of

lease expense for certain leases and agreed to perform additional outreach and research. The Boards also

continue to look at the lessor model, which they hope to keep consistent with lessee accounting. The extra

work will push back the issuance of an exposure draft (ED) until at least the third quarter of 2012.

Progress on financial instruments

Classification and measurement

The Boards are jointly redeliberating parts of their classification and measurement models to reduce

differences. They tentatively decided that a financial asset could be measured in a category other than fair

value through net income (depending on the business model for that asset) if its contractual terms result only

in payments of principal and interest on specified dates.

The Boards also reached tentative decisions on the effects of contingent cash flows, modifications of the

economic relationship between principal and interest, and prepayment and extension options on the cash flow

characteristics assessment of financial assets. These tentative decisions would change the model the FASB is

developing and require minor amendments to the application guidance in IFRS 9.5

5 IFRS 9, Financial Instruments

Accounting update

Financial reporting briefs Life sciences March 2012 5

The Boards plan to discuss the need and basis for bifurcation of financial assets, the appropriateness of a category for debt instruments measured at fair value through OCI and any interrelated issues. Although the Boards want to more closely align their proposals, we do not expect full convergence in the near term.

Impairment The Boards continue to jointly develop an approach for measuring impairment that reflects the general pattern of deterioration in the credit quality of financial assets (e.g., loans, debt securities) and is based on expected losses. The Boards clarified that assets would initially be classified in Bucket 1, except for purchased assets with an explicit expectation of credit losses at acquisition, which would be classified in either Bucket 2 or 3.

The allowance would reflect losses expected over the next 12 months for assets in Bucket 1 and lifetime expected losses for assets in Bucket 2 or 3. Assets would move out of Bucket 1 if the deterioration in their credit quality is more than insignificant since initial recognition and it is at least reasonably possible that the contractual cash flows may not be fully recoverable. Assets would move to Bucket 2 if they were evaluated collectively and Bucket 3 if they were evaluated individually. The Boards decided to provide indicators, but no bright lines, about when to move assets. If either criterion is no longer met, assets would move back to Bucket 1, except for purchased assets with explicit evidence of credit deterioration, which would never move to Bucket 1.

The Boards also agreed that trade receivables with significant financing components would follow an expected-loss approach. Companies could make a policy election to either fully apply the three-bucket model or use a simpler approach that would require initial and subsequent classification in Bucket 2 or 3. No decision was made on trade receivables that don’t have a significant financing component.

Hedging The FASB has not yet begun to redeliberate its May 2010 hedging proposal. This part of the project is on hold until other phases move closer to completion.

Liquidity and interest rate risk disclosures The FASB initially intended to address liquidity and interest rate risk disclosures related to financial instruments as part of the classification and measurement project but recently created a separate project to address them more quickly. The FASB plans to issue an ED in the second quarter.

Comments are in on consolidation and investment companies The FASB is reviewing comment letters on its proposals on consolidation and investment companies.

Respondents to the consolidation proposal generally expressed support for the FASB’s proposal to amend the guidance for both variable interest entities and voting partnerships to include a consideration of whether a decision-maker is using its power as a principal or an agent. Many asked for clarification on several aspects of the proposal relating to the evaluation of variability, kick-out rights, related-party interests and implicit interests. Like others, we support the proposal. We also encouraged the FASB to consider moving toward a single consolidation model, which could reduce existing complexity in the variable interest model and improve comparability across arrangements.

Accounting update

6 Financial reporting briefs Life sciences March 2012

Many respondents expressed concerns that the proposed criteria for investment companies do not allow for sufficient use of judgment. They pointed out that many companies that now qualify as investment companies might not qualify under the proposed requirements.

Update on other emerging issues At its March meeting, the EITF discussed comments on the cumulative translation adjustments proposal

(Issue No. 11-A)6 and decided that further analysis and outreach is needed. Under the proposal, a parent that

ceases to have a controlling financial interest in certain foreign assets that meet the definition of a business

would release into earnings a portion of the cumulative translation adjustment (CTA) attributable to those

assets. Concerns raised by respondents and several Task Force members include the scope of the proposal,

operational challenges that may result and how companies would determine CTA amounts related to net

investment hedges.

The EITF also reached conclusions on a handful of relatively narrow industry issues, which the FASB will consider putting out for comment. The conclusions reached by the EITF are not expected to significantly affect life sciences companies.

6 Proposed ASU, Consolidation (Topic 810) Parent’s Accounting for the Cumulative Translation Adjustment upon the Sale or Transfer of a Group

of Assets That Is a Nonprofit Activity or a Business within a Consolidated Foreign Entity (a consensus of the FASB Emerging Issues Task Force)

Financial reporting briefs Life sciences March 2012 7

Emerging life sciences companies could get regulatory relief A bill that would create a new category of issuers for “emerging growth companies” and exempt them from certain SEC requirements has received significant bipartisan support in Congress. The Reopening American Capital Markets to Emerging Growth Companies Act of 2011, known as the IPO On-ramp bill, would phase in certain public company compliance requirements, including Sarbanes-Oxley Section 404(b), and would require only two years of audited financial statements in connection with an IPO rather than three years.

The SEC, meanwhile, is considering a recommendation from its Advisory Committee on Small and Emerging Companies (the Committee) that it increase the number of record holders that trigger a company’s obligation to register and report as a public company. The Committee also recommended an increase to the record holder threshold below which a company may terminate registration and suspend its reporting obligation. In both cases, the Committee recommended that the record holder count exclude employees who hold company stock if there are restrictions on their ability to sell the stock in a secondary market.

SEC staff wants more disclosure of European debt exposure The SEC staff issued guidance laying out what it expects registrants to disclose in their interim and annual reports about their direct and indirect exposure to European debt holdings, noting that disclosures so far have been inconsistent in both substance and presentation. For life sciences registrants, these include disclosures about government and government agency receivables in addition to government bonds.

The SEC staff wants registrants to disclose gross funded (i.e., on-balance sheet) exposure separately by country, segregated by sovereign (i.e., government entities) and non-sovereign exposures (e.g., distributors, non-government health care providers) and by financial instrument (e.g., accounts receivable, leases, debt, derivatives, investments in securities). Registrants also should consider separately disclosing the effects of credit default protection. Finally, registrants are expected to disclose how management is addressing the exposures and any related developments, including those after the reporting date.

The guidance doesn’t name specific countries but indicates that registrants should focus on those that are experiencing significant economic, fiscal or political strains that increase the likelihood of default and consider disclosing how they selected the countries. The SEC staff has previously said registrants should disclose their exposure to Greece, Ireland, Italy, Portugal and Spain.

Proxy season is upon us Proxy season is fast approaching, and there are several items public life sciences companies should keep in mind. For starters, this will be the first year that a company will be required in certain circumstances to include shareholder proposals in its proxy materials that would amend the company’s governing documents on shareholder director nominations.

In reviews of proxy statement disclosures, the SEC staff also is expected to focus on the following:

• Disclosures about the consideration of director qualifications and diversity in director nominations

Regulatory developments

In this section, we highlight important

developments on capital formation initiatives

that appear to be gaining steam in Washington.

We also discuss new SEC disclosure guidance

related to exposures to European debt.

Regulatory developments

8 Financial reporting briefs Life sciences March 2012

• Disclosures about why a company’s leadership structure is appropriate, both when the same individual serves as principal executive officer and chairman of the board and when different individuals serve in these roles

• Disclosures of peer companies used to benchmark executive compensation, including how the peer group was selected

• Disclosures of risks arising from overall compensation policies

• Disclosures in Compensation Discussion and Analysis about how the Compensation Committee considered the prior year’s say-on-pay vote in compensation decisions

The SEC staff also continues to focus on the reporting of share-based compensation in the Summary Compensation Table. The staff is primarily concerned that large amounts of compensation may not be reported in the table.

What’s happening with IFRS Consistent with his comments at the December 2011 AICPA National Conference on Current SEC and PCAOB Developments, James Kroeker, the SEC’s Chief Accountant, reaffirmed that the staff is moving toward recommending a framework for incorporating IFRS in the US that is based on an endorsement approach. While he did not provide new information on a timeline, we expect the SEC staff to make a recommendation to the full Commission in the coming months.

Opposition to mandatory audit firm rotation Over 90% of the more than 600 responses received so far on the PCAOB’s concept release on possible ways to enhance auditor independence, objectivity and professional skepticism oppose mandatory audit firm rotation. It is already the second-largest number of comment letters the PCAOB has received on a rule-making project.

Of particular note was a letter from the US Government Accountability Office (GAO). The GAO was required by Congress to study mandatory audit firm rotation in 2003. At that time, the GAO raised questions about whether mandatory audit firm rotation would be the most efficient and effective way to enhance auditor independence and audit quality. In its comment letter, the GAO did not support mandatory audit firm rotation and suggested that there was no evidence to show that it would improve audit quality.

While opposing mandatory audit firm rotation, many respondents expressed support for the PCAOB’s overall effort to enhance auditor independence, objectivity and professional skepticism. The PCAOB is gathering more feedback at roundtables, and it extended the comment period on its proposal to 22 April 2012.

PCAOB reviewing comments on audit committee communications proposal The PCAOB is reviewing comment letters on its proposal to enhance the relevance and quality of communications between the auditor and the audit committee. In response to constituents’ concerns about its initial March 2010 proposal, the PCAOB tried to better align new communication requirements in the new proposal with other PCAOB standards. The proposal would not impose any additional performance requirements other than communications.

Other considerations

Financial reporting briefs Life sciences March 2012 9

IRS proposes regulations on medical device excise tax The IRS and the Treasury Department issued proposed regulations in February on

the 2.3% medical device excise tax (IRC §4191) that manufacturers and importers

will be required to pay on sales of taxable medical devices starting in 2013. The

proposed regulations define what constitutes a taxable medical device that is

subject to the tax. The regulations also discuss tax treatment of leases, associated

or secondary devices sold with a primary device and medical software and IT

systems, among other items. The regulations also address tax exempt sales, such

as certain devices purchased by the general public at retail for individual use and

the sale of devices for further manufacture and export.

Life sciences companies should review the proposed regulations and consider

whether any of their transactions will be subject to the tax. The regulations do

not appear to create any new accounting considerations; however, life sciences

companies should continue to monitor developments.

AICPA extends comment period for its IPR&D practice aid

Due to respondents’ requests for additional time, the AICPA extended the

comment period on its IPR&D practice aid working draft until 24 May 2012. In

November 2011, the AICPA proposed updates to the practice aid to reflect

significant changes to US GAAP that have affected the accounting for the

acquisition of assets to be used in research and development activities. While not

authoritative, the aid provides best practices for preparers, auditors, valuation

specialists and others to consider when accounting and valuing acquired IPR&D

assets. We encourage life sciences companies to comment on the working draft.

The FASB’s going concern project gets a makeover

The FASB decided not to require that management assess whether there is

substantial doubt about a company’s ability to continue as a going concern.

The FASB also decided not to try to improve disclosures that would serve as an

early warning of a company’s potential inability to continue as a going concern as

part of this project because it is addressing liquidity risk disclosures separately in

its financial instruments project (discussed earlier).

The FASB changed course to focus on providing principles-based guidance on

when and how to prepare financial statements using the liquidation basis of

accounting. The FASB tentatively decided that a company should prepare financial

statements on a liquidation basis only if liquidation is imminent. The FASB intends

to issue an exposure draft soon, with a 90-day comment period.

FASB issues final ASU on offsetting

The FASB issued ASU 2011-117 in late 2011 requiring new disclosures to

help users of financial statements understand certain significant quantitative

differences in balance sheets prepared under US GAAP and IFRS. The existing

US GAAP guidance allowing balance sheet offsetting remains unchanged. The

new disclosures are required for periods beginning on or after 1 January 2013

and must be applied retrospectively.

FAF completes its first post-implementation review

In a report on its first post-implementation review of a FASB standard, the

Financial Accounting Foundation (FAF) said FASB Interpretation No. 48 (FIN 48)8 is

accomplishing its purpose and its benefits outweigh its costs. Post-implementation

reviews are intended to evaluate these items and the standard-setting process.

In its report, the FAF summarized the feedback it received from stakeholders and

recommended ways to improve the standard-setting process.

The FAF now plans to review FASB Statement No. 141(R), Business Combinations,

and FASB Statement No. 131, Disclosures about Segments of an Enterprise and

Related Information.

FAF considers responses to its private company proposal The FAF is considering comments on its proposal to establish a Private Company

Standards Improvement Council (the Council). Under the proposal, the Council

would have the authority to identify, propose, deliberate and vote on specific

improvements to US accounting standards for private companies, subject to

ratification by the FASB. The FAF also hosted public roundtable meetings to gain

additional input from stakeholders. We expect the FAF will now make a final

decision on the plan.

7 ASU 2011-11, Disclosures about Offsetting Assets and Liabilities 8 FIN 48, Accounting for Uncertainty in Income Taxes (codified primarily in ASC 740, Income Taxes)

Other considerations

Other considerations

10 Financial reporting briefs Life sciences March 2012

COSO considers update of its internal controls framework The Committee of Sponsoring Organizations of the Treadway Commission (COSO)

released for public comment a proposed update to the Internal Control —

Integrated Framework. The proposal, which updates COSO’s 1992 framework to

reflect changes in the business and operating environment since its issuance

20 years ago, would codify the internal control concepts in the original framework

into 17 principles and supporting attributes. The proposal retains the definition of

internal control and the five components of internal control and should not result in

significant changes to current practice for designing, implementing and assessing

internal controls over financial reporting. Comments are due by 31 March 2012.

COSO plans to issue the final framework in the fall of 2012. During the second

quarter, COSO plans to expose for public comment additional guidance related to

applying the framework to internal controls over financial reporting.

Conflict minerals and executive compensation rules update

The SEC is expected to issue final rules on conflict minerals and proposed rules

on executive compensation by 30 June 2012. The conflict minerals rule, which

may affect life sciences companies that make medical devices, would require

companies to furnish reports about conflict minerals originating in the Democratic

Republic of the Congo and adjoining countries.

The executive compensation rules would require life sciences companies to

disclose pay-to-performance relationships, pay ratios of CEOs to other employees

and executive compensation clawback policies in their annual proxy statements.

Effective date highlights

Financial reporting briefs Life sciences March 2012 11

Effective in 2012 (for calendar year-end companies)

ASU 2011-12 — Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (ASC 220)

Fiscal years beginning after 15 December 20111 (public)

Fiscal years ending after 15 December 20122 (private)

ASU 2011-09 — Disclosures about an Employer’s Participation in a Multiemployer Plan (ASC 715-80) Annual periods for fiscal years ending after 15 December 2011 (public) Annual periods for fiscal years ending after 15 December 2012 (private)

ASU 2011-08 — Testing Goodwill for Impairment (ASC 350) Fiscal years beginning after 15 December 20113 (public and private)

ASU 2011-07 — Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities (EITF Issue 09-H; ASC 954)

Fiscal years beginning after 15 December 20111 (public)

First annual period ending after 15 December 2012, and interim and annual periods thereafter (private)

ASU 2011-05 — Presentation of Comprehensive Income (ASC 220) Fiscal years beginning after 15 December 20111 (public)

Fiscal years ending after 15 December 20122 (private)

ASU 2011-04 — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASC 820)

Periods beginning after 15 December 2011 (public)

Annual periods beginning after 15 December 2011 (private)

ASU 2011-03 — Reconsideration of Effective Control for Repurchase Agreements (ASC 860) Periods beginning on or after 15 December 2011 (public and private)

ASU 2011-02 — A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring (ASC 310) Periods beginning on or after 15 June 20114 (public)

Annual periods ending on or after 15 December 2012 including interim periods within those annual periods (private)

ASU 2010-28 — When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (EITF Issue 10-A; ASC 350)

Fiscal years beginning after 15 December 20101 (public)

Fiscal years beginning after 15 December 20111 (private)

Effective after 2012 (for calendar year-end companies)

ASU 2011-11 — Disclosures about Offsetting Assets and Liabilities (ASC 210) Annual reporting periods beginning on or after 1 January 2013 and interim periods within those annual periods (public and private)

ASU 2011-10 — Derecognition of in Substance Real Estate — a Scope Clarification (EITF Issue 10-E; ASC 360) Fiscal years beginning on or after 15 June 20121 (public)

Fiscal years ending after 15 December 20132 (private)

ASU 2011-06 — Fees Paid to the Federal Government by Health Insurers (EITF Issue 10-H; ASC 720) Calendar years beginning after 31 December 2013 (public and private)

1 Fiscal years and interim periods within those years 2 Fiscal years and interim and annual periods thereafter 3 The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after 15 December 2011. Early adoption is permitted, including for annual and interim

goodwill impairment tests performed as of a date before 15 September 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.

4 The disclosures required by paragraphs 310-10-50-33 through 50-34, which were deferred by ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, are effective for interim and annual periods beginning on or after 15 June 2011.

Effective date highlights

12 Financial reporting briefs Life sciences March 2012

To the Point • More work needed on revenue recognition (15 March 2012)

• Board weighing effects of putting leases on the balance sheet (1 March 2012)

• FASB tries to simplify impairment test for indefinite-lived intangibles (25 January 2012)

• PCAOB seeks comment on expanded audit committee communications (19 January 2012)

• Surprises lurk in the proposed revenue recognition model (5 January 2012)

• Reclassifications are deferred — for now (29 December 2011)

• Impairment — a major step toward convergence (22 December 2011)

• Offsetting of financial instruments — new disclosures (22 December 2011)

• Support grows for keeping US GAAP but basing future standards on IFRS (8 December 2011)

• Creditors may identify more loan modifications as troubled (5 April 2011)

Technical Line • Using the 2012 XBRL US GAAP taxonomy (15 March 2012)

• Changes in reporting comprehensive income (8 March 2012)

• Tax extenders have expired — again (9 February 2012)

• The revised revenue recognition proposal — life sciences (2 February 2012)

• How to avoid XBRL errors in certain registration statements (26 January 2012)

• Accounting for incentive payments for using electronic health records (12 January 2012)

• Aggregating milestone method disclosures may sometimes be appropriate (12 January 2012)

• The revised revenue recognition proposal — health care (12 January 2012)

• Double-exposure: The revised revenue recognition proposal (12 December 2011)

• Respondents to PCAOB overwhelmingly oppose mandatory audit firm rotation (5 January 2012)

• New troubled debt restructuring disclosures vary significantly (4 January 2012)

• Consolidation and investment company accounting could change (8 December 2011)

• How to use the new qualitative screen to test goodwill for impairment (17 November 2011)

• Fair value measurement — A closer look at the converged guidance (16 June 2011)

Financial reporting developments • Fair value measurement (January 2012)

• Bankruptcies and liquidations (December 2011)

• Foreign currency matters (December 2011)

• Intangibles — Goodwill and other (December 2011)

Archived webcasts • Eurozone contingency planning: risks and opportunities

(28 February 2012, Duration: 01:00)

• Domestic tax quarterly webcast series: a focus on federal tax matters (11 January 2012, Duration: 01:30)

Comment letters • Joint re-proposal on revenue recognition (13 March 2012)

• PCAOB proposal on communications with audit committees (29 February 2012)

• Proposed ASU on investment properties (15 February 2012)

• Proposed ASU related to consolidation: Principal vs. Agent analysis (15 February 2012)

• Proposed ASU related to investment companies (15 February 2012)

• FAF Proposal to establish Private Company Standards Improvement Council (6 January 2012)

• PCAOB concept release on auditor independence and audit firm rotation (18 November 2011)

Other • EITF Update — March 2012 meeting highlights (March 2012)

• Accounting pronouncements effective for the first quarter of 2012 (15 March 2012)

• Practical matters for the c-suite — To consolidate or not to consolidate — that is the question (28 February 2012)

• Proxy season 2012: board priorities for shareholder engagement (February 2012)

• Audit committee: leading practices and trends (February 2012)

• 2011 year-end issues audit committees should consider (February 2012)

• Practical matters for the c-suite — SEC reminder: management is responsible for the output provided by third-party pricing services (26 January 2012)

• 2011 Standard Setter Update (January 2012)

• BoardMatters Quarterly (January 2012)

• SEC in Focus (January 2012)

• Joint Project Watch: FASB/IASB joint projects from a US GAAP perspective (December 2011)

• Practical matters for the c-suite — Revenue recognition project: second time’s a charm? (21 December 2011)

• 2012 proxy statements — An overview of the requirements (November 2011)

Ernst & Young

Assurance | Tax | Transactions | Advisory

About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are

united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK

company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

© 2012 Ernst & Young LLP. All Rights Reserved.

SCORE no. BB2318

This publication has been carefully prepared but it necessarily contains information in summary form and is therefore intended for general guidance only; it is not intended to be a substitute for detailed research or the exercise of professional judgment. The information presented in this publication should not be construed as legal, tax, accounting, or any other professional advice or service. Ernst & Young LLP can accept no responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. You should consult with Ernst & Young LLP or other professional advisors familiar with your particular factual situation for advice concerning specific audit, tax or other matters before making any decision.

This and many of the publications produced by our US Professional Practice Group, are available free on AccountingLink at www.ey.com/us/accountinglink.

Reference library Click on any of the Ernst & Young publications below, all of which are available

free of charge on AccountingLink at http://www.ey.com/us/accountinglink.