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To help protect your privacy, PowerPoint has blocked automatic download of this picture.To help protect your privacy, PowerPoint has blocked automatic download of this picture.FERC Accounting and Reporting RequirementsJason Gambone, Director, Deloitte & Touche LLPJamie Saunders, Sr. Consultant, Deloitte & Touche LLPKelly Louque, Sr. Staff Accountant, Entergy CorporationMay 17, 2016

FERC OverviewAbout FERCFERC – Federal Energy Regulatory Commission– An independent agency that regulates the interstatetransmission of electricity, natural gas, and oil Provides regulation over rates for wholesale sales andtransmission of electricity in interstate commerce. Provides oversight of mandatory reliability standards forthe bulk power system. Promoters of strong national energy infrastructure,including adequate transmission facilities. Provides regulation of jurisdictional issuances of stock anddebt securities, assumptions of obligations and liabilities,and mergers.** FERC website – www.ferc.gov2Copyright 2015 Deloitte Development LLC All rights reserved.

FERC OverviewFederal Power ActKey Provisions: Section 203Section 203 regulates Corporate Activities and Transactions by public utilities such as: Mergers & Consolidations Sale, lease, or disposal of assets exceeding 10M Purchase and acquisition of securities exceeding 10M Purchase, lease, or acquire generation for interstate wholesale sales exceeding 10MFiling Process includes a comprehensive application by the jurisdictional public utilityinvolved in any of the covered Section 203 activities. This is supported by: Contracts Proposed accounting entries Agreements Additional documentation supporting the underlying transactionStakeholder Intervention Motion to Intervene – Under §385.214 Intervention (Rule 214), a stakeholder(s) has theright to intervene upon filing a notice or a motion to interveneFERC can accept, reject, set for settlement, or find the filing deficient.3Copyright 2015 Deloitte Development LLC All rights reserved.

FERC OverviewFederal Power ActKey Provisions: Section 203Key Considerations: Mergers & Other Section 203 transactions Mergers must be consistent with public interest; The FERC focuses on four factors: the effect on competition, the effect on rates, theeffect on regulation, and the ability for cross-subsidization (Order 707) Order reaffirmingcommission policy and termination proceeding RM11-14, RM96-6 Majority of filings contain a hold harmless provision which (Policy on hold harmlessPL15-3) :‒ Mitigates adverse effects on rates (does not allow transactional (transitional)costs through)‒ Clarifies controls & procedures to track and identify subjected costs‒ Commit to a hold harmless period (which is no longer a specific period (i.e., 5years) as of 2015)‒ Show cost savings based on executed transaction (if seeking recovery in lateryears)4Copyright 2015 Deloitte Development LLC All rights reserved.

FERC OverviewFederal Power ActKey Provisions: Section 205Section 205 requires rates on file. Jurisdictional public utilities must file all rates, terms, andconditions made, demanded, or received in connection with interstate transmission orwholesale electricity sales. These rates are provided through the filing of a tariff or schedules.Absent a waiver, rates must be filed at least 60 days before they become effective.Any rates charged for interstate transmission and wholesale sale of electricity must be on filewith the FERC. This filing should include: Rates Terms Conditions Additional documentation supporting proposed ratePublic Notice of Filing Issued – Providing time for responsesFERC can accept, reject, suspend, or find the filing deficient. It can also set the ratesfor settlement, trial type or oral hearing.5Copyright 2015 Deloitte Development LLC All rights reserved.

FERC OverviewFederal Power ActKey Provisions: Section 205 (cont’d)Key Considerations: Rates on File Rates are just and reasonable - A just and reasonable rate is cost justified and marketjustified Rates are not unduly discriminatory or preferential Filed rate doctrine – Rates on file are the rates charged Rates are subject to interest and refundsKey Provisions: Section 206Section 206 allows the FERC, after a hearing held upon its own motion or upon complaint bycustomer or competitor, may determine that an existing rate, term, or condition is not just orreasonable, unduly discriminatory or preferential, the FERC should determine the just andreasonable rate.No filing Process, the burden of proof lies with the FERC. Upon Commission review, thisprocess can result in refunds & interest up to 15 months.Key Considerations: Rates are just and reasonable Rates are not unduly discriminatory or preferential Filed rate doctrine Burden of proof on the Commission6Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingUSofA Numbering SystemThe account numbering plan used herein consists of a systemof three-digit whole numbers as follows:100-199 Assets and other debits200-299 Liabilities and other credits300-399 Plant Accounts400-432, 434-4357 Income Accounts440-459 Operating Revenue500-599900-949 Operation & Maintenance Customer accounts, customerservice and informational,sales, and general andadministrative expensesCopyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFinancial StatementsFERC reporting– Form 1 – Annual reporting of major electric utility Form 1f – Annual report of non-major electric utility– Form 2 – Annual reporting of major natural gas company Form 2a – Non-major Natural Gas Pipeline annual report– Form 60 - Annual Report of Centralized Service Companies– Form 3-Q - Quarterly Financial Report of Electric Utilities,Licensees, and Natural Gas CompaniesForm 1 and Form 2 have a due date of April 18, 2016Form 60 has a due date of May 1Form 3 Q have a due date of 60 days (Major) or 70 days (Non-major)after quarter end8Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC to U.S GAAP Accounting DifferencesExamples of common differences:– All Subsidiaries, regardless of ownership percentage orcontrol, are accounted for using the equity method– No distinction in FERC reporting between current and longterm classification for certain accounts such as debt,regulatory assets and regulatory liabilities– For FERC reporting, power purchase and sale transactionswith an RTO are netted based on hourly volumes; separatenetting for real time and day ahead markets (under GAAP,different units of account for netting are acceptable)9Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC to U.S GAAP Accounting DifferencesCommon differences (cont.)– Accumulated cost of removal is included in accumulateddepreciation for FERC reporting (classified as a regulatoryliability in SEC reporting)– Revenues and expenses from nonutility activities areclassified in the “below the line” accounts under FERCreporting (typically classified within operations underGAAP)– FERC allows reporting as regulatory assets incurred coststhat can be reasonably expected to be recovered (underGAAP, amounts must be probable of recovery)10Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC to U.S GAAP Accounting DifferencesCommon differences (cont.)– Income tax differences – Balance Sheet FERC reporting–Deferred income tax assets (account 190) anddeferred income tax liabilities (accounts 281, 282 and283) are presented gross US GAAP reporting–Deferred tax assets and liabilities are netted byjurisdiction and recorded as noncurrent deferred taxassets or liabilities, as appropriate.11Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC to U.S GAAP Accounting DifferencesCommon differences (cont.)– Income tax differences – Income statement For FERC reporting, income tax expense amounts areclassified in a variety of above the line and below theline accounts Below the line income tax expense or benefit applies tothe various pre tax revenue and expense amounts thatare classified below the line Best practice-prepare a separate effective tax rateanalysis for the above the line and below the lineaccounts12Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC to U.S GAAP Accounting DifferencesCommon differences (cont.)– Uncertain tax positions FERC Docket A107-2-000 (May 25, 2007) sets forthguidance Certain classifications that are required or permittedunder GAAP for uncertain tax positions (ASC 740-45)are not permitted under FERC reporting13Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC to U.S GAAP Accounting DifferencesCommon differences (cont.)– Uncertain tax positions Uncertain tax positions related to temporarydifferences must continue to be classified within thedeferred tax accounts under FERC reporting (theliability for uncertain tax benefits under GAAP maynot be combined with the deferred tax accounts) Interest must be charged to account 431 andpenalties must be charged to account 426.3 (underGAAP, an acceptable policy is to include interest andpenalties in income tax expense)14Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC reporting using XML Conversion of certain FERC forms (including Form 1 andForm 2) to XML– North American Energy Standards Board (NAESB) will developthe standards and protocols to report to FERC using XML Expected to take 2-4 years (informal goal to be ready for testing in2.5 years) Expressed desire for industry involvement, including testing in asandbox environment Companies will need to develop systems to export data to FERCusing XML‒ Multiple vendors interested in providing this service EEI/AGA task force to provide industry input and keep us informed Continued use of Visual Fox Pro until XML is ready15Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingAccountant Certification Code of Federal Regulations and Instructions for filing Form1, 1-F, 2 and 2-A require a CPA certification statement The certification should:– Attest to the conformity, in all material respects, of the financialstatements with the uniform system of accounts and publishedaccounting releases16Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingAccountant CertificationSchedules covered by CPA Certification: Comparative balance sheet Statement of income for the year (total with separatecolumns for electric, gas and other utility) Statement of retained earnings (for current year) Statement of cash flows (for current year) Notes to financial statementsNote that the Statement of Accumulated Comprehensive Income,Comprehensive Income and Hedging Activities (pages 122a and 122b ofForm 1) is not required to be audited17Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingAccountant Certification Most audit firm reports state that the audit of the financial statements wasconducted in accordance with auditing standards generally accepted in theUS (the AICPA auditing standards) The AICPA issued new reporting standards that changed the wording of thestandard auditors’ report effective for calendar year 2012 Many audit firm reports include an “emphasis of matter” paragraph (notingthat the uniform system of accounts is a basis of accounting other thanGAAP) and a report restriction paragraph The audit firm report must be submitted within 30 days of the Form 1 or 2due date Filers are encouraged to file the audit firm report electronically, although itcan be mailed18Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Accounting & ReportingFERC & EEI/AGA Annually, the EEI/AGA FERC Accounting Liaison Group meetswith the FERC Chief Accountant and his staff to discuss andexchange views on industry accounting issues– This group was created in 1965– Current Chair is Tom Mitchell from American Electric PowerServices Corporation– AGA participated for the first time in 2015– Meeting was held on August 12, 2015 in Washington, DC– Attended by 14 company representatives (13 companies)– Attended by 8 FERC staff, including Steven Hunt, Deputy ChiefAccountant19Copyright 2015 Deloitte Development LLC All rights reserved.

FERC Research ToolsFERC.gov & e-LibraryThe FERC.gov website provides access to resources regardingFERC accounting and reporting guidance– FERC.gov allows key word searches Examples of searches:– Annual Enforcement Report– Accounting Matters– Uniform System of Accounts– Landmark OrderseLibrary allows you to search by docket or group of dockets– Search by key words– Includes wildcard search capability under “General Search” Docket prefix defines the type of filing or document20Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementOrganization ChartNew Director, Larry Parkinson and Deputy Director, Lee Ann Watson* FERC website – www.ferc.gov24Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementAreas of FocusContinued areas of focus for FERC Staff include: Formula Rates - Specifically mentioned - are the balance sheet amounts properfor ratemaking (accruals, goodwill, fair value adjustments)– Short-term recurring accruals are not a concern– Long-term accruals may be excluded from formula rates (not consideredfor ratemaking purposes or for those with market based rates) Examples: contract retentions, legal reserves, contingencies Tax Prepayments – Recording of income tax payments in which a refund hasbeen elected in Account 165, Prepayments, resulting in over-recoveries. Mergers & Acquisitions– Goodwill– Internal Merger Costs– Policy on Hold Harmless (PL15-3) Allocated Labor – Inappropriate or unsupported allocation of labor costs betweentransmission and distribution projects when an employee supported both.26Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementAreas of FocusContinued areas of focus for FERC Staff include: Plant Classification – Distribution plant placed into service without appropriatepolicies and controls being utilized to ensure project costs are properly classified. Regulatory Assets – Need to be supported Service Company Allocations – Allocation methodologies need to be supported Natural Gas Accounting & Reporting– Erroneous Accounting and reporting‒ Penalty revenues assessed to noncompliant shippers, transmission mains andcompression station expenses, line pack inventory changes, shipper imbalances andcash-outs, lost and unaccounted-for gas, gains from the sale of cushion gas Tariff Issues27Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementAudit Determination & SelectionCompanies are selected for audit using a risk based assessment based onthe Commission’s strategic plan areas of focus FERC staff does not target a particular company Audit plan is approved by the Chair of the CommissionCulture of compliance assessment by the FERC staff Drives the audit procedures and level of testing Recommended Internal Audit (IA) involvement regardingcompliance with FERC regulations– Normally see involvement with GAAP reporting but not FERC– Examples where IA can be involved were development offormula rates, compliance with hold harmless commitments,merger reviews, and Order 1000 commitmentsNecessary part of regulation28Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Office of EnforcementAudit Determination & SelectionSignificantEventsRelevantRisks facingthe nmentConsultswith otheroffices withFERCIndustry Outreach29Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementPreparing for an AuditA few recommended tips: Provide concise responses to every data request on key areas Request rolling submission of responses if tight deadline Request site visit agenda/topic areas in advance for preparation Provide overviews through conference calls of areas that aren’t as critical Research Orders, filings, and guidance relevant to the scope area(s) Ensure accounting practices are understood (ratemaking and/or acctg,retail or wholesale) Provide copies of overview materials Provide an open flow of communication Ask for clarification on topics, issues, areas of audit Provide observations and walk-throughs of systems supporting audit scopeCopyright 2015 Deloitte Development LLC All rights reserved.30 areas

FERC - Office of EnforcementDivision of Audits & AccountingThere were 22 audits completed in 2015Legend: MBR market based rates; EQR electronic quarterly reporting; FR formula rates;OATT open access transmission tariff; NDT nuclear decommissioning trust; Acct/Rpt accounting & reporting; DR Demand Response; RR record retention; M mergerSearch by docket number at www.ferc.gov/docs-filing/elibrary.asp31Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementDivision of Audits & AccountingAs of April 2016, there were 13 audits commenced for FY16:Legend: MBR market based rates; EQR electronic quarterly reporting; FR formula rates; OATT open access transmission tariff; NDT nucleardecommissioning trust; Acct/Rpt accounting & reporting; DR Demand Response;RR record retention; M mergerSearch by docket number at www.ferc.gov/docs-filing/elibrary.asp32Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementDivision of Audits & Accounting Included in 2015 Report on Enforcement compliance alert section– A&G – included nonoperational expenses and maintenance expenses– Merger goodwill – included in the equity component of the capitalstructure– Depreciation rates – using state approved or blended rates without FERCapproval– Merger costs – including any merger-related costs– Tax prepayments – overpayments recorded as prepayments– Unused inventory and equipment – remove unused items fromconstruction projects– Allocated labor – need current time studies– ARO – need specific FERC approval to include costs in formula rates– Below-the-line costs – instances of lobbying, donations, penalties, andcompromise settlements being charged above-the-line– Plant Classification – distribution plant included in transmission plant34Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementDivision of Audits & Accounting Key Orders and Guidance related to findings:– Acquisition Premiums/Goodwill‒ Order 592, Commission Policy on Mergers‒ AC11-46– Depreciation rates‒ Order 618, Depreciation Accounting‒ Section 302(a) of FPA‒ 18 C.F.R. § 35.1(e)– Merger costs‒ PL15-3, Policy Statement on Hold Harmless Commitment‒ Below-the-line in Account 426.5, Other Deductions‒ General Instruction No. 5, Submittal of Questions– Tax prepayments‒ 2015 Report on Enforcement, Account 143 or 146, as appropriate‒ Account 236, Taxes Accrued35Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementDivision of Audits & Accounting– Consolidated Method of Accounting‒ Order 469, Adopt Equity Method of Accounting‒ Account 123.1, Investment in Subsidiary Companies– Asset Retirement Obligations‒ Order 631, Accounting, Financial Reporting, and Rate Filing Requirementsfor AROs– Formula Rates‒ Staff’s Guidance on Formula Rates– Regulatory Assets & Liabilities‒ Order 552, Revisions to the USoA .Regulatory created Assets andLiabilities– Deferred Tax Liabilities associated with AFUDC Equity‒ AI93-5, Accounting for Income Taxes– Gas Imbalances (not reported net)‒ Order 581, Revisions of USoA .Reporting Requirements for Natural Gas‒ Account 174, Miscellaneous Current and Accrued Assets (Receivables)‒ Account 242, Miscellaneous Current and Accrued Liabilities (Payables)36Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementRecent Audit Activity Docket No. PA14-2– Scope: formula rates, accounting and reporting– Key Findings:‒ Accounting for Merger Transaction Costs‒ Merger Transaction Internal Labor Costs‒ Merger Transaction Outside Services and Related Costs‒ Use of the Consolidated Method of Accounting37– Pertinent Guidance:‒ Account 426.5, Other Deductions‒ Order No. 469 states, in part, Under the equity method of accounting, the utility’sinvestment account is increased or decreased to reflect the utility’s proportionateshare of a subsidiary’s current earnings applicable to common stock regardless ofwhether the earnings are actually paid out as dividends to the utility. When dividendsare received, the investment account is reduced by an equivalent amount.‒ Account No. 123.1, Investments in Subsidiary CompaniesB. This account shall be maintained in such a manner as to show separately for eachsubsidiary: the cost of such investments in the securities of the subsidiary at the timeof acquisition; the amount of equity in the subsidiary's undistributed net earnings ornet losses since acquisition; advances or loans to such subsidiary; and fullparticulars regarding any such investments thatare pledged.Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementRecent Audit Activity Docket No. FA15-1– Scope: FERC gas tariff, accounting regulations in the USofA, Form 2 reportingrequirements, compliance review program– Key Findings:‒ Accounting for Imbalances‒ Accounting and reporting accruals and third-party reimbursements‒ Accounting and reporting of ADIT‒ Accounting and reporting accrued taxes– Pertinent Guidance:‒ Order No. 581 explained that pipelines should record a receivable and payable for allcustomer gas that is used to meet imbalances to reflect their right to receive gasfrom one shipper and their obligation to provide gas to another shipper.‒ Account 252, Customer Advances for Construction, states: This account shall includeadvances by customers for construction which are to be refunded either wholly or inpart. When a customer is refunded the entire amount to which he is entitled,according to the agreement or rule under which the advance was made, the balance,if any, remaining in this account shall be credited to the respective plant account.38Copyright 2015 Deloitte Development LLC All rights reserved.

FERC - Office of EnforcementRecent Audit Activity Docket No. FA15-1 continued,– Pertinent Guidance‒ Accounting for Income Taxes, Docket No. AI93-5-000 states: An entity shall recordthe deferred tax liability for the equity component of AFUDC in Account 282,Accumulated Deferred Income Taxes Other Property, and any correspondingregulatory asset in Account 182.3, Other Regulatory Assets. The regulatory asset isitself a temporary difference for which deferred incomes taxes shall be recognizedand recorded in Account 283, Accumulated Deferred Income Taxes Other.‒ Accrued Taxes: Destin did not make any offsetting entries to remove the accruedincome taxes in Account 236, which resulted in a cumulative balance reported inAccount 236 since 2005. Destin must adjust the Account 236 balances to reflect thecorrect accrued taxes and credit the excess amount to Account 211, MiscellaneousPaid-In Capital, taking into consideration the estimated and final income taxpayments made by its member companies. Docket No. FA15-14– Scope: merger, accounting and reporting– Key Findings:‒ Accounting for Merger Transaction Costs– Pertinent Guidance‒ Account 426.5, Other Deductions39Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestOther Topics Addressed by FERC: RTO filings – changes in accounting policies or corrections– Encourage dialogue with customers in formula rate updates withrespect to new GAAP and correction of any errors Proposed policy statement on hold harmless commitments– Issued in January 2015– EEI and 8 others filed comments in March 2015– Most significant issue is making commitments unlimited induration40Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestPensions and Other Postretirement Benefit Costs Exposure Draft released in January 2016– Improving thePresentation of Net Periodic Pension Cost and Net PeriodicPostretirement Benefit Cost– Proposed changes Service cost presented as an operating expense Remaining components presented in a separate non-operating itemin the income statement Only the service cost component would be eligible for capitalization– EEI/AGA Comment Letter– May result in complex tracking of amounts capitalized forregulatory accounting vs GAAP Would differences be classified as regulatory assets and liabilities?41Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestLease ASU 2016-02 All leases will be presented on the balance sheet Straight-line expense for former operating leases Effective for years ending after 12/15/18 Modified retrospective adoption to first balance sheetpresented What FERC account will be utilized for the “right of use”asset for operating leases that are currently off-balancesheet?42Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestDiscontinued Operations Discussed recently issued guidance by FASB and potentialimpact on FERC accounting and reporting– ASU 2014-08 – Reporting Discontinued Operations andDisclosure of Components of an Entity Disposal of an entity or a group of components of an entityrequired to be reported as discontinued operations if thedisposal represents a strategic shift that has (or will have) amajor effect on an entity’s operations and financial results(whether held for sale, sold, or disposed of other than sale,such as an abandonment or in a distribution to owners in aspinoff) No impact on FERC reporting since FERC has nopresentation of discontinued operations on the FERCIncome Statement43Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestRevenue from contracts with customers ASU 2014-09 – Revenue from Contracts with Customers– Overall, we do not expect significant accounting impacts on theindustry from applying the ASU, but given its principles-basedrequirements and the elimination of industry-specific guidance, we areworking diligently to identify and address any potential issues.– Potential issues include contract modifications, price and volumevariability contracts, contributions in aid of construction, andpresentation of operating revenue.– Open question not discussed with FERC Staff: FERC formula raterevenue recognition AICPA industry task force is currently evaluating Is the alternative revenue program:– All amounts billed to customers under formula rates– Only the true-up amount44Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestExtraordinary and Unusual Items ASU 2015-01 – Extraordinary and Unusual Items– Eliminates the concept of extraordinary items for presentation onthe face of the income statement.– Potential additional FERC vs. GAAP difference unless FERCdecides to revise the USofA to eliminate Accounts 434, 435, and409.3.– We understand FERC staff observed that there may beinstances where FERC may require the continued use of theextraordinary items accounts depending on the nature of thetransaction.45Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestPresentation of Debt Issuance Costs ASU 2015-03 – Presentation of Debt Issuance Costs– Present debt issuance costs on the balance sheet as a directdeduction from the carrying amount of the debt liability,consistent with discounts.– Will result in another FERC vs. GAAP difference.– FERC Account 181 is presented as a deferred asset on theFERC balance sheet.– Account 181 should continue to be used to avoid understatingthe long term debt balances used to determine debt/equityweighting.46Copyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestCloud Computing Arrangements ASU 2015-5 Fees Paid in a Cloud Computing ArrangementThe guidance in this Subtopic applies only to internaluse software that a customer obtains access to in ahosting arrangement if both of the following criteria aremet:a.b.47The customer has the contractual right to take possession of thesoftware at any time during the hosting period without significantpenaltyIt is feasible for the customer to either run the software on its ownhardware or contract with another party unrelated to the vendor tohost the softwareCopyright 2015 Deloitte Development LLC All rights reserved.

FERC – Relevant TopicsAdditional Topics of InterestCloud Computing Arrangements ASU