October 2022

AcSOC Announces New AcSB Chair

Oct 13, 2022

On October 13, 2022, the Accounting Standards Oversight Council (AcSOC) announced that Armand Capisciolto, FCPA, FCA, current interim Accounting Standards Board (AcSB) Chair, will be appointed as permanent Chair effective May 1, 2023.

Review the press release on the AcSB's website.

Audit Quality and Investor Protection under the Holding Foreign Companies Accountable Act

Oct 26, 2022

The Securities and Exchange Commission (SEC) published a statement by acting chief accountant Paul Munter regarding audit quality and investor protection under the Holding Foreign Companies Accountable Act.

In light of uncertainty involving the PCAOB's recent agreement with Chinese authorities, certain China- and Hong Kong-based issuers may be attempting to structure audit engagements with registered public accounting firms located either in the U.S. or elsewhere to avoid the potential of consecutive PCAOB HFCAA determinations and a potential resultant trading prohibition.

Review the statement on the SEC's website.

FASB Begins Deliberating Project on Digital Assets

Oct 07, 2022

At its August 31, 2022 meeting, the FASB began deliberating its project on the accounting for and disclosure of digital assets. The accounting for crypto assets, including potential measurement alternatives for such assets, will be discussed at a future Board meeting.

Specifically, the Board tentatively decided that a digital asset held by an entity that meets all the following criteria would be within the scope of the project:

  • it meets the U.S. GAAP definition of an intangible asset.
  • the holder is not provided with enforceable rights to, or claims on, goods, services, or other assets.
  • the asset resides on a blockchain or other distributed ledger.
  • it is secured by cryptography.
  • it is fungible.

The Board also tentatively decided that the scope of the project would apply to all entities. However, the Board acknowledged that it may need to address industry-specific issues in the future. Given its decision to limit the scope of the project to certain digital assets, the Board decided to change the name of the project to the “Accounting for and Disclosure of Crypto Assets.”

Re­view the Deloitte Heads Up for further details.

FASB says fair-value accounting best captures the economics of crypto assets

Oct 18, 2022

On October 10-11, 2022, the Financial Accounting Standards Board (FASB) and the Accounting Standards Board of Japan (ASBJ) held a joint meeting in Norwalk. The meeting was the 31st in a series of biannual meetings between the two standard setters.

The two boards informed each other about their respective activities and exchanged views on technical topics in which they both have an interest, including accounting for goodwill, accounting for crypto-assets, and the boundary of financial reporting.

At this meeting, Chair Richard R. Jones noted that, as having identified by their respective stakeholders, "crypto assets and financial instruments," were of top priority.

On the heels of this meeting, the FASB announced on Wednesday, that companies should use fair-value accounting for measuring bitcoin and other crypto assets. In the absence of specific accounting or disclosure rules for cryptocurrency assets, this method will allow companies to recognize losses and gains immediately. Inching one step closer towards clearing up uncertainty over reporting how much such holdings are worth.

The next meeting between the FASB and ASBJ is expected to be held in the first half of 2023.

Review the press release on the FASB's website.

IASB announces webinars on primary financial statements project

Oct 04, 2022

On October 14, 2022, the International Accounting Standards Board (IASB) will hold two virtual webinars on the latest updates to the primary financial statements project. The webinars will be conducted by IASB technical staff members Aida Vatrenjak, Roanne Hasegawa, Juliane-Rebecca Upmeier and Nick Barlow and discuss the main proposals in the IASB’s exposure draft "General Presentation and Disclosures" and key decisions made during redeliberation up to September 2022.

In addition, the project team, IASB members and ASAF members will be holding outreach meeting during October and November to obtain feedback to determine whether certain proposals are working as intended.

The two webinar will be at 9:00 and 15:00 BST.

Review the press release on the IASB’s website.

IASB concludes webcast series on dynamic risk management

Oct 14, 2022

On October 14, 2022, the International Accounting Standards Board (IASB) technical staff released its final webcast in a series of eight webcasts it produced on its dynamic risk management (DRM) project.

The first webcast provided an overview of the project. The next six webcasts focused on elements of DRM. The final webcast released today uses a simplified example to illustrate how the DRM model is expected to work in practice, and how different elements explained in the previous webcasts link together.

Access all webcasts released so far on the IASB's website.

IASB finalizes amendments to IAS 1 regarding the classification of debt with covenants

Oct 31, 2022

On October 31, 2022, the International Accounting Standards Board (IASB) published "Non-current Liabilities with Covenants (Amendments to IAS 1)" to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments are effective for reporting periods beginning on or after January 1, 2024.

 

Background

In January 2020, the Board issued Classification of Liabilities as Current or Non-current, which amended IAS 1, Presentation of Financial Statements. The amendments clarified how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances. The amendments are effective for annual reporting periods beginning on or after January 1, 2023, with earlier application permitted.

In December 2020, the IFRS Interpretations Committee published a tentative agenda decision in response to informal feedback and enquiries about how an entity applies the amendments to particular fact patterns. After considering feedback to its tentative agenda decision, the Committee handed the matter over to the IASB as that feedback provided information about situations the Board did not specifically consider when developing the 2020 amendments.

In response to that new information, the Board decided to amend IAS 1 with respect to classification (as current or non-current), presentation and disclosures of liabilities for which an entity’s right to defer settlement for at least 12 months is subject to the entity complying with conditions after the reporting period.

A corresponding exposure draft was published in November 2021. After deliberating the feedback received, the IASB has now finalised the proposed amendments.

 

Key changes

The amendments in Non-current Liabilities with Covenants (Amendments to IAS 1)

  • Modify the requirements introduced by Classification of Liabilities as Current or Non-current on how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances: Only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months.
  • Defer the effective date of the 2020 amendments to January 1, 2024.

Three proposals the IASB included in its November 2021 exposure draft were not finalised:

  • the requirement that an entity has to present non-current liabilities with covenants separately in the statement of financial position;
  • the requirement that an entity has to disclose whether and, if so, how it expected to comply with covenants after the reporting date; and
  • the clarifications of some situations in which an entity would not have a right to defer settlement of a liability.

Feedback on the exposure draft in these cases led the IASB to conclude that the proposed amendments were not needed, too costly, or would fail to achieve their objective.

 

Effective date

The amendments are effective for reporting periods beginning on or after January 1, 2024. The amendments are applied retrospectively in accordance with IAS 8 and earlier application is permitted.

 

Additional information

Review the press release on the IASB's website.

IASB webcast series on dynamic risk management

Oct 10, 2022

On October 10, 2022, the International Accounting Standards Board (IASB) technical staff announced a series of eight webcasts on its dynamic risk management (DRM) project, which are being released in batches.

The first webcast provided an overview of the project. Now another six webcasts have been released that focus on elements of DRM. They explain:

  • Risk management strategy and target profile (webcast 2)
  • Current net open risk position (webcast 3)
  • Risk mitigation intention and benchmark derivatives (webcast 4)
  • Designated derivatives (webcast 5)
  • Retrospective assessment and unexpected changes (webcast 6)
  • Measurement of the DRM adjustment (webcast 7)

Review the press release and access all webcasts released so far on the IASB's website.

SEC Adopts Compensation Recovery Listing Standards and Disclosure Rules

Nov 04, 2022

In October 2022, the Securities and Exchange Commission (SEC) adopted rules to require securities exchanges to adopt listing standards that require issuers to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers.

The final rules require a listed issuer to file the policy as an exhibit to its annual report and to include disclosures related to its recovery policy and recovery analysis where a recovery is triggered. The Commission proposed compensation recovery rules in 2015 and reopened the comment period on the proposal in October 2021 and again in June 2022.

Review the press release on the SEC's website.

The Auditor’s Responsibility for Fraud Detection

Oct 19, 2022

In October, the Securities and Exchange Commission (SEC) released this speech by Paul Munter, Acting Chief Accountant.

In this Statement, they (1) discuss the auditor’s responsibilities with respect to fraud, including observations of some auditor shortcomings; (2) highlight how the auditor’s responsibilities are incorporated currently in the PCAOB standards, including the PCAOB’s quality control standards; and (3) provide reminders on good practices.

Review the full speech on the SEC's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.