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News

FASB meeting Image

Highlights of the FASB’s July 17 meeting

Jul 19, 2019

At its July 17, 2019, meeting, the FASB discussed (1) reference rate reform; (2) effective date considerations for private companies, not-for-profit organizations, and small public companies; (3) the lessor’s accounting for operating lease receivables under ASC 842, “Leases”; and (4) implementation of the contract combination guidance in ASC 606, “Revenue From Contracts With Customers,” by colleges and universities.

Ref­er­ence rate reform

The Board made tentative decisions about reference rate reform, specifically facilitation of the effects of the transition away from interbank offered rates to alternative reference rates. Specific topics discussed included (1) hedge accounting relief related to the effects of reference rate reform and (2) the transition method, disclosures, relief period, comment period, and cost-benefit analysis related to future proposed guidance on this subject. The Board di­rected its staff to begin draft­ing a pro­posed ASU for a vote by written ballot.

For more in­for­ma­tion, see the ten­ta­tive Board decisions on the FASB’s Web site.

Effective date considerations for private companies, not-for-profit organizations, and small public companies

The Board tentatively decided to amend how the effective dates of major standards are staggered for certain entities, including private companies, not-for-profit organizations, and small public companies. Specifically, the FASB decided to give such entities implementation relief by delaying the effective dates of its standards on credit losses, derivatives and hedging, leases, and insurance for two years after the effective dates for SEC filers (excluding smaller reporting companies, as defined by the SEC). The Board di­rected its staff to begin draft­ing two proposed ASUs that incorporate its decisions on the effective dates: one for the credit losses, derivatives and hedging, and leasing standards and one for the insurance standard.

For more in­for­ma­tion, see Deloitte’s July 18, 2019, Heads Up as well as the tentative Board decisions on the FASB’s Web site.

Leasing implementation issue

The Board discussed the accounting for impairment of operating lease receivables and affirmed the FASB staff’s view that two methods of accounting for the impairment of operating lease receivables are acceptable.

For more in­for­ma­tion, see Deloitte’s related journal entry as well as the tentative Board decisions on the FASB’s Web site.

Revenue implementation issue for colleges and universities

The Board dis­cussed an implementation issue under ASC 606, Revenue From Contracts With Customers, with respect to the combination of tuition and housing contracts provided by colleges and universities.

For more in­for­ma­tion, see the tentative Board decisions on the FASB’s Web site.

FASB document Image

FASB staff issues Q&As on expected credit losses

Jul 18, 2019

The FASB staff has issued a Q&A document, “Topic 326, No. 2: Developing an Estimate of Expected Credit Losses on Financial Assets.”

The Q&As address the following topics:

  • “Use of historical loss information.”
  • “Making reasonable and supportable forecasts.”
  • “The reversion to historical loss information.”

For more in­for­ma­tion, see the press release and Q&A document on the FASB’s Web site.

IASB document Image

IASB publishes proposed amendments to IAS 12

Jul 17, 2019

The IASB has published an exposure draft (ED), “Deferred Tax Related to Assets and Liabilities Arising From a Single Transaction — proposed amendments to IAS 12.”

Under the proposed amendments, the initial recognition exemption would not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition and result in the recognition of deferred tax assets and liabilities in the same amount.

Comments on the ED are due by November 14, 2019. For more information, see the press release, ED, and In Brief overview on the IASB’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC and NASAA issue statement on the application of securities laws to opportunity zone investments

Jul 16, 2019

The SEC and North American Securities Administrators Association (NASAA) have issued a joint statement, “Staff Statement on Opportunity Zones: Federal and State Securities Laws Considerations.”

The opportunity zone program, which was established by the Tax Cuts and Jobs Act, provides “tax incentives for long-term investing in designated economically distressed communities.” The purpose of the statement is to “help participants in the opportunity zone program understand the compliance implications for qualified opportunity funds under federal and state securities laws.”

For more information, see the press release and statement on the SEC’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC issues statement on LIBOR transition

Jul 12, 2019

The SEC has issued a statement regarding the expected discontinuation of LIBOR after 2021 and how market participants can manage their transition from LIBOR by evaluating existing contracts, new contracts, and other business risks.

In addition, the statement details guidance from the Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets, as well as from the Office of the Chief Accountant, on the discontinuation of LIBOR and how registrants can respond to the risks.

For more information, see the press release and statement on the SEC’s Web site.

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PCAOB issues resources on critical audit matters for audit committees and investors

Jul 12, 2019

The PCAOB has issued resources on critical audit matters (CAMs) for investors and audit committees.

The resource for investors addresses changes to the auditor’s report; frequently asked questions about CAMs; and the implementation of PCAOB Auditing Standard 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion.

The resource for audit committees contains information on working with auditors to apply the new CAM requirements.

CAQ document Image

CAQ issues discussion document on monitoring inflation

Jul 12, 2019

The Center for Audit Quality (CAQ) International Practices Task Force (IPTF) has issued a discussion document, “Monitoring Inflation in Certain Countries.”

The dis­cus­sion doc­u­ment addresses the IPTF’s “frame­work for com­pil­ing in­fla­tion data to assist reg­is­trants in mon­i­tor­ing in­fla­tion sta­tis­tics in con­nec­tion with their de­ter­mi­na­tion of the in­fla­tion­ary status of coun­tries in which they have op­er­a­tions.”

For more in­for­ma­tion, see the discussion document on the CAQ’s Web site.

CAQ document Image

CAQ issues publication on critical audit matters

Jul 12, 2019

The CAQ has issued “Investor Relations: Get Up to Speed Now on Critical Audit Matters.”

The publication is intended to help investor relations groups communicate with investors regarding critical audit matters (CAMs), since communications about CAMs will need to be included in auditors’ reports starting in the summer of 2019.

For more information, see the publication on the CAQ’s Web site.

AICPA document Image

AICPA issues SAS 136 and SAS 137

Jul 10, 2019

The AICPA’s Auditing Standards Board has published two Statements on Auditing Standards (SASs): No. 136, “Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA,” and No. 137, “The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports.”

SAS 136 “addresses the auditor’s responsibility to form an opinion on the financial statements of employee benefit plans (EBPs) subject to the Employee Retirement Income Security Act of 1974 (ERISA), hereinafter referred to as ERISA plans. It also addresses the form and content of the auditor’s report issued as a result of an audit of ERISA plan financial statements.”

SAS 137 “addresses the auditor’s responsibilities relating to other information, whether financial or nonfinancial information (other than financial statements and the auditor’s report thereon), included in an entity’s annual report.”

For more in­for­ma­tion, see the press release on the AICPA’s Web site.

SEC document Image

SEC and other organizations issue guidance to exclude community banks from the scope of the Volcker Rule

Jul 10, 2019

The SEC and several other government agencies — including the Federal Reserve Board, CFTC, FDIC, and OCC — have jointly issued a final rule, “Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds,” in response to amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Under the final rule, “community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5 percent or less of total consolidated assets” are excluded from the scope of the Volcker Rule. In addition, the final rule permits certain hedge funds or private equity funds to “share the same name or a variation of the same name with an investment adviser as long as the adviser is not an insured depository institution, a company that controls an insured depository institution, or a bank holding company.”

For more in­for­ma­tion, see the press release and final rule on the SEC’s Web site.

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