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PCAOB staff issues guidance on communications with audit committees concerning independence

Jun 07, 2019

The PCAOB staff has issued guidance related to PCAOB Rule 3526, “Communication With Audit Committees Concerning Independence.”

The staff guidance provides (1) an overview of Rule 3526(b), including background information; (2) the reasoning behind the need for this guidance; and (3) “specific direction to registered public accounting firms on how to comply with their Rule 3526(b) obligations” under certain circumstances.

For more information, see the staff guidance on the PCAOB’s Web site.

FASB staff issues Q&As on the application of the limited discretion indicator and cost-sharing provisions for not-for-profit entities

Jun 07, 2019

The FASB staff has issued a Q&A document, “Subtopic 958-605: Application of the Limited Discretion Indicator and Accounting for Cost-Sharing Provisions in a Grant Agreement.”

The Q&As discuss how the limited discretion indicator should be “applied when determining whether a budget and related stipulations within a grant agreement are deemed to be a barrier to entitlement”; how an entity should “determine whether a cost-sharing provision in an agreement is a barrier to entitlement”; and whether “cost-sharing provisions in an agreement [should] be analogized to matching provisions when determining how to account for the timing and pattern of revenue recognition.”

For more information, see the staff Q&A on the FASB’s Web site.

SEC issues guidance related to retail investors’ relationships with financial professionals

Jun 05, 2019

The SEC has adopted a package of rules, forms, and interpretations to improve retail investors’ relationships with broker-dealers and investment advisers.

The package includes:

  • “Regulation Best Interest” — Establishes a “new standard of conduct specifically for broker-dealers that substantially enhances the broker-dealer standard of conduct beyond existing suitability obligations.”
  • Form CRS Relationship Summary — Requires investment advisers and broker-dealers “to deliver a relationship summary to retail investors at the beginning of their relationship.”
  • Investment adviser interpretation — Reaffirms and clarifies “the Commission’s views of the fiduciary duty that investment advisers owe to their clients under the Advisers Act.”
  • “Solely incidental” interpretation — Confirms and clarifies that a “broker-dealer’s advice as to the value and characteristics of securities or as to the advisability of transacting in securities falls within the ‘solely incidental’ prong of this exclusion if the advice is provided in connection with and is reasonably related to the broker-dealer’s primary business of effecting securities transactions.”

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

AICPA proposes amendments related to the definition of materiality

Jun 05, 2019

The AICPA’s Auditing Standards Board (ASB) has issued an exposure draft (ED) of a proposed Statement on Auditing Standards (SAS) and a proposed Statement on Standards for Attestation Engagements (SSAE) that would “align the materiality concepts discussed in AICPA Professional Standards with the definition of materiality used by the U.S. judicial system, the auditing standards of the PCAOB, the U.S. Securities and Exchange Commission (SEC), and the Financial Accounting Standards Board.”

Comments on the proposed SAS and proposed SSAE are due by August 5, 2019. For more information, see the ED on the AICPA’s Web site.

GASB revamps procedures related to collecting implementation information

Jun 05, 2019

The GASB has announced that it is “revamping its procedures for collecting implementation information — by starting the process before major new standards have been implemented and continuing through the first and second years of applying the standards.”

These implementation efforts will begin with the collection of information about the following four GASB Statements:

  • Statement 72, Fair Value Measurement and Application.
  • Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.
  • Statement 84, Fiduciary Activities.
  • Statement 87, Leases.

In addition to selecting a random group of governments to participate in surveys related to all four Statements, the GASB is seeking volunteers to work on the new procedures associated with Statements 84 and 87.

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

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