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AICPA issues practice aid on audit considerations related to credit losses

Sep 13, 2019

The AICPA has issued a practice aid, “Allowance for Credit Losses — Audit Considerations.”

The practice aid addresses “key considerations in auditing the allowance for credit losses (ACL) related to loans under [ASC] 326-20 and disclosure considerations.” Specific topics covered include “obtaining an understanding of the entity, assessing the risks, identifying the controls relevant to the audit, designing an audit response, performing audit procedures, and evaluating the audit results.”

FASB revises proposal on simplifying the balance sheet classification of debt

Sep 12, 2019

The FASB has issued a revised version of its proposed Accounting Standards Update (ASU) “Simplifying the Classification of Debt in a Classified Balance Sheet (Current Versus Noncurrent).”

The proposed ASU “would introduce a principle for determining whether debt or other instruments within the scope of the proposed amendments would be classified as a noncurrent liability as of the balance sheet date.” The proposal is part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the cost and complexity of certain aspects of GAAP for financial statement users).

The proposed ASU is a revised version of the FASB’s January 2017 exposure draft (ED). The press release on the proposal notes the following regarding the changes the FASB made to the guidance in the original ED:

Much of the guidance in this revised proposal is similar to the original 2017 proposal on which the Board has received extensive feedback. Based on input received from stakeholders — including the Private Company Council — the Board added proposed requirements related to unused long-term financing arrangements, such as a line of credit, and grace periods. The revised proposal reflects and seeks comments on these changes, as well as the expected costs and expected benefits of the proposed amendments. [Emphasis added]

Comments on the proposed ASU are due by October 28, 2019.

SEC proposes amendments to the CAT NMS plan

Sep 11, 2019

The SEC has issued a proposed rule, “Proposed Amendments to the National Market System Plan Governing the Consolidated Audit Trail,” known as the “CAT NMS Plan.”

The proposed rule would “impose public transparency requirements on the self-regulatory organizations that are participants to the CAT NMS Plan.” Specifically, participants “would be required to file with the Commission and publish a complete implementation plan for the [CAT] and quarterly progress reports, each of which must be approved by a supermajority vote of the Operating Committee of CAT NMS, LLC.”

Comments on the proposed rule are due 45 days after the date of its publication in the Federal Register. For more information, see the press release on the SEC’s Web site.

FASB staff proposes improvements to SEC Reporting Taxonomy

Sep 09, 2019

The FASB staff has proposed technical and other conforming improvements to the 2020 SEC Reporting Taxonomy.

The proposal would modify standard and documentation labels and would introduce eight “new elements that were proposed based on a topical review for accounting changes and error corrections for which the underlying recognition and measurement are not specified by GAAP but are used by GAAP filers.”

Com­ments on the pro­posed SEC tax­on­omy im­prove­ments are due by November 8, 2019. For more in­for­ma­tion, see the release notes on the FASB’s Web site.

SEC posts drafts of EDGAR Filer Manual for upcoming EDGAR release

Sep 09, 2019

The SEC has issued drafts of Volume I, II, and certain technical specifications related to its Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual for upcoming EDGAR Release 19.3.

The new release is sched­uled for im­ple­men­ta­tion on September 30, 2019. The drafts have not been ap­proved by the Com­mis­sion and are subject to change. The final version of the EDGAR Filer Manual will be posted on the SEC’s Web site once it has been ap­proved.

For more in­for­ma­tion, see the fol­low­ing on the SEC’s Web site:

FASB proposes guidance related to effects of reference rate reform

Sep 05, 2019

The FASB has issued a proposed Accounting Standards Update (ASU), “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.”

The proposed ASU would provide temporary, optional expedients and exceptions related to applying U.S. GAAP to contract modifications, hedging relationships, fair value hedges, and other transactions affected by reference rate reform. The purpose of the proposal is to “ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting.” However, the proposed amendments would “apply only to contracts or hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.”

Comments on the proposed ASU are due by October 7, 2019. For more information, see the press release and FASB in Focus newsletter on the FASB’s Web site.

FASB discusses income taxes

Sep 05, 2019

At its September 4, 2019, meeting, the FASB discussed its project on simplifying the accounting for income taxes.

The Board discussed comments received on its May 2019 proposed ASU, Simplifying the Accounting for Income Taxes, and made decisions related to (1) redeliberation issues, (2) transition and effective date, and (3) analysis of costs and benefits. The Board directed its staff to begin drafting a final ASU for a vote by written ballot.

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

FASB and ASBJ hold biannual meeting

Aug 30, 2019

On August 29–30, 2019, the FASB met with the Accounting Standards Board of Japan (ASBJ) in Norwalk, Connecticut. The meeting is the 26th in a series of biannual meetings the two standard setters hold to further their “cooperative efforts to develop high-quality global accounting standards.”

In ad­di­tion to giving updates on their re­spec­tive stan­dard-set­ting ac­tiv­i­ties at the meeting, the two boards ex­changed views on tech­ni­cal topics in which they both have an in­ter­est, in­clud­ing accounting for goodwill and intangibles, reference rate reform, accounting for leases, and financial performance reporting and disclosures.

The next meeting between the FASB and ASBJ is ex­pected to be held in the first quarter of 2020 in Tokyo, Japan. For more in­for­ma­tion about the latest meeting, see the press release on the FASB’s Web site.

FAF appoints new GASAC member

Aug 29, 2019

The trustees of the Financial Accounting Foundation (FAF) have appointed Fiona Ma to the Governmental Accounting Standards Advisory Council (GASAC).

Ms. Ma’s initial term is effective immediately and will conclude on December 31, 2020.

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

PCAOB issues report on 2018 interim inspections of broker-dealers

Aug 29, 2019

The PCAOB has published a report on its 2018 interim inspections of broker-dealer auditors.

The purpose of the inspections is to “assess firms’ compliance with applicable laws, rules, and professional standards when performing audit and attestation engagements for broker-dealers.” Overall, the report found that “the percentage of deficiencies for audit and attestation engagements remained high and continued improvement is needed.”

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

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