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News

CAQ (US Center for Audit Quality) Image

CAQ releases highlights of March 2019 joint meeting with the SEC staff

May 17, 2019

The Center for Audit Quality (CAQ) has published highlights of the March 20, 2019, CAQ SEC Regulations Committee joint meeting with the SEC staff.

Topics discussed at the meeting included:

  • Individually tailored non-GAAP financial measures.
  • Emerging growth company (EGC) transition requirements for new accounting standards.
  • Presentation of the contractual obligations table upon adoption of the new leasing standard, ASC 842.
  • Presentation of earnings before interest, tax, depreciation, and amortization (EBITDA) after the adoption of ASC 842.
  • Regulation S-X, Rule 3-05, requirements for EGCs submitting a draft registration statement for an IPO.
  • Impact of ASC 842 on significance tests under Rule 3-05.
  • Financial statement schedules for an investee under Regulation S-X, Rule 3-09.
  • The requirement to file a Form 8-K under Item 2.01 when a waiver for Rule 3-05 financial statements has been obtained.

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

CAQ document Image

CAQ issues publication on emerging technology

May 17, 2019

The Center for Audit Quality (CAQ) has released a publication, “Emerging Technologies, Risk, and the Auditor’s Focus — A Resource for Auditors, Audit Committees, and Management.”

This publication “explores financial reporting implications of the evolving use of technology such as artificial intelligence, the internet of things, and smart contracts.”

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

FASB document Image

FASB issues ASU to ease transition to the credit losses standard

May 15, 2019

The FASB has issued an Accounting Standards Update (ASU), “Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief.”

The ASU  “allows an option for preparers to irrevocably elect the fair value option, on an instrument-by-instrument basis, for eligible financial assets measured at amortized cost basis upon adoption of the credit losses standard.” The overall purpose of the new guidance is to enhance “the comparability of financial statement information provided by institutions that otherwise would have reported similar financial instruments using different measurement methodologies, potentially decreasing costs for financial statement preparers while providing more useful information to investors and other users.”

For entities that have not yet adopted the credit losses standard, the ASU will be effective when the credit losses standard is implemented. For entities that have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

For more information, see Deloitte's related Heads Up newsletter as well as the press release and ASU on the FASB’s Web site.

FASB document Image

FASB proposes simplifications to accounting for income taxes

May 14, 2019

The FASB has issued a proposed ASU, “Simplifying the Accounting for Income Taxes.”

The proposal, which is part of the Board’s simplification initiative, is aimed at reducing the complexity and costs of income tax accounting. Specifically, the proposed ASU would (1) remove certain exceptions to the general principles in ASC 740 and (2) simplify certain aspects of income-tax-related GAAP for financial statement preparers. The proposal would not create new accounting requirements in ASC 740.

Comments on the proposed ASU are due by June 28, 2019. For more information, see Deloitte's related Heads Up newsletter as well as the press release and proposed ASU on the FASB’s Web site.

FASB meeting Image

Highlights of the FASB’s May 8 meeting

May 13, 2019

At its May 8, 2019, meeting, the FASB discussed (1) agenda prioritization and (2) its project on Codification improvements to hedge accounting.

Agenda prioritization

The Board discussed the results of staff research and decided to add two projects to the EITF’s agenda: (1) a financial instruments project on clarifying the interactions between ASC 321 and ASC 323 and (2) a revenue recognition project on contract modifications of licenses of intellectual property. In addition, the Board decided to expand the scope of its project on improving the accounting for asset acquisitions and business combinations.

For more information, see Deloitte’s related journal entry as well as the meeting minutes on the FASB’s Web site.

Codification improvements — hedge accounting

The Board discussed ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, and made tentative decisions related to hedged risk in a cash flow hedge, contractually specified components, dual fair value and net investment hedges, the use of the term “prepayable” under the shortcut method, and transition guidance.

For more information, see Deloitte's related journal entry as well as the meeting minutes on the FASB’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC proposes changes to cross-border security-based swap transactions

May 10, 2019

The SEC has issued “Proposed Rule Amendments and Guidance Addressing Cross-Border Application of Certain Security-Based Swap Requirements,” which the Commission describes as “a package of rule amendments and interpretive guidance to improve the framework for regulating cross-border security-based swaps transactions and market participants.”

Specifically, the proposed amendments would “improve the regulatory framework by pragmatically addressing implementation issues and efficiency concerns, and in some cases further harmonizing the regulatory regime governing security-based swaps administered by the Commission with the regulatory regime governing swaps administered by the Commodity Futures Trading Commission.”

Comments on the proposed amendments are due 60 days after the date of their publication in the Federal Register. For more information, see the press release and proposals on the SEC’s Web site.

PCAOB (US Public Company Accounting Oversight Board) Image

PCAOB issues staff inspection brief

May 10, 2019

The PCAOB has published a staff inspection brief, “Staff Preview of 2018 Inspection Observations.”

Topics covered in the inspection brief include (1) observations and good practices related to efforts to improve audit quality; (2) common audit deficiencies observed in 2018; and (3) observations on technology, implementation of new accounting and auditing standards and rules, and audit committee communications.

CAQ (US Center for Audit Quality) Image

CAQ issues publication on credit losses

May 10, 2019

The Center for Audit Quality (CAQ) has released a publication, “Preparing for the New Credit Losses Standard: A Tool for Audit Committees.”

This publication “is designed to help audit committees exercise their oversight responsibilities as companies implement a new credit losses accounting standard that begins to take effect in January 2020.”

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

AICPA (American Institute of CPAs) Image

AICPA issues SAS 134 and SAS 135

May 10, 2019

The AICPA’s Auditing Standards Board has published two Statements on Auditing Standards (SASs): No. 134, “Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements,” and No. 135, “Omnibus Statement on Auditing Standards — 2019.”

SAS 134 “addresses the auditor’s responsibility to form an opinion on the financial statements and the form and content of the auditor’s report issued as a result of an audit of financial statements.” This SAS also discusses “the auditor’s responsibilities, and the form and content of the auditor’s report, when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary, and when additional communications are necessary in the auditor’s report.”

SAS 135 “is intended to more closely align [AICPA] guidance with the PCAOB's standards by primarily amending AU-C section 260, Communications With Those Charged With Governance, AU-C section 550, Related Parties, and AU-C section 240, Consideration of Fraud in a Financial Statement Audit, in AICPA Professional Standards.”

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

CAQ (US Center for Audit Quality) Image

CAQ updates publication on ICFR

May 09, 2019

The Center for Audit Quality (CAQ) has released an updated version of its 2013 publication “Guide to Internal Control Over Financial Reporting [ICFR].”

The publication provides an overview of ICFR and focuses on “key ICFR concepts” such as the control environment, control activities, reasonable assurance, and the hierarchy of ICFR deficiencies. The 2019 edition includes “additional information highlighting the significant body of research demonstrating the importance of ICFR to enhancing investor confidence and strengthening the financial reporting process.”

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

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