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News

AICPA (American Institute of CPAs) Image

AICPA revises description of materiality

Dec 06, 2019

The AICPA’s Auditing Standards Board has published Statement on Auditing Standards (SAS) No. 138, “Amendments to the Description of the Concept of Materiality,” and Statement on Standards for Attestation Engagements (SSAE) No. 20 by the same name.

The new standards change the description of materiality used in AICPA Professional Standards to make it consistent with the definition used by the U.S. judicial system, PCAOB, SEC, and FASB (formerly, the definition was aligned with that used by the IASB and IAASB). The AICPA’s revised description of materiality states, in part, that “misstatements, including omissions, are material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.”

SAS 138 and SSAE 20 are effective for periods ending, or for practitioners’ examination or review reports dated, on or after December 15, 2020, respectively.

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

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GASB issues proposed implementation guide

Dec 05, 2019

The GASB has issued a proposed implementation guide, “Implementation Guidance Update — 2020,” which contains Q&As that would “clarify, explain, or elaborate on” certain GASB Statements.

Topics ad­dressed in the pro­posed guide’s Q&As include:

  • The financial reporting entity.
  • Fiduciary activities.
  • Leases.
  • External investment pools.
  • Certain asset retirement obligations.
  • Conduit debt obligations.

In ad­di­tion, the pro­posed guide would amend certain Q&As from pre­vi­ously issued im­ple­men­ta­tion guides.

Com­ments on the pro­posed im­ple­men­ta­tion guide are due by January 31, 2020. For more in­for­ma­tion, see the press release and pro­posed guide on the GASB’s Web site.

SEC (US Securities and Exchange Commission) Image

SEC appoints two new deputy chief accountants

Dec 04, 2019

The SEC has appointed John Vanosdall and Paul Munter as deputy chief accountants in the Office of the Chief Accountant (the “Office”).

Mr. Vanosdall will lead the activities of the Office’s accounting group. Such activities include “understanding investor and other perspectives on accounting matters and consulting with public companies, auditors, and divisions and offices within the SEC on the application of accounting standards and financial disclosure requirements.” In addition, Mr. Vanosdall will help the Office with matters related to the SEC’s oversight of the FASB. For more in­for­ma­tion, see the press release on the SEC’s Web site.

Mr. Munter will lead the Office’s activities related to international matters. Such activities include “working closely with various international organizations including the International Organization of Securities Commissions, the International Accounting Standards Board, and the International Auditing and Assurance Standards Board, among others.” For more in­for­ma­tion, see the press release on the SEC’s Web site.

CAQ document Image

CAQ issues publication on company-prepared information

Dec 03, 2019

The Center for Audit Quality (CAQ) has released a publication, “The Role of Auditors in Company-Prepared Information: Present and Future.”

The report “provides a foundational understanding of the current role of auditors in various types of company-prepared and publicly disclosed information” and is intended to help investors and audit committees understand “how auditors are positioned to help fill existing gaps in enhancing the reliability of decision-useful information.”

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

SEC document Image

SEC issues proposed rule on the use of derivatives by investment funds

Nov 27, 2019

The SEC has issued a proposed rule, “Use of Derivatives by Registered Investment Companies and Business Development Companies; Required Due Diligence by Broker-Dealers and Registered Investment Advisers Regarding Retail Customers’ Transactions in Certain Leveraged/Inverse Investment Vehicles.”

The pro­posal would “enhance the regulation of the use of derivatives by registered investment companies, including mutual funds, exchange-traded funds (ETFs) and closed-end funds, as well as business development companies” and “provide an updated and more comprehensive approach to the regulation of funds’ derivatives use.”

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

FASB document Image

FASB makes narrow-scope improvements to credit losses standard

Nov 27, 2019

The FASB has issued Accounting Standards Update (ASU) No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments — Credit Losses.”

The ASU amends certain aspects of the FASB’s guidance on credit losses and clarifies how entities should report “expected recoveries,” which can occur after an entity has written off a portion, or all, of a financial asset and then later believes some or all of the amount will be recovered. In addition, the ASU “reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities.”

For more information, see the press release and ASU on the FASB’s Web site.

FASB document Image

FASB proposes Codification improvements

Nov 27, 2019

The FASB has issued a proposed Accounting Standards Update (ASU), “Codification Improvements.”

The proposed ASU would (1) remove references to various FASB Concepts Statements, (2) situate all disclosure guidance in the appropriate disclosure section of the Codification, and (3) make other improvements and technical corrections to the Codification.

Comments on the proposed ASU are due by December 26, 2019. For more information, see the proposed ASU on the FASB’s Web site.

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FASB ratifies EITF consensus

Nov 22, 2019

At its November 20, 2019, meeting, the FASB ratified the Emerging Issues Task Force (EITF) consensus on Issue 19-A, “Financial Instruments — Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815,” and directed its staff to draft a final Accounting Standards Update (ASU) for a vote by written ballot.

For more in­for­ma­tion, see De­loitte’s EITF Snap­shot as well as the tentative Board decisions on the FASB’s Web site.

SEC document Image

SEC aligns Staff Accounting Bulletin series with ASC 326

Nov 22, 2019

The SEC has issued Staff Accounting Bulletin (SAB) No. 119, which aligns certain portions of its interpretive guidance with FASB Accounting Standards Codification (ASC) Topic 326, “Financial Instruments — Credit Losses.”

Specifically, SAB 119 adds Section M, “Financial Reporting Release No. 28 — Accounting for Loan Losses by Registrants Engaged in Lending Activities Subject to FASB ASC Topic 326,” to SAB Topic 6, “Interpretations of Accounting Series Releases and Financial Reporting Releases.”

For more in­for­ma­tion, see the SAB 119 page on the SEC’s Web site.

IFRS Foundation badge (dk green) Image

IFRS Foundation issues guide on accounting policies

Nov 21, 2019

The IFRS Foundation has issued “Guide to Selecting and Applying Accounting Policies — IAS 8.”

This guide outlines the following three-step process companies can use to “determine their accounting policies when preparing IFRS financial statements”:

  • Step 1 — “Consider whether an IFRS Standard specifically applies to the transaction, other event or condition.”
  • Step 2 — “Consider whether IFRS Standards deal with similar and related issues.”
  • Step 3 — “Refer to and consider the applicability of the ‘Conceptual Framework for Financial Reporting.’”

The steps are accompanied by examples illustrating how they are applied.

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

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