GASB Statement No. 70 Accounting and Financial Reporting for Nonexchange Financial Guarantees
Background The objective of Governmental Accounting Standards Board Statement No. 70 (“GASB Statement No. 70”) is to improve the recognition, measurement and disclosure guidance for governments that have extended or received financial guarantees that are nonexchange transactions. A nonexchange financial guarantee is defined as a guarantee of an obligation of a legally separate entity (including blended or discretely presented component units), which requires that guarantor to indemnify a third-party obligation holder, under specified conditions. Pledges of future revenues are not financial guarantees, as they are contingent upon the collection of future revenues. The key to the definition is “non-exchange”. The. Read More.
Stolen EINs Costing IRS Billions of Dollars
Made public by the Treasury Inspector General for Tax Administration (“TIGTA”) last week, a new government report says the Internal Revenue Service (“IRS”) has lost billions in revenue because of stolen Employer Identification Numbers (“EIN”). The TIGTA’s report, which reviewed how the IRS issues EINs and identifies stolen or falsely acquired EINs for reporting income and withholding, stated the practice could cost the IRS $11.4 billion over five years. For instance, over 277,000 tax returns from 2011 that listed stolen EINs and included false income and withholding reporting created fraudulent refunds of over $2.2 billion. Click here to read the full story. Read More.
FAF Issues Final Policy on GASB Scope of Authority
The Financial Accounting Foundation (“FAF”), the parent organization of the Financial Accounting Standards Board (“FASB”) and Governmental Accounting Standards Board (“GASB”) adopted a new policy in November that clarifies the process for determining which topics fall under the GASB’s authority for standard setting and guidance. The policy, GASB Scope of Authority: Consultation Process Policy, creates a pre-agenda process that the GASB and FAF would follow to determine whether the GASB could consider the topic for standard-setting activity. The new policy amends the original proposal so that the GASB will be required to do its consultation in the pre-agenda phase, which helped. Read More.
SEC Releases Report on Credit Ratings
The U.S. Securities and Exchange Commission (“SEC”) released its Credit Rating Agency Independence Study to Congress on November 21, 2013. This report was a requirement of Title IX of the Dodd-Frank Act, which also mandated the SEC to study how independence of nationally recognized statistical rating organizations (“NRSROs”) affects credit ratings. Overall, the study found that the rating agencies had proper policies and procedures in place to manage conflicts of interest. Therefore, the Office of Credit Ratings (established by the Dodd-Frank Act) did not recommend any policy changes. A full copy of the report can be found here .
PCAOB Approves Dodd-Frank Conforming Amendments for Broker-Dealer Audits
The Public Company Accounting Oversight Board (“PCAOB”) has amended its rules to include the audits and auditors of brokers and dealers registered with the U.S. Securities Exchange Commission (“SEC”). This change was authorized by the Dodd-Frank Act, which amended the Sarbanes-Oxley Act to grant PCAOB oversight authority over the audits of broker-dealers registered with the SEC. These changes include adding references to audits and auditors of broker-dealers in the PCAOB rules, and requiring the inclusion of broker-dealer audit client information on the PCAOB’s registration, withdrawal and reporting forms. Audit firms that audit broker-dealers would now have to comply with PCAOB standards. These. Read More.
Hagel Makes Splash With with Another Savings Initiative
On December 4th, Defense Secretary Chuck Hagel announced plans to save an additional $1 billion over the next five years by cutting staff and contractors. “Much of these savings will be achieved through contractor reductions,” he said. The total headcount has not been specified, but the internal staff would most likely be cut through attrition. “Every dollar that we save by reducing the size of our headquarters and back-office operations is a dollar that can be invested in war fighting capabilities and readiness.” The cuts represent 20 percent of the management headquarters budget and will be taken in roughly equal. Read More.