SEC Proposes Changes to Auditor Independence Rules
To address circumstances when auditors borrow funds or issue debt to accrue working capital, the Securities and Exchange Commission (“SEC”) has proposed updates to its auditor independence rules for lending relationships. The proposed amendments include updating Rule 2-01 of Regulation S-X to replace the current 10 percent bright-line shareholder ownership test with what the SEC calls a “significant influence” test and introducing a “known through reasonable inquiry” standard for recognizing the beneficiaries of the audit client’s equity securities. The SEC also wants to change its definition of “audit client” to exclude funds that are otherwise deemed affiliates of the audit. Read More.
AICPA Revenue Recognition Working Drafts Issued
The American Institute of Certified Public Accountants’ (“AICPA”) Financial Reporting Executive Committee has released the following working drafts concerning revenue recognition guidance: Issue #6-9B, Gaming Entity’s Accounting for Management Contract Revenues, Including Costs Reimbursed by Managed Properties Issue #15-3, Contract Modifications The working drafts propose guidance for implementation matters with the five-step revenue recognition model under Topic 606, Revenue from Contracts with Customers. Specifically, Issue #6-9B relates to the gaming industry and Issue #15-3 focuses on the telecommunications industry. Feedback on both working drafts is due by Monday, July 2.
AICPA and Healthcare Trade Group to Issue Guidance for Revenue Standard
To help healthcare companies with Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606), the Healthcare Financial Management Association and the American Institute of Certified Public Accountants are planning to offer additional industry-specific guidance. The interpretive guidance is expected to address when healthcare providers should record revenue from special state funding methods that cover deficits between Medicaid reimbursements and patient care costs. Frustration over recognizing revenue related to provider tax programs was discussed at last month’s meeting between the FASB and the Healthcare Financial Management Association’s Principles and Practices Board. Brian Conner, a national practice leader for hospitals. Read More.
Dodd-Frank Executive Compensation Rules Still Delayed
For the last eight years, the Securities and Exchange Commission (“SEC”) has been working to finish the Dodd-Frank Act’s executive compensation rules. Based on recent comments by William Hinman, the rules are far from being completed. Speaking on April 26 before the House Financial Services Committee’s Capital Markets subcommittee, the director of the agency’s Division of Corporation Finance said the executive compensation rules would not be finished this fiscal year. Minnesota Rep. Keith Ellison pressed Hinman about why the SEC is taking so long to complete the executive compensation rules. During his questioning, Ellison referenced unfinished rules on clawbacks (Release. Read More.
GSA Develops E-Commerce Portal
Section 846 of the 2018 National Defense Authorization Act (“the Act”), “Procurement through Commercial E-Commerce Portals,” establishes an e-commerce portal program, similar to Amazon and other e-commerce platforms, for the acquisition of commercial items by the Federal government. Section 846 defines an e-commerce portal as “a commercial solution providing for the purchase of commercial products aggregated, distributed, sold, or manufactured via an online portal” and requires the General Services Administration (“GSA”) to develop the portal “through multiple contracts with multiple commercial e-commerce portal providers.” Commercial e-commerce sites usually include a provider that can fulfill orders directly and/or provide an opportunity. Read More.
FASB Proposes Improved Collaborative Arrangements Guidance
A newly proposed Accounting Standards Update (“ASU”) by the Financial Accounting Standards Board (“FASB”) offers organizations improved guidance regarding collaborative arrangements. The proposed ASU, Collaborative Arrangements (Topic 808): Targeted Improvements , focuses on changes to generally accepted accounting principles related to collaborative arrangements. One proposed change includes adding unit-of-account guidance under Topic 808, which would align the guidance with Topic 606, Revenue from Contracts with Customers, limited to when a company is reviewing the nature of Topic 606. The FASB also proposes two clarifications, such as defining when certain transactions concerning collaborative participants must be accounted for as revenue under Topic 606 when the collaborative member. Read More.