Credit Loss Standard Update Could Benefit Subprime Auto Lenders
To help lenders that provide auto loans to customers with little to no credit, the Financial Accounting Standards Board (“FASB”) will issue a proposed amendment to the transition guidance for Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Scheduled for release next year, the proposal would allow subprime auto lenders and other businesses to measure financial instruments, which were previously recorded at amortized cost, at fair value when they apply the credit loss standard beginning in 2020. Existing auto loans would be calculated similarly to loans distributed after the. Read More.
New PCAOB Leadership Approves Budget Increases
By a unanimous vote on November 15, the Public Company Accounting Oversight Board (“PCAOB”) approved its budget for 2019. Next year’s PCAOB budget will be $273.7 million, a $13.8 million rise from 2018. PCAOB member Jay Brown remarked that the 2019 budget reflects careful consideration of the resources the audit regulator needs to carry out its mission to protect the interest of investors and the public. Such resources include the addition of several positions, like chief compliance officer and chief risk officer. Brown also said next year’s budget adds liaison positions responsible for conducting outreach to the PCAOB’s stakeholders. The. Read More.
Investment Companies Receive Update to Interpretive Guidance
The Securities and Exchange Commission’s (“SEC”) Division of Investment Management has revised its interpretive guidance to help investment companies meet updated reporting requirements. Issued under the Investment Company Reporting Modernization Frequently Asked Questions, the updated guidance clarifies the final rules in Release No. 33-10231, Investment Company Reporting Modernization. Release No. 33-10231 increases fund company disclosures regarding investment holdings. The update to the Investment Company FAQs states that reports on Form N-PORT, a new monthly portfolio form, do not need to be filed if a fund has been liquidated, merged or terminated and has no investments remaining despite not yet deregistering with. Read More.
2018 Audit Committee Transparency Barometer Released
The Center for Audit Quality and Audit Analytics have issued the fifth edition of their Audit Committee Transparency Barometer , an annual report aimed to help companies and audit committees improve how they communicate to investors, regulators and the public. Per this year’s report, investors and other stakeholders continue to have more information disclosed to them. In addition, more S&P 500 companies are disclosing their considerations in appointing an audit firm, and sharing criteria for reviewing an audit firm. Download the 2018 Audit Committee Transparency Barometer from the Center for Audit Quality website.
Task Force Proposes Amended Accounting for TV Production
In response to the rapidly evolving television production and distribution business models like online streaming services, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force (“EITF”) has proposed an update to U.S. GAAP. Issued by the FASB as Proposed Accounting Standards Update (“ASU”) No. 2018-280, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials, a Consensus of the FASB’s Emerging Issues Task Force, the proposal would update Accounting Standards Codification (“ASC”) 926-20, Entertainment—Films—Other Assets—Film Costs, to require television show creators to account for production costs similarly. Read More.
Group of Banks Ask FASB to Change Credit Loss Standard
Twenty-one regional banks are asking the Financial Accounting Standards Board (“FASB”) to consider a different approach for calculating loan loss under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In a letter submitted last week to the FASB, the group of banks warned that the credit loss standard could lessen regulatory capital and cause banks to restrict their lending in economic downturns. The regional banks propose amending the requirement for recognizing credit losses to alleviate any drastic changes in earnings and mitigate problems the standard may cause with. Read More.