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FASB Issues Guidance on Nonemployee Share-Based Payments

The Financial Accounting Standards Board (“FASB”) has issued new guidance aimed to lower costs and improve financial reporting related to nonemployee share-based payments. Accounting Standards Update (“ASU”) No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, expands on Topic 718, Compensation—Stock Compensation to comprise of share-based payments issued to nonemployees and aligns the accounting of share-based payments to nonemployees and employees. The new standard also replaces Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The guidance under ASU No. 2018-07 is effective for public companies for fiscal years, as well as interim periods within those years, starting after December. Read More.

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Questionnaire Issued for Actuarial Section of OPEB Plan Reports

A six-page questionnaire to complete with comprehensive annual financial reports (“CAFRs”) for other post-employment benefits (“OPEB”) plans was recently issued by the Government Finance Officers Association (“GFOA”). Questions for the Actuarial Section of an OPEB Plan’s Comprehensive Annual Financial Report replaces the actuarial section of the GFOA checklist, Postemployment benefit systems and investment pools. The GFOA advises that the new questionnaire is exclusive to the actuarial section of the CAFRs for OPEBs that have applied Governmental Accounting Standards Board Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. An update for the entire checklist is expected soon. The questionnaire is available on the GFOA website.

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SEC Deputy Chief Accountant Discusses Impact of Tax Reform

Earlier this month at the 37th annual Securities and Exchange Commission (“SEC”) and Financial Reporting Institute Conference, SEC deputy chief accountant Sagar Teotia spoke on the financial reporting impact of the Tax Cuts and Jobs Act. In particular, Teotia shared his observations on Staff Accounting Bulletin (“SAB”) No. 118, which was issued in January to help public companies and auditors adjust to the tax changes . He noted that SAB No. 118 does not offer companies an option to defer the application of the income tax guidance and splits the accounting for the income tax effects caused by the Act into three “buckets”. Teotia also cautioned that the disclosure guidance under SAB No. 118 offers financial statement users vital information concerning how. Read More.

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FASB Issues Standard for Contributions

A new Accounting Standards Update (“ASU”) by the Financial Accounting Standards Board (“FASB”) will have a significant impact on financial statements of entities who receive grants. ASU No. 2018-08, Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made , differentiates grants and similar contracts with government agencies and others as reciprocal transactions (exchanges) or nonreciprocal transactions (contributions). The new standard also establishes new indicators for when a contribution is conditional. The amendments in ASU No. 2018-08 apply to all entities that receive or distribute contributions, but they do not apply to transfers of assets from governments to companies. Public companies and nonprofits that have issues, or is a conduit bond obligor for,. Read More.

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FASB Close to Finalizing Consolidation Standard

During a recent follow up to a May 16 discussion concerning its upcoming Accounting Standards Update, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, the Financial Accounting Standards Board (“FASB”) agreed on an effective date and transition requirements for private entities. Per decisions made at its June 6 meeting, the FASB announced that private entities will have to apply the guidance in the standard for fiscal years starting after December 15, 2020. Early adoption will be allowed, and private entities must apply the guidance retrospectively with a cumulative-effect adjustment to retained earnings at the start of the. Read More.

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FASB Discusses Improvements to Insurance Company-Issued Long-Duration Contracts

Deliberations continued last week on the Financial Accounting Standards Board’s (“FASB”) proposed Accounting Standards Update, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The proposal aims to improve financial reporting for long-duration contracts issued by insurance companies. In discussing the proposed standard, the FASB focused on the discount rate reset upon initial adoption, affecting the liability for future policy benefits for traditional and limited-payment contracts. The FASB decided to update the modified retrospective transition method discount rate, by which as of the transition date, an insurance company would maintain the discount rate assumption for calculating net premiums. Read More.

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