FASB Continues Discussions on Disclosure Framework Project
During a discussion at last Wednesday’s meeting, the Financial Accounting Standards Board (“FASB”) made the following decisions on proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8, Notes to Financial Statements: Nonprofits and private companies must be retained on the notes to financial statements. A discussion on the possible negative consequences of disclosures will be included. The disclosure of changes in line items not easily understood will be considered. The disclosure of alternative measures clearly useful in reviewing prospects for future cash flows will be considered. No disclosure objectives were established without giving specific requirements on how those objectives. Read More.
AICPA Seeks to Preserve Use of Cash Method Accounting
The American Institute of Certified Public Accountants (“AICPA”) wants Senate Finance Committee Chairman Orrin Hatch to prevent restricting the use of cash method accounting. In a July 17 letter to Hatch on Congress’ current tax reform efforts, the AICPA said cash method accounting provides a simpler application choice than the accrual method. In addition, the AICPA argued that the cash method creates fewer compliance expenses, and taxpayers aren’t required to pay tax prior to receiving related income. Companies that apply cash accounting disclose revenue and costs when they are received and paid. Small companies with yearly gross receipts of under. Read More.
AICPA Committee Proposes Interpretation for Long Association
As part of its convergence project with the International Ethics Standards Board for Accountants, the American Institute of Certified Public Accountants’ (“AICPA”) Professional Ethics Executive Committee has released the exposure draft, Proposed Interpretation –Long Association of Senior Personnel With an Attest Client). The proposal concerns independence threats when an attest client has a long association with senior personnel. The Committee’s proposed Interpretation would state that an AICPA member’s lengthy inclusion among the attest engagement team’s senior personnel could cause a familiarity threat with the attest client. The familiarity threat could also extend to the team’s operations, senior management of the. Read More.
Topics: AICPA, AICPA Professional Ethics Executive Committee, American Institute of Certified Public Accountants "AICPA", International Ethics Standards Board for Accountants "IESBA", Long Association
FASB Rejects Pleas for More Implementation Guidance on Credit Loss Standard
As concerns mount regarding implementation of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, the American Institute of Certified Public Accountants’ Private Companies Practice Section Technical Issues Committee (“the Committee”) wants the Financial Accounting Standards Board (“FASB”) to provide more guidance on the standard. FASB members, however, have no plans to offer additional implementation guidance. Addressing the matter this week with Committee representatives, FASB members said that the board’s credit loss standard for writing down losses on bad loans contains sufficient accounting guidance and examples. FASB Vice Chairman. Read More.
FASB Issues Update on Certain Financial Instruments with Liabilities and Equity Characteristics
Following recommendations from the Private Company Council, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I simplifies accounting for select financial instruments with down round features, a rule in an equity-linked financial instrument or embedded feature that offers a downward adjustment. Read More.
Topics: Accounting Standards Update, Derivatives and Hedging (Topic 815), Distinguishing Liabilities (Topic 480), Earnings Per Share (Topic 260), FASB, Financial Accounting Standards Board "FASB", Financial Instruments, mandatorily redeemable financial instruments, Private Company Council "PCC"
Recap of Private Company Council’s July 11 Meeting
Private Company Council (“PCC”) and Financial Accounting Standards Board (“FASB”) members met Tuesday to discuss stakeholder feedback from the June 13 private company town hall meeting. In addition, the PCC offered input on the following FASB projects: Consolidation Targeted Improvements to Related Party Guidance for Variable Interest Entities Liabilities and Equity—Targeted Improvements Cloud Computing (EITF Issue No. 17-A) Nonemployee Share-Based Payment Accounting Improvements Invitation to Comment on Agenda Consultation Balance Sheet Classification of Debt Updates on these FASB projects and a full meeting recap are available on the PCC website.
Topics: Balance Sheet, Cloud Computing, Consolidation, FASB, FASB standard-setting agenda, Financial Accounting Standards Board "FASB", Invitation to Comment, liabilities and equity, nonemployee share-based awards, Private Company Council "PCC", Variable Interest Entity "VIE"