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SEC Commissioner Says Agency Lacks Ability to Prohibit Mandatory Arbitration

Speaking last month on whether the Securities and Exchange Commission (“SEC”) should allow public companies to restrict investors’ ability to seek grievances in a courtroom, commissioner Hester Peirce said the agency lacks the authority to ban companies from requiring shareholder disputes be decided via arbitration. Peirce noted that the Federal Arbitration Act prevents the SEC from overturning an arbitration clause that agrees with state law. She believes the matter is the responsibility of state regulators. Peirce also said that if any states allow, companies should have the ability to decide whether arbitration is required. She acknowledged that arbitration could be. Read More.

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End of SEC Tax Reform Grace Period Could Increase Disclosures

Last December after the Tax Cuts and Jobs Act (“TCJA”) was signed into law, the Securities and Exchange Commission (“SEC”) issued interpretative guidance that allows companies to use good faith estimates to adapt to the income tax effects. With the guidance expiring soon, the agency is advising businesses to apply the income tax disclosure requirements under U.S. GAAP once the grace period ends. SEC Staff Accounting Bulletin (“SAB”) No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, allows businesses to use reasonable estimates and provisional amounts to calculate the new tax law’s impact. SAB No. 118 also. Read More.

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FASB Tweaks Guidance for Leases

In July, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that includes targeted improvements to its leases standard. ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, introduces a transition model for entities and offers a practical expedient to lessors concerning separation of lease and non-lease components. The new standard also provides entities the option to apply the transition requirements at the guidance’s adoption date rather than the earliest comparative period disclosed in financial statements. For entities that have not adopted Topic 842, the effective date of ASU No. 2018-11 is the same as the effective date. Read More.

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CAQ Executive Director to Retire

Cindy Fornelli, executive director of the Center for Audit Quality, has announced that she will retire in the spring of next year. As the CAQ’s first executive director, Fornelli has spent the past 12 years helping carry out the organization’s vision for enhancing investor confidence and public trust in the global capital markets. Accomplishments during her tenure include helping advance audit quality, fighting financial reporting fraud, and encouraging groundbreaking academic research. At this time, plans for Fornelli’s successor are yet to be announced. Click here to read Fornelli’s letter announcing her retirement.

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SEC Chairman Issues Statement on Staff Guidance

In a statement issued last week on the Securities and Exchange Commission’s (“SEC”) staff guidance, chairman Jay Clayton affirmed that the guidance is “nonbinding” with no “enforceable legal rights or obligations.” Clayton noted that statements the SEC staff issues often contain a disclaimer emphasizing the difference between the agency’s rules and regulations and staff viewpoints. He stressed that the SEC should consider this distinction when carrying out its market oversight responsibilities. Clayton gave no reason for deciding to express the distinction between SEC rules and staff opinions. However, he did note that federal banking groups had issued a similar statement.. Read More.


AICPA Committees to Explore Guidance for Digital Currencies

Following similar efforts by the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”), the American Institute of Certified Public Accountants’ (“AICPA”) Auditing Standards Board and Financial Reporting Executive Committee are considering whether to issue accounting and auditing guidance on digital currencies and initial coin offerings. Both committees plan to research the matter and will likely compose a list of financial reporting questions that have appeared concerning digital transactions. Dan Noll, the AICPA director of accounting standards, said the AICPA is considering guidance on digital currencies due to the pervasive nature of the questions being asked on. Read More.

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