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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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CAQ Board Issues Four Grants for Auditing Research

The Center for Audit Quality’s (“CAQ”) Research Advisory Board grant program recently announced it will fund the following academic research projects focused on how audits are conducted: “How Can Audit Committee Support Improve Auditors’ Application of Professional Skepticism?” by Joseph F. Brazel (North Carolina State University), Anna Gold (Vrije Universiteit Amsterdam), and Tammie Schaefer (University of Missouri – Kansas City) “‘Alexa, Audit Loan Grades’: Enhancing Auditor Reliance on Artificial Intelligence Through Anthropomorphism” by Sean Dennis and Benjamin P. Commerford (University of Kentucky) “Encouraging Relational Thinking to Enhance Auditor Use of Audit Data Analytics Output” by Cassandra Estep, Bright Hong, and. Read More.

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COSO Releases Enterprise Risk Management Supplement

A supplement to Enterprise Risk Management – Integrating with Strategy and Performance was recently published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Issued as Enterprise Risk Management: Integrating with Strategy and Performance – Compendium of Examples, the new guidance features detailed examples for applying principles from the revised Enterprise Risk Management Framework. It also includes illustrations and case studies developed from industry practices recognized through comprehensive research (e.g., interviews, case studies). The examples offer context to the industry wherein the illustrated business operates, highlights applicable principles, shows how Enterprise Risk Management (“ERM”) is integrated with the business. Read More.

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Task Force to Issue Final Consensus on Cloud Computing Arrangements

The Emerging Issues Task Force (“EITF”) has agreed to issue a final consensus on its project to clarify the accounting for implementation expenses for a cloud computing arrangement that is a service contract. Voted on at a recent EITF meeting, Issue No. 17-A, “Customer’s Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement That Is Considered a Service Contract,” will include the following decisions in the final consensus: Businesses will be required to capitalize the implementation costs of a hosting arrangement that is a service contract using the guidance under Goodwill and Other—Internal-Use. Read More.

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SEC Proposes Rolling Back the Volcker Rule

Weeks after President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act , a bill to roll back systemic risk regulations under the Dodd-Frank Act, the Securities and Exchange Commission (“SEC”) is taking aim at reversing another Dodd-Frank rule. In a 3-2 vote on June 5, the SEC issued a proposal to amend the Dodd-Frank Act’s Volcker Rule, which limits banks’ proprietary trading and prohibits them from owning hedge funds and private equity funds. The proposal would create new requirements centered on a bank’s trading activities, with an aim to alleviate the burden small- and mid-sized companies face in complying with the Volcker rule. It would also revise the exemptions. Read More.

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