The ASBCA Issues Two CAS Decisions
By: John Ford , Senior Consultant, Government Contractor Services Group Recently, the Armed Services Board of Contract Appeals (“ASBCA” or “the Board”) issued two decisions relating to the Cost Accounting Standards (“CAS”) that should be of interest to contractors. In the first decision, Raytheon Company, Space and Airborne Systems, ASBCA No. 58608 (August 19, 2016), the Board decided that the contracting officer had abused her discretion by failing to consider all the factors listed in Federal Acquisition Regulation (“FAR”) 9903.305 in determining whether increased costs to the government resulting from an accounting practice change were material. As a large contractor doing billions. Read More.
Changes Proposed to Hedge Accounting Guidance
An Exposure Draft has been issued to improve the guidance in relation to hedging activities. The proposed Accounting Standards Update (“ASU”), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, includes the Financial Accounting Standards Board’s (“FASB”) recommendations to help entities disclose the economic results of their risk management activities. The proposed changes also aim to simplify hedge accounting guidance while maintaining the value of the financial reporting information presented. Comments on the proposal are due Tuesday, November 22. More on the proposed changes to hedge accounting guidance is available in the FASB news release.
Banks to Change Practices for FASB Credit Loss Standard
A day after the Financial Accounting Standards Board (“FASB”) published its final standard for writing down bad loans and securities, federal banking regulators announced that banks will change how they set aside loss reserves under the new guidance. Regulators want banks to apply Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, in a practical and reasonable manner with respect to their size and risk profile. Smaller banking institutions, for instance, are expected to modify their current allowance procedures to meet the FASB’s new requirements without using expensive and complex. Read More.
Revenue Recognition Narrow-Scope Amendments and Practical Expedients Issued
The Financial Accounting Standards Board has issued Accounting Standards Update (“ASU”) No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU No. 2016-12 clarifies guidance in certain areas and adds practical expedients. The updated guidance and practical expedients in the amendments include the following: Assessing the Collectibility Criterion in Paragraph 606-10-25-1(e) and Accounting for Contracts That Do Not Meet the Criteria for Step 1 (Applying Paragraph 606-10-25-7). ASU No. 2016-12 clarifies the collectibility criterion in Step 1, and adds a new criterion to paragraph 606-10-25-7 which clarifies when revenue is recognized for a contract that. Read More.
Credit Loss Standard Coming in June
According to Financial Accounting Standards Board (“FASB”) member Lawrence Smith, the standard setter is on track to publish Accounting Standards Update No. 2012-260, Financial Instruments — Credit Losses (Subtopic 825-15). Despite numerous delays, Smith said that the updated guidance for writing down bad loans and securities is scheduled to be issued by June 30th. The FASB also plans to meet again later this month to consider the standard’s costs and benefits, as well as revisit the previously agreed upon 2019 effective date for public entities.
Financial Reporting Manual Updated
On March 17th, the Securities and Exchange Commission’s Division of Corporation Finance issued an updated Financial Reporting Manual that addresses transition issues in regard to Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). The updates include implementation guidance for companies that adopt the Financial Accounting Standards Board’s revenue recognition standard using the full retrospective method or modified retrospective approach. Companies that adopt the full retrospective method, for instance, will not have to recalculate their investments in other entities, as stated by Rule 3-09 of Regulation S-X. The revised Financial Reporting Manual also reflects changes from the. Read More.