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.
Small Bank Executives Say More Resources Needed to Implement Credit Loss Standard
To prepare for the Financial Accounting Standards Board’s (“FASB”) credit loss standard, Bank of America assembled a 50-employee team. Small community banks, however, lack the resources and workforce to effectively comply with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This issue was highlighted recently during a panel discussion at the AICPA’s National Conference on Banks and Savings Institutions in Maryland. Greg Saville, executive vice president of Kansas-based First National Bank, argued that his entire bank is of equal size to Bank of America’s assembled team. Saville also noted. Read More.
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.
Regulators to Offer Flexibility on FASB Credit Loss Standard
When it comes to the Financial Accounting Standards Board’s (“FASB”) credit loss standard, Federal Reserve chief accountant Joanne Wakim said regulators want to give banks flexibility when estimating their expected losses on loans and securities. At the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions this week, Wakim echoed the FASB’s statements that there is no single method to help banks estimate loan losses, and financial institutions should take several factors into account. She also said banks could continue to use current methodologies with changes to inputs and assumptions. Further, Wakim said regulators will not. Read More.
Lawmakers and Bank Representatives Discuss FASB Credit Loss Standard
The Financial Accounting Standards Board’s (“FASB”) credit loss standard was a key focus at the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions in Maryland last week. Lawmakers and representatives from the banking industry met with Securities and Exchange Commission (“SEC”) chief accountant Wesley Bricker and FASB member Harold Schroeder to share their concerns regarding the guidance under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. During a session in Rep. Blaine Luetkemeyer’s office, several regional bank representatives urged Bricker and Schroeder to amend. 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.