SEC Deputy Chief Accountant Discusses Impact of Tax Reform
Earlier this month at the 37th annual Securities and Exchange Commission (“SEC”) and Financial Reporting Institute Conference, SEC deputy chief accountant Sagar Teotia spoke on the financial reporting impact of the Tax Cuts and Jobs Act. In particular, Teotia shared his observations on Staff Accounting Bulletin (“SAB”) No. 118, which was issued in January to help public companies and auditors adjust to the tax changes . He noted that SAB No. 118 does not offer companies an option to defer the application of the income tax guidance and splits the accounting for the income tax effects caused by the Act into three “buckets”. Teotia also cautioned that the disclosure guidance under SAB No. 118 offers financial statement users vital information concerning how. Read More.
Revised White Paper Issued on Governmental and Business Financial Reporting
Helping distinguish between governmental and business financial reporting, a revised White Paper has been issued by the Governmental Accounting Standards Board (“GASB”). The White Paper, Updated: Why Governmental Accounting and Financial Reporting Is—and Should Be—Different , elaborates that the difference between governmental accounting and reporting standards and the standards for for-profit businesses require independent standards so that the information provided meets the needs of stakeholders when assessing government accountability, as well as to help make political, social and economic decisions. The White Paper also provides guidance on specific questions that typically arise regarding why general purpose governments cannot use accounting standards developed for for-profit businesses. Download the White Paper from the GASB website.
Financial Restatements Lowest in 15 Years
Audit Analytics is reporting the lowest total number of financial restatements among publicly traded companies since 2002. In its May report, Audit Analytics said restatements dropped 6.83 percent last year (671 companies). Separately, the percentage of financial restatements in 2016 was the lowest since 2007. Regulatory oversight is receiving partial credit for the low numbers. Audit Analytics Director of Research Don Whalen was not surprised by the downward trend, saying that improved internal controls over financial reporting have helped companies. Whalen noted the improved internal controls are due largely to the Public Company Accounting Oversight Board’s efforts and the Committee. Read More.
FASB to Update Definitions for Key Accounting Concepts
At its May 3 meeting, the Financial Accounting Standards Board (“FASB”) voted to expand efforts to update its Conceptual Framework. The decision impacts potential updates to Concepts Statement (“CON”) No. 6, Elements of Financial Statements, which provides definitions for key financial reporting concepts like assets, liabilities, and revenues. Board members also agreed to preserve the goal of financial reporting as mentioned in CON No. 8, Conceptual Framework for Financial Reporting—Chapter 1, the Objective of General Purpose Financial Reporting. Viewed as the main characteristic of the Conceptual Framework, the chapter says that a financial reporting’s objective is to offer useful financial. Read More.
Comment Letters Ask FASB to Limit Future Projects
Some trade groups want the Financial Accounting Standards Board (“FASB”) to provide more leeway for implementing current accounting standards before taking on new projects. In feedback to the FASB’s Invitation to Comment, Agenda Consultation, groups like the American Bankers Association (“ABA”) asked the board to consider the time and costs needed when new standards are implemented. The ABA also noted that standards involving revenue, leases, credit losses and financial instrument measurement and classification require significant undertaking that could last over several years. Other comment letters to the agenda consultation document came from the Institute of Management Accountants (“IMA”), which advised. Read More.
Topics: American Bankers Association "ABA", Credit Losses, Financial Accounting Standards Board "FASB", Financial Instruments, financial reporting, Institute of Management Accountants "IMA", leases, U.S. GAAP
FASB Seeks Feedback on Agenda Considerations
The Financial Accounting Standards Board (“FASB”) has released an Invitation to Comment regarding possible financial accounting and reporting topics to add to its agenda. The Invitation to Comment features potential issues and solutions on intangible assets, pensions and other post-retirement benefit plans, distinguishing liabilities from equity, and reporting performance and cash flows. In particular, the FASB is seeking feedback on whether improvement opportunities exist for the financial reporting issues raised in the Invitation to Comment, the priority and approach the board should take in addressing each issue, and if any other financial reporting areas not listed in the document should. Read More.