SEC Official Asks Public Companies to Focus on Key FASB Standards
Securities and Exchange Commission (“SEC”) official Michael Dusza is advising public companies to consider how the adoption of several standards from the Financial Accounting Standards Board (“FASB”) could impact their financial reporting controls. During a speech last month in Washington D.C., Dusza stressed that the accounting changes for revenue recognition, leases, and credit losses are likely to create significant challenges when public companies test internal controls during the adoption phase. Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers (Topic 606), is effective January 1, 2018 for public business entities. ASU No. 2016-02, Leases (Topic 842), will be. Read More.
Topics: COSO, Credit Losses, FASB, Financial Accounting Standards Board "FASB", Financial Instruments - Credit Losses (Topic 326), Internal Control Reporting, Internal Controls, lease accounting, Leases (Topic 842), Public Companies, Revenue Recognition, SEC, Securities and Exchange Commission "SEC"
SEC Approves Updates to Auditor’s Report
The Securities and Exchange Commission (“SEC”) has unanimously approved an audit reporting standard by the Public Company Accounting Oversight Board requiring significant improvements to certain public company reports. Such improvements aim to make the auditor’s report more informative and address the communication of critical audit matters (“CAMs”) and disclosures concerning auditor tenure. The new auditor’s report is expected to offer investors meaningful insight regarding audits, such as important estimates and judgments, substantial unusual transactions, and other potential risk areas for an organization. Speaking on the objective of the auditing standard, SEC Chairman Jay Clayton said investors will benefit from a. Read More.
Senate Bill Gives Sarbanes-Oxley Exemption to Small Banks
Banks holding less than $1 billion in assets could receive an exemption from the auditor attestation requirements of Section 404(b) under the Sarbanes-Oxley Act of 2002. Under S. 1962, the Community Bank Access to Capital Act of 2017, the proposed Senate bill frees smaller banks from the more complicated and expensive reforms under Sarbanes-Oxley. S. 1962 also requires public companies to hire an external auditor to attest to management’s internal controls over financial reporting. The bill’s co-sponsor, Senator Mike Rounds (R-S.D.), stated the proposed measure would promote growth among community banks and help them support their communities. Section 404(b) advocates. Read More.
Biotech Executive Pushes for Additional Sarbanes-Oxley Exemption
Several business lobbyists say Section 404(b) in the Sarbanes-Oxley Act of 2002 requiring auditors to attest clients’ internal controls create unnecessary expenses to public companies. In response, lobbyists are asking Congress to give additional exemptions for small and medium-sized companies. Representing the Biotechnology Innovation Organization during a July 18 hearing by the House Financial Services Committee, aTyr Pharma Senior Vice President John Blake testified that biotech companies currently developing drugs do not pose the same risks as bigger companies do with their financial reporting systems. Blake believes minimal benefit is gained from the auditor attestation requirements regarding financial reporting controls.. Read More.
SEC Committee Fails to Reach Consensus on Board Diversity
The Securities and Exchange Commission’s (“SEC”) Advisory Committee on Small and Emerging Companies recently failed to agree on proposed changes to improve disclosures regarding board diversity. During its December 7 conference call, panel members held lengthy discussions about the diversity disclosure recommendations but could not reach a consensus to vote. Per Release No. 33-9089, Proxy Disclosure Enhancements, public companies must disclose in proxy statements if diversity plays a role in their director nomination process and how such considerations are made. The release, however, does not provide a clear definition of “diversity,” but gives companies the freedom to determine how the. Read More.