SEC Improves Internal Controls
According to a recent Government Accountability Office (“GAO”) report, the Securities and Exchange Commission’s (“SEC”) internal controls are improving. In fiscal 2015, only six of the SEC’s 58 internal supervisory controls tested had deficiencies. Comparative to the GAO’s 2013 review, the six deficiencies mark a significant reduction from the 27 flaws identified in fiscal 2011. The GAO noted that none of the flaws are likely to inhibit the SEC from ensuring their divisions and offices carry out actions accordingly. Specifically, the watchdog agency found two flaws without clear control activities, three that showed a major element did not align with. Read More.
Topics: Division of Corporation Finance "Corp Fin", Division of Enforcement, Dodd-Frank Act, GAO Report, Government Accountability Office "GAO", Internal Controls, Office of Compliance Inspections and Examinations, Securities and Exchange Commission "SEC"
SEC’s Bricker Discusses Credit Loss Standard
The Financial Accounting Standards Board’s (“FASB”) standard for reporting credit losses was the subject of Wesley Bricker’s speech at last week’s American Institute of Certified Public Accountants’ National Conference on Banks & Savings Institutions. Bricker, the Security and Exchange Commission’s (“SEC”) Interim Chief Accountant, addressed the importance of implementing Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326). In particular, Bricker encouraged companies to work with their audit committees and auditors to review implementation plans so the new standard meets the reporting objectives. He also noted that the implementation process requires collaboration between all stakeholders when applying the standard’s. Read More.
Topics: American Institute of Certified Public Accountants "AICPA", Credit Loss Model "CECL", FASB Financial Instruments project, Financial Accounting Standards Board "FASB", Financial Instruments - Credit Losses (Topic 326), Securities and Exchange Commission "SEC"
Additional Income Tax Disclosures Proposed
The Financial Accounting Standards Board (“FASB”) wants to increase the disclosure requirements for income taxes. In its Proposed Accounting Standards Update, Income Taxes (Topic 740): Disclosure Framework – Changes to the Disclosure Requirements for Income Taxes, the FASB recommends all entities add the following disclosures: An explanation of a tax law amendment that is likely to impact the entity in a later period. Income or losses from ongoing operations previous to income tax expenses or benefits separated between domestic and foreign. Income tax expenses or benefits from ongoing operations separated between domestic and foreign. Income taxes paid separated between domestic. Read More.
Smaller Reporting Company Changes Proposed
A proposal by the Securities and Exchange Commission (“SEC”) aims to expand the financial thresholds under its definition for “smaller reporting company,” making it easier for companies to qualify for certain scaled disclosures under Regulation S-K and Regulation S-X. The changes would raise the threshold for a smaller reporting company from $75 million to $250 million. In addition, companies without a public float would be allowed to offer scaled disclosures if their annual revenues are below $100 million, which is double the current threshold. Another proposed change relates to when companies revert from being an accelerated filer back to being. Read More.
Re-Proposed Rule on Incentive-Based Compensation Issued
A 2011 proposed rule published in the Federal Register has been re-proposed by the Securities and Exchange Commission and other agencies. The agencies seek to amend the rule to implement section 956 of the Dodd-Frank Act, which would create general requirements for incentive-based compensation arrangements. Similar to the 2011 version, the re-proposed rule would ban incentive-based compensation at financial institutions that might promote inappropriate risks by offering excessive compensation or cause a material loss. The new proposal, however, incorporates the agencies’ supervisory experiences since the proposal was originally issued five years ago.
SEC Adopts JOBS Act and FAST Act Amendments
The Securities and Exchange Commission (“SEC”) has approved final rule amendments that implement provisions of the Jumpstart Our Business Startups Act (“JOBS Act”) and the Fixing America’s Surface Transportation Act (“FAST Act”). In particular, the final rules concern the registration, termination of registration, and suspension of reporting under Section 12(g) of the Securities Exchange Act of 1934. The final rules also establish a non-exclusive safe harbor for determining holders of record when evaluating an issuer’s registration responsibilities under Section 12(g). The final rules will be effective 30 days after publication in the Federal Register. More on the approved JOBS Act and FAST Act amendments can be found. Read More.