SEC Aims to Fix Auditor Independence Rule by Next Fall
Addressing complaints that the current loan provision under its auditor independence rule is outdated, the Securities and Exchange Commission (“SEC”) expects to finalize planned changes to the rule by September 2019. The final rule will likely be based on Release No. 33-10491, Auditor Independence With Respect to Certain Loans or Debtor-Creditor Relationships. Issued in May, the proposal addresses practical challenges in deciding whether an auditor complies with independence Rule 2-01 of Regulation S-X when engaged in a lending relationship with its audit clients’ shareholders. To finance its business operations, an accounting firm may borrow from a bank or acquire funds by. Read More.
Group Wants Quality Control Standards to Cover Firm Governance and Leadership
With the Public Company Accounting Oversight Board (“PCAOB”) researching whether to update quality control standards, its Standing Advisory Group (“SAG”) believes the standards should be amended to include firm governance and leadership. Talking to reporters after the SAG’s November 29 meeting, PCAOB Chairman William Duhnke said the board may elevate its research on the standards to a standard-setting project sometime next year but is currently determining the next steps. The PCAOB’s quality control standards mandate accounting firms to employ systems with reasonable assurance that a firm’s employees meet professional standards and the firm’s quality standards. Firm governance and leadership include. Read More.
Reporting Issuers to Get Regulation A Exemptions from SEC
In response to the passing of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the Securities and Exchange Commission (“SEC”) plans to offer Regulation A exemptions to reporting issuers. SEC’s Division of Corporation Finance director William Hinman said the agency will act quickly to make the exemptions available to companies bound by reporting under Section 13 or 15(d) of the Securities and Exchange Act. The SEC initially planned to issue a proposal on the Regulation A exemptions in September 2019, but Hinman noted that the agency will accelerate the matter by skipping its formal rulemaking process. If any questions. Read More.
PCAOB Awaits Congress Vote before Proposing Audit Inspection Program
Before it proposes a permanent inspection program for auditors of brokerage firms, the Public Company Accounting Oversight Board (“PCAOB”) wants Congress to pass a bill that curbs broker-dealers’ audit requirements. Speaking earlier this month at the PCAOB’s Investor Advisory Group meeting, William Duhnke stated that the board is waiting for Congress to vote on the Small Business Audit Correction Act this year to allow for legislative movement. If the bill is not passed by the end of the current session, the PCAOB chairman said the board will prioritize its program early next year to address what the inspection program will. Read More.
Mortgage Bankers Association Wants a Delay in Credit Losses Standard
Another banking group wants the Financial Stability Oversight Council (“FSOC”) to postpone the effective date of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In a letter last month, the Mortgage Bankers Association (“MBA”) urged the FSOC to complete a quantitative impact study to examine the effects of the Financial Accounting Standards Board’s (“FASB”) credit losses standard. The MBA considers the study critical to helping banking agencies, banks, and others understand the standard’s full impact and any unanticipated effects. Echoing concerns from the Bank Policy Institute , the MBA says the credit losses standard. Read More.
FASB Proposes Slight Updates to Three Major Accounting Standards
Multiple clarifications are in the works for three of the Financial Accounting Standards Board’s (“FASB”) top accounting standards. On November 19, the FASB issued a proposal featuring changes to the following Accounting Standards Updates (“ASU”): ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The proposal features 11 changes to the credit loss standard. The proposed clarifications include how companies calculate the allowance for credit losses on accrued interest receivable balances and accounting for the allowance when moving debt securities between measurement categories. Also proposed are clarifications regarding when a company must. Read More.