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Public Companies Advised to Review Internal Controls for Cybersecurity

An October 16 report from the Securities and Exchange Commission (“SEC”) asks public companies to reassess their internal accounting control systems to safeguard against potential cyber-attacks. The SEC wants issuers to evaluate the degree to which cyber-related threats should be considered when developing and maintaining their internal controls. Issuers are also asked to determine whether their internal controls can provide reasonable assurances in protecting company assets from cyber-related risks. Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 Regarding Certain Cyber-Related Frauds Perpetrated Against Public Companies and Related Internal Accounting Controls Requirements is the result. Read More.

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SEC Commissioner Says Agency Lacks Ability to Prohibit Mandatory Arbitration

Speaking last month on whether the Securities and Exchange Commission (“SEC”) should allow public companies to restrict investors’ ability to seek grievances in a courtroom, commissioner Hester Peirce said the agency lacks the authority to ban companies from requiring shareholder disputes be decided via arbitration. Peirce noted that the Federal Arbitration Act prevents the SEC from overturning an arbitration clause that agrees with state law. She believes the matter is the responsibility of state regulators. Peirce also said that if any states allow, companies should have the ability to decide whether arbitration is required. She acknowledged that arbitration could be. Read More.

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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.

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SEC Chief Accountant Offers Banks Advice on Implementing Credit Loss Standard

Along with attending a session with lawmakers and banking representatives on the Financial Accounting Standards Board’s credit loss standard , the Securities and Exchange Commission’s (“SEC”) Wesley Bricker gave a speech on the matter at the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions in Maryland. During his speech, the SEC chief accountant told financial companies to be careful when implementing Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. He advised banks to have an implementation process in place to understand the possible impact of the standard on their financial situation. Bricker’s reasoning is due to ASU No. 2016-13 requiring banks. Read More.

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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.

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SEC Chairman Issues Statement on Staff Guidance

In a statement issued last week on the Securities and Exchange Commission’s (“SEC”) staff guidance, chairman Jay Clayton affirmed that the guidance is “nonbinding” with no “enforceable legal rights or obligations.” Clayton noted that statements the SEC staff issues often contain a disclaimer emphasizing the difference between the agency’s rules and regulations and staff viewpoints. He stressed that the SEC should consider this distinction when carrying out its market oversight responsibilities. Clayton gave no reason for deciding to express the distinction between SEC rules and staff opinions. However, he did note that federal banking groups had issued a similar statement.. Read More.

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