Audit & Assurance

Thursday, 30 September 2021

AICPA finalizes auditing standard on risk assessment

Written by Thomson Rueters

Abstract: Auditors use risk assessment to determine the nature and scope of confirmation, testing, inquiry and analytical procedures that are appropriate during a company’s external audit. This article highlights key provisions of recently finalized audit standards on risk assessment that aim to improve audit quality. The final standard is expected to come out in October and go into effect for periods on or after December 15, 2023. In recent years, the business environment has changed dramatically...

Published in Audit & Assurance
Thursday, 30 September 2021

Should your company buy or lease equipment purchases?

Written by Thomson Rueters

Abstract: Businesses periodically need to add equipment to grow their operations and replace outdated assets. When this need arises, business owners may ask their financial advisors whether it’s better to buy or lease those assets. There’s no universal “right” choice. And recent changes to the lease accounting and federal income tax rules have muddied the waters...

Published in Audit & Assurance
Thursday, 30 September 2021

Business combinations: How to allocate the purchase price

Written by Thomson Reuters

Abstract: In mergers and acquisitions, how you divvy up the selling price among acquired assets and liabilities can have important consequences after the deal closes. This article lists five steps required to allocate the purchase price to acquired assets (including goodwill and other identifiable intangibles) as well as liabilities under U.S. Generally Accepted Accounting Principles...

Published in Audit & Assurance
Thursday, 26 August 2021

Post-mortem of revenue recognition rules

Written by Thomson Ruetres

Abstract: During the FASB’s post-implementation review of the revenue recognition rules, eight topics surfaced as challenging for public companies. This article discusses those topics, which include the principal vs. agent determination, licensing distinction, estimates of variable consideration, short-cycle contract manufacturing and more. The Financial Accounting Standards Board (FASB) recently conducted a post-implementation review of Accounting Standards Update (ASU) No...

Published in Audit & Assurance
Thursday, 26 August 2021

FASB updates guidance on acquired contracts for revenue

Written by Thomson Rueters

Abstract: On July 28, the FASB approved a proposal that clarifies how companies should recognize and measure revenue-generating contracts that have been acquired in business combinations. This article explains what’s changing and how it may help eliminate accounting differences among companies’ financial reporting practices. On July 28, the Financial Accounting Standards Board (FASB) approved a proposal that clarifies how companies should recognize and measure revenue-generating contracts that have been acquired in business combinations. Here’s an overview of what’s changing and how it may help eliminate accounting differences among companies’ financial reporting practices...

Published in Audit & Assurance
Thursday, 26 August 2021

Coming soon: New, simpler rules for private company stock option

Written by Thomson Rueters

Abstract: The PCC on June 22, 2021, approved the issuance of a new standard related to pricing equity-classified share option awards. This article explains how the guidance provides a simpler and less costly way for private companies to determine the fair value of employee stock options and other share-based awards at grant date or upon a modification to an award. The rules will be effective prospectively for fiscal years on or after December 15, 2021. The Private Company Council (PCC) on June 22, 2021, approved the issuance of a new standard related to pricing equity-classified share option awards...

Published in Audit & Assurance
Thursday, 26 August 2021

FASB proposes last-minute change to lease accounting rules

Written by Thomson Rueters

Abstract: On June 16, the FASB issued a proposal that would give private companies a more flexible approach when using a discount rate to measure lease liabilities. This article discusses how the proposal would allow private companies to elect to use a risk-free rate as the discount rate for leases by asset class, rather than for the entire lease portfolio. A sidebar explains a recent change to how lessors must account for certain leases with variable payments. On June 16, the Financial Accounting Standards Board (FASB) issued a proposal that would enable private companies to have a more flexible approach when using a discount rate to measure lease liabilities...

Published in Audit & Assurance
Thursday, 15 July 2021

Will the FASB expand income statement disclosures?

Written by Thomson Rueters

The devil is in the details when it comes to financial reporting, and investors want to know exactly what those details are, according to Financial Accounting Standards Board (FASB) Chair Richard Jones. “Investors and other allocators of capital have indicated support for more disaggregation of financial reporting information,” said Jones during a Securities and Exchange Commission and Financial Reporting Institute Conference held virtually in June. The income statement has been targeted as a key area where investors want more granular information. “This would help them better assess the results of operations and estimates of future cash flows and risks, such as risks relating to earnings, foreign currencies, legislation, reputation and income taxes,” said Jones...

Published in Audit & Assurance
Thursday, 15 July 2021

Update on government assistance disclosures

Written by Thomson Rueters

The Financial Accounting Standards Board (FASB) unanimously voted to finalize a revised version of rules it proposed about six years ago on government assistance disclosures. This decision on May 26 is an important step towards consistency in the way companies report those items. Inconsistency in practice Government assistance refers to perks and other incentives policymakers provide to lure large companies to establish a business in their states with the goal of driving economic growth by boosting jobs for residents. Under existing U...

Published in Audit & Assurance

The M&A market is currently hot in many industries. However, due to uncertainty in the marketplace, many buyers are tying a portion of the purchase price to whether the company achieves prescribed financial benchmarks after the deal closes. Subsequent reporting of so-called “contingent consideration” can be confusing, especially for companies new to the M&A arena. The Financial Accounting Standards Board (FASB) is evaluating ways to simplify the requirements, while preserving investors’ needs for robust information...

Published in Audit & Assurance
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