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Audit & Assurance

Wednesday, 04 March 2020

Simplifying MD&A and KPI disclosure requirements

Written by Thomson Reuters

In January, the Securities and Exchange Commission (SEC) issued a proposal that would streamline the disclosure requirements in management’s discussion and analysis (MD&A) of financial condition and results of operations. The proposal is part of a broader effort to overhaul the disclosure regime for public companies. On the same day that the proposal was issued, the SEC published interpretive guidance on disclosing key performance indicators (KPIs). Proposed changes to MD&A Public companies are required to write MD&As under Reg...

Published in Audit & Assurance
Wednesday, 04 March 2020

Updated audit risk alert: A view from the trenches

Written by Thomson Reuters

The American Institute of Certified Public Accountants (AICPA) recently issued the 2019/2020 edition of the Audit Risk Alert (ARA), General Accounting and Auditing Developments. This publication provides auditors with an overview of recent economic, industry and regulatory developments that might affect how they conduct audits. Here are some highlights to help private companies understand the auditor’s mindset in the current audit season — and beyond. Economic uncertainty When assessing risk, auditors must consider the effects of external forces on the organization...

Published in Audit & Assurance
Wednesday, 04 March 2020

How will the new CECL affect financial reporting?

Written by Thomson Reuters

The new current expected credit loss (CECL) standard goes into effect this year for large public companies. However, a recent study by Moody’s Investors Service reports that bank-to-bank comparisons will be muddled, because the new rules don’t prescribe a specific model for measuring losses. But the study also found that new rules are unlikely to have a significant effect on banks’ loss reserves or credit ratings. FASB changes the rules In response to the financial crisis of 2007–2008, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No...

Published in Audit & Assurance
Tuesday, 28 January 2020

PCAOB sheds light on CAMs

Written by Thomson Reuters

In fiscal year 2019, auditors of large public companies began to include so-called “critical audit matters” (CAMs) in their audit reports. Here are initial observations from the Public Company Accounting Oversight Board (PCAOB) about the effort that large audit firms have put into implementing the guidance for the first time.  Refresher on CAMs Auditing Standard (AS) 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, represents a major change to the brief pass-fail auditor reports that have been in place for decades. The updated guidance requires auditors to add a discussion of CAMs to the audit report...

Published in Audit & Assurance
Tuesday, 28 January 2020

AUP engagements: No written assertion, no problem

Written by Thomson Reuters

The AICPA’s Auditing Standards Board (ASB) issued a revised attestation standard in December 2019. It will give accountants more flexibility when performing agreed-upon procedures (AUP) engagements. What is an AUP engagement? An AUP engagement is a type of limited assurance engagement in which a CPA performs specific procedures on a particular “subject matter” and reports the findings without providing an opinion or conclusion...

Published in Audit & Assurance
Tuesday, 28 January 2020

6 ways reporting income taxes just got easier

Written by Thomson Reuters

The Financial Accounting Standards Board (FASB) recently issued a new accounting standard that simplifies income tax accounting requirements in six unrelated areas that are costly and complex. Here are the details.  Updated guidance In December 2019, the FASB issued the changes to remove specific technical exceptions to general principles found in Accounting Standards Codification (ASC) Topic 740, Income Taxes. These items often produce information that investors have a hard time understanding...

Published in Audit & Assurance
Tuesday, 21 January 2020

Debt classification matters to healthcare companies

Written by Thomson Reuters

In September 2019, the Financial Accounting Standards Board (FASB) issued a proposal to simplify the classification of debt. Many healthcare organizations are concerned that the proposal, if approved, would distort their financial metrics and trigger debt covenants. In early 2020, the healthcare sector will get another stab at stating their case to the FASB. First exposure draft  Initial deliberations for the debt classification project began in 2014...

Published in Audit & Assurance
Tuesday, 21 January 2020

Clarifying the credit loss standard

Written by Thomson Reuters

Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, will change the way banks and other creditors report losses from soured loans. With the implementation deadline looming for most public companies, accountants have some lingering questions about the details of the updated guidance. So, in November 2019, the Financial Accounting Standards Board (FASB) issued narrowly drawn amendments to clarify five issues...

Published in Audit & Assurance
Tuesday, 21 January 2020

More companies to be exempt from auditor attestation of financial controls

Written by Thomson Reuters

The Securities and Exchange Commission (SEC) is moving full steam ahead on plans to finalize a controversial rule that would exempt more than 500 additional companies from the auditor attestation of financial controls. This attestation is required for most public companies under Section 404(b) of the Sarbanes-Oxley Act of 2002. Several large investor groups oppose expanding the exemption.  Overview Congress passed Sarbanes-Oxley in response to scandals at Enron, WorldCom and others that cost investors approximately $85 billion...

Published in Audit & Assurance
Tuesday, 10 December 2019

Preventing and detecting elder investor exploitation

Written by Thomson Reuters

The mission of the Securities and Exchange Commission (SEC) is “to educate and empower investors so they can plan for a financially secure future.” In October, the SEC held a roundtable to help raise awareness about exploitation against a particularly vulnerable group of investors — the elderly. Older investors tend to lose more money to fraud scams and have less time to recover than younger people.    Educating the elderly about potential financial exploitation schemes is the first line of defense...

Published in Audit & Assurance
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