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

Abstract: Private companies recently told the FASB that the accounting rules for debt modifications are too complex. This article explains why private companies would like the FASB to add a project on the debt modification rules to its current agenda, along with several other hot topics. A sidebar covers a recent narrow-scope update to the rules for call options, including warrants that are commonly used by special purpose acquisition companies. The Private Company Council (PCC) is the primary advisory body to the Financial Accounting Standards Board (FASB) on private company matters...

Published in Audit & Assurance
Thursday, 13 May 2021

FASB decides to issue new proposal for hedging transactions

Written by Thomson Rueters

Abstract: On March 31, 2021, the FASB decided to change the name “last-of-layer” hedging method and to propose expanding the accounting model that was introduced about four years ago. This article explains the proposal and how it may better align financial reporting for hedging transactions with the entity’s risk management approach. On March 31, 2021, the Financial Accounting Standards Board (FASB) decided to change the name “last-of-layer” to the “portfolio layer” hedging method. The FASB also approved a proposal to expand the accounting model that was introduced about four years ago...

Published in Audit & Assurance
Thursday, 13 May 2021

Concerns about the going concern assumption during an audit

Written by Thomson Rueters

Abstract: The estimated number of going concerns for fiscal year 2019 fell to the lowest amount in 20 years. But the pandemic caused financial distress that could bring an end to this downward trend for fiscal year 2020. This article reviews the going concern assumption and responsibilities for identifying “substantial doubt” about a company’s ability to operate as a going concern over the next year. A sidebar summarizes key findings from the Audit Analytics going concern study...

Published in Audit & Assurance
Thursday, 13 May 2021

Tone at the top: Diversity starts in the boardroom and the C-suite

Written by Thomson Rueters

Abstract: Diversity, equity and inclusion are buzzwords in strategic management today. This article highlights the benefits that progressive initiatives in these areas bring to public and private companies and how companies can showcase their progress in footnote disclosures and separate diversity, equity and inclusion reports. Diversity, equity and inclusion are buzzwords in strategic management today. Here are some advantages that progressive initiatives in these areas bring to public company boards of directors and private company management teams — and how your company can implement an effective diversity, equity and inclusion (DEI) program...

Published in Audit & Assurance
Friday, 26 March 2021

Convertible instruments: FASB encourages early adoption of new rules

Written by Thomson Reuters

In August 2020, the Financial Accounting Standards Board (FASB) issued updated guidance to simplify the accounting rules for convertible instruments and contracts in an entity’s own equity. The changes will provide investors with less-costly, more-comparable information that’s easier to understand. The updated guidance allows for early adoption but generally no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. A company can adopt the guidance only as of the beginning of its fiscal year...

Published in Audit & Assurance
Friday, 26 March 2021

FASB approves new rules for goodwill triggering events

Written by Thomson Reuters

On February 10, the Financial Accounting Standards Board (FASB) voted 6 to 1 to finalize its December 2020 proposal on the assessment of events that may trigger a goodwill impairment test. However, the scope of the guidance has been expanded to cover a broader number of private companies and not-for-profits in the final rules. Triggering events Goodwill is an accounting term used for a specific acquired intangible asset that’s recorded on the balance sheet in a merger or acquisition. It’s determined by deducting the fair market value of tangible assets, identifiable intangible assets and liabilities obtained in the purchase, from the cost to buy a business...

Published in Audit & Assurance
Tuesday, 09 March 2021

Simplifying the rules for reporting franchise fees

Written by Thomson Reuters

On January 28, 2021, the Financial Accounting Standards Board (FASB) published an accounting workaround to the complicated revenue recognition rules for private franchise businesses. The updated guidance will provide a simpler way for franchisors to account for revenues gleaned for helping franchisees to set up shop. The details Accounting Standards Update (ASU) No. 2021-02, Franchisors — Revenue from Contracts with Customers: Practical Expedient, introduces a practical expedient to Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers...

Published in Audit & Assurance
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