Audit & Assurance

Monday, 14 September 2020

Coming soon: Updated rules for reporting convertible instruments

Written by Thomson Reuters

The Financial Accounting Standards Board (FASB) recently issued new guidance to simplify the accounting rules for convertible instruments and contracts in an entity’s own equity. Though narrower than initially proposed, the changes will provide investors with more-comparable information that’s easier to understand. Here are some FAQs about the changes.  Why are the rules changing?..

Published in Audit & Assurance
Monday, 14 September 2020

FASB to consider goodwill amortization for public companies

Written by Thomson Reuters

The Financial Accounting Standards Board (FASB) is currently researching an approach that would allow public companies to amortize goodwill. Here are the details of this ongoing project.  Reporting goodwill Goodwill is an acquired intangible asset that comes on the balance sheet through a business combination. The book value of goodwill is determined by deducting from the cost to buy a business the fair market value of tangible assets, identifiable intangible assets and liabilities obtained in the purchase...

Published in Audit & Assurance
Monday, 14 September 2020

Hot topics for public company audit committees

Written by Thomson Reuters

The COVID-19 crisis has dramatically altered the business world, creating new risks, uncertainties and, in some cases, opportunities. What are audit committee chairs most concerned about during these unprecedented times? Ongoing outreach project Each year, the Public Company Accounting Oversight Committee (PCAOB) actively reaches out to capital market participants to identify critical issues that audit committees are dealing with. In 2019, during PCAOB audit inspections, nearly 400 audit committee chairs of U...

Published in Audit & Assurance
Tuesday, 01 September 2020

Reminder: Management is responsible for going-concern assessments

Written by Thomson Reuters

Going-concern issues are in the spotlight during the COVID-19 crisis. Under U.S. Generally Accepted Accounting Principles (GAAP), management, not auditors, is responsible for stating whether there’s substantial doubt about a company’s ability to continue as a going concern...

Published in Audit & Assurance
Tuesday, 01 September 2020

FASB proposes another delay for updated insurance standard

Written by Thomson Reuters

On July 9, the Financial Accounting Standards Board (FASB) issued a proposal that would give insurers an additional year to implement the updated accounting standard for long-duration contracts. Insurers requested the delay in light of COVID-19 challenges. Update calls for major changes Accounting Standards Update (ASU) No. 2018-12, Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued in August 2018 to improve and simplify the reporting requirements for long-term insurance policies...

Published in Audit & Assurance
Tuesday, 01 September 2020

No more accounting rules, please!

Written by Thomson Reuters

Though the full effects of the COVID-19 pandemic are yet unknown, every business and not-for-profit organization is affected in some way. Executives have been working tirelessly to devise contingency plans and rework their companies’ goals and budgets to address potential risks. Some lawmakers and regulators are responding with potential relief measures. Congressional letter to SEC House Financial Services Chair Maxine Waters recently sent a letter to the Securities and Exchange Commission (SEC), urging it to halt all rulemakings not relating to the COVID-19 crisis...

Published in Audit & Assurance
Monday, 20 July 2020

COVID-19-related government assistance: To report or not to report?

Written by Thomson Reuters

Investors, lenders and market analysts rely on accounting rules published by the Financial Accounting Standards Board (FASB) to get the insight they need about companies, especially when rare events take place. Some stakeholders worry that — because the FASB never completed its 2015 proposal on government assistance disclosures — companies may fail to report COVID-19-related financial relief in a transparent and consistent manner. This information could prove material to stakeholders’ investment and lending decisions. At a recent meeting, FASB members discussed how companies should disclose COVID-19-related financial relief measures...

Published in Audit & Assurance
Monday, 20 July 2020

AICPA issues guidance on reporting PPP loans

Written by Thomson Reuters

The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act designated $349 billion in Paycheck Protection Program (PPP) loans to help small businesses stay afloat during the COVID-19 crisis. The Small Business Administration (SBA) will forgive PPP loans if certain conditions are met. Recipients of PPP loans are unclear about how to account for these loans, however. Should these arrangements be treated as loans or grants under U...

Published in Audit & Assurance
Monday, 20 July 2020

Dispelling EBITDAC rumors

Written by Thomson Reuters

Stakeholders have long been concerned about financial metrics that don’t comply with U.S. Generally Accepted Accounting Principles (GAAP). But a new non-GAAP figure — earnings before interest, taxes, depreciation, amortization, and coronavirus (EBITDAC) — has resurrected the debate over whether companies should be allowed to use these unaudited metrics...

Published in Audit & Assurance

In response to the novel coronavirus (COVID-19) crisis, the implementation deadlines have been deferred for the updated accounting rules on current expected credit losses (CECL), revenue recognition and leases. But those deferrals apply only to certain entities. In particular, the CECL deferral excludes publicly traded insurers, credit card companies and auto lenders. Now these overlooked creditors are asking the Financial Accounting Standards Board (FASB) to extend them the same relief...

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