Audit & Assurance

Tuesday, 28 August 2018

SEC proposes changes to the whistleblower program

Written by Thomson Reuters

The Securities and Exchange Commission (SEC) is proposing amendments to its guidelines for reviewing whistleblower claims and handing out awards to people who report wrongdoing. Here’s an overview of the SEC whistleblower program and proposed changes to make the program more effective and efficient.  What is the whistleblower program? In 2010, Congress established the whistleblower program for the SEC to administer under the Dodd-Frank Wall Street Reform and Consumer Protection Act...

Published in Audit & Assurance
Tuesday, 28 August 2018

Identifying cyber risks in an audit

Written by Thomson Reuters

As the frequency and severity of cyber attacks have increased, data security should be a critical part of the audit risk assessment. The Public Company Accounting Oversight Board (PCAOB) made cybersecurity one of the areas of focus for inspection about three years ago. Here’s what that project has revealed so far. Increased scrutiny During a June 2018 meeting of the Standing Advisory Group, PCAOB inspectors reported that public company auditors today are increasingly focused on matters related to cybersecurity...

Published in Audit & Assurance
Tuesday, 28 August 2018

FASB simplifies accounting rules for stock compensation

Written by Thomson Reuters

The Financial Accounting Standards Board (FASB) has expanded the scope of its stock compensation guidance to include share-based payments to nonemployees for goods and services. The amendment to U.S. Generally Accepted Accounting Principles (GAAP) eliminates existing guidance that called for businesses that give stock awards to independent contractors or consultants to follow a separate standard from the one used for employee stock compensation...

Published in Audit & Assurance
Tuesday, 29 May 2018

Adopting the new revenue recognition standard: Lessons from the front lines

Written by Magdalena Marriott, CPA, MBA, CISA

For companies that follow generally accepted accounting principles (GAAP) in the U.S., adoption of the new revenue recognition standard is in full swing. Calendar-year public companies were required to adopt the new standard as of  Jan...

Published in Audit & Assurance
Monday, 02 April 2018

New standards highlight the importance of strong internal controls

Written by Thomson Reuters

Companies need to pay close attention to how the adoption of some of the FASB’s new standards may affect their control systems in 2018 and beyond. In particular, major changes to the accounting requirements for reporting revenue, leases and credit losses will bring challenges when it comes to testing internal control over financial reporting (ICFR). Here’s how the impending changes will affect public and private companies — and their auditors. Public companies  In the next few years, public companies must adopt three major accounting rule changes: Accounting Standards Update (ASU) No...

Published in Audit & Assurance
Monday, 02 April 2018

Disclosing cybersecurity risks

Written by Thomson Reuters

In the wake of the Equifax breach, which exposed personal information of roughly 145.5 million people, the Securities and Exchange Commission (SEC) has announced plans to update its interpretive guidance for disclosing cybersecurity issues. The SEC wants to remind public companies of their responsibility to keep investors informed when data is breached or severe hacks are attempted. Need for change At a recent American Bar Association meeting, David Fredrickson, chief counsel of the SEC’s Division of Corporation Finance, said that the SEC doesn’t expect to overhaul its Disclosure Guidance: Topic No...

Published in Audit & Assurance
Monday, 02 April 2018

Fair value returns to the spotlight

Written by Thomson Reuters

In December 2015, the Financial Accounting Standards Board (FASB) released a proposal intended to improve financial statement disclosures about the estimates used to determine the fair values of assets and liabilities. After an almost two-year lull, the FASB resumed its deliberations on this project and, in March 2018, voted to approve its 2015 proposal. Here’s a closer look at fair value and how the requirements for reporting fair value will change under the updated standard. Fair value hierarchy Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly market transaction, as opposed to a fire sale or other unusual circumstance...

Published in Audit & Assurance
Monday, 02 April 2018

Disclosure relief: SEC redefines “smaller reporting company”

Written by Thomson Reuters

In the coming months, the Securities and Exchange Commission (SEC) is expected to revise the definition of “smaller reporting company.” This change will allow more companies to file reports with a lighter load of disclosures. The goals are twofold: The proposal aims to promote capital formation and to reduce the compliance costs for smaller companies. Scaled disclosures Under Rule 405 of the Securities Act of 1933, small reporting companies are currently defined as those with a public float up to $75 million or zero public float but annual revenues under $50 million...

Published in Audit & Assurance
Monday, 02 April 2018

FASB proposes updated standard for cloud computing

Written by Thomson Reuters

The Financial Accounting Standards Board (FASB) recently issued a proposal to clarify how to account for the costs of setting up business software packages that are managed in the cloud. If finalized, the proposal would let more of the costs of implementing a cloud computing contract be spread over the contract’s life. Reporting hosting arrangements In April 2015, the FASB published Accounting Standards Update (ASU) No. 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement...

Published in Audit & Assurance
Thursday, 15 March 2018

COSO updates ERM framework for sustainability issues

Written by Thomson Reuters

In recent years, an increasing number of companies have voluntarily issued so-called “sustainability” reports in response to growing interest from investors and lenders about potential environmental, social and governance (ESG) risks. Unfortunately, these reports often vary significantly from company to company. In February, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD) proposed an updated draft of COSO’s Enterprise Risk Management — Integrated Framework that addresses the growing interest in ESG issues.  Here’s more on sustainability reporting and how enhancing an organization’s enterprise risk management (ERM) framework may help reduce ESG risks...

Published in Audit & Assurance
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