Proposed SAS – Auditing Accounting Estimates & Related Disclosures
The AICPA has issued another proposed SAS titled Auditing Accounting Estimates & Related Disclosures. The proposal was issued in August 2019. The project was driven by high rates of nonconformity found in auditing estimates as it is the most common audit issue detected by practice monitoring programs worldwide. The standard addresses risk assessment and response as well as audit procedure interweaving its requirements with other sections of the audit standards. Comments are due November 22, 2019.
Proposed SAS – Conforming Edits to 800 Series
The AICPA has issued a proposal to align the 800 section of the auditing standards with SAS 134. The proposal addresses special purpose frameworks, single financial statements and elements as well as summary financial statements. The goal was to align the report with some modifications due to topics. Comments are due October 28, 2019.
Reference Rate Reform & Balance Sheet Classification of Debt
This week’s blog covers two big proposals from FASB that just came out. The first proposal relates to the movement away from LIBOR. As LIBOR has come under scrutiny there has been a movement to replace LIBOR as a reference rate. However, changing the reference rate can cause significant issues for hedging and other relationships. As a result, FASB is proposing a gentler approach to reference rate reform that will help those impacted by LIBOR’s replacement. The second proposal addresses the never-ending drama related to balance sheet classification of debt. While it sounds like an easy area, the movement to a principles-based approach has identified some impacts that may be unexpected. As such, FASB is reproposing the standard to gather feedback. Both standards will impact many entities so we wanted to get them out there in a timely manner!
New Valuation Guide
The AICPA has published the Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies guide. The guide is intended to help preparers, auditors, and valuation specialists with the accounting for and valuation of portfolio company investments held by investment companies that fall under the scope of FASB’s Accounting Standards Codification ASC 946, Financial Services—Investment Companies. The guide was developed by the AICPA PE/VC Task Force which includes members from the PE/VC industry, auditors, valuation practitioners, and AICPA staff.
Two Proposals to Delay Effective Dates for Private Entities
This blog addresses two proposed ASUs that will delay effective dates for private companies. Now that private companies have started to implement revenue recognition, we know that it takes more effort for private companies to go through the adoption process. In addition, private companies struggle with the back to back nature of these major changes and have to triage each standard. As a result, the FASB is proposing delaying the CECL, hedging and leases standard for private companies. During this process, the Board also updated its framework for effective dates for private companies. In addition, to the three standards, FASB issued a separate exposure draft delaying the effective date of long-duration contracts for all entities.
2 GASB Exposure Drafts – 20XX Omnibus & 457 Plans
https://youtu.be/f7IPQ51mdPk This week's blog is a two for one special. GASB has issued two niche exposure drafts. The first is the 20XX Omnibus that addresses a variety of very specific technical issues and corrections. The second addresses the scope of pension...
ITC – Identifiable Intangible Assets and Subsequent Accounting for Goodwill
https://youtu.be/791it9X8x-U FASB has issued an Invitation to Comment aimed to provide feedback to the standard setter on the subsequent accounting for goodwill as well as feedback related to identifiable intangibles. In 2014, the FASB using a PCC alternative allowed...
Information Systems Services
The AICPA’s Professional Ethics Executive Committee (PEEC) of the AICPA has published a revision to Independence Rule Interpretations related to Information System Services. The interpretation offers guidance to members that provide nonattest services related to an attest client’s information systems. It is much more detailed than previous guidance in order to help members understand under what circumstances independence would be impaired and when it would not be impaired. The newly released amendment is effective on January 1, 2021 and early implementation is allowed.
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