Peer Review & Risk Assessment
The AICPA has updated the Peer Review Manual to address identified issues in Risk Assessment. According to the Journal of Accountancy, one in ten firms fail to comply with the risk assessment suite. As a result, the Peer Review Program Manual was updated to include specific guidance regarding evaluation of noncompliance with the risk assessment standards. The changes were effective October 1, 2018. Risk assessment, internal controls and documentation will continue to be targets of the AICPA based on the results of the Enhancing Audit Quality (EAQ) Initiative.
Q3 in Review
This blog gives a high level of overview of what standard setters issued during the third quarter of 2018! Q3 was a busy quarter for FASB. They rolled out several final standards ranging from niche industry guidance for insurance entities to two lease updates. They also rolled out an update to the concept statements which resulted in two ASUs removing, adding and clarifying disclosures for fair value and defined benefit plans. GASB also issued one final statement on equity interests.
Recognition of Elements of Financial Statements
GASB has proposed a Preliminary Views Document for a Concept Statement – Recognition of Elements of Financial Statements. The concept statement addresses recognition which deals with measurement focus and basis of accounting, what should be reported and when. The PV proposes a short-term financial resources measurement focus (which was discussed in last week blog on the PV for the Financial Reporting Model) and an economic financial resources measurement focus. The PV also includes a hierarchy for recognition. Comments are due by February 15, 2019.
Financial Reporting Model Improvements
GASB has issued a Preliminary Views document, Financial Reporting Model Improvements. It is a follow up to the ITC proposed in December 2016. The PV introduces the short-term financial resources measurement focus for governmental funds which also brings a change in format to governmental fund financial statements. Also addressed in the PV is the definitions of operating and nonoperating revenues and expenses. The PV also addresses new subtotals for proprietary fund financial statements, requires two new variance columns for budgetary information and introduces a new schedule of government wide expenses by natural classification. Comments are due by February 15, 2019.
Section 457 Deferred Compensation Plans
GASB is performing pre-agenda research on Deferred Compensation Plans–Reexamination of Statement 32. The research is to understand current terms and conditions regarding Section 457 plans. To get feedback, they have issued a quick survey that looks to obtain information about 457 plans to determine if any changes to guidance are needed. Interested parties can respond at
https://www.fafsurveys.org/se/4CA36E9202A9610E. Responses are due Friday, October 19, 2018.
Multiemployer Benefit Plans Chapter
The AICPA has issued a draft of a chapter for its EBP guide on multiemployer benefit plans. The chapter and related appendices address accounting and reporting for Taft-Hartley plans. The AICPA is seeking feedback on the proposed draft. Comments are due November 6th.
EAQ – Audit Risk Assessment Tool
As part of the AICPA’s enhancing audit quality initiative, the AICPA has started to create forms and templates firms can use to document their considerations in areas where deficiencies have been found. The AICPA recently released a risk assessment template that assists firms with proper documentation and consideration of the risk assessment suite. It even includes videos! The template can be found at: https://www.aicpa.org/interestareas/frc/auditattest/riskassessment.html
Credit Losses – Improvements to Topic 326
FASB has issued an exposure draft to make two updates to the credit loss standard. The first proposal would delay the effective date for nonpublic entities by one year. In addition, the exposure draft clarifies that operating leases are not in the scope of Topic 326. Comments are due in September.
Disclaimer: The information contained within this blog is provided for informational purposes only. Viewing this material does not qualify for CPE credit. Additionally, this general knowledge is not intended to substitute for obtaining accounting, legal, or financial advice from a professional accountant with specific knowledge of your organization. Finally, watching this blog and/or subscribing to the newsletter do not create an accountant-client relationship.
