Genuine Learning Blog
The Genuine Learning Blog is a video series designed to keep you abreast of the latest developments in accounting and auditing. This is a not a teaser, marketing tool. This blog breaking down new proposals from GASB, FASB, and the AICPA into short manageable videos. Watching this series will make you better informed than your peers!
If you thought we were done with Revenue Recognition and Topic 606, you would definitely be surprised to hear that the Financial Accounting Standards Board (FASB) issued an exposure draft this morning to address revenue recognition for franchisors by offering a practical expedient. This standard was foreshadowed in the discussion for ASU 2020-05 which delayed revenue recognition by one year for private entities. Comments are due November 5th.
The AICPA has issued a Technical Q&A (TQA) titled Accounting for Lease Components in Type A Life Care Contracts by Continuing Care Retirement Communities. Issued August 2020, the TQA addresses common questions in the healthcare arena related to the application of lease accounting (Topic 842) for Type A Life Care Contracts. The TQA provides CCRCs with common considerations to determine whether there is a lease and if so, what the appropriate accounting would be. This has been a hot topic for the CCRC industry and many will be grateful to have some guidelines for accounting purposes which should reduce diversity in practice.
Cryptocurrency is becoming a more recognized transaction with more entities participating in this ecosystem. The AICPA has issued non-authoritative guidance on accounting and auditing digital assets. Current FASB does not have authoritative guidance in this area, so the practice aid addresses some common considerations. In addition, it addresses the questions firms need to address before accepting a client and provides procedures to ensure that digital asset risks are properly identified and an appropriate audit response is performed. We’ll take a high-level look at some of the considerations for those contemplating moving into this area.
The AICPA has issued a proposed SAS to clarify and improve the risk assessment standards. For the past few years, the AICPA has focused its audit quality initiatives on risk assessment. Now that the IAASB has issued a final standard, the AICPA is proposing changes to align with the ISAs but also help firms better understand how to use risk assessment to plan and perform effective and efficient audits. This video blog covers the major changes in the standards. Comments are due November 25th.
The AICPA has issued nonauthoritative guidance from its Materiality Working Group of ASEC designed to assist practitioners in determining when there is a material misstatement in an attest engagement. As many attestation engagement include subject matter that are not quantifiable, the guidance provides examples of how to insure compliance with the attest standards and truly evaluate findings in a variety of subject matter.
FASB has proposed its newest PCC alternative for private company GAAP. The proposal would permit the use of 409A valuations for GAAP purposes when valuating equity based options. Comments are due October 1.
https://youtu.be/u3mp8yA8YZc GAO has issued an audit alert to provide some considerations for auditors as to how COVID19 will impact Yellow Book audits. The alert addresses risk assessment, audit evidence, quality control. While nonauthoritative, the alert can help...
FASB has issued a proposed Concept Statement addressing the definition of elements of financial statements. The 10 key elements (assets, liabilities, equity etc.) are getting an update to better define the key components that describe an element. Comments are due November 13th.
GASB has proposed its Exposure Draft which would improve the financial reporting model. The proposal includes changes to MD&A, extraordinary items, presentation of proprietary funds, and implements the short-term financial resource measurement focus for governmental funds which was introduced in an ED earlier this month. Comments are due February 26, 2021.
FASB has issued an exposure draft that would delay the effective date of ASU 2018-12 which provides updated guidance on financial reporting for long duration insurance contracts. The ED would also provide for transition relief for entities who early adopt. Comments are due August 24th.
GASB has issued a preliminary views document which is their second phase in updating revenue and expense guidance. Building on the ITC issued in 2018, the PV continues to develop the model for categorization, recognition, and measurement. In lieu of the 3 methods proposed in the ITC, GASB has developed a Category A / Category B. For those familiar with the FASB guidance in Topic 606, the introduction of performance obligations for Category A should feel somewhat similar. Due to the scope of the project, COVID19 and upcoming fiscal year ends for many governments, comments are not due until February 2021.
GASB has proposed major changes to the concept statements for recognition. The proposal further develops the concept of the short term financial resources measurement focus. It makes changes to these concepts from the prior preliminary views document. Comments are due February 26, 2021.
This week we review the standards issued and proposed in the second quarter of 2020 for GASB, FASB, and the AICPA. While it was a slower quarter, GASB did manage to finalize quite a few final standards while also issuing exposure drafts for the conceptual framework and a preliminary views document on revenue and expenses. FASB focused solely on COVID19. The AICPA addressed COVID19, as well, while also issuing the final standard in their reporting suite and four TQAs.
OMB has issued an updated memo addressing Covid-related flexibilities provided under prior OMB Memos. Many of the flexibilities offered in the earlier memos have been rescinded. The memo does permit two flexibility measures to continue – coverage of salaries and single audit submission deadlines. However, the flexibility for 2020 year ends has been rescinded.
The AICPA has issued a Technical Q&A to provide guidance on how nongovernmental entities should account for monies received under the CARES Act. The Q&A addresses questions related to how to account for the forgiveable portion of the PPP loans. GASB has issued a separate exposure draft addressing accounting for governmental entities.
GASB has issued an exposure draft, Accounting and Financial Reporting Issues Related to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020 and Coronavirus Diseases, to address questions relating to the proper accounting for CARES Act funding including PPP. The Q&A addresses questions about whether this would be treated as an extraordinary or special item, as operating or nonoperating revenue and when does a forgivable loan become revenue. Comments are due June 25th.
The National Association of State Boards of Accountancy (NASBA) has proposed revisions to the Uniform Accountancy Act (UAA) Model Rules. The AICPA has already approved CPA Evolution and thus now changes are needed to the UAA. The proposed revisions make changes to the educational requirements for sitting for the CPA exam. Changes include a focus on professional skepticism as well as data analytics. The goal is to encourage uniformity between states for licensure. Comments are due August 31, 2020.
GAO has issued an alert addressing COVID and Yellow Book CPE requirements. More rules being relaxed. It does NOT change CPE requirements for any other organizations. The relaxation of CPE is intended to be responsive to the cancellations of many CPE events due to COVID19.
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.
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