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ACCOUNTING AND SEC HEADLINES:
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Lease Accounting -- New Edition of A Closer Look Examines Changes to Leasing Standard
We have issued a new edition of "A Closer Look" that provides a summary of recently issued amendments to ASC Topic 842,
Leases. This edition also examines the accounting transition and disclosure effects of each amendment.
SEC Staff Views -- SEC Chairman Cautions on the Authority Given SEC Staff Views
SEC Chairman Jay Clayton issued a statement clarifying the authority given to SEC staff views vs. the official rules and regulations issued by the SEC. The SEC staff frequently makes their views known through a variety of communications, including written statements, compliance guides, letters, speeches, responses to frequently asked questions and responses to specific requests for assistance. Clayton cautioned that the SEC’s “longstanding position is that all staff statements are nonbinding and create no enforceable legal rights or obligations of the Commission or other parties.”
Clayton believes that the SEC should keep this important distinction in mind and has directed directors of the Division of Enforcement and the Office of Compliance Inspections and Examinations to further emphasize this distinction to their staff. Clayton indicated that “our divisions and offices, including but not limited to the Division of Corporation Finance, the Division of Investment Management and the Division of Trading and Markets, have been and will continue to review whether prior staff statements and staff documents should be modified, rescinded or supplemented in light of market or other developments.”
Capital Formation -- SEC Chairman Discusses Capital Formation
SEC Chairman Jay Clayton recently discussed small business capital formation and efforts by the SEC in this area. Clayton indicated that he believes “the SEC should be keenly focused on helping small businesses from coast to coast access capital to grow, create new jobs, and, in turn, provide investors, including our Main Street investors, expanded investment opportunities. That is why we have been reaching out to and engaging with businesses across the country. We also should recognize, in our analysis, the many connections among small, medium and large businesses, long-term investment capital and, importantly, human capital.”
Clayton shared his views on efforts the SEC has undertaken over the last sixteen months that are intended to foster capital formation, and what should be expected from the SEC’s upcoming regulatory agenda. Topics covered by Clayton included:
- Initial Coin Offerings;
- Efforts to Promote Capital Formation for Public Companies and Companies Considering Going Public;
- Scaled Disclosure Framework for Smaller Companies; and
- Disclosure Modernization and Simplification.
Financial Instruments -- FASB Codification Improvements Discussed
As reported in its "Summary of Board Decisions" publication, the FASB met on September 5, 2018, and discussed proposed amendments to the Codification to clarify implementation issues related to Accounting Standards Updates No. 2016-13,
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, No. 2017-12,
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, and No. 2016-01,
Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.
The FASB decided to amend the guidance in Update 2016-13 for each of the following issues:
- Effective interest rate (EIR) for variable rate loans;
- Adjusting the EIR for prepayment expectations;
- Consideration of costs to sell when foreclosure becomes probable;
- Clarification that reinsurance receivables are within the scope of Subtopic 326-20;
- Reference error in paragraph 310-40-55-14; and
- Cross-references in the guidance for equity method losses.
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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Lease Accounting -- New Edition of A Closer Look Examines Changes to Leasing Standard
As discussed above, we have issued a new edition of "A Closer Look" that provides a summary of recently issued amendments to ASC Topic 842,
Leases. This edition also examines the accounting transition and disclosure effects of each amendment.
International Entities -- 2018-2019 Edition of Knowledge-Based Audits of International Entities
We have published the 2018-2019 edition of
CCH's Knowledge-Based Audits™ of International Entities.This publication provides practitioners with the most effective approach for conducting audits of international commercial entities. This guide features in-depth discussions of CCH's Knowledge-Based Audit™ (KBA) methodology, a risk-based methodology that is fully compliant with the International Standards on Auditing (ISAs) promulgated by the International Auditing and Assurance Standards Board (IAASB).
This edition of the publication provides guidance on the implementation of the standards and rules promulgated by the IAASB, as well as best practices based on the guidance promulgated by other regulators. This guide has been updated to include guidance on the ISAs through April 2018.
See our Literature Updates for complete details.
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