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ACCOUNTING AND SEC HEADLINES:
Segment Reporting -- FASB Discusses Segment Reporting
As reported in its "Summary of Board Decisions" publication, the FASB met on December 19, 2018, and discussed feedback received on the 2018 segment aggregation study. That study considered alternatives to improve the aggregation criteria and the reportable segments process. The FASB acknowledged the challenges identified by participants in the study. Specifically, the FASB was concerned that the alternatives could increase the frequency of restatements of segment information in prior reporting periods. The FASB also was concerned about the incentive for entities to use the flexibility within the management approach to work around the alternatives. Overall, the FASB was not persuaded that the alternatives provided cost-beneficial solutions.
The FASB directed its staff to focus next on the segment disclosure requirements in order to facilitate a second segment reporting study. As part of that effort, the FASB staff will analyze options to improve how the management approach applies to the segment disclosure requirements, specifically, the meaning of “regularly reviewed” information. The staff plans to bring that analysis to the FASB at a later date. The FASB plans to make technical decisions upon the conclusion of both studies.
Hedge Accounting – New Benchmark Interest Rate Discussed
We have published a new edition of the GAAP Update Service. This new edition discusses FASB Accounting Standards Update (ASU) No. 2017-12, Targeted Improvements to Accounting for Hedging Activities
. This new guidance affects companies that apply hedge accounting to hedges of interest rate risk. It makes one very narrow, but important, change to US GAAP. Specifically, the new rule adds the overnight index swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) to the list of acceptable US benchmark interest rates for hedge accounting purposes.
Debt and Equity – New Edition of Accounting for Debt and Equity Securities Interpretation Published
We have added a new edition of our interpretation, Accounting for Certain Investments in Debt and Equity Securities - Interpretations of Topics 320 and 321
. This interpretation provides a general background on FASB Accounting Standards Codification Topic 320, Investments—Debt Securities
, and Topic 321, Investments—Equity Securities
, along with interpretations of specific paragraphs and provisions, as well as guidance in the form of questions and answers related to Topics 320 and 321.
With some narrow exceptions, Topics 320 and 321 apply to all for-profit entities, not just financial institutions.
Loan Impairments – New Edition of Accounting by Creditors for Impairment of a Loan Interpretation Published
We have added a new edition of our interpretation, Accounting by Creditors for Impairment of a Loan
. This interpretation addresses the accounting by creditors for impairment of certain loans and is derived from Topic 310, Receivables
. The guidance herein does not apply to all receivables, but rather refers only to the measurement and disclosure related to a subset of the population of loans. This subset consists of loans that are identified for evaluation and that are individually deemed to be impaired. It also applies to all loans that are restructured in a troubled debt restructuring involving a modification of terms.
AUDITING AND INTERNAL CONTROLS HEADLINES:
Not-for-Profit Reporting-- 2019 Edition of CCH's Not-for-Profit Reporting Published
We have published the 2019 edition of CCH’s Not-for-Profit Reporting
. This guide is a vital resource that puts expert analysis and explanations of not-for-profit accounting, financial reporting, and regulatory reporting at your fingertips. Our not-for-profit experts translate complicated jargon to make difficult issues understandable.
The 2019 Edition of Not-for-Profit Reporting has been reorganized and updated throughout with the very latest information from the FASB’s ASC and industry best practices that may assist preparers and users of not-for-profit organization financial statements. This publication includes illustrative example financial statements for a not-for-profit organization. An appendix presents a comprehensive example not-for-profit-entity set of financial statements with notes after implementation of ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities
, and 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.
Quality Control – 2019 Edition of CPA’s Guide to Quality Control and Peer Reviews Published
We have published the 2019 edition of the CPA’s Guide to Quality Control and Peer Reviews
. The publication is organized into 12 chapters that provide a straightforward and practical reference for formulating a quality control system and ensuring effective regulation of all but the largest of CPA firms.
The 2019 Edition of CPA's Guide to Quality Control and Peer Reviews includes:
Revenue Recognition – Auditing the Five-Step Model in ASC Topic 606 Discussed
- Expanded and updated discussions and practical application material for current AICPA concerns in the areas of leadership responsibilities for quality control, nonattest services, appropriateness and effectiveness of continuing education; and risk assessment documentation.
- Expanded resources for detecting and resolving quality control problems.
- Updates on the status of the AICPA Peer Review Integrated Management Application (PRIMA).
- More than 65 practice aids, including four new practice aids to assist firms in responding to peer review findings, and enhancements to the examples of completed quality control documents that firms can tailor to serve as their own quality control documents.
We have published a new edition of the GAAS Update Service. This new edition is intended to assist auditors to focus on certain key considerations that are relevant to auditing the five-step model of ASC 606.
Fiduciary Activities -- GASB Proposes Implementation Guide on Fiduciary Activities
The Governmental Accounting Standards Board (GASB) has issued the proposed Implementation Guide, Fiduciary Activities
. The proposal includes numerous questions and answers about the GASB’s standards on accounting and financial reporting for fiduciary activities, GASB Statement No. 84, Fiduciary Activities
, adopted two years ago. The comment deadline is February 28, 2019.
The GASB intends for its Implementation Guides to clarify, explain, or elaborate on the requirements of GASB pronouncements. To that end, the exposure draft includes questions and answers related to accounting and financial reporting for fiduciary activities in accordance with the requirements of Statement 84.
Topics covered by the new questions and answers include:
- Identifying fiduciary activities;
- Reporting fiduciary activities in fiduciary funds;
- Statement of fiduciary net position;
- Statement of changes in fiduciary net position; and
- Reporting fiduciary component gains.
In addition, the exposure draft proposes amendments to questions and answers previously issued by the GASB in Implementation Guides 2015-1 and 2017-2. The amendments in the Exposure Draft, if adopted as proposed, will supersede these Implementation Guides.
Most of the guidance in the proposed Implementation Guide is expected to be effective for financial reporting periods beginning after December 15, 2018. The guidance in Questions 5.2 and 5.5 (relating to amendments of questions concerning operations of public employee retirement systems in previous Implementation Guides) is expected to be effective for financial reporting periods beginning after June 15, 2019.
GASB Implementation Guide -- GASB Proposal Discussed
We have published a new edition of the Governmental GAAP Update Service. This new edition discusses the GASB’s proposed update to its Implementation Guide. This year’s Exposure Draft proposing to update the existing
Implementation Guide questions and posing some new questions has the least amount of changes since the issuance of the comprehensive Implementation Guide in 2015. Only 15 questions are new proposed questions. Four existing questions are proposed to be amended.
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