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ACCOUNTING AND SEC HEADLINES:
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Guarantor Disclosures – SEC Amends Rules on Financial Disclosures about Guarantors and Issuers of Guaranteed Securities
The SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. These changes are intended to both improve the quality of disclosure and increase the likelihood that issuers will conduct debt offerings on a registered basis.
The amended rules focus on “the provision of material, relevant, and decision-useful information regarding guarantees and other credit enhancements, and eliminate prescriptive requirements that have imposed unnecessary burdens and incentivized issuers of securities with guarantees and other credit enhancements to offer and sell those securities on an unregistered basis. In doing so, the final amendments are intended to improve disclosure and reduce the SEC registration-related compliance burdens for issuers, including the time burden of collecting information that will no longer be required, and provide investors with protections that would not be present in an unregistered offering.”
The amendments will be effective on January 4, 2021, but voluntary compliance will be permitted in advance of the effective date.
Fund Names – SEC Requests Comment on Fund Names Rule
The SEC has issued a request for public comment on its current requirements that restrict the use of potentially misleading fund names. The SEC indicates that fund names are “often the first piece of information investors see and they can have a significant impact on an investment decision.”
The request seeks feedback on whether the current requirements are effective and whether there are viable alternatives that the SEC should consider. The request is the latest in the SEC’s ongoing efforts to review and improve our existing rules to better inform and protect investors.
Comments are due by 60 days from publication in the
Federal Register.
Investment Advisors – SEC Amends Certain Exemptions from Investment Adviser Registration
The SEC adopted amendments to two rules in order to implement congressionally mandated exemptions from registration for investment advisers who advise rural business investment companies (RBICs). These exemptions were enacted as part of the RBIC Advisers Relief Act of 2018, which amended the Investment Advisers Act.
According to the SEC, the agency adopted amendments to rules 203(l)-1 and 203(m)-1. These rules implement exemptions from SEC registration for advisers to venture capital funds and private funds. The amendments include RBICs in the definition of the term “venture capital fund” and exclude their assets from the definition of the term “assets under management” for purposes of the private fund adviser exemption.
Advisers to RBICs, which are licensed by the U.S. Department of Agriculture, use the equity raised in capitalizing their funds to make venture capital investments mostly in smaller enterprises located primarily in rural areas.
The amendments are effective upon publication in the
Federal Register.
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AUDITING AND INTERNAL CONTROLS HEADLINES:
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Dealerships – 2018-2019 Edition of Knowledge-Based Audits, Preparations, Compilations and Reviews of Dealerships Guide Published
We have published the 2018-2019 edition of
Knowledge-Based Audits, Preparations, Compilations and Reviews of Dealerships Guide. This new edition provides guidance for various types of dealerships, including retail automotive, heavy truck, marine and motorcycle.
This edition of the guide provides guidance on the implementation of the standards and rules promulgated by the ASB, as well as best practices based on the guidance promulgated by the PCAOB and other regulators and examines all applicable review, compilation, and preparation engagement standards and shows you how to conduct engagements in the most efficient and thorough manner possible.
This guide has been updated to include guidance on the ASB's Statement on Auditing Standards (SAS) No. 133,
Auditor Involvement with Exempt Offering Documents, as well as accounting requirements of the FASB, current through the
FASB Accounting Standards Codification as of December 31, 2018, and through Accounting Standards Update (ASU) No. 2018-05,
Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.
This publication is current through SSARS-24,
Omnibus Statement on Standards for Accounting and Review Services—2018; AICPA Audit Risk Alert
Developments in Preparation, Compilation, and Review Engagements—2017/18; the AICPA Guide
Preparation, Compilation and Review Engagements; the revised AICPA Code of Professional Conduct (Code); and ET Section 1.295
Nonattest Services.
SOC for Supply Chain – New AICPA Guide Published
This AICPA Guide,
SOC for Supply Chain: Reporting on an Examination of Controls Relevant to Security, Availability, Processing Integrity, Confidentiality, or Privacy in a Production, Manufacturing, or Distribution System, has been developed by members of the SOC for Supply Chain Working Group of the AICPA Assurance Services Executive Committee (ASEC) in conjunction with members of the Auditing Standards Board (ASB).
The purpose of the guide is to assist practitioners engaged to examine and report on a system that produces, manufactures, or distributes products, including controls over one or more of the:
- Security of the entity’s system;
- Availability of the entity’s system;
- Processing integrity of the entity’s system;
- Confidentiality of the information that the entity’s system processes or maintains for customers and business partners; and
- Privacy of personal information that the entity’s system collects, uses, retains, discloses, and disposes of for customers and business partners
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