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ACCOUNTING AND SEC HEADLINES:
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Checklists – New Edition of US GAAP Disclosure Checklists Published

We have published new editions our General U.S. GAAP Financial Statement Disclosures Checklist, the General U.S. GAAP Interim Financial Statement Disclosures Checklist, and our various Industry-Specific Disclosures Checklists. These new editions have been updated as necessary for the disclosure and presentation requirements in effect as of June 30, 2020.

These checklists include changes made by the FASB to the FASB Accounting Standards Codification™ (Codification) since the issuance of our checklists dated March 31, 2020, through Accounting Standards Update (ASU) No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities.

Checklist – New Edition of AutoCheck U.S. GAAP Disclosures Checklist and AutoCheck U.S. GAAP Interim Disclosures Checklist Published

The AutoCheck U.S. GAAP Disclosures Checklist and the AutoCheck U.S. GAAP Interim Disclosures Checklist have been updated for the disclosure and presentation requirements in effect as of June 30, 2020.

This checklist includes changes made by the FASB to the FASB Accounting Standards Codification™ (Codification) since the issuance of our checklists dated March 31, 2020, through ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities.

SEC Checklists – New Edition of SEC Disclosure Checklists Published

We have updated the following SEC disclosure related checklists through June 30, 2020:

• Financial Statement Disclosures. This checklist outlines the required SEC disclosures for financial statements included in 1934 and 1933 Act domestic filings that are incremental to U.S. GAAP. The checklist is organized by topic.
• Management's Discussion and Analysis. This checklist outlines the required SEC disclosures for MD&A included in 1934 and 1933 domestic filings, including Forms 10-K and S-1.
• Incremental Certifications, Disclosures, and Reporting Mandated by Sarbanes-Oxley. This checklist outlines the certification, disclosure and reporting requirements resulting from the SEC rules mandated by the Sarbanes-Oxley Act of 2002.
• SEC Form 10-Q checklist. This checklist is for financial and nonfinancial information included in Form 10-Q and is organized by form item number.

We have updated these checklists for select references to COVID-19 guidance issued by the SEC and its staff. However, companies should consider their disclosures regarding COVID-19 and see our COVID-19 Financial Reporting Checklist for special disclosure considerations related to the pandemic.

We have also added reference to a statement issued by SEC Chairman Jay Clayton and others on the importance of significant disclosure when dealing with emerging markets investments.

Insurance Contracts – IASB Issues Amendments to IFRS 17

The IASB has issued amendments to IFRS 17, Insurance Contracts, aimed at helping companies implement the Standard and making it easier for them to explain their financial performance.

The fundamental principles introduced when the IASB first issued IFRS 17 in May 2017 remain unaffected. The amendments, which respond to feedback from stakeholders, are designed to:

• Reduce costs by simplifying some requirements in the Standard;
• Make financial performance easier to explain; and
• Ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time.

The IASB has also issued an amendment to the previous insurance contracts Standard, IFRS 4, so that eligible insurers can still apply IFRS 9, Financial Instruments, alongside IFRS 17.

The deferral of the effective date by two years, to annual reporting periods beginning on or after 1 January 2023, is intended to allow time for an orderly adoption of the amended IFRS 17 by jurisdictions around the world. This should enable more insurers to implement the new Standard at the same time.

Financial Instruments – IASB Issues Amendments to IFRS 9

The IASB has issued an amendment to the previous insurance contracts Standard, IFRS 4, so that eligible insurers can still apply IFRS 9, Financial Instruments, alongside IFRS 17

COVID-19 – SEC Chief Accountant Emphasizes the Continued Need for High Quality Financial Reporting

SEC Chief Accountant Sagar Teotia has published a statement emphasizing the continued importance of high-quality financial reporting for investors in light of COVID-19. Teotia indicates that as “many public companies now prepare for their next reporting cycle (e.g., second quarter financial reporting), we emphasize that the participants in the financial reporting system continue to play an important role in the functioning of our markets and in our collective national effort to mitigate the COVID-19 pandemic. We look forward to our financial reporting system continuing to provide a steady flow of timely, decision-useful information to investors and our public capital markets.”

Topics discussed by Teotia include:

• OCA’s Engagement and Work Related to High-Quality Financial Reporting;
• Engagement with the FASB and the PCAOB;
• Engagement with International Standard Setters and Other Regulators; and
• Engagement with and the Vital Role of Audit Committees.

COVID-19 – SEC Staff Publishes Statement on Paper Document Requirements for Non-Form 144 Documents

The staff of the Division of Corporation Finance (Corp Fin) has published a Statement Regarding Requirements for Certain Paper Documents (other than Forms 144) in Light of COVID-19 Concerns. Corp Fin is aware of logistical difficulties submitting certain forms (other than Forms 144) in paper given the spread of COVID-19. In light of ongoing health and safety concerns related to COVID-19, the staff is providing the following statement to those affected by COVID-19 regarding forms listed in the statement. This staff statement is temporary and covers those who submit the following forms until the staff provides public notice that it no longer will be in effect; that notice will be published at least two weeks before the announced termination date.

COVID-19 – SEC Chairman Provides Update on SEC Relief

SEC Chairman Jay Clayton provided an updated on SEC relief provided in light of COVID-19. The update provides a summary of current targeted, temporary relief and assistance provided by the SEC and staff, along with the staff’s views on whether and, if so, how that relief should be adjusted taking into account market outreach and observations. Clayton indicates that it “is clear that the need for certain relief remains, such as relief to ensure continued remote operations and to provide flexibility in light of continued market volatility.”

Forms 144 – SEC Staff Publishes Statement on Paper Copies of Forms 144

Corp Fin has published a Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns. Corp Fin is aware of logistical difficulties of submitting Forms 144 on paper given the spread of COVID-19. In light of ongoing health and safety concerns related to COVID-19, the staff is providing the following statement to those affected by COVID-19 regarding Forms 144. This staff statement is temporary and covers those who submit Forms 144 until the staff provides public notice that it no longer will be in effect; that notice will be published at least two weeks before the announced termination date.

Volker Rule – Financial Regulators Modify Volcker Rule

The SEC and four other federal regulatory agencies finalized a rule modifying the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds—known as covered funds. The final rule is broadly similar to the proposed rule from January 2020.

The Volcker rule generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund.

Like the proposal, the final rule modifies three areas of the rule by:

• Streamlining the covered funds portion of rule;
• Addressing the extraterritorial treatment of certain foreign funds; and
• Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address.

The rule will be effective on October 1.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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GAAS Practice Manual – 2021 Edition of GAAS Practice Manual Published

We have published the 2021 edition of the GAAS Practice Manual (the Manual). The primary objective of the Manual is to provide the practitioner with a comprehensive and quick reference source for currently effective American Institute of Certified Public Accountants (AICPA) pronouncements of Statements on Auditing Standards (SAS), Statements on Standards for Attestation Engagements (SSAE), Statements on Standards for Accounting and Review Services (SSARS), and interpretations of these standards.

The 2021 Edition of GAAS Practice Manual has been updated for new pronouncements through the issuance of Statement on Auditing Standards (SAS) No. 141 titled, “Amendment to the Effective Dates of SAS Nos. 134–140”; Statement on Standards for Attestation Engagements (SSAE) No. 20 titled, “Amendments to the Description of the Concept of Materiality”; and Statement on Standards for Accounting and Review Services (SSARS) No. 25 titled, “Materiality in a Review of Financial Statements and Adverse Conclusions.”

Payroll Protection Program Lenders – AICPA Issues Accounting Guidance for PPP Lenders

The AICPA and its Depository Institutions Expert Panel (DIEP) has released several Technical Questions and Answers (TQA) to help depository institutions, credit unions, credit card companies, broker-dealers, insurance companies and other lenders appropriately account for the loans they distribute under the Paycheck Protection Program (PPP).

The new TQAs include questions and answer questions under Q&A Section 2130, Receivables, and address how creditors may restructure loans made in response to COVID-19 that result in restructurings that are not troubled debt restructurings and include periods of reduced payments, including payment deferrals, fee waivers, extension of repayment terms or delays in payment. They also answer other related questions regarding the PPP, loan origination fees, and the SBA guarantee.

“Given the unique nature of the PPP, lenders have had many questions about how to account for these types of loans and report on their arrangements. These TQAs provide answers to technical accounting questions that are important for the appropriate financial reporting of PPP program loans and any concessions granted in light of the recent pandemic,” said Jason Brodmerkel, CPA, AICPA Senior Manager, Accounting Standards —Depository and Lending Institutions.

The TQAs include the following:

• Section TQA 2130.41 Determination of the Effective Interest Rate;
• Section TQA 2130.42 Classification of Advances Under the Paycheck Protection Program;
• Section TQA 2130.43 Consideration of the SBA Guarantee Under the Paycheck Protection Program; and
• Section TQA 2130.44 Accounting for the Loan Origination Fee Received From the SBA.

Employee Benefit Plans – AICPA Publishes ERISA Employee Benefit Plan Financial Statement Audit Special Considerations for COVID-19

The AICPA has published ERISA employee benefit plan financial statement audit special considerations—2020: COVID-19 environment implications and financial statement disclosures. This non authoritative tool is intended to help auditors identify whether there are any unique situations to consider from an employee benefit plan audit and/or financial reporting perspective for plan calendar years ending on December 31, 2019.

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GOVERNMENTAL GAAP HEADLINES:
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Checklist – New Edition of Summary Checklist of Recent GASB Standards Published

We have updated our “Summary Checklist of Recent GASB Standards,” for the release of GASB Statement 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The component unit determination provisions in Statement 97 are effective immediately. Others are effective for periods beginning after June 15, 2021.

Revenues and Expenses – GASB Issues Preliminary Views on Revenue and Expense Recognition Models

The Governmental Accounting Standards Board (GASB) issued for public feedback the Preliminary Views, Revenue and Expense Recognition. Comments are due by February 26, 2021.

The GASB has added this project to its technical agenda to:

• Develop guidance applicable to topics for which existing guidance is limited;
• Improve existing guidance that has been identified as challenging to apply;
• Consider inclusion of a performance obligation approach in the GASB’s authoritative literature; and
• Assess existing and proposed guidance based on the conceptual framework.

The GASB intends this Preliminary Views to present its current thinking about the development of a comprehensive, principles-based model that establishes categorization, recognition, and measurement guidance applicable to a wide range of revenue and expense transactions, which, if adopted as standards, is expected to enhance the usefulness of information governments report on their revenues and expenses.

The GASB introduced in the Preliminary Views a new methodology for categorizing transactions, which is then used as a basis for applying recognition proposals. Determining the transaction category would be based on the assessment of specific characteristics that a binding arrangement may or may not contain. This categorization methodology is intended to identify transactions with performance obligations.

If a transaction is determined to have a performance obligation based on the categorization characteristics, the associated revenue or expense would be recognized based on the satisfaction of the performance obligation. For transactions that are determined not to have a performance obligation, the GASB proposed specific recognition guidance based on the various subcategories of transactions (for example, derived taxes, such as income and sales taxes and imposed taxes, such as property taxes).

The GASB has tentatively scheduled a series of public hearings and user forums on the Preliminary to enable stakeholders to share their views with the GASB.

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