Accounting Research Manager^TM

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ACCOUNTING AND SEC HEADLINES:
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A Closer Look -- New Edition of A Closer Look Discusses 2018 U.S. GAAP and SEC Rule Changes
We have published a new edition of "A Closer Look" that discusses recent changes to requirements that may impact year-end financial reporting. 2018 has seen some of the most significant changes in the history of financial reporting. This “year in review” edition takes a closer look at:

• FASB Accounting Standards Updates that could affect 2018 year-end financial reporting including:
• Adoption of lease standard
• Hedge accounting
• Implementation of standard on credit losses
• SEC Rules, Regulations and Related Items including:
• Disclosure update and simplification
• Smaller reporting company definition
• SAB Topic 11M (SAB 74) disclosure
• In-Line XBRL tagging
• Tax Cut and Jobs Act disclosures
• Threshold for additional disclosure by private companies in offerings of securities to employees
• Cybersecurity
• Non-GAAP financial measurers
• Corp Fin Release of Certain Staff Communications and Serious Deficiency Letters
• SEC Staff Views

You may want to save this edition to your desktop. It is sure to be a valuable resource as you plan and prepare your 2018 financial reporting.

Collaborative Agreements -- FASB Improves the Accounting for Collaborative Arrangements
The FASB has issued Accounting Standards Update (ASU) No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, that clarifies the interaction between the guidance for certain collaborative arrangements and the Revenue Recognition financial accounting and reporting standard.

A collaborative arrangement is a contractual arrangement under which two or more parties actively participate in a joint operating activity and are exposed to significant risks and rewards that depend on the activity’s commercial success. The ASU provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard.

The ASU also provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. It accomplishes this by allowing organizations to only present units of account in collaborative arrangements that are within the scope of the revenue recognition standard together with revenue accounted for under the revenue recognition standard. The parts of the collaborative arrangement that are not in the scope of the revenue recognition standard should be presented separately from revenue accounted for under the revenue recognition standard.

For public companies, the amendments in ASU No. 2018-18 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other organizations, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted.

Entertainment Industry -- FASB Proposes Improvements to Accounting for Episodic Television Series
The FASB has issued a proposed Accounting Standards Update (ASU) that would align the accounting for production costs for films and episodic content produced for television and streaming services. Stakeholders are encouraged to review and provide input on the ASU, based on an Emerging Issues Task Force (EITF) consensus-for-exposure, by December 7, 2018.

Current accounting guidance provides different capitalization requirements for entertainment industry content production depending on the type of content being produced. For films, production costs are capitalized. For episodic content (e.g., a TV series that airs a new episode each week), production costs are capitalized subject to a constraint based on contracted revenues in the initial and secondary markets.

In recent years, however, the entertainment industry has experienced a significant change in production and distribution models. For example, online streaming services and new participants into the industry have introduced different business models, such as subscription-based revenue models. As a result, some stakeholders have questioned whether the constraint in the capitalization guidance for episodic content still provides relevant information to investors considering these changes.

The proposed ASU would address this issue by converging the capitalization guidance for films and episodic content. It would also address when a company or organization should assess films and license agreements for program material for impairment at the film-group level, while amending the presentation and disclosure requirements for content that is either produced or licensed.

Checklist -- Summary Checklist of Recent U.S. Accounting Standards Updated
We have published a new edition of our “Summary Checklist of Recent Authoritative U.S. Accounting Standards," to reflect the issuance of ASU 2018-18, which is discussed above.

See our Literature Update for complete details.

Broker-Dealers -- SEC Publishes Final Rule on Disclosure of Order Handing Information
The SEC has published final rule, Disclosure of Order Handing Information. This final rule requires additional disclosures by broker-dealers to customers regarding the handling of their orders. The SEC is adding a new disclosure requirement which requires a broker-dealer, upon request of its customer, to provide specific disclosures related to the routing and execution of the customer’s NMS stock orders submitted on a not held basis for the prior six months, subject to two de minimis exceptions. The SEC is also amending the current order routing disclosures that broker-dealers must make publicly available on a quarterly basis to pertain to NMS stock orders submitted on a held basis, and the Commission is making targeted enhancements to these public disclosures.

In connection with the new requirements in this final rule, the SEC is amending Regulation NMS to include certain newly defined and redefined terms that are used in the amendments. The SEC also is amending Regulation NMS to require that the public order execution report be kept publicly available for a period of three years. Finally, the SEC is adopting conforming amendments and updating cross-references as a result of the rule amendments being adopted.

This final rule is effective 60 days after the date of publication in the Federal Register. Compliance with the final rule is 180 days after the date of publication in the Federal Register.

Leases -- FASB Discusses Narrow Scope Improvements for Lessors
As reported in its "Summary of Board Decisions" publication, the FASB met on October 31, 2018, and redeliberated the proposed amendments to Topic 842, Leases, for the following three issues related to lessor accounting in that Topic:

• Issue 1: Sales Taxes and Other Similar Taxes Collected from Lessees. The FASB affirmed its decision to provide an accounting policy election for sales and other similar taxes not to be accounted for as lessor costs as provided in the proposed Accounting Standards Update.
• Issue 2: Lessor Costs. The FASB decided to require that lessors exclude from variable payments all costs paid by a lessee directly to a third party. Additionally, the FASB decided that costs not part of the consideration in the contract that are paid by a lessor directly to a third party and are reimbursed by a lessee are considered lessor costs that the lessor should account for as variable payments.
• Issue 3: Recognition of Variable Payments for Contracts with Lease and Nonlease Components. The FASB affirmed its decision to clarify paragraph 842-10-15-40, subject to additional amendments that would further clarify how and when variable payments may be allocated to a lease component only.

The FASB also discussed transition and effective dates. For entities that have not yet adopted the amendments in Accounting Standards Update No. 2016-02, Leases (Topic 842), the FASB decided to align the transition and effective date guidance of a final Update with the guidance in the amendments in Update 2016-02.

For entities that have already adopted Update 2016-02 at the time a final Update is issued, the Board decided that the effective date should be the original effective date of Update 2016-02 for those entities. Alternatively, those entities may adopt the amendments either: (1) in the first reporting period ending after issuance of the Update; or (2) in the first reporting period following the issuance of the Update. The FASB decided to allow either prospective application or retrospective application for entities that have already adopted the amendments in Update 2016-02.

The FASB decided that the amendments apply to all new and existing leases.

Checklist -- New Edition of International Financial Reporting Standards Checklist Published
We have published a new edition of our “Summary Checklist of Recent Authoritative International Financial Reporting Standards." This edition reflects the Definition of Material (Amendments to IAS 1 and IAS 8), that improves the definition of “material.” The IASB has issued amendments to its definition of “material” to make it easier for companies to make materiality judgements.

See our Literature Update for complete details.

SEC Enforcement -- SEC Commissioner Peirce Discusses SEC Enforcement Program
SEC Commissioner Hester M. Peirce recently discussed her views on the SEC's Enforcement Program. Peirce indicated that a "strong enforcement program contributes to the health of our capital markets. By contrast, a wrong approach to enforcement cheapens the program, weakens the rest of the agency, and takes a toll on the reputation of our capital markets." Topics discussed by Peirce included a focus not on statistics but strong enforcement, why the SEC's enforcement efforts should never be about the money, and the SEC's ability to seek help in enforcing securities laws.

Commitments and Contingencies -- New Interpretations Published
We have published new interpretations related to accounting and financial reporting including:

• Accounting and Disclosure Requirements for Guarantees;
• Liability Modifications, Exchanges and Extinguishments;
• Interpretations of Subtopic 275-10, "Risks and Uncertainties“;
• Examples of Risks and Uncertainties Disclosures in Financial Statements;
• Disclosures of Unconditional Purchase Obligations;
• Accounting for Guaranteed Cost and Retrospectively Rated Insurance Policies; and
• Contingencies and Commitments - Interpretive Guidance.

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AUDITING AND INTERNAL CONTROLS HEADLINES:
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A Closer Look -- New Edition of A Closer Look Discusses 2018 U.S. GAAP and SEC Rule Changes
As discussed above, we have published a new edition of "A Closer Look" that discusses recent changes to requirements that may impact year-end financial reporting. 2018 has seen some of the most significant changes in the history of financial reporting. This “year in review” edition takes a closer look at:

• FASB Accounting Standards Updates that could affect 2018 year-end financial reporting including:
• Adoption of lease standard
• Hedge accounting
• Implementation of standard on credit losses
• SEC Rules, Regulations and Related Items including:
• Disclosure update and simplification
• Smaller reporting company definition
• SAB Topic 11M (SAB 74) disclosure
• In-Line XBRL tagging
• Tax Cut and Jobs Act disclosures
• Threshold for additional disclosure by private companies in offerings of securities to employees
• Cybersecurity
• Non-GAAP financial measurers
• Corp Fin Release of Certain Staff Communications and Serious Deficiency Letters
• SEC Staff Views

You may want to save this edition to your desktop. It is sure to be a valuable resource as you plan and prepare your 2018 financial reporting.

HUD -- 2018-2019 Edition of Knowledge-Based Audits of Housing and Urban Development Published
We have published the 2018-2019 edition of Knowledge-Based Audits^TM of Housing and Urban Development Programs. This publication is designed to help the auditor efficiently and effectively perform financial statement audits of housing and urban development programs in accordance with auditing standards generally accepted in the United States of America (U.S. GAAS), Government Auditing Standards (GAGAS), and the Consolidated Audit Guide for Audits of HUD Programs, published by the U.S. Department of Housing and Urban Development (HUD Audit Guide).

This edition of the publication provides up-to-date guidance for audits of programs identified under Chapter 3, HUD Multifamily Housing Programs, Chapter 4, HUD Multifamily Hospital Program, Chapter 5, Insured Development Cost Certification, Chapter 6, Ginnie Mae Issuers of Mortgage-Backed Securities, and Chapter 7, FHA-Approved Lenders.

This edition includes revisions, updates, and enhancements to reflect current accounting authoritative literature including, among other things, auditing pronouncements through AICPA Statement on Auditing Standards (SAS) No. 133, Auditor Involvement with Exempt Offering Documents;the revised AICPA Code of Professional Conduct (Code); and ET Section 1.295, Nonattest Services. The 2018–2019 tools include links to specific guidance that provides instant access to detailed analysis related to the steps and processes discussed in the workpapers. Many new tips, practice alerts, and examples have been incorporated.

See our Literature Update for complete update.

Not-for-Profit Entities -- 2018-2019 Edition of Knowledge-Based Preparation, Compilation, and Review Engagements of Not-for-Profit Entities Published
We have published the 2018–2019 edition of Knowledge-Based^TM Preparation, Compilation, and Review Engagements of Not-for-Profit Entities. This toolset is designed to help the accountant efficiently and effectively perform financial statement preparation engagements, compilations, and reviews of nonpublic commercial entities in accordance with Statements on Standards for Accounting and Review Services (SSARS) issued by the Accounting and Review Services Committee (ARSC) of the American Institute of Certified Public Accountants (AICPA).

The tools in this edition of the publication have been updated, where applicable, to take into account the latest literature, standards, and guidance applicable to preparation, compilation, and review engagements, including Statement on Standards for Accounting and Review Services (SSARS) No. 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.

The 2018–2019 tools are current through ASU No. 2018-05.

See our Literature Update for complete update.

Health Care Entities -- 2018-2019 Edition of Knowledge-Based Audits of Health Care Entities Published
We have published the 2018–2019 edition of Knowledge-Based^TM Audits of Health Care 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 Auditing Standards Board’s (ASB’s) clarified auditing standards. The KBA methodology drives audit strategy that is scalable to any size engagement participating in the health care industry, while aiding the auditor in achieving efficiencies and effectiveness resulting in overall cost-savings by helping to reduce the tendency to over audit for both an audit of financial statements only and integrated audits, when applicable.

This edition of the publication 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 Public Company Accounting Oversight Board (PCAOB) and other regulators. 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 on the accounting requirements of the Financial Accounting Standards Board (FASB), current through the FASB Accounting Standards Codification as of February 13, 2018, and through ASU 2018-05.

See our Literature Update for complete update.

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