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ACCOUNTING AND SEC HEADLINES:
SEC Disclosures – SEC Staff Publishes Guidance on Disclosures Pertaining to Russia’s Invasion of Ukraine and Related Supply Chain Issues
The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published a Sample Letter to Companies Regarding Disclosures Pertaining to Russia’s Invasion of Ukraine and Related Supply Chain Issues. The letter indicates that Corp Fin believes that companies should provide detailed disclosure, to the extent material or otherwise required, regarding:
- Direct or indirect exposure to Russia, Belarus, or Ukraine through their operations, employee base, investments in Russia, Belarus, or Ukraine, securities traded in Russia, sanctions against Russian or Belarusian individuals or entities, or legal or regulatory uncertainty associated with operating in or exiting Russia or Belarus;
- Direct or indirect reliance on goods or services sourced in Russia or Ukraine or, in some cases, in countries supportive of Russia;
- Actual or potential disruptions in the company’s supply chain; or
- Business relationships, connections to, or assets in, Russia, Belarus, or Ukraine.
The financial statements may also need to reflect and disclose:
- The impairment of assets;
- Changes in inventory valuation;
- Deferred tax asset valuation allowance;
- Disposal or exiting of a business;
- Changes in exchange rates; and
- Changes in contracts with customers or the ability to collect contract considerations.
In addition, Corp Fin indicates that since Russia’s invasion of Ukraine, many companies have experienced heightened cybersecurity risks, increased or ongoing supply chain challenges, and volatility related to the trading prices of commodities regardless of whether they have operations in Russia, Belarus, or Ukraine that warrant disclosure.
Corp Fin also indicates that companies should also “consider how these matters affect management’s evaluation of disclosure controls and procedures, management’s assessment of the effectiveness of internal control over financial reporting, and the role of the board of directors in risk oversight of any action or inaction related to Russia’s invasion of Ukraine, including consideration of whether to continue or to halt operations or investments in Russia and/or Belarus.”
AUDITING AND INTERNAL CONTROL HEADLINES:
Preparation, Compilation, and Review Engagements – 2022 Edition of Knowledge-Based Preparation, Compilation, and Review Engagements (Post-SSARS-25) Published
We have published the 2022 edition of Knowledge-BasedTM Preparation, Compilation, and Review Engagements. 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 2022 tools include links to detailed analyses related to the steps and processes discussed in the workpapers. Also included is a revised financial statement disclosures checklist that provides a centralized resource of the required and recommended U.S. GAAP disclosures and key presentation items currently in effect, using the style referencing under the FASB Accounting Standards CodificationTM.
The tools in this edition 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-25), Materiality in a Review of Financial Statements and Adverse Conclusions; and the AICPA Guide Preparation, Compilation and Review Engagements.
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