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ACCOUNTING AND SEC HEADLINES:

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Software Development Costs – New Edition of Interpretation on Accounting for Software Development Costs and Cloud Computing Arrangements Published

We have published a new edition of our Interpretation, Accounting for Software Development Costs and Cloud Computing Arrangements. This new edition has been updated through ASU No. 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements.

Inflation – New Edition of Inflation Rates for Judging Whether an Economy Is Highly Inflationary Memo Published

We have published a new edition of our Interpretation, Inflation Rates for Judging Whether an Economy Is Highly Inflationary –June 2024. This new edition has been issued and reflects the latest available inflation rate information.

The following change was made to the classification of countries under this Interpretation from the previous Interpretation dated March 31, 2024:

• Nigeria has been moved to the list of countries that may have highly inflationary economies from the list of countries that do not have highly inflationary economies.

Revenue Recognition Guide – 2025 Edition of Revenue Recognition Guide Published

We have published the 2025 edition of the Revenue Recognition Guide. This guide is a comprehensive reference manual covering key concepts and issues that arise in determining when and how to recognize revenue.

This edition includes numerous updates to examples of public company disclosures illustrating various issues and topics. It also includes updates from the 2024 edition to clarify guidance and address additional topics and fact patterns, including:

• Chapter 2 now includes discussion of how to determine whether a transaction in which a portion of the consideration is cash should be treated as a nonmonetary or monetary transaction.
• Chapter 3 includes more detailed discussion of how termination provisions in a contract should be taken into account in assessing the contract under Topic 606/IFRS 15.
• Chapter 4 has been updated to clarify that breakage estimates should be updated throughout the life a contract, and to include discussion of residual value guarantees.
• Chapter 5’s discussion of valuation of equity instruments received from customers has been enhanced to discuss vesting provisions.

Cybersecurity – SEC Staff Updates Interpretations for Material Cybersecurity Incidents

The staff in the SEC’s Division of Corporation Finance (Corp Fin) published new Compliance and Disclosure Interpretation (CDI), concerning Item 1.05 of Exchange Act Form 8-K, Material Cybersecurity Incidents. Corp Fin added new questions 104B.05 through 104B.09. These new questions provide additional guidance on determining materiality of cybersecurity incidents.

SEC Registration Statements – SEC Staff Updates FAQs on Voluntary Submission of Draft Registration Statements

The SEC staff updated its Frequently Asked Questions (FAQs), Voluntary Submission of Draft Registration Statements. On June 29, 2017, the Division of Corporation Finance (Corp Fin) announced that it would accept certain draft registration statements for nonpublic review. Corp Fin has prepared these questions and answers to address preliminary questions about the expanded procedures.

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AUDITING AND INTERNAL CONTROL HEADLINES:

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Financial Audit Manual – GAO Updates Financial Audit Manual Volume 3

The U.S. Government Accountability Office (GAO) issued updates to Volume 3 of the Financial Audit Manual (FAM). The FAM is maintained by the GAO and the Council of the Inspectors General on Integrity and Efficiency (CIGIE).

The Financial Audit Manual presents a methodology for auditors to perform financial statement audits of federal entities in accordance with professional standards. It is a tool for enhancing accountability over taxpayer-provided resources.

The July 2024 revision replaces Financial Audit Manual, Volume 3 (June 2023 version) and contains the Federal Financial Reporting Checklist. Volume 3 incorporates accounting standards issued by the Federal Accounting Standards Advisory Board through June 2024 that are effective for the fiscal year ending September 30, 2024, and Office of Management and Budget Circular A-136, Financial Reporting Requirements, guidance issued on May 30, 2024. This revision supersedes previously issued versions of FAM Volume 3 and should be used for audits of the 2024 federal entity financial statements.

The FAM is a three-volume publication and also includes:

• Volume 1: Audit methodology (updated June 2024); and
• Volume 2: Detailed implementation guidance (Updated June 2024).

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GOVERNMENT HEADLINES:
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Financial Audit Manual – GAO Updates Financial Audit Manual Volume 3

The U.S. Government Accountability Office (GAO) issued updates to Volume 3 of the Financial Audit Manual (FAM). The FAM is maintained by the GAO and the Council of the Inspectors General on Integrity and Efficiency (CIGIE).

The Financial Audit Manual presents a methodology for auditors to perform financial statement audits of federal entities in accordance with professional standards. It is a tool for enhancing accountability over taxpayer-provided resources.

The July 2024 revision replaces Financial Audit Manual, Volume 3 (June 2023 version) and contains the Federal Financial Reporting Checklist. Volume 3 incorporates accounting standards issued by the Federal Accounting Standards Advisory Board through June 2024 that are effective for the fiscal year ending September 30, 2024, and Office of Management and Budget Circular A-136, Financial Reporting Requirements, guidance issued on May 30, 2024. This revision supersedes previously issued versions of FAM Volume 3 and should be used for audits of the 2024 federal entity financial statements.

The FAM is a three-volume publication and also includes:

• Volume 1: Audit methodology (updated June 2024); and
• Volume 2: Detailed implementation guidance (Updated June 2024).

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