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ACCOUNTING AND SEC HEADLINES

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Revenue Recognition – 2026 Edition of Revenue Recognition Guide Published

We have published the 2026 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 2025 edition to clarify guidance and address additional topics and fact patterns.

Accounting Estimates – PCAOB Issues Staff Publication on Auditing Accounting Estimates

The PCAOB released a staff publication, Audit Focus: Auditing Accounting Estimates, to help smaller audit firms address the challenges of auditing accounting estimates. The PCAOB’s inspection staff continues to identify deficiencies related to auditors’ testing of accounting estimates.

PCAOB AS 2501, Auditing Accounting Estimates, including Fair Value Measurements, allows for different approaches to testing of an accounting estimate. An auditor should use one or a combination of those approaches.

The publication provides the following resources:

• Reminders from PCAOB standards regarding critical accounting estimates, developing an independent expectation of an accounting estimate, and use of data.
• Common deficiencies the staff has observed, such as auditors not identifying significant assumptions, not evaluating the reasonableness of significant assumptions, not performing sufficient procedures when testing significant assumptions, and not evaluating the company’s methods and how management analyzed the sensitivity of critical accounting estimates.
• Good practices the staff has observed, such as audit firms updating their internal guidance and work programs for testing estimates, and revising their policies and procedures to require engagement teams to use audit programs for testing accounting estimates and the engagement partner and engagement quality review partner to review the estimates.

Government Grants – New Edition of GAAP Update Published

We have published a new edition of the GAAP Update, Accounting for Government Grants (Proposal). This new edition discusses the FASB proposal on government grants that, if adopted as proposed, establishes new rules that would:

• Establish a recognition threshold for government grants;
• Permit two options for recognizing a grant related to an asset; and
• Permit two approaches to presenting a grant related to income.

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ACCOUNTING AND INTERNAL CONTROLS HEADLINES

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