Oct. 3: The U.S. Supreme Court justices refused to review a former Tyco Electronics Corp. accountant's claim he was unlawfully terminated for blowing the whistle on top executives’ shady financial practices (Wiest v. Tyco Elecs. Corp., U.S., No. 15-1429, cert. denied 10/3/16).

Jeffrey Wiest argued the appeals court erred when it affirmed dismissal of his Sarbanes-Oxley Act retaliation claim by saying that his whistle-blowing activity didn't contribute to his termination.

Wiest argued that his supervisors had retaliated for his whistleblowing when they decided to investigate him for alleged sexual misconduct on the job.

The justices without comment declined Wiest's invitation to review the SOX Act's scope of protection for purported whistle-blowers.

American Institute of CPA’s


Oct. 4: The American Institute of CPA’s issued four proposals with specific guidance for applying the revenue recognition standard for the gaming industry, asset managers, software providers and users and the telecommunications industry. This brings to nine the number of industry-specific applications in the works from the AICPA for complying with the Financial Accounting Standards Board’s Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, which takes effect for most publicly traded companies in 2018.

The Financial Accounting Standards Board


Oct. 5: The Financial Accounting Standards Board voted to issue a very narrow proposal to reduce the cost and complexity of applying accounting for modifications under ASC 817,Compensation—Stock Compensation. FASB said that companies should have clarity about what type of share-based payment award transaction wouldn't need to apply “modification accounting” under stock compensation rules.


Oct. 5:  FASB unanimously voted to clarify accounting rules to make it clear that under service concession arrangements, when companies operate infrastructure—such as airports, bridges, prisons, tunnels—for state and local governments, the government is the customer.


Oct. 5:  FASB unanimously approved a proposal that would assist analysts and other financial statement end users to have a better understanding of a company's overall cash inflows and outflows.

  “I think this is clearly a real improvement for financial reporting,” FASB member Daryl Buck said. “I think that it makes a lot of sense and it would be more useful for users of financial statements to see the ultimate cash inflows and outflows out of the entity, including whether they're restricted or not,” he said.

Existing generally accepted accounting principles tend to treat restricted cash as if it isn't cash, said Buck, but yet it is still fungible just like unrestricted cash is.


Oct. 5: Federal bank regulators won't dictate increase in loan losses under new FASB credit losses rules- nor do they expect to see—banks report a set percentage increase in loan loss allowances under new g rules, Lara Lylozian, an assistant chief accountant at the Federal Reserve Board of Governors, said in a webinar.

Many bankers are looking for such a benchmark and have been asking questions about those possible obligations. “There is no benchmark and there are no plans by the agencies to publish a benchmark for how much an allowance should increase upon adoption,” Lylozian said.


Oct. 7: Accounting support fees that public companies pay annually to fund the FASB’s budget will likely increase in 2017, the president and CEO of FASB's parent organization, the Financial Accounting Foundation said.


Oct. 10: FASB affirmed, on a 4-3 vote its proposal to eliminate the second step of the two-step goodwill impairment test that companies are currently required to perform. The goal of the simplification, which was proposed in May, is to give companies a cheaper, simpler way to apply the goodwill impairment test. Eliminating step two would reduce costs for preparers while maintaining the usefulness of information provided to financial statement users, board members said.

However, some firms have said the change, though simpler, could decrease precision of goodwill impairment calculations and cause some firms to recognize impairment where none exists.


Oct. 11: FASB moved to clarify the proposed changes to the definition of a business. FASB’s aim is to help companies to distinguishing a business combination from a purchase or sale of a bundle of assets. This will affect whether companies capitalize or expense. Companies wanting to use what U.S. accounting standard setters call an improved definition of a business may start to apply the new principles in January 2017.


Oct. 13: FASB chairman Russell Golden questioned why private companies are lobbying for more time to apply new or revised standards when rule changes have made them simpler. Golden also stated his belief that some auditors’ work to get clients up to speed on changed rules might violate auditor independence requirements.

The Securities and Exchange Commission


Oct. 11: The Securities and Exchange Commissionsaid Oct. 11 it filed a record number of enforcement actions for the second year in a row, resulting in orders for more than $4 billion in disgorgement and penalties.

The SEC said it brought 868 cases in fiscal 2016, compared to a then-record 807 in fiscal 2015 and 755 in fiscal 2014. The fiscal 2016 figure includes 548 independent actions alleging securities law violations, 195 “follow on” administrative proceedings and 125 actions alleging delinquent filings.

The Governmental Accounting Standards Board


Oct. 6: The Financial Choice Act, a plan by the House Financial Services Committee to replace the Dodd-Frank Act, would threaten the independent funding of GASB and place that body at risk, the president and CEO of GASB parent organization, the Financial Accounting Foundation, said today.

The Financial Choice Act includes a provision that would repeal the provision under Dodd-Frank that gives GASB its funding, FAF’s Terri Polley said during a meeting of management accountants, “Right now it looks like the bill’s not going to go anywhere, but we’re keeping an eye on it—we’re hearing it could move in the lame duck session, and depending on who’s elected, could happen in the next Congress,” she said.



Oct. 4: The U.K. Financial Reporting Council soon will begin preliminary discussions with constituents about the possible impacts of the U.K.’s decision to leave the European Union, FRC executive director for corporate governance and reporting Paul George told Bloomberg BNA respondent David Jones.  The FRC—which establishes and enforces accounting, auditing and actuarial standards for the U.K. and Ireland—needs to conduct “a fair amount of outreach to stakeholders because we want to bring stakeholders with us” as the council prepares for the U.K.’s exit from the EU, George said in a phone interview.

U.K. Prime Minister Theresa May said Oct. 2 that the government would trigger the process for leaving the EU, known as Brexit, by the end of March 2017.


Oct. 14: The European Securities and Markets Authority (ESMA) plans to highlight concerns about international financial reporting standards in Europe to the IFRS Foundation under a renewed pact the two organizations unveiled Oct. 13.

In particular, ESMA will call the foundation's attention to “emerging financial reporting issues arising from financial innovation and other new developments,” the two groups said in their statement of protocols for cooperation.


Oct. 14: Russia has adopted Order No. 156n.—amendments to IFRS 15, the revenue recognition rule, to deal with diversity in stakeholders' understanding of the standard—the latest issues addressed by the discussions of the U.S. standard setters' and international standard setters' Transition Resource Group for Revenue Recognition. The amendments take effect for annual periods beginning on or after Jan. 1, 2018.




Oct. 3: Auditors should prepare to write expanded audit reports—likely including critical audit matters—as The Public Company Accounting Oversight Board seeks to complete its final auditor's reporting model rule by the end of the year, according to the board's Sept. 30 standard-setting agenda. Other items in the PCAOB's standard-setting agenda intended for release in 2017's first quarter are:

• auditing accounting estimates, including fair value measurements proposal, for which the board issued a staff consultation paper issued in August 2014 (10 APPR 914, 10/10/14); and

• the auditor's use of the work of specialists proposal, for which the board issued a staff consultation paper May 28, 2015 (11 APPR 623, 7/3/15).


Oct. 7: PCAOB Chairman James Doty wants boards of directors of public companies to become more engaged in overseeing the audits of their companies to boost investor confidence.

I hope that you will go back to your board clients and persuade them to think about what the audit can do for them and the company,” Doty told a Vanderbilt law school conference on law and business.


American Institute of CPAs

Oct.4:  The Center for Audit Quality issued two alerts—one for auditors of public companies and a second one for auditors of broker-dealers.

Auditors of public companies need to focus on:

 • improving transparency through disclosure of engagement partner and certain other participants;

• improper alteration of audit documentation;

• effective communication with audit committees;

• assessing and responding to risks of material misstatement;

• internal control over financial reporting; 

• segment identification and disclosure; and

• going concern.

CAQ' s second alert directed auditors of brokers and dealers registered with the U.S. Securities and Exchange Commission to pay attention to PCAOB and SEC rules.



Oct. 5: The Russian authorities released new quality-assessment criteria applicable to self-regulatory organizations (SROs) of auditors and clarified the legislation that applies to auditing businesses.

The Russian Finance Ministry released the guidelines No. IS-audit-7 to notify auditing businesses and individual auditors about new quality assessment criteria that would apply to all SROs of auditors from Jan. 1, 2017. The new system of quality assessment has three ratings:

• “no violations found,”

• “correctable violations found”; and

• “non-correctable violations found.”


Oct. 6: Deutsche Bank AG, indicted for colluding with Banca Monte dei Paschi di Siena SpA to conceal the Italian lender's losses, mismarked the transaction and dozens of others on its own books, according to an audit commissioned by Germany's regulator. Executives at Deutsche Bank arranged 103 similar deals with a total value of 10.5 billion euros ($11.8 billion) for 30 clients, according to the audit, a copy of which was seen by Bloomberg. The enhanced repos allowed clients to avoid using mark-to-market accounting, which would have forced them to immediately recognize changes in value, according to the audit.

Instead, Deutsche Bank executives structured the deals to be eligible for accrual accounting, the report said. That enabled parties to book gains or losses as they occurred over a longer period of time (17 APPR, 8/26/16).


Oct.17: The Public Company Accounting Oversight Board and the Finnish Patent and Registration Office announced a new cooperative agreement for auditor oversight and data protection. The two regulators will cooperate in oversight of audit firms subject to both jurisdictions.


Composed and Compiled by Laura Tieger Salisbury, Accounting Policy and Practice reporter and editor

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