Accounting & Auditing Highlights for the Week Ending February 23, 2018


Accounting Highlights:   

Derivatives

February 20: Banks and other companies will soon receive guidance to simplify accounting for using derivatives to counter risk of loss and unwelcome changes in values of financial holdings. Click here to see the full story (Subscription required). 

February 22: Banks are happy with the proposed addition of a benchmark interest rate that the Fed and accounting rulemakers pitched to replace the problematic Libor for derivatives meant to cut the risk from interest rate changes. Click here to see the full story (Subscription required). 

Financial Restatements

February 20: Grupo Televisa SAB's financial statements won't need to be restated, auditor PricewaterhouseCoopers concluded, providing relief for investors after the Mexican media giant disclosed “material weaknesses” in its accounting systems. Click here to see the full story (Subscription required). 

Digital Currency

February 20: Digital currencies just got name-checked by a group that many of their boosters would probably rather avoid: Securities and Exchange Commission inspectors. Click here to see the full story (Subscription required). 

Cybersecurity

February 21: Companies seeking more clarity on disclosing cybersecurity issues to the SEC in the wake of Equifax Inc.’s massive data breach may soon get it. The SEC will vote on whether to release new guidance on reporting about cyber risks and incidents. Click here to see the full story (Subscription required). 

February 23: The SEC issued new guidance for how public companies should report cyberthreats and breaches to investors as a number of high-profile hacks put a spotlight on the issue. SEC Chairman Jay Clayton said it “reinforces and expands” staff guidance from 2011 for making cybersecurity disclosures under existing reporting requirements. Click here to see the full story (Subscription required). 

Securities and Exchange Commission

February 21: When Trump's SEC fines Wall Street, it's often done quietly. Take TPG Capital LP, for years the SEC had been investigating TPG and its competitors over concerns they were pocketing tens of millions of dollars in fees that were largely hidden from investors. Upon conclusion of their investigation, the SEC disclosed the sanction in a dense legal document that was quietly posted on the agency's website after U.S. stock markets had closed. Click here to see the full story (Subscription required). 

February 23: SEC administrative law judges’ appointments are constitutionally defective, an investment adviser told the U.S. Supreme Court today. Click here to see the full story (Subscription required). 

Tax Reform

February 21: Complications and sunsets in the tax law as well as its passage solely by Republican votes, render it inherently unstable and vulnerable to changes in the years ahead, tax professionals said. “At the legislative level, this bill will have to be revisited in all likelihood at some point,” said Ray Beeman, co-leader of Ernst & Young LLP's Washington Council. Click here to see the full story (Subscription required). 

February 21: The House Ways and Means Committee is gathering feedback from tax professionals to help develop a list of new tax law provisions that need to be fixed administratively or by Congress, Chairman Kevin Brady (R-Texas) said. Click here to see the full story (Subscription required). 

February 22: The Treasury Department will soon issue a notice on controversial language limiting interest expenses under the new tax law. The new section limits the amount of business interest expenses that can be deducted to 30 percent of earnings before interest, taxes, depreciation, and amortization. Click here to see the full story (Subscription required). 

Executive Compensation

February 21: Israeli drugmaker Teva Pharmaceutical Industries Ltd. reported a $19.3 million difference between its CEO's 2017 compensation and the annual salary of its median worker. The median annual pay of Teva's employees totaled $64,081 last year, compared with new CEO Kåre Schultz's $19.37 million in total compensation, the company said in a filing with the SEC. Click here to see the full story (Subscription required). 

Whistle-Blowers

February 22: The U.S. Supreme Court agreed with Digital Realty Trust Inc. that the Dodd-Frank Wall Street Reform and Consumer Protection Act defines a whistleblower as an individual who reports alleged securities violations or fraud charges to the SEC. The law doesn't protect workers who report allegations only within their companies, the justices said, rejecting the SEC's broader definition of a whistleblower. Click here to see the full story (Subscription required). 

Class Actions

February 22: General Electric Co. faces what may be the first shareholder securities fraud suit alleging it misled shareholders about its insurance liabilities and a resulting SEC investigation. Click here to see the full story (Subscription required).      

Exempt Organizations

February 22: The new tax law brought an unpleasant surprise for many tax-exempt organizations by imposing a 21 percent excise tax on compensation in excess of $1 million and on certain “parachute payments.” Click here to see the full story (Subscription required). 

International Accounting Highlights:

Japan

February 20: Japanese banks are awaiting guidance on the base erosion and anti-abuse tax (BEAT) included in the U.S. tax reform law, which some worry may apply to interest payments on inter-company loans and bonds. Click here to see the full story (Subscription required). 

United Kingdom

February 21: The U.K. government has increased the number of staff on its “Google tax” team in a move that highlights a growing focus on the cross-border structures of multinational companies. Click here to see the full story (Subscription required). 

February 23: U.S. tax reform has given companies listed on the U.K.’s benchmark FTSE 100 stock index a total short-term financial gain of $22.4 billion, according to data compiled by Bloomberg Tax. Click here to see the full story (Subscription required). 

Composed and Compiled by Gery Brownholtz, Accounting Editor, Bloomberg BNA

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