Accounting and Auditing Highlights April 22- May 5, 2017





May 1: The American Institute of CPA’s issued a working draft of guidance for the telecommunications industry that will have to adopt the upcoming revenue-recognition accounting standard, effective for most public companies Jan. 1, 2018. The AICPA has 16 industry task forces tailoring application guidance for each industry.


May 4: Financial Accounting Standards Board member Marc Siegel said at an accounting conference in New York that the FASB will begin a series of revenue recognition podcasts May 11 to help investors understand the impact of the new standard on various industries.

The board will first tackle issues pertinent to the aerospace and defense sectors and investors will be able to listen in and ask questions. Raytheon Co., and General Electric Co. will participate in the webcast.


May 2: Many public companies are adopting cloud computing to handle the new revenue rules, Jagan Reddy, chief executive officer of Leeyo Software Inc., a provider of revenue automation solutions, told Bloomberg BNA. “We witnessed last year 100 percent growth, whereas prior years we had 30-to-40 percent." 

Some practitioners are worried about using cloud computing because of cybersecurity concerns


May 4: FASB might not have embarked on a major overhaul of revenue recognition rules had the board fully understood the costs of implementing them, FASB member Lawrence Smith suggested in comments at the Baruch financial reporting conference. Smith leaves the board June 30. He indicated his comments were his own.

“We need to better evaluate the costs of implementing our standards,” Smith said. “And we need to better evaluate it in terms of the increased emphasis of internal controls over financial reporting.”

Following the speech, Smith told Bloomberg BNA that when FASB was considering adding the revenue project to its agenda over a decade ago, the International Accounting Standards Board's lack of much guidance on revenue recognition caused the board to embark on a comprehensive, joint project, rather than a targeted, more limited revision of the U.S. rules.


April 27: Moody's vice president-senior accounting analyst Kevyn Dillow told Bloomberg BNA that the  impact of IFRS 15: Revenue from Contracts with Dillow on company credit ratings probably won't change in the near term unless a company alters its business practices as a result of implementing the standard.

The Financial Accounting Standards Board


May 4: The Financial Accounting Standards Board tentatively decided to propose remove irrelevant, post-1987 guidance for the calculation of bad debt reserves of U.S. savings and loans and related deferred taxes, but decided to retain recognition and disclosure rules for bad-debt reserves from pre-Dec.31 1987.

The Securities and Exchange Commission


May 2: Supreme Court Justice Anthony Kennedy has sworn in Jay Clayton as the 32nd Chair of the U.S. Securities and Exchange Commission after the U.S. Senate confirmed him in a 61 to 37 vote.

Will he be instrumental in replacing many of the Doff- Frank Act’s provisions? During his March 23 Senate Banking Committee hearing Clayton said that he believed the Dodd-Frank Act should be looked at to see if it is achieving its objective, but that he had no plans for attacking any specific provision.


May 4: SEC chief accountant Wes Bricker said at the Baruch reporting conference that it was unlikely that loan loss standards that will come into effect for banks in 2020 will be put on hold.  Banks are requesting an economic impact study.


May 4: Mark Kronforst and Wes Bricker, two top SEC accountants said that the SEC’s efforts to curb companies’ financial reporting that strays too far from generally accepted accounting principles or alternative performance measures that might mislead investors have succeeded. Kronforst credited companies for taking the initiative and heeding the SEC’s message.

American Institute of CPAs


April 26: The American Institute of CPAs has created a “risk-management reporting framework” intended to provide a common language for describing cybersecurity risks that companies confront and how they intend to overcome them.The voluntary framework would help companies inform investors of efforts to guard against cybersecurity risks and the effectiveness of those efforts.



April 7: An Institute of Chartered Accountants in England and Wales’s spokesman said that there will be significant differences between retailers using IFRS 16 and those who continue to report using U.K. GAAP (Generally Accepted Accounting Practice).

The IFRS leasing standard won't take effect for nearly two years. Nevertheless, auditors warn that it means that financial ratios and performance measures will look very different, and that companies should start to prepare now.


April 10: The European Markets and Securities Authority (ESMA)—an independent European Union authority that oversees securities markets—said  that national authorities in the European Economic Area brought more enforcement actions on financial statements against more  companies in 2016 than in 2015. ESMA also told companies to weigh the risks arising from Brexit—the UK’s decision to leave the EU—in their financial risk disclosures.


April 12: U.K. entities that use alternative performance measures (APMs) should clearly explain why they include them in annual reports, the U.K. Financial Reporting Council said.

Companies use APMs to provide financial results that fall outside international financial reporting standards and, in the U.K., generally accepted accounting practice.

Investors “should expect to see disclosures that give a clear and complete understanding of the APMs presented, how they are calculated and why they are useful,” FRC chief executive Stephen Haddrill said, in an open letter to investors.



April 25: The Public Company Accounting Oversight Board is at risk of losing its Investor Advisory Group if a provision of Dodd- Frank is repealed. The measure is, part of House Financial Services Committee Chairman Jeb Hensarling (R-Texas), draft Financial Choice Act.

The proposed repeal is based upon the idea that 22-member PCAOB Investor Advisory Group is unnecessary because the Securities and Exchange Commission, which oversees the PCAOB, has its own Investor Advisory Committee and a formally designated investor advocate

The Council of Institutional Investors and members of the Investor Advisory Group disagreed strongly with the draft legislation’s proposal to abolish the PCAOB panel.

“The PCAOB’s mission, as mandated by Congress, is to protect investors,” Jeffrey Mahoney, CII’s general counsel, told Bloomberg BNA. “Investors are the primary users of the audited financial reports that the PCAOB oversees.”

May 4: The PCAOB is almost ready to release the final version of the auditor’s reporting model, first proposed in 2011. Board member Jeanette Franzel told Bloomberg BNA May 5 that the PCAOB wants to wait to brief newly- appointed SEC Commissioner Jay Clayton first.



May 2: President Vladimir Putin signed federal law extending control of auditing oversight, including unplanned audits after complaints that businesses failed to comply with domestic or international auditing rules or the Code of Ethics.

May 4: The U.K’s Financial Reporting Council said it started an investigation of KPMG plc, for its audits of Rolls-Royce’s earnings for 2010 through 2013. This follows Rolls Royce’s deferred prosecution agreement with the U.K.’s Serious Fraud Office over bribery and corruption allegations that was reached in January.


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


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