August 7: The Senate unanimously approved President Donald Trump's pick, David J. Kautter, to be treasury assistant secretary for tax policy. Green-lighting Kautter means he can now play a key role as Republicans gear up for tax reform in the coming weeks. Click here to see the full story (Subscription required).
August 8: The accounting and finance professions must anticipate and embrace the biggest technological changes they have confronted in the last 50 to succeed in a rapidly evolving economy. Ellison-Taylor, Chairman of the American Institute of CPAs and of its international companion organization, told the American Institute of CPAs’ Governmental Accounting and Auditing Update conference that the profession needs to “retool and reskill to meet demands in [the] future.” Click here to see the full story (Subscription required).
August 9: Cybersecurity hackers are using increasingly sophisticated psychological methods to compromise state and local governmental computer systems. “There are only two types of entities—those who have been breached and those who don't know they've been breached,” Kevin Smith, partner at Crowe Howarth LLP, told the cybersecurity session of the AICPA’s Governmental Accounting and Auditing Update conference. Click here to see the full story (Subscription required).
August 9: Documentation is vital for making accounting judgments. Documentation diligence is an “incredibly important aspect” of ensuring accurate accounting judgments and estimates, a U.S. Securities and Exchange Commission (SEC) official told the American Accounting Association conference. SEC Deputy Chief Accountant Sagar S. Teotia said it is crucial to “step back” and check if conclusions and estimates make sense as part of the larger financial reporting picture. Click here to see the full story (Subscription required).
August 10: Accountants should strive to integrate efforts to adopt new revenue recognition, leasing, and loan loss rules, which will help smooth adoption of all three, an SEC official told an accounting conference. “Given that there's multiple standards, a best practice would be not to just do revenue, and then do leasing, and then CECL, to the extent that all three significantly impact you,” SEC Deputy Chief Accountant Sagar Teotia said. “To the extent you can, try to leverage it, I think, [this] is where we've found people have had a lot of success.” Click here to see the full story (Subscription required).
August 10: The Financial Accounting Standards Board's revenue recognition standard is serving as a “catalyst” for how state and local governments should approach the problem. Governmental Accounting Standards Board Chairman David Vaudt told the AICPA Governmental Accounting and Auditing Update conference that his board, in light of the FASB standard, is considering whether revenue should be recognized at the time of sale or when (or as) the obligation is fulfilled; and if a performance obligation approach should be used for government transactions and if so, for which ones? Click here to see the full story (Subscription required).
DEFINED BENEFIT PLANS
August 11: Steady improvements in American life expectancy have stalled, and more Americans are dying at younger ages. But for companies straining under the burden of their pension obligations, the distressing trend could have a grim upside: If people don't end up living as long as they were projected to just a few years ago, their employers ultimately won't have to pay them as much in pension and other lifelong retirement benefits. Click here to see the full story (Subscription required).
August 11: U.S. accounting rulemakers will turn to the public for advice on how to address four new topics: financial statement performance reporting, liabilities and equity, intangible assets, and pensions. FASB plans to discuss publicly in the next several weeks whether to approach the four topics with targeted improvements or with a more fundamental change in guidance. There are “mixed views as to what the issues specifically are in financial reporting and what path the board ought to take to address that,” FASB Vice Chairman James Kroeker told Bloomberg BNA. Click here to see the full story (Subscription required).
August 14: Some life insurers have already started flagging potential pain points from adopting new rules for reporting loan losses. The new rules might impinge on investments in mortgage loans, and reserves booked for loan losses would have to be leveraged, life insurers said. The rules, typically associated with banks, apply to any company that holds financial assets subject to credit losses, certain trade receivables, reinsurance receivables and certain off-balance sheet credit exposures. Click here to see the full story (Subscription required).
August 15: SEC staffers discovered at least one cybersecurity issue with the “vast majority” of broker-dealers, investment advisers, and funds they examined, a new risk alert said. The problems included cybersecurity procedures and policies that provided only general guidance to employees and didn't appear to be enforced by firms. Computer system maintenance, such as installing software updates to address vulnerabilities, also seemed to be a challenge for at least some of the 75 firms the SEC staff observed. Click here to see the full story (Subscription required).
August 16: KPMG LLP will pay more than $6.2 million to resolve allegations that it didn't adequately audit an oil and gas company's financial statements, the SEC said. The accounting giant in 2011 missed evidence that Miller Energy Resources Inc. inflated the value of assets the company acquired by more than $400 million, misleading investors. KPMG and its partner in charge “failed to exercise the requisite degree of due professional care and skepticism” in reviewing records on the oil and gas interests Miller Energy purchased in Alaska, the agency said. Click here to see the full story (Subscription required).
INTERNATIONAL ACCOUNTING HIGHLIGHTS:
August 11: Transparent accounting may be one of the topmost concerns of bond investors in developed markets. In China; however corporate governance is a risk when investing in Chinese operations. Performance potential often outweighs murky ownership issues. Click here to see the full story (Subscription required).
August 11: The Internal Revenue Service (IRS) is making significant progress completing a complex web of government-to-government relationships that will allow it to exchange confidential taxpayer information with other tax administrations. As of July 31, the IRS had signed 17 bilateral competent authority agreements to exchange companies’ global tax and profit reports, a spokesman for the IRS confirmed to Bloomberg BNA. Click here to see the full story (Subscription required).
August 14: European Union (EU) countries are considering investment and development restrictions among the sanctions they would impose on a country placed on the EU tax haven blacklist, due to be finalized by the end of 2017. The pending legislation, one of which allows the European Investment Bank (EIB) to issue loans to foreign countries, is among pending sanctions under consideration by countries in the bloc as they finalize the tax haven blacklist. Click here to see the full story (Subscription required).
OFFSHORE EARNING DISCLOSURES
August 15: The amount of earnings permanently reinvested offshore by top U.S. companies increased again in 2016, to reach nearly 10 percent of total assets, according to a report compiled by a Massachusetts financial reporting research company. The largest companies’ reinvestments delay obligation to report tax liability. Click here to see the full story (Subscription required).
August 17: The U.K. Financial Reporting Council said that it has assessed the largest fine in its history against PricewaterhouseCoopers LLP (PwC). The council, which establishes and enforces accounting and auditing standards for the United Kingdom and the Republic of Ireland, penalized PwC 5.1 million pounds ($6.56 million) for the firm's role in auditing fellow accounting firm RSM Tenon Group PLC for the year ending June 30, 2011. Click here to see the full story (Subscription required).
August 18: New financial reporting standards in Singapore that affect how companies record leases, on everything, from airplanes to office buildings, could complicate the tax workload for affected companies, tax professionals said. Singapore's tax regulator, the Inland Revenue Authority of Singapore (IRAS), has put out a call for public comment on the new accounting standards, known as FRS 116. Click here to see the full story (Subscription required).
Composed and Compiled by Gery Brownholtz, Accounting Editor, Bloomberg BNA
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