ACCOUNTING & AUDITING HIGHLIGHTS WEEK ENDING OCTOBER 20, 2017


ACCOUNTING HIGHLIGHTS:

CLOUD COMPUTING

October 16: The FASB’s Emerging Issues Task Force voted to have all cloud computing “hosting arrangements” to be treated as an internal software license that is capitalized and booked on the balance sheet as an asset. Companies would no longer need to book them as expenses. Click here to see the full story (Subscription required).

CREDIT LOSSES

October 16: The FASB said that they will weigh a request from Congressional lawmakers to delay accounting rules on loan losses until an economic impact study can be done. “We will carefully consider the recommendations in the Congressional letter as part of the implementation phase of our standard-setting process,” a FASB spokeswoman told Bloomberg BNA. Click here to see the full story (Subscription required).

INSPECTIONS

October 16: A plan to make permanent the Public Company Accounting Oversight Board's (PCAOB) interim inspection program for audits of broker-dealers remains in development at the staff level. The board will continue its inspections under the interim program, which was set up  under the Dodd-Frank Act, while working to develop a plan for a permanent inspection program. Click here to see the full story (Subscription required).

DISCLOSURE

October 17: Last quarter, General Electric Co. reported earnings of 28 cents a share. Also 13 cents a share, 19 cents a share and 15 cents a share — all at the same time. The numbers represent profit that includes or excludes certain items, such as pension costs and discontinued operations. These methods obscure the company's true performance, and has drawn fresh scrutiny from the Securities and Exchange Commission (SEC). Click here to see the full story (Subscription required).

October 19: Almost three-quarters of companies worldwide don't include in annual financial reports the risks that climate change could pose to their business. Of those that do recognize climate-related financial risks, most companies describe potential impacts, but don’t quantify those impacts in financial terms or model them using scenario analysis. Click here to see the full story (Subscription required).

October 20: The Securities and Exchange Commission (SEC) is working on more changes to a corporate disclosure regulation after recently proposing updates to the rule, an agency official said. The SEC proposed amendments aimed at streamlining Regulation S-K, which governs non-financial statement disclosure requirements. Click here to see the full story (Subscription required).

SUSTAINABILITY

October 17: Annual sustainability reports just aren't cutting it as investors pump more money into ethical investment funds. Companies aren't meeting investor needs on sustainability reporting. Click here to see the full story (Subscription required).

LEGAL SERVICES

October 18: The Big Four accounting firms’ moves into legal consulting services are capturing the attention of law firms wary of stronger competition and U.S. regulators keen to prevent such services from violating auditor independence rules. The PCAOB said it is monitoring the accounting firms’ expansion into legal services to ensure it doesn't compromise the independent audits of their clients’ financial statements. Click here to see the full story (Subscription required).

DEFINED BENEFIT PLANS

October 18: Some pension plan sponsors will likely be able to avoid implementing the IRS's new longevity tables for funding purposes until 2019. The IRS gave sponsors the option of delaying use of the new tables if they show the earlier date would have adverse business consequences. Click here to see the full story (Subscription required).

PENSION BENEFIT GUARANTY CORPORATION

October 18: The Pension Benefit Guaranty Corporation is ramping up its efforts to use alternate dispute resolution procedures with pension plan sponsors. The PBGC, which insures private pension plans, launched a pilot project to offer mediation as part of the agency's early warning program. Click here to see the full story (Subscription required).  

DIGITAL CURRENCY

October 19: Companies looking to introduce new digital currencies into the marketplace may have to brace for scrutiny from a new source—the Commodity Futures Trading Commission. The agency said virtual “tokens” used in initial coin offerings can come under the CFTC’s oversight. Click here to see the full story (Subscription required).

October 19: Regulators worldwide are finding that it's incredibly hard to control the explosive growth of money tied to no nation. Russian President Vladimir Putin is the latest to call for regulation of cryptocurrencies, saying they can be used for money laundering or tax evasion. Click here to see the full story (Subscription required).

October 19: While Wall Street has had trouble minting a bitcoin exchange-traded fund, a closed-end fund based on the cryptocurrency may be just a few years away. Click here to see the full story (Subscription required).  

SECURITIES AND EXCHANGE COMMISSION

October 19: The SEC is one step closer to having a full complement of commissioners now that the Senate Banking Committee has scheduled a hearing for nominees Hester Peirce and Robert Jackson. The agency has two vacancies under Chairman Jay Clayton. Click here to see the full story (Subscription required).

ANTIFRAUD

October 19: Rio Tinto Group, the world's second-biggest miner, and two of its former top executives have been charged with fraud for allegedly failing to follow accounting standards and company policies to accurately value and record its assets. Click here to see the full story (Subscription required).

HOSPITALS

October 20: Some hospitals and health-care service providers that have reported increased bad debt expenses because of patients’ inability to pay will see a much smaller amount of debt reflected in their income statements after applying new revenue rules in January. Bad debt is the most significant issue health-care service providers must tackle when they apply the new revenue rules next year. Click here to see the full story (Subscription required).

TAX REFORM

October 20:  Companies may want to adjust accounting methods to reduce their amount of taxable foreign earnings and profits ahead of a likely deemed repatriation under tax reform. The Republican tax reform framework proposes a two-tiered, one-time repatriation tax, under which U.S. corporations would automatically be considered, or deemed, to have brought back their offshore earnings over an unspecified period of time. Click here to see the full story (Subscription required).  

AUDIT HIGHLIGHTS

AUDITOR OVERSIGHT

October 17: The U.K. Financial Reporting Council (FRC) has fined Ernst & Young LLP 1.8 million pounds ($2.4 million) after the firm acknowledged misconduct in auditing the U.K. affiliate of technology wholesaler Tech Data Corp. Click here to see the full story (Subscription required).

October 20: The lead accounting firm providing the engagement partner's name and information about other audit participants will have primary responsibility for disclosing the correct information, to avoid reputational damage or disciplinary action by the PCAOB. Click here to see the full story (Subscription required).    

INTERNATIONAL ACCOUNTING HIGHLIGHTS:

INTERNATIONAL STANDARDS

October 16: Banks and other companies that use certain types of pre-payable financial assets will have additional accounting alternatives under two international financial reporting measures. “Banks that have granted loans or invested in securities with symmetric prepayment options would be affected most” by these changes, an IASB spokeswoman told Bloomberg BNA. Click here to see the full story (Subscription required).

INTERNATIONAL DEVELOPMENTS

October 17: Investors want U.K. companies to reveal in annual reports how they plan to respond to the country's divorce from the European Union. Investors want to know the details of risks that companies face as the U.K. prepares to exit the EU, a process known as Brexit, and how company boards are managing those potential hazards. Click here to see the full story (Subscription required).

October 19: Accounting firms should begin preparing for fundamental changes in how they operate. Firms must devise new ways for entry-level accounting professionals to learn their craft as many of the tasks that newcomers performed in the past are becoming automated. Click here to see the full story (Subscription required).  

UNITED KINGDOM

October 20: A senior U.K. tax figure said it's time to review local rules that obligate U.K. tax advisers to inform the tax authority of tax schemes they design and sell after the U.K.’s tax authority had its first court victory against a promoter that failed to disclose a scheme under the country's disclosure of tax avoidance schemes rules. Click here to see the full story (Subscription required).

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

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