ACCOUNTING & AUDITING HIGHLIGHTS WEEK ENDING OCTOBER 27, 2017


 

ACCOUNTING HIGHLIGHTS:

 

TRANSFER PRICING

 

October 23: The arm's-length standard for transfer pricing is viewed differently by the Internal Revenue Service and some courts and companies. Under the arm's-length standard, the amount charged by one related party to another for a good or service should be the same as it would be in a transaction between unrelated parties. Click here to see the full story (Subscription required).

 

DEBT INSTRUMENTS

 

October 23: The IRS hasn't reached a conclusion on certain debt issues that arise when a corporation is converted into a disregarded entity, such as a single-member limited liability company. The IRS's new priority guidance plan contains regulations on the modification of debt instruments, including issues related to disregarded entities. Click here to see the full story (Subscription required).

 

CORPORATE TAXES

 

October 23: Government rule-writers are considering whether to withdraw a 2009 set of proposed IRS regulations on stock-basis allocation in reorganizations. No decision has been made on what to do with the outstanding proposed regulations, but if they are withdrawn, it would be based on the principle that the government shouldn't leave proposed rules in place that it doesn't intend to finalize. Click here to see the full story (Subscription required).

BLOCKCHAIN

October 24: The American Institute of CPAs said it partnered with Wall Street Blockchain Alliance, a nonprofit trade association, to define the impact of blockchain technology for the accounting profession and to advance it professionally and in public acceptance. Click here to see the full story (Subscription required).

 

TAX REGULATIONS

 

October 24: The IRS will focus on reducing regulatory burden and crafting rules to implement a new process for auditing partnerships in the coming year, the agency said in its latest priority guidance plan. The focus of this year's plan falls in line with a mandate from President Donald Trump for federal agencies to trim regulations and ease requirements where possible. Click here to see the full story (Subscription required).

 

FINANCIAL INSTITUTIONS

 

October 25: New IRS rules for healthy banks buying failed banks during the most recent financial crisis are getting mixed reviews from experts. The IRS issued regulations to simplify the process for financial institutions to value assets they bought from collapsed banks using federal money. Click here to see the full story (Subscription required).

 

CYBERSECURITY

 

October 26: Cybersecurity would be a top priority if they are confirmed to serve on the Securities and Exchange Commission, nominees Robert Jackson and Hester Peirce told the Senate Banking Committee. The candidates expressed concern about the cyber-vulnerability of the planned Consolidated Audit Trail, a massive database of information intended to help the SEC fight illegal trading and monitor market disruptions. Click here to see the full story (Subscription required).

 

October 27: Cybersecurity risk has emerged as a new focus of enforcement by the SEC, Chairman Jay Clayton said, whose own agency fell victim to a computer hack. “Cyber is a new avenue for old frauds,” Clayton said. “In fact, it's a very efficient, effective, and low-cost way to execute old frauds.” Click here to see the full story (Subscription required).

 

DIGITAL CURRENCY

 

October 27: SEC Chairman Jay Clayton said he is bothered by fraud in cryptocurrencies and crypto-offerings, part of rapid technological change that he says has big impacts on the investment marketplace. The SEC is monitoring developments in blockchain technology. Blockchain is a computerized venue and operating system for a broad range of sales, purchases, and other financial transactions. Click here to see the full story (Subscription required).

 

ANTIFRAUD

 

October 27: The former chief executive officer of a Florida-based franchisor of children's educational programs is facing SEC charges he made misstatements about the company's finances and his personal financial history. Creative Learning Corp. and two former CLC officials settled related claims based on their alleged roles in the controversy without admitting or denying wrongdoing. Click here to see the full story (Subscription required).   

 

AUDITING HIGHLIGHTS:

 

NEW AUDIT REPORT

 

October 24: Auditors will have to disclose—to investors and others—what raised the most concerns while reviewing companies’ financial statements, under new auditing reporting rules approved by the SEC. Under the new Public Company Accounting Oversight Board (PCAOB) rules, auditors won't be able just to give a company's financial statements a pass or a fail. Click here to see the full story (Subscription required).

 

ALTERNATIVE PERFORMANCE MEASURES

 

October 26: Financial regulators and accounting standard setters should become more involved in preventing misleading use of financial performance indicators that fall outside of generally accepted accounting principles, members of the investor adviser arm to the PCAOB concluded. The consensus is that the lack of standardization and consistency of non-GAAP measures poses a risk to the reliability and efficiency of capital markets. Click here to see the full story (Subscription required).

 

AUDITOR OVERSIGHT

 

October 27: The ability of companies and their auditors to satisfactorily apply new revenue recognition and lease accounting rules will be a major focus of the PCAOB’s inspections. New accounting and auditing standards are always an area of inspection focus. Click here to see the full story (Subscription required).

 

INTERNATIONAL ACCOUNTING HIGHLIGHTS:

 

EUROPEAN UNION

 

October 23: The European Parliament will increase pressure on European Union member nations to adopt public beneficial owner registries for company and commercial trusts after its Panama Papers investigative committee concluded that some in the bloc have turned a blind eye to tax evasion and money laundering. Click here to see the full story (Subscription required).

 

DIGITAL CURRENCY

 

October 23: Australia will now recognize emerging digital currencies as a form of money after Parliament passed a bill to end double taxation on digital currency transactions. A definition of “digital currency” will now be inserted into the country's goods and services tax law, and the current exclusion of “money” from the meaning of a “supply” will be revised to add digital currency to that exclusion. Click here to see the full story (Subscription required).

 

October 27: Singapore doesn't plan to regulate cryptocurrencies such as bitcoin, but will remain alert to money laundering and other potential risks stemming from their use, the head of the country's central bank said. Bitcoin's rally and the proliferation of other digital assets is attracting the wary eyes of regulators globally, though many central banks have still refrained from supervising cryptocurrencies. Click here to see the full story (Subscription required).

 

DISCLOSURES

 

October 24: Listed companies in the U.K. are providing more details on the potential economic impacts of leaving the European Union, the U.K. Financial Reporting Council said. Click here to see the full story (Subscription required).

 

INSURANCE

 

October 25: Entities that issue insurance policies soon will be able to draw on an updated system of electronic tags in completing financial statements when using international financial reporting standards (IFRS). The International Accounting Standards Board (IASB) told its staff to proceed with preparing the final update to the digital tags—known as a taxonomy—for IFRS 17: Insurance Contracts. Click here to see the full story (Subscription required).

 

BUSINESS COMBINATIONS

 

October 26: Companies using IFRS to record an acquisition will have a clearer notion of whether they bought a business or a mix of resources and activities under an upcoming international accounting rule change. The IASB voted 14-0 to instruct its staff to begin writing the clarifications to IFRS 3: Business Combination, on defining a business. Click here to see the full story (Subscription required).

 

October 26: Companies could treat the purchase of an operating oil and gas field as a business even if the operation lacks a workforce, under proposed guidance for clarifying international business combination accounting rules. The 14-member IASB voted unanimously to include an example on acquisitions in the oil and gas industry as part of its amendments to IFRS 3: Business Combination, covering the definition of a business. Click here to see the full story (Subscription required).

 

FOREIGN CURRUPT PRACTICES ACT

 

October 27: SAP SE is being investigated by U.S. authorities after a probe into its South African business found misconduct in work related to the politically connected Gupta family. Click here to see the full story (Subscription required).

 

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

 

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