ACCOUNTING & AUDITING HIGHLIGHTS WEEK ENDING NOVEMBER 3, 2017


ACCOUNTING HIGHLIGHTS:

ALTERNATIVE PERFORMANCE MEASURES

October 30: The head of the Securities and Exchange Commission said companies have gotten the SEC's message that their performance reports shouldn't stray from audited financial information using generally accepted accounting principles. SEC Chairman Jay Clayton also signaled that the commission will remain vigilant on the use of non-GAAP earnings measures and other “key performance indicators” that, while valuable to investors, can also misrepresent financial outcomes. Click here to see the full story (Subscription required).

ENFORCEMENT  

October 30: Cross-border audit inspections and countering fraudulent alteration of documents remain the top priorities of the Public Company Accounting Oversight Board’s enforcement division. Click here to see the full story (Subscription required).  

SECURITIES AND EXCHANGE COMMISSION

October 30: Acting director Peter Driscoll has been named director of the SEC's Office of Compliance and Inspections, which examines investment advisers, investment companies, broker-dealers, and other entities registered with the agency. Driscoll has served as OCIE's acting chief since January after former director Marc Wyatt departed for the private sector. Click here to see the full story (Subscription required).

November 1: The Senate Banking Committee said it will vote in an executive session on the nominations of academics Hester Peirce and Robert Jackson to the SEC. Peirce is a senior research fellow at George Mason University's Mercatus Center and Jackson is a professor at Columbia Law School. She would fill a Republican seat on the commission and Jackson a Democratic one. Click here to see the full story (Subscription required).

November 2: SEC nominees Hester Peirce and Robert Jackson moved one step closer to confirmation after the Senate Banking Committee approved their nominations. Panel members in a voice vote sent the nominations to the full Senate for consideration. Click here to see the full story (Subscription required).

November 3: Companies that want to exclude from proxy materials a shareholder resolution involving “ordinary business operations” should also address the board's analysis of any significant policy issue raised by the proposal, the SEC staff said. Click here to see the full story (Subscription required).    

EXECUTIVE PAY

October 30: Apple Inc. asked the SEC if it can exclude a shareholder proposal that pushes iPhone maker to explore linking executive pay to performance on diversity and sustainability. In letter made public this week by the SEC, Apple attorneys asked if it could exclude the proposal, from Zevin Asset Management, because similar initiatives haven't garnered the minimum 6 percent of shareholder support required for re-submission. Click here to see the full story (Subscription required).  

MUTUAL FUNDS

October 31: Mutual of America Life Insurance Co.'s wholly owned advisory subsidiary could risk enforcement action if it proceeds with its plans to allocate the operating expenses of a fund it advises without prior SEC approval. The allocation plan proposed by the adviser “creates the potential for conflicts of interest,” and could work to disadvantage some funds, the SEC Division of Investment Management said. Click here to see the full story (Subscription required).

TRANSFER PRICING

October 31: Beginning in 2018, the U.S. will participate with several other countries in a pilot program designed to prevent cross-border tax disputes, with the hope that it will help dispose of low-risk transfer pricing issues. The Internal Revenue Service is interested in conducting joint audits with jurisdictions in the future. Click here to see the full story (Subscription required).

TAX POLICY

October 31: Tax policy officials at the Treasury Department will work closely with congressional staff to “serve as a bridge between Congress and the regulatory process” in developing tax reform legislation, Dana Trier, deputy assistant secretary for tax policy, said. Trier also said he has been thinking about the regulatory implications of all the issues that have come up in tax reform discussions with Congress. Click here to see the full story (Subscription required).

REAL ESTATE INVESTMENT TRUSTS

November 1: Fourteen real estate investment trusts (REITs)—including Boston Properties, Kilroy Realty Corp. and Forest City Realty Trust Inc.—say new revenue and lease accounting rules will bring burdensome and costly changes to how they report rent collected from multifamily apartment complexes. Click here to see the full story (Subscription required).

PRIVATE LETTER RULINGS

November 1: The IRS in private letter rulings examined a utility's use of the tax code's normalization rules, a state fund program's activities in assisting individuals who are wait-listed for Medicaid waivers, and a pension plan overpayment as a result of a systematic error. In other substantive PLRs the IRS considered a county's employee retirement plan, an S corporation's termination of such status, and a proposed transfer of interest in an inherited property, and provided a supplement to a previously issued ruling on a bankruptcy reorganization. Click here to see the full story (Subscription required).  

ACCOUNTING RULES

November 1: Private companies, a majority of which are small-to-mid-sized firms, continue to have simpler, less costly accounting rules despite the mandate of the Private Company Council having shifted from its initial role five years ago, FASB member Harold Monk told Bloomberg Tax in a video interview.

See Monk interview here: https://www.bna.com/private-companies-relief-m73014471521/Click here to see the full story (Subscription required).  

SHAREHOLDER ACTIVISM

November 1: Automatic Data Processing Inc. plans to complain to regulators about what it claims are “false and misleading statements” made by Bill Ackman, as the proxy fight at the payroll and human resources outsourcer escalates ahead of a shareholder vote. In an 18-page letter billionaire activist investor Ackman claimed ADP had provided “non-public, inaccurate and misleading statements” of its own to the proxy advisory firm. Click here to see the full story (Subscription required).  

REVENUE RECOGNITION

November 2: Many companies have shown marked progress in preparing for the Jan. 1 shift to sweeping rules on revenue reporting, potentially heading off problems with investors and regulators, Big Four accounting firm partners told Bloomberg Tax. “Most companies are going to be able to comply with the new rules,” Stephen Thompson, a KPMG LLP partner said. Click here to see the full story (Subscription required).

COMPENSATION

November 2: Companies that must disclose the ratio of CEO compensation to that of the median employees are finding the calculation difficult, and they're not receiving much help from the federal agency imposing it, analysts say. Click here to see the full story (Subscription required).

AICPA

November 2: Companies will get timely and expert counsel from CPAs after the renewal of an accord that allows accountants in the U.S., Canada or Mexico to obtain licenses in any of the North American countries, an official of the American Institute of CPAs told Bloomberg Tax. Click here to see the full story (Subscription required).

DISCLOSURE

November 3: The Trump administration said it will exit a global anti-corruption effort that compels oil, gas and mining companies to disclose the payments they give governments worldwide. The decision may undercut the effort that aims to give citizens and watchdogs in poor but mineral-rich nations details on how much their government leaders get in taxes, royalties and lease payments. Click here to see the full story (Subscription required).

STEAMSHIP COMPANIES

November 3: The FASB plans to eliminate outdated guidance on deferred taxes stemming from an expiring tax relief exception for steamship and commercial fishing companies. The rule change will require companies to report any remaining deferred income taxes related to statutory reserve deposits made before Dec. 16, 1992. Click here to see the full story (Subscription required).

EXECUTIVE COMPENSATION

November 3: The Republican tax plan proposes to eliminate a decades-old rule that's been blamed for fueling the meteoric rise of executive compensation at U.S. companies. Under current law, businesses can write off as much as $1 million in compensation expenses for chief executive officers and four other top-paid bosses, plus any amount beyond that if it's tied to performance targets. The Republican proposal would keep the $1 million threshold but eliminate the exemption for pay linked to results, denying companies the option to write off large equity awards. Click here to see the full story (Subscription required).

INTERNATIONAL ACCOUNTING HIGHLIGHTS;

SYSTEMIC RISK

October 30: The European Union took a step toward bedding down its framework for dealing with too-big-to-fail banks as the bloc's parliament and national government representatives agreed to formalize the creation of a new class of debt that can be used to protect taxpayers when lenders fail. Click here to see the full story (Subscription required).

INTERNATIONAL BANKING

October 31: Ireland's government repeated its threat to punish banks should they fail to deal with an escalating scandal linked to overcharging for home loans. If the nation's Central Bank decides progress has not been “sufficient or acceptable,” the government could look at raising taxes or increasing oversight, Finance Minister Paschal Donohoe told reporters. Click here to see the full story (Subscription required).

INTERNATIONAL ACCOUNTING RULES

November 2: Ukraine amended its financial reporting laws to allow businesses to use officially published international financial reporting standards (IFRS) — provided they are translated into Ukranian—and to file financial statements electronically. Click here to see the full story (Subscription required).

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

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