The GASB has issued a proposal around disclosures related to certain risks. The proposal provides disclosure requirements for certain concentrations and constraints. Comments are due September 30, 2022.View Details
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This week marked a major consolidation in the ESG standard setting arena. The IFRS Foundation completed its consolidation of the Value Reporting Foundation (VRF). The IFRS Foundation is the parent entity to the IASB who writes IFRS. It will now also be the parent to the new International Sustainability Standards Board’s (ISSB) which is working to develop a comprehensive global baseline of sustainability disclosures for the capital markets and will leverage the resources of the VRF as part of this consolidation.View Details
The FASB has issued a proposal to address transition for insurance entities in applying ASU 2018-12. The proposal addresses the requirements to apply the new standard to contracts that have been sold. This is a very niche standard so comments are due August 8th.
The second quarter of 2022 is behind us and it was a very busy one for standard setters. The AICPA issued their suite of standards related to quality control. They also issued a SAS related to NOCLAR which corresponds to changes recently made to the ethics requirements. GASB issued 3 final standards in Q3 and FASB issued 1 final standard.View Details
The AICPA has provided more details about the upcoming transition for the CPA exam which is scheduled for January 2024. The new blue print provides details on the types of skills expected of newly licensed CPAs as well as the design of the exam. Comments are due September 30th.View Details
The AICPA's Professional Ethics Executive Committee (PEEC) has proposed changes to a few interpretations to align the verbiage around ownership with previously issued interpretations related to loans. The proposed changes address three sections of the ethics code. Comments are due July 5.View Details
The AICPA's Professional Ethics Executive Committee (PEEC) has proposed some new independence rules related to compliance audits. The AICPA is aware that much of the new COVID19 related funding is causing many entities who have no been subject to audit requirements or single audit requirements historically to now be subject to them. They add 2 definition and revise the definition of financial statement attest client to help identify which independence rules apply to these engagements. Comments are due September 1, 2022.
FASB has issued an Invitation to Comment to gather feedback about the operability of leveraging IAS 20 for government grants for for-profit entities in the US. The ITC does not include any preliminary views but is to help the FASB staff gather information from stakeholders about any benefits or issues that should be considered in the project. Comments are due September 12, 2022.
Suggested Call to Action: Do you think IAS 20 is operable for for-profit entities in the US?
The GLS team had a great time this week in Las Vegas for the ENGAGE conference. The team was able to interact with clients and colleagues both at the exhibit booth and at various evening functions. We also had a wonderful client reception on Monday, which included the cover reveal of Melisa's new book Money Matters for Nonprofits. This book demystifies financial statements and basic accounting, empowering nonprofit board members and other stakeholders to better advise their organizations and make an even greater difference in the world. At ENGAGE, Melisa enjoyed presenting on Nonprofit Hot Topics and attending some CPE for a change. But all good things come to an end. The team is heading home with ideas to build on this momentum.
The AICPA has issued a TQA in May addressing reporting and dating issues related to Other Information (OI) received after the date of the auditor's report. SAS 137 added some additional performance and reporting requirements. The TQA clarifies some common questions the AICPA was receiving with regard to these changes. Link: https://www.aicpa.org/resources/download/aicpa-technical-questions-and-answers-tqas-9165-01-03
The FAF has issued a draft strategic plan for the FASB, GASB and FAF for public comment. The draft reviews the vision, mission and values of the FAF and also 6 key goals that they hope to achieve. Comments are due July 22, 2022.
GAO has issued in 2022-2027 Strategic Plan. It includes the identification of 12 trends impacting the United States as well as 4 key efforts which are near-term priorities to provide the Congress with timely and fact-based analysis of the most important issues facing the nation.View Details
The PCAOB has issued a staff spotlight looking at some auditor considerations when using a service provider in the confirmation process. It encourages auditors to evaluate whether they have maintained control over the confirmation and to what extent they can rely on third party controls. This is nonauthoritative guidance to help improve audit quality. Link: https://pcaobus.org/documents/observations-reminders-confirmation-process-spotlight.pdf Suggested Call to Action: Do you or your auditors use third party tools for the confirmation process? #auditing #commondeficienciesView Details
FASB has issued a proposal to amend the sunset provision in ASU 2020-04 due to the extension of LIBOR into 2024. In addition, it has proposed to expand the definition of SOFR due to market changes. Comments are due June 6th.View Details
OMB has updated the 2021 Compliance Supplement for two programs - Provider Relief Funds and Coronavirus State and Local Fiscal Recovery Funds. DHHS can removed the special test & provisions requirements for Provider Relief Funds (93.498) which related to out of network patient expenses. In order to reduce burden on smaller entities, Treasury is now offering an alternative examination engagement in lieu of requiring a Program Specific audit or Single Audit for entities that would not have required this level of audit had it not been for the receipt of CSLFRF funds (21.027). Treasury estimates 10,000 entities will be able to forego a Single Audit in lieu of this new compliance examination which has been added to Appendix VII thereby still maintaining accountability but reducing costs and complexity.View Details
The AICPA has proposed significant changes to AU-C 600 and the requirements of a group audit. Some changes are definitional but the new standard also includes a more risk based approach for addressing financial statements that contain multiple components. Comments are due June 21, 2022. https://us.aicpa.org/content/dam/aicpa/research/exposuredrafts/accountingandauditing/downloadabledocuments/20210204a/20220323a-group-audits-ed.pdfView Details
On March 9th, President Biden issued an executive order encouraging the federal government to research and respond to the use of digital assets including cryptocurrency. It go so far as to ask the Federal Reserve to research a Central Bank Digital Currencies. The EO focuses primarily of research requirements. Link: https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/ Suggested Call to Action: Do you believe the US should create a Central Bank Digital Currency?
The SEC has proposed new environmental, social and governance (ESG) reporting and disclosure requirements for public companies. For larger companies, it would also include an attestation requirement regarding greenhouse gas disclosures. Comments are due 30 days after publication in the Federal Register, or May 20th, whichever is later. Link: https://www.sec.gov/files/33-11042-fact-sheet.pdf https://www.sec.gov/rules/proposed/2022/33-11042.pdf Suggested Call to Action: Do you agree with the requirements for public companies to provide ESG disclosures?View Details
As NASBA gets ready to transition the CPA exam to its new format, current students were eager to know what happens if a part they passed changes and how that would be considered for the new exam. Thankfully, NASBA has issued a very easy to understand transition model for students. The new exam is set to launch in 2024! Link: https://nasba.org/blog/2022/02/25/transition-policy/ Suggested Call to Action: What are your thoughts on the changes coming to the CPA Exam?View Details
The AICPA's Government Audit Quality Center has released 4 tools that can help auditors make sense of auditing provider relief funds. It addresses the unique HHS audit requirements as well as how to handle Parent / Subsidiary relationships. It also has a tool for auditors new to performing single audits as well as a checklist for organizations getting their first single audit. The GAQC has made these available to the public and you do NOT need to be a GAQC member to access (although the membership is more than worth the investment!)View Details
While much of the focus of the implementation of SAS 134-140 have been on the financial statement report and the Single Audit report, it is important to note that the when the AICPA issued updated examples in their A&A guide, it included changes to the Yellow Book report as well. We'll review some of the biggest changes to make sure these minor edits are included when issuing GAGAS reports. Suggested Call to Action: Have you updated your templates for the new reports?View Details
The AICPA's Healthcare Expert Panel has issued a Technical Q&A regarding the accounting for vaccines that were provided during the pandemic. The guidance applies to nonprofits and for profit entities. The TQA requires entities to evaluate whether the transaction is exchange or nonexchange and if nonexchange whether the entity is acting as a principal or an agent. Link: https://www.aicpa.org/resources/download/tqa-section-6400-71View Details
The AICPA has issued an exposure draft addressing AU-C 935, Compliance Audits. This section is used when performing Single Audits. The appendix references were in need of an update from other recently issued SASes. This would correct the appendix to ensure auditor's understood what paragraphs in various AU-C sections do not apply when performing Single Audits. Comments are due May 16. Link: https://us.aicpa.org/content/dam/aicpa/research/exposuredrafts/accountingandauditing/downloadabledocuments/20210225a/20220207a-compliance-ed.pdfView Details
FASB has issued a new Chapter to the Concepts Statements focusing on Presentation. Presentation includes how the elements are presented as totals and subtotals on the face of the financial statements. While Concept Statements are not GAAP, they are the theory used by the board to create GAAP. Link: https://fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176179209702&acceptedDisclaimer=trueView Details
FASB has issued an exposure draft which would require additional disclosure about supplier financing arrangements sometimes referred to as reverse factoring. These disclosures would provide users with information about the agreements and the location of the obligation in the financial statements. Comments are due March 21.View Details
The FASB has issued an update to the definition of key elements in the Concept Statements. The definitions of an asset, liability, revenue and expenses have all received an update. This blog will discuss what's changing and how the concept statements interact with the writing of ASUs.View Details
The Professional Ethics Executive Committee (PEEC) of the AICPA has postponed the implementation of the Information System Services Interpretation [link to official release] an additional year [Link to JOA newsletter]. In addition, PEEC has also provided a new practice aid [link to practice aid]. The interpretation will now be effective in January 2023.View Details
Happy New Year! Let's wrap up 2021 with a review of all things accounting and auditing! 2021 saw a flurry of activity from the AICPA, FASB and GASB. We'll review the final and proposed standards that were issued in 2021. Wishing you all a prosperous 2022!View Details
FASB announced its updated research agenda based off of initial discussions of the earlier 2021 Invitation to Comment. The ITC was an agenda consultation project to hear from stakeholders what their thoughts were on the next phase of standard setting. The research agenda includes 6 items that if approved will move to the standard setting agenda. Link: https://fasb.org/cs/Satellite?c=FASBContent_C&cid=1176179121674&pagename=FASB%2FFASBContent_C%2FNewsPageView Details
The AICPA's Professional Ethics Executive Committee (PEEC) has issued a Temporary Policy Statement Related to the Uniformed Services Employment and Reemployment Rights Act(USERRA) and parallel state statutes. They are providing an exception to the simultaneous employment requirements, assuming certain qualifications are met, for employees who provide services to the military and are also serving in the armed forces. The temporary policy is effective until rescinded by PEEC. Link: https://us.aicpa.org/content/dam/aicpa/interestareas/professionalethics/community/exposuredrafts/downloadabledocuments/2021/2021novemberofficialreleasetemporarypolicystatement.pdfView Details
The FASB has issued an exposure draft as part of its Disclosure Framework project to update the disclosure requirements for interim reporting. The proposal follows ASU 2018-13 and 2018-14 in updating disclosures using the new conceptual framework. Comments are due January 31, 2022. Link: https://fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176178812005View Details
FASB has issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This much awaited ASU addresses disclosures for for profit entities about the types of government assistance as well as the accounting for the assistance. While the standard does not provide recognition or measurement guidance it does scope the disclosures to when a for profit entity is applying ASC 958-605 or IAS 20 typically by analogy. The standard is effective for annual periods beginning after December 15, 2021.View Details
FASB issued ASU 2021-09, Discount Rate for Lessees That Are Not Public Business Entities. The much anticipated changes to permit the use of the private company alternative without having to elect it for all leases has been issued. This should help reduce cost and complexity by allowing nonpublic entities to decide when to apply the alternative. Link: https://fasb.org/cs/Satellite?c=Document_C&cid=1176178876155&pagename=FASB%2FDocument_C%2FDocumentPageView Details
The AICPA has issued a Technical Q&A to address questions surrounding reporting on the SEFA when the amount reported does not tie back to the financial statements due to DHHS's requirement to report based on the reporting to the Portal. The TQA provides guidance on the application of AU-C 725 to this scenario.View Details
The AICPA's Accounting & Review Services Committee (ARSC) has issued an exposure draft titled Quality Management for an Engagement Performed In Accordance with SSARS. As the AICPA has already exposed changes to the current quality control standards and a related SAS about QM at the engagement level, ARSC is providing guidance on the application of QM to SSARS engagements. Comments are due by January 31, 2022.View Details
Governmental Accounting Standards Board (GASB) has issued GASB Statement 98 renaming the Comprehensive Annual Report to the Annual Comprehensive Financial Report. The standard eliminates an unintended consequence when the acronym was pronounced that was similar to a racial slur. By renaming the report, the new acronym removes the offensive issue and engages in an inclusive environment.View Details
Today Financial Accounting Standards Board (FASB) issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. It addresses how to account for contract assets recognized under Topic 606 in a business combination. The standard will be effective for public companies for fiscal years beginning after December 15, 2022 and for all other entities for fiscal years beginning after December 15, 2023.View Details
The Financial Accounting Standards Board (FASB) has issued another private company alternative, ASU 2021-07, Determining the Current Price of an Underlying Share for Equity-Classified Share-Based Awards. This is a result of the work of the PCC and their goal to help leverage pre-existing information in pricing shares. The practical expedient is effective prospectively for fiscal years beginning after December 15, 2021. Early adoption is permitted for financial statements that have not yet been issued or made available for issuance as of its issuance today.View Details
The AICPA has issued a proposal to update key terminology and certain ethics interpretations to better align with changes made by the SEC. The AICPA issued a temporary enforcement policy earlier this year. The goal is for this proposal to make the needed alignments. Comments are due January 5, 2022. Link: https://us.aicpa.org/content/dam/aicpa/interestareas/professionalethics/community/exposuredrafts/downloadabledocuments/2021/2021-october-sec-loans-convergence.pdfView Details
The long awaited changes by the AICPA to Risk Assessment have been issued. SAS 145, which will be effective in 2023, updates several definitions and provides clarity on areas that had significant practice issues. With a focus on IT and understanding IT risks, the standard also modernizes risk assessment. This update is also part of the convergence effort with the IAASB. We’ll review at a high level the key changes you need to know about that are coming down the pike!View Details
The AICPA has issued a proposal to make updates to the Peer Review standards. The changes are primarily formatting to make the standards more user friendly. There are a handful of substantive changes as well. Comments are due by December 15, 2021.View Details
This week's GLS blog addresses the final standards that were issued by the AICPA, FASB and GASB in the third quarter of 2021. While it was a light quarter from a standard setting perspective, some of the issued standards address implementation issues which are always helpful. As we expect some big standards to issue in Q4, a light quarter is likely a good thing as all standard setters have big projects on their plate as well!View Details
The AICPA's Professional Ethics Executive Committee (PEEC) has issued a proposal to revise the rules around unpaid fees. The current rules use a one year period with no considerations of materiality. The proposal would move to a principles based approach with a threats and safeguards application. Comments are due December 20, 2021 https://www.aicpa.org/content/dam/aicpa/interestareas/professionalethics/community/exposuredrafts/downloadabledocuments/2021/2021-September-unpaid-fees.pdfView Details
The AICPA has issued a proposed ethics interpretation to help CPAs understand to what extent they can assist clients with implementing new accounting standards. The proposal identifies certain items as being nonattest services for which the normal rules for nonattest services would apply - management having SKE, management accepting responsibility etc. On the other hand, it also identifies prohibited nonattest services the CPA can not perform without impairing independence. Comments are due December 20, 2021.View Details
This week's blog addresses part 2 of the IFR4NPO Consultation Paper. The second part of the paper focuses on NFP Specific Financial Reporting Issues. The project is looking for feedback on a variety of nonprofit specific financial reporting considerations. If you have a background in nonprofits, we encourage you to respond to Part 2 of the consultation paper by September 24th, 2021.View Details
The AICPA has issued a Technical Q&A to address common questions regarding what qualifies as a third party assessment and which standards including independence should be applied by the third party. The TQA provides guidance on what qualifies at a TQA, which independence rules apply and which standards can be used by CPAs.
Call to Action: Which standards do you use when performing or requesting a third party assessment?View Details
The AICPA's Professional Ethics Executive Committee (PEEC) has issued an updated proposal around reporting noncompliance with laws and regulations (NOCLAR). Originally issued in 2017, PEEC has been trying to converge with the international standards while addressing unique US issues. The proposal includes separating the requirements for those in public practice between those providing attest services and those providing services that are not attest services. It also provides other clarifications in response to the comment letters received in the first proposal. Comments are due June 30.
Call to Action: Do you agree with the proposed changes to the ethics code?View Details
The AICPA has issued a very narrow proposal to add a new requirement for successor auditors to discuss suspected fraud and NOCLAR with predecessor auditors if granted permission by management as part of the client acceptance process. This is the first of two blogs addressing new requirements regarding NOCLAR.
Call to Action: How would this proposal impact your client acceptance process?View Details
This week's blog continues with the discussion of the AICPA's proposed changes to Quality Management. SQMS 2 addresses the role and responsibilities of the engagement quality reviewer. We'll look at the proposal including the proposed cooling off period and qualifications to give you an overview of the proposed standard.
Call to Action: What impact will this proposal have on your current system of quality?View Details
The final blog in our QM series addresses the proposed audit standard. The audit standard assists the engagement team to understand their responsibilities on applying the system of quality management to an individual audit engagement. Comments are due June 11, 2021.
Call to Action: Are you planning to respond to this important proposal?View Details
The AICPA has issued three new proposals related to quality management. The new SQM Standards will replace the extant quality control (SQCS) and provide a more scalable and risk-based QM methodology. This is the first of three blogs that will dive into the details of each proposal. This blog addresses A Firm’s System of Quality Management and the components of a system of quality management.
Call to Action: What impact will this change to adopt these quality management standards have on your firm?View Details