Further, the release provides notice regarding the procedures the SEC has established to identify issuers and to impose trading prohibitions on the securities of certain Commission-Identified Issuers, as required by the HFCAA. 2022 Riveron Consulting, LLC. Further, the recent volume of restatements has a pronounced swing from big R restatements to little r revisions. The IASB will strive to make its standards compatible and complementary to facilitate seamless reporting by companies to provide investors with a comprehensive, decision-useful set of information. Both the SEC and Financial Accounting Standards Board (FASB) have primarily focused on ensuring recent changes to standards are properly implemented and adopted, rather than rolling out sweeping new changes. hb``pe``````$ And I for one would hope we can continue and deepen our relationship to the mutual benefit of our two boards and our stakeholders.. Your views matter to us, so please continue getting involved in our work.. This is not an aspirational process when companies are reporting actual numbers. %%EOF He believes there is a playbook to restore the publics trust that includes robust enforcement, remedies, and compliance. Grewal indicated that he has observed that people have declined their trust in our institutions, including government and financial institutions. A prevalent theme included the battle for accounting talent and the need to expand the inflow of professionals to meet the increasing reporting demands of a dynamic investor environment. Corp Fin urged companies to consider providing applicable prominent disclosures related to risks associated with the HFCAA, including the possible risk of losing the listing in the future. Narrow definition of brokerage services for Sec. On more recent rulemaking, SEC Chief Accountant of the Division of Corporate Finance Lindsay McCord examined the continued adoption and compliance of the new rules related to MD&A, and this year will mark the first for many issuers to apply those rules in year-end reporting. Dr. Barckow indicated that the future work of the IASB and its priorities will be guided by feedback from its latest agenda consultation, which is required by the agencies due process to undertake every five years to seek views on whether weve got the right balance in our work and views on which issues we should prioritize. We want to help you understand complex accounting matters and we believe you deserve the best training in the world, regardless of whether you work for a large, multinational company or a small, regional accounting firm. Key takeaways from the 2021 AICPA & CIMA Conference on Current SEC and PCAOB Developments. Dr. Andreas Barckow provided an update on the activities of the IASB. It may also include pre-existing subsidiaries into a new entity or a combination of these items. SEC Chair Gary Gensler recently indicated that while more than 50 jurisdictions have worked with the PCAOB to allow the required inspections, two historically have not: China and Hong Kong. %PDF-1.7 % Allowed tags:
Add a new comment: This blog shares our insights and conversations about accounting, auditing, and training matters. Although the volume of SPAC mergers has declined from the peak earlier in the year, they remain a popular vehicle through which to access the capital markets. Accounting Insights from the 2021 AICPA Conference, Financial Accounting and Internal Reporting, Special Purpose Acquisition Companies (SPACs), Financial Close & Corporate Performance Management (CPM), Aerospace, Defense, & Government Contractors, Human Capital: New Disclosures May Propel Values-Based Investing, Fitting Internal Controls and SOX Within the IPO Roadmap, Capital Markets Activity and the Current Economic Outlook: Q3 2021 Update, AICPA Conference Recap: 2021 Highlights and Key Themes, Eliminating the need to fair value contract assets and liabilities accounted for under ASC 606 in purchase accounting (ASU 2021-08), Permitting non-public entities to apply incremental borrowing rate practical expedients at an asset class level under ASC 842 (ASU 2021-09), Revisiting certain gross write-off disclosures required under CECL, including the requirement to disclosure write-offs by vintage (not yet issued), Revising the accounting for goodwill model, potentially moving to an amortization plus impairment model, Revising the level at which goodwill impairment analysis is performed, moving to either the reportable or operating segment level from the reporting unit level, Updating the expiration date of the reference rate reform guidance to align with LIBORs expected extended life, Revisiting segment reporting and expanded disclosures related to expense line items. Serving legal professionals in law firms, General Counsel offices and corporate legal departments with data-driven decision-making tools. endstream endobj startxref -Post-implementation reviews. This interpretive release was issued in 2010 and provides guidance to public companies regarding the SECs existing disclosure requirements as they apply to climate change matters. The IASB is currently conducting post-implementation reviews on the IASBs suite of consolidation Standards (IFRS 10, 11 and 12) and the IASBs financial instruments standard (IFRS 9). SEC guidance states that if a company is disclosing a metric, certain disclosures should be included such as a definition of the metrics and how it is calculated. Many companies take the view that errors in historical financial statements are no longer material given that current financial statements are available and provide the most material information to investors. This conference is being held Monday-Wednesday, December 6-8, 2021. Auditors, regulators, and industry practitioners examined the top factors shaping the accounting and finance world at this years AICPA & CIMA Conference on Current SEC and PCAOB Developments. GAAP Dynamics is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. Patrick Garrett, Zac McGinnis, Jenn Braden, Jason Johnston. Grewal is open to reviewing the SECs current admission policy in which wrongdoers do not admit or deny their guilt. Enforcement discussed some of the reporting and disclosure cases they have brought. It's important to company disclosure obligations and ignoring bad facts leads to bad results. As personnel come back to the office, companies may want to identify potential pandemic related deficiencies or weaknesses in their internal control structures and what adjustments may be made. The IASB started its deliberations of the feedback in spring this year, and while it is making good progress, Dr. Barckow believes the IASB will certainly spend the next year, too, to get through all the feedback and make decisions. We specialize in unifying and optimizing processes to deliver a real-time and accurate view of your financial position. It is important to clearly label and describe the non-GAAP adjustments in the particular measure so that investors are able to compare similarly titled measures across more than one company. Some key themes are already becoming clear from this consultation process, including that the board should be mindful how much change it imposes on stakeholders and that the IASB should reserve time for working with the new International Sustainability Standards Board as well as on emerging issues. Want to learn more about how GAAP Dynamics can help you? According to IASB and AICPA representatives and other key accounting leaders, the push for increased ESG reporting has occurred in response to investor demands, and the trend is expected to increase. PCAOB 2020 Inspection Results: Deficiency Rates Fall, High quality accounting standards and rules, High quality application against those standards and rules, High quality audits of financial statements, Wanting to see more in terms of financial statement disaggregation, Wanting to see more guidance on emerging topics, Wanting the FASB to re-evaluate areas of U.S. GAAP that are redundant, Wanting the FASB to improve its internal procedures (e.g., standard-setting procedures). Enabling organizations to ensure adherence with ever-changing regulatory obligations, manage risk, increase efficiency, and produce better business outcomes. In advance, consider the appropriate reporting for a spin-off (including reverse spin transactions) to both parties of the transaction. The overall feedback received mostly related to the following areas: Here is the full speech that Mr. Jones gave at the conference, for reference. Visit our global site, or select a location. Dr. Barckow indicated that while both the ISSB and the IASB will be independent, the IFRS Foundation Trustees have made clear that the two Boards are expected to work in very close cooperation to drive compatible reporting from the outset. Our solutions for regulated financial departments and institutions help customers meet their obligations to external regulators. Gathering and evaluating all information is important in reaching GAAP decisions. Some of the qualitative factors considered by the company included that the: Corp Fin appreciated the qualitative factors and they are things that it sees generally with SAB 99 analysis. Riveron explores the economic climate and trends across M&A and SPACs in this Q3 2021 update. A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. Remedies must appropriately deter relevant conduct. Somebody had asked about non-GAAP disclosures and wondered if all the non-GAAP rules and attention were too much considering all the other new disclosures (ESG, human capital, reference rate reform, etc.) Another personal highlight for me from the conference was during a Q&A session at the end of Day 1 with Mr. Munter. As such, the SEC staff reminded preparers to approach materiality analyses from an objective perspective. Health Savings Accounts: 2023 cost-of-living adjustments. Corp Fin indicated that it has seen a significant uptick in transactions driven by IPOs and the use of Special-Purpose Acquisition Companies (SPACs). Disclosures may be appropriate under existing requirements in: Corp Fin indicated that its review program has been providing comments on company social responsibility reports and disclosures that discuss legislative or regulatory developments that may impact the company. Regulators must continue to enforce traditional securities laws areas but also must stay ahead of emerging threats. Dr. Barckows remarks focused on sustainability, the IASBs current and future work program, and convergence. Dr. Barckow discussed the following three current work program projects that the board has received comments on: -Primary Financial Statements. Preserving the convergence work of the Boards predecessors is an ongoing challenge, and it is now up to Dr. Barckow as IASB Chair and Rich Jones as FASB Chair to work together so that the gains of the earlier years convergence work are preserved for the benefit of investors around the globe. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. When an error is quantitatively large, it may be difficult for qualitative factors to overcome this in order to determine something is not material. What are APIs, and why are they important to accountants and CPA Firms? Keep up-to-date on the latest insights and updates from the GAAP Dynamics team on all things accounting and auditing. The Final Rule, Release No. McCord highlighted nuances preparers should be aware of, especially regarding retrospective application of guidance; for instance, supplementary financial information that should be included in MD&A disclosures when issuers lose their emerging growth company (EGC) status. This is a message that the IASB have also heard loud and clear from its stakeholders and advisory bodies, connectivity between accounting requirements and sustainability disclosure requirements is essential. 2022 GAAP Dynamics All Rights Reserved. 91 0 obj <>/Filter/FlateDecode/ID[<81E5D458F4E0432896509C8B954CBC93><1D3B5C94DACEA7458E6D84C1A3D1F9A9>]/Index[20 211]/Info 19 0 R/Length 246/Prev 254540/Root 21 0 R/Size 231/Type/XRef/W[1 3 1]>>stream This project aims to create a better structure for the statement of profit or loss by introducing an operating, an investing and a financing category of income and expenses and requiring companies to present two new subtotals. The priorities of the division stress the importance of the accounting and audits profession in the work of the division. Corp Fin has an overall focus on disclosures during the IPO stage. In most cases, these transactions involve substantial judgment to determine the correct reporting. AH320o[ V c`5`|q"G2p13aQ>r.5F-v5 T6we1|g`a zqQ}xC?asF13! | Tags: Accounting, In the news. Here, focus areas will include financial reporting, internal control, and an increase in independent auditor procedures. The information considered should not be guided by your hopes and dreams, but must be guided by what actually took place and faithfully represent the underlying transaction. In this webinar, Riveron experts discussed the latest trends and key themes addressed by regulators and accounting professionals during the 2021 AICPA Conference on SEC and PCAOB Developments. Subscribe to Riveron Insights and get relevant news and trends shaping the world of accounting, finance, technology, and operations. Going into 2022, companies will continue to make the most of favorable market conditions. Companies will need a robust corporate governance structure around these critical ESG metrics and related disclosures. For even more reference, here are additional recaps of the conference from Deloitte and EY (note that PwC and KPMG summaries were not available as of this blog publishing date).

Corp Fin indicated that the guidance in SAB 99, Materiality, remains guidance and requires quantitative and qualitative considerations when determining if something is material to a reasonable investor. Enabling tax and accounting professionals and businesses of all sizes drive productivity, navigate change, and deliver better outcomes. Companies need to consider all the information, not just the facts that support its conclusion or its desired narrative of how things are going to be. Subscribe to our blog, GAAPology, by entering your email below.

They ensure every topic is thoroughly researched and meticulously broken down to provide up to date and accurate information. At that time, the IASB had concluded that the existing impairment provisions could not be significantly improved rather than making changes at the fringes. Midlothian, Virginia 23114, The GAAP Dynamics team has grown! Learn whats new inside the CCH Axcess Audit solutions, /Feature/WoltersKluwer/OneWeb/SearchHeader/Search, The worlds most trusted medical research platform, Evidence-based drug referential solutions, Award-winning infection control and monitoring, Cloud-based tax preparation and compliance, workflow management and audit solution, Integrated tax, accounting and audit, and workflow software tools, Tax Preparation Software for Tax Preparers, Integrated regulatory compliance and reporting solution suite, Market leader in UCC filing, searches, and management, eOriginal securely digitizes the lending process from the close to the secondary market, Software solutions for risk & compliance, engineering & operations, and EHSQ & sustainability, Registered agent & business license solutions, Market-leading legal spend and matter management, contract lifecycle management, and analytics solutions, The most comprehensive and detailed resource for IP professionals, AICPA & CIMA Conference Highlights December 8, 2021, FASB issues improvements to fair value guidance, PCAOB adopts new requirements for lead auditors use of other auditors, AICPA releases new quality management standards. 151 Le Gordon Drive, Suite 101

Preparers should review both the guidance on non-GAAP financial measures and metrics to ensure that they are appropriately classifying the information being disclosed. APIs create connectivity to increase efficiency, automate tasks, and improve staff retention by helping tax and accounting applications work together. Management is encouraged to bring a heightened scrutiny to their annual assessments of the effectiveness of internal controls over financial reporting (ICFR). A SPAC process presents an accelerated timeline to prepare the regulatory reporting and listing requirements, and once the target company is identified for the merger, it is imperative that a target company has a comprehensive plan in place to address the resulting demands of becoming a public company. Companies must have qualified staff involved in the financial reporting processes, including developing robust internal accounting controls and disclosure controls. If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended December 31, 2022. This letter provides views of the Corp Fin staff, indicating that the letter contains sample comments that the Division may issue to companies regarding their climate-related disclosure or the absence of such disclosure. These transactions often involve the transfer of assets and operations into a newly formed registrant. Companies continue to discuss or disclose key financial and nonfinancial metrics when describing the performance of their business. Error generally was isolated to the discontinued operations portion of the financial statements; Error was already now corrected since it was revised (not restated). The scope of these carve out financials must balance the importance of providing historical information against the composition of the business going forward. CCH Accounting Research Manager delivers interpretive guidance and authoritative content needed to confidently make accounting, financial reporting and audit decisions. Posted on Dec 14, 2021 by The implications of getting the transaction and reporting wrong could be significant. It is hosted by GAAP Dynamics. Staff from the SECs Division of Corporation Finance (Corp Fin) discussed a number of topics related to SEC accounting and disclosure requirements. Some of the projects Dr. Barckow mentioned in relation to both the IASBs current and future work plan are topics the FASB has also received similar feedback on or are linked to projects the IASB and the FASB have worked on together in the past. The amendments also require that a Commission-Identified Issuer that is a "foreign issuer," as defined in Exchange Act Rule 3b-4, provide certain additional disclosures in its annual report for itself and any of its consolidated foreign operating entities. The FASB also emphasized the continued prioritization of stakeholder feedback in the process of developing new standards and revising existing guidance. No timetable on the issuance of a proposal was given. Meet the Newest Members of GAAP Dynamics! ), but investors are shifting their focus to disclosures that better describe the various impacts to a business.

Mr. Munter reminded us that even though investors are shifting their focus onto more impactful business disclosures, high-quality financial reporting is still top of mind and reminded us of three important elements that rule when it comes to financial reporting: Here is a statement from Mr. Munter on the SECs continued focus on high quality financial reporting in a complex environment. The amendments are effective 30 days after publication in the Federal Register. Given the robustness and diversity in views, finding a solution is truly challenging. Even though Gary Gensler did not make an appearance at this years conference, Paul Munter, SEC Acting Chief Accountant, did a fantastic job summarizing important messages from the SEC on Day 1. Dr. Barckow indicated that having concluded that the IASB couldnt respond to investors concerns about post-acquisition performance by improving the effectiveness of testing goodwill for impairment, the organization shifted gears and asked whether companies can provide investors with more useful information about the acquisitions they make to help them assess whether they have been a success. As CPAs, we believe great training is vital to doing your job well and maintaining the public trust. In the two examples, quantitative factors were significant (i.e., 20% change in net income, 50% change in loss on discontinued operations). The objective of these reviews is to assess whether the standard is working as the IASB had intended and not to reopen rounds of known arguments. As lifelong learners, we believe training is important. Form 10-K now includes a new Item 9C, Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Tracey Golden, the former AICPA chair, led with perspective on fostering and developing accounting talent, and a panel led by Crystal Cooke, the AICPAs director of diversity and inclusion, underscored the importance of equitable and inclusive practices. For companies seeking to forge a successful path forward, here are the key insights that emerged from the three-day event: A growing desire to understand financial results and its environmental and social impacts will mandate companies and their finance functions to invest in developing ESG governance and related controls. SPAC disclosures should adequately explain the financial incentives involved for all parties in the SPAC transaction, especially the incentives the SPAC sponsor may reap as part of the transaction upon completion of the business transaction. The following are some highlights from conference speeches or presentations. Corp Fin provided a number of reminders to keep in mind when using non-GAAP financial measures, including: Corp Fin reminded conference participants that company disclosure controls and procedures must cover non-GAAP financial measures since it is part of the disclosures being made in SEC filings. Investors do focus heavily on current financial results, but it is a balance with historical information and an entitys track record. The IASBs primary objective to bring transparency to the subsequent performance of a business combination was received well by users and less well received by preparers. Corp Fin cautioned that this SAB does not directly address the scope of activities or revenue streams to be included in the spin-off financial statements. ;y s#6 Tan>-*.\PU 9=7 In the current higher volume capital markets environment, the SEC staff has focused on the application of guidance, highlighting several areas in addition to materiality, such as changes to management discussion and analysis (MD&A), segment reporting, non-GAAP measures, and stock-based compensation. One approach the IASB is considering is to investigate a package of disclosures that could substitute, at least in part, the perceived loss of information that proponents of the impairment-only approach fear when abandoning that model. These controls are essential to the sort of robust compliance necessary. In addition, Corp Fin urged conference participants to review the guidance in Commission Guidance Regarding Disclosure Related to Climate Change. Corp Fin urged conference participants to review the final rules issued by the SEC relating to Holding Foreign Companies Accountable Act (HFCAA). Business spin-off transactions are complex and have certain financial statement requirements as part of the initial registration statement.

Big r results in restatement of previously issued financial statements and withdrawal of the auditor opinion. And as I said, our cooperation continues to this day. However, in the companys SAB 99 analysis it relied on qualitative factors to overcome these significant quantitative factors. And my second biggest highlight came from the SEC Enforcement update, when Gurbir Grewal, Director, and Matt Jacques, Chief Accountant, referred to this years conference as the Catalina Wine Mixer of accounting conferences, which inspired this blog theme, and produced the most laughter Ive ever seen at any conference Ive ever attended! We dont think of training as a tick the box exercise, but rather an opportunity to empower your people to help them make the right decisions at the right time.

Health Savings Account (HSA) contribution limits and amounts that determine whether a health plan is an HSA-eligible high-deductible health plan are set to increase in 2023. As transactions involving international entities rise, conference discussion highlighted the difference between international independence standards and Rule 2-01 of Regulation S-X, noting Rule 2-01 uses principles-based standards, and these present a high hurdle to reach a conclusion that an accountant could remain objective and impartial. This requires both regulators like the SEC and professionals like accountants or auditors. High-quality financial reporting is still top of mind (dont touch my drum set! In general, if an accounting error is identified, an assessment of whether the error is a Little r or Big r restatement. Dr. Barckow indicated that keeping each other informed is obviously vitally important. All rights reserved. The International Sustainability Standards Board (ISSB) was created this year to formulate a new baseline for sustainability reporting that meets investor needs. Specialized in clinical effectiveness, learning, research and safety. SPAC transactions present some novel reporting and disclosure issues that are being addressed in Corp Fins review process.