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Tax News

Federal court rules employment-discrimination settlement doesn’t trigger capital gains tax.

The Court of Appeals for the Federal Circuit, affirming the Court of Federal Claims, concluded that the settlement payments received by an individual from an employment discrimination suit were not capital gains income. The court ruled that payments received by the individual, James Duffy, did not represent gains from the sale or exchange of goodwill associated with a capital asset, but rather were for the exclusive purpose of avoiding the expense and inconvenience of further litigation.

SEC News

Update planned for banking industry guide.

The SEC is revising its industry guide for banking companies, which was last updated in 1986. The planned revisions are part of a broader effort to revise the disclosure rules for U.S. companies and make them simpler to follow. The SEC plans to issue a draft for public comment by fall 2016.

Senior enforcement lawyer to step down.

On January 11, the SEC announced that Julie Riewe, co-director of the Enforcement Division’s asset management unit, will step down in February. Riewe oversaw a number of initiatives during her tenure, including a targeted program to investigate hedge funds suspected of falsely inflating their investment performance. She also pursued enforcement actions through collaborative efforts with other SEC offices.

FASB News

Community bankers campaign for changes to planned credit loss standard

Community bankers are pressuring FASB to make its forthcoming accounting standard on writing down bad loans and securities easier to understand. The accounting board announced a public roundtable meeting with community bankers, auditors, and regulators in February not long after the Independent Community Bankers of America (ICBA) publicly urged all seven FASB members to participate in an open exchange with executives from small banks. “We’ve had tons of outreach with the FASB and various board members and staff, but never anything in front of the full board so they can all hear about all the various concerns we have,” said James Kendrick, vice president of accounting and capital policy at the ICBA.

Clarifications to revenue standard’s guidance on licenses.

On January 6, FASB instructed its research staff to clarify two aspects of tallying revenues related to licenses of intellectual property. Questions about how to account for licenses have dogged FASB and the IASB both before and after their joint standard was published in May 2014. FASB intends to publish an update before the second quarter of 2016.

PCAOB News

Chinese auditors may face disciplinary actions

The PCAOB is preparing to punish some Chinese auditors that have resisted its efforts to inspect the audit firms and review their workpapers. After the latest round of negotiations with Chinese regulators stalled, the PCAOB requested that the Chinese affiliates of the Big Four firms hand over certain data by early December 2015. Chinese government officials generally do not permit companies to provide certain data to foreign regulators because of national security concerns. The disciplinary proceedings could be stayed if U.S. and Chinese officials can agree to inspections and PCAOB inspectors are given access to the documents.

IASB News

Chairman defends financial instruments standard.

On January 11, IASB Chairman Hans Hoogervorst defended the board’s high-profile accounting standard requiring banks and other financial businesses to acknowledge losses on loans earlier in the credit cycle. Speaking before the European Parliament’s committee on economic and monetary affairs in Brussels, Hoogervorst conceded that the changes outlined in IFRS 9, Financial Instruments, will require more judgment than companies currently make, but he said that the final accounting outcome will better reflect the economics of most lending and trading activities. “The whole purpose of why it was written so strictly & was to limit judgment and to limit leeway for management to create hidden reserves or whatever. It was to limit earnings management,” Hoogervorst said.