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Tax News

IRS accepting ITIN renewal applications, encourages taxpayers to act soon.

The IRS has reminded taxpayers that, in light of recent changes made to the Individual Taxpayer Identification Number (ITIN) programs, it has begun accepting ITIN renewal applications from taxpayers whose ITINs will be invalid as of October 1. Taxpayers who have ITINs with middle digits of 78 or 79 will also need to renew their ITINs before filing a federal return in 2017. ITINs that have not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return as of January 1, 2017.

SEC News

Companies respond to effort to limit non-GAAP information.

SEC officials seem satisfied with how companies have responded to the agency’s efforts to combat what regulators described as an excessive use of non-GAAP numbers, particularly in quarterly earnings releases. “We’ve seen marked improvements in these earnings releases,” the Office of the Chief Accountant’s Ruth Uejio said of the Compliance and Disclosure Interpretations the commission published in May. “A few high-profile companies changed how they reported non-GAAP results to comply with the new guidance. We are happy with the result.”

Bricker says strong internal controls will aid adoption of FASB’s credit loss standard.

The SEC wants financial institutions to identify the necessary changes to their internal controls as they prepare to implement the FASB’s standard for credit losses, according to SEC Interim Chief Accountant Wesley Bricker. The standard will require much more judgment because banks and other lenders will have to immediately record the full amount of their expected credit losses when they originate loans or purchase securities, Bricker said during a September 21 speech to the AICPA National Conference on Banks and Savings Institutions in National Harbor, Maryland. “Implementation will involve in many cases a fresh look at estimation processes and related policies, procedures, systems, and internal controls.”


Research staff criticizes private company alternative to “down round” proposal.

On September 30, FASB’s staff told the board’s Private Company Council (PCC) that its proposed approach for simplifying the accounting for instruments with so-called “down round features” would result in inconsistent accounting between public and private companies. The PCC alternative “would result in accounting differences across instruments with similar or identical economics,” and between public and private companies, said FASB project consultant Rosemarie Sangiuolo. Not giving accounting recognition to the effects of a down round feature “could create a slippery slope, in that it’s hard to know where to stop,” she added.

AICPA panel urges FASB to end balance sheet classification of debt project.

The AICPA’s Private Companies Practice Section Technical Issues Committee (TIC) urged FASB to scrap its project to simplify the balance sheet classification of debt. FASB, which has yet to issue a formal proposal, believes its amendments will improve the distinction between short-and long-term liabilities. During a meeting with FASB, TIC member Jacob Gatlin spelled out the reasons why the majority of the committee wants the standards setter to stop pursuing the project, all of which relate to debt refinancing. “Lenders often require a year-end financial statement before they’ll process the refinance, so there might be a constraint in processing the request in a timely fashion,” said Gatlin.


Standard to expand audit report nearing completion.

The PCAOB is close to wrapping up a project to expand the auditor’s report to make it more useful for investors. The board is drafting a final standard that it wants to adopt by the fourth quarter of 2016, according to the latest update to the board’s standards-setting agenda, published on October 3. The adoption would conclude years of effort on this issue.


Lease standard’s implementation focus of conference.

On October 7, the International Financial Reporting Standards (IFRS) Foundation, the IASB’s parent organization, held a conference with the Institute of Chartered Accountants in England and Wales to examine implementation of the lease accounting standard issued earlier this year. The lease standard, which replaces IAS 17, was issued in January and becomes effective in January 2019. The conference addressed the transition process and some of the standard’s aspects, such as its definition of a lease, its effects on financial reporting systems, how it may affect some lessors’ ability to borrow, and the disclosure requirements.