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IRS regulations modify, add to FATCA reporting, withholding rules.
The IRS has issued final and temporary regulations that modify and add to existing regulations under the Foreign Account Tax Compliance Act (FATCA). The modifications apply to the subjects of information reporting by foreign financial institutions (FFI) with respect to U.S. accounts, as well as withholding certain payments to FFIs and other foreign entities. The new regulations are effective as of January 6; however, taxpayers may apply the regulations as far back as January 28, 2013.
White renews call for IFRS.
On January 5, SEC Chair Mary Jo White issued a 1,600-word statement that called U.S. support of IFRS “imperative for the protection of U.S. investors and companies and the strength of our markets.” The statement was issued two weeks before she planned to step down, but was intended to pave the way for her successor to resume work on an issue that has proceeded fitfully through the rulemaking process for decades. “I strongly urge the next chair and commission to build on our past efforts, and give the goal of high-quality globally accepted accounting standards the focus and support this critical issue deserves,” White said.
Definition of business under GAAP revised.
On January 5, FASB revised the definition of a business under U.S. GAAP. The revision comes in response to complaints that the existing definition was too broad and forced companies to unnecessarily follow complicated guidance for business combinations when merely buying or selling assets. The revised definition is intended to sharpen the distinction between the purchase or disposal of a business and the purchase or disposal of assets. The update is considered phase one of FASB’s broader effort to sharpen the difference between the acquisition or sale of a business and the acquisition or sale of a group of assets.
The PCAOB’s reorganized auditing standards became effective at the end of 2016.
PCAOB’s Hanson quits two years before end of term.
PCAOB member Jay Hanson, who joined the audit regulator in 2011, resigned unexpectedly in December, two years before his term was to end. No reason was given for Hanson’s departure. During his time on the board, Hanson developed a reputation as a defender of the auditing profession. In his final public decision before resigning, Hanson was the lone dissenting vote against the PCAOB’s 2017 budget, the first time a board member has done so since the board was established.
Reorganized auditing standards go into effect at end of 2016.
The PCAOB’s reorganized auditing standards became effective at the end of 2016. The audit regulatory board adopted the reorganized standards to make them easier to read and use in March 2015 in Release 2015-002, Reorganization of PCAOB Auditing Standards and Related Amendments to PCAOB Standards and Rules. Under the changes, individual standards are grouped by topic and organized in a four-digit numbering system, which replaces the sequentially numbered standards. “It essentially follows the flow of how the audit is conducted,” PCAOB Chief Auditor Martin Baumann said on December 6 at the AICPA’s Conference on Current SEC and PCAOB Developments in Washington. “We think this will help various users of our standards to navigate the standards more easily.”
Second discussion paper on rate-regulated industries expected in 2017.
After years of debate, 2017 may see a proposed international standard on reporting the effect of pricing regulation on industries such as utilities and transit services take shape. On December 14, members of the IASB discussed a model that that could result in businesses subject to rate regulation recognizing some regulatory assets and liabilities. The board plans to fine-tune the model in early 2017, but this does not mean that a standard will be published in 2017. Due to the issue’s complexity, the board expects to seek another round of comments through a second discussion paper before it works on an exposure draft.