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IRS confirms extension for C corporations.
The IRS has confirmed the most recent draft instructions for Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, which provide a six-month extension for 2016 and later C corporation calendar year returns. The extension comes as a part of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. As a result, C corporations using a calendar year must file by April 15 of the following year.
Approval granted for FASB’s 2017 accounting support fee.
On January 31, the SEC approved the fees FASB uses from public companies to support its operations. The Sarbanes-Oxley Act of 2002 (SOX) established the accounting support fee for the PCAOB and FASB to keep the standards setters independent of the firms and companies that follow their rules and standards. FASB and the PCAOB are not government agencies, but because the support fees that underwrite their annual budgets must be approved each year, the federal government has determined that they are subject to sequestration. Under SOX section 109, the fee cannot exceed the accounting board’s recoverable budget expenses.
Effort to update performance reporting requirements to start slowly, if ever.
FASB faces a large undertaking if it tries to address the complaints it has heard about the guidance for the format of income and cash flow statements. This guidance was a frequently cited problem in feedback on the document FASB released in August asking for comments about which areas of U.S. GAAP require its attention, but there is no consensus about how it can be fixed. “No offense, but I dreaded coming to this meeting because you read these memos summarizing these comment letters, and you just walk away scratching your head, saying, ‘What do we do now?’” said FASB member Lawrence Smith at a February 1 gathering where a spirited debate on the issue broke out.
Still no agreement on inspections of Chinese auditors.
After a decade of on-again, off-again negotiations, the PCAOB has still not reached an agreement to inspect Chinese accounting firms with clients listed on U.S. stock exchanges. During a hearing of the U.S.-China Economic and Security Review Commission (USCC), a panel created by Congress to examine bilateral issues, some financial professionals said the PCAOB needs to consider a new approach, given the country’s determined resistance to examining audit firms on Chinese soil. “The PCAOB could follow the lead of the European Union and negotiate regulatory equivalency under which the PCAOB would accept the work of Chinese regulators as their own,” said Paul Gillis, author of the China Accounting Blog, during a January 26 hearing of the USCC. To address the obvious shortcomings of inspection equivalency, Gillis said the PCAOB could try to get Chinese regulators to agree to a process that would allow the U.S. board to examine the Chinese inspectors.
Planned auditor report rule on hold until SEC has new chairman.
PCAOB Chairman James Doty has said the audit regulatory board will not finalize its rules for an expanded auditor’s report until the SEC’s next chairman is sworn in. On January 4, incoming President Donald Trump named corporate attorney Jay Clayton, a partner with Sullivan & Cromwell LLP, to head the agency. Clayton must be confirmed by the Senate, but the Banking Committee has yet to announce a confirmation hearing. “It seemed to be a good idea as the work became complete to give a new chair a chance to know where we are,” Doty said during a brief interview after he moderated a panel discussion at the Center for Audit Quality’s 10th anniversary event on January 30 in Washington.
Hoogervorst: Digital transformation to factor in standard setting’s future.
On January 28, IASB Chairman Hans Hoogervorst said in a speech that the international accounting board’s future activities will make use of digital technology. “Investors increasingly consume financial information electronically,” Hoogervorst said at a conference on digital information in Dhaka, Bangladesh. He also said the board’s standards-setting activity will take advantage of the growing prevalence of automation and interactive data. “The more information that becomes available,” Hoogervorst said, “the more important it is to be able to sift trustworthy information from the more spurious.”