Plan to Amend U.S. GAAP’s Tax Disclosures Waiting on Tax Reform
As the House and Senate advance their bills to overhaul the tax system, FASB is waiting to determine whether it needs to update U.S. GAAP to keep pace should the tax reforms become law. The board may have to revise its recognition and measurement guidance for income taxes, in addition to updating the disclosure rules for taxes. Speaking to FASB’s Investor Advisory Committee (IAC) on November 9, Chairman Russell Golden said the board was closely following political developments and, if change materializes, will take action. “First, we need to stand ready to see if any questions that companies, auditors, or investors have about the impact about whatever that will come about from tax reform,” Golden said. “Then, we’re going to reevaluate the tax disclosure proposal; it was obviously written under current legislation.”
Vote Set for 2018 Budget, Strategic Plan
The PCAOB has scheduled a meeting for November 16 to vote on its 2018 budget. The audit regulator typically sets its budget near the end of the year and then submits it to the SEC for approval, a move required by the Sarbanes-Oxley Act of 2002. Changes to the budget have in recent years been somewhat modest, with the board’s 2017 budget rising 4.2% to $268.5 million. Staffing takes up the largest portion of the board’s spending and accounted for $206 million, or about 77% of total spending, in 2017. “The 4% dollar increase over the 2016 budget reflects the full-year cost of recent hires, rent increases, standard annual benefit and compensation adjustments, and other administrative expenses,” PCAOB Chairman James Doty told the SEC.
Hoogervorst Adopts Cautious Stance on Sustainability Reporting
In a speech to an international accounting seminar in in São Paulo, Brazil, on November 9, IASB Chairman Hans Hoogervorst reiterated the board’s opinion on its lack of role in sustainability reporting. “Let me be clear; we do not plan to get into environmental and sustainability reporting. That is not our area of expertise,” Hoogervorst said. “Our remit is, and will remain, financial reporting—with focus on the participants in the capital markets. That is, investors and potential creditors.” That said, the IASB is aware that IFRS financial reporting has its limitations, and that the information investors deem important is not always captured in the financial statements. “Investors need to understand a company’s business model and its strategy for long-term value creation. They need to understand the intangibles that are vital to their business model. And, yes, sustainability issues can also be important for long-term value creation in certain industries, just think of mining and car manufacturing,” Hoogervorst said.