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Treasury report recommends action on eight significant tax regulations.
The Treasury Department has released a report outlining actions that would reduce the burden of eight tax regulations. On April 21, President Trump issued Executive Order 13789, which instructed the Treasury Secretary to review all “significant tax regulations” issued on or after Jan. 1, 2016, submit two reports based on this review, and follow with concrete action to alleviate the burdens of regulations that meet criteria outlined in the order. The Department also announced that its comprehensive review has already identified over 200 regulations that it believes should be repealed. The Department will begin the repeal process in the fourth quarter of 2017.
Chief accountant says lessons learned from revenue standard’s implementation can be used again.
During the Global Board Leaders Summit hosted by the National Association of Corporate Directors on October 2 in National Harbor, Maryland, SEC Chief Accountant Wesley Bricker said that companies should take the lessons they learn from implementing FASB’s revenue accounting standard and apply them when preparing for the standards for lease contracts and credit losses. The three standards are expected to make substantial changes to financial reporting, and companies must begin complying with revenue recognition in 2018, leases in 2019, and credit losses in 2020. “If management has accumulated some lessons learned in implementing revenue, they should be identifying those now, so that they can be incorporated into implementation planning for the other major standards,” Bricker said.
Lawmakers call for delay of credit loss standard.
In a letter dated October 5, 26 Republican members of Congress asked FASB and the SEC to delay the effective date of the accounting standard considered to be the board’s chief response to the 2008 financial crisis. The group, led by Representatives Lee Zeldin (R-NY) and Ted Budd (R-NC), called on the accounting board and the market regulator to further examine how the Current Expected Credit Losses (CECL) standard affects the stability of the banking sector and the availability and affordability of credit. By calling for losses to be calculated on the day a loan is originated, instead of when borrowers fall behind on payments, the standard will fundamentally change the accounting for capital and credit, potentially tightening the availability of loans, the lawmakers said. “We also urge a delay in the full implementation of this standard until the completion of such an analysis,” the group wrote. “The FASB values input of all stakeholders, including members of Congress, and is in the process of evaluating the letter,” a FASB spokesperson said. The SEC declined to comment.
U.K. mulls fate of IFRS in Brexit’s wake.
Despite the U.K.’s plan to formally leave the European Union, it should not abandon international accounting standards, the Institute of Chartered Accountants of England and Wales (ICAEW) said in a September 29 report. Britain’s listed companies are currently required to prepare financial statements under IFRS as adopted by the EU. The U.K. is also an influential voice on the European Financial Reporting Advisory Group (EFRAG), which advises the European Commission on accounting issues and is authorized to approve individual IASB standards for use in the EU. “We suggest that … a move away from IFRS would risk making the U.K. a less attractive market for investors,” the report says. “We conclude that, as a major global financial center, the U.K. should continue to adhere to internationally accepted standards.” An IASB spokesperson declined to comment on the report.
Audit Practice Alert provides guidance for revenue standard.
On October 5, the PCAOB issued an Audit Practice Alert to aid auditors examining their clients’ implementation of FASB’s revenue recognition standard, which is scheduled to go into effect in 2018. The 20-page interpretive guidance provides a highlight of board requirements and other considerations for auditing revenue. The update is expected to usher in major changes, as it would erase approximately 180 pieces of individual, industry-specific revenue guidance in U.S. GAAP and provide a single, principles-based, five-step process by which all businesses must calculate the top line in their income statements. It also requires new disclosures, such as qualitative and quantitative information about revenue recognized from contracts with customers and significant judgments and changes in judgments. “As companies implement the new revenue standard, they may need to change their systems, processes, and controls, or to develop new ones,” the PCAOB said. “Done poorly, such changes could pose heightened risks of material misstatement, including fraud risks.”