First Standards-Setting Meetings of New Year Scheduled
FASB is scheduled to hold its first meeting of the new year on January 10. The board is also scheduled to meet on January 17 and January 24, but it has not posted preliminary agendas for any of the upcoming sessions.
2018 to Usher in Major Accounting Changes for Not-for-Profit Groups
Charities, foundations, and museums are in for major financial reporting changes in 2018. Not-for-profit organizations with fiscal years that end on December 31, 2017, need to be ready to overhaul how they prepare their financial statements because of the changes in Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. The update is the first significant change to not-for-profit accounting in more than two decades. A central part of the new standard requires new, enhanced information about an organization’s finances, starting with its liquidity, or access to cash. “What it’s really saying is, ‘What do I need to do to make sure I have money to pay the bills? What are my policies? Do I have cash reserve balances? Do I have lines of credit?’” said FASB supervising project manager Rick Cole. “What do I do to make sure I’m going to be able to pay the bills as they come through?” Not-for-profits must also offer information about endowments that have dropped below their initial value or the value set by law or a contract. In addition to stating by how much the endowment value has dropped, they have to say what they are doing to make up the shortfall, such as whether they will stop or reduce spending from accounts that are running a deficit.
Staff Guidance Updated to Help Reporting of Audit Firm Tenure
On December 28, 2017, the PCAOB updated its staff guidance to help accounting firms comply with the requirements for the expanded audit reports they will have to begin filing in 2018. The update gives additional information to guide accounting firms when determining the tenure, or length of time they have served a client that should be reported. “In the absence of other evidence about when the auditor signed an initial engagement letter or began performing audit procedures, tenure can be determined based on the year in which the auditor first issued an audit report on the company’s financial statements or, if earlier, the auditor’s estimate of when work would have commenced to enable the issuance of such report,” the update states. The PCAOB said it will monitor implementation of the new requirements and issue additional guidance as necessary.