Proposal to Allow Greater Capitalization of Cloud Computing Costs
FASB has released a proposed amendment to U.S. GAAP for public comment to clarify accounting issues regarding the costs associated with setting up business software packages managed in the cloud. The proposal seeks to align the requirements for capitalizing the implementation costs for a hosting arrangement that is a service contract with the requirements for capitalizing the implementation costs from developing or obtaining software that a company runs on its servers or servers operated by a third party. The accounting for the service element of the hosting arrangement would not be affected by the proposed amendment. The deadline for comments is April 30. FASB said the effective date for the proposed changes will be determined once its Emerging Issues Task Force (EITF) has an opportunity to review the feedback submitted in response to it.
ASB Issues Guidance for PCAOB’s Revised Audit Reporting Requirements
On March 2, the AICPA’s Auditing Standards Board (ASB) issued Auditing Interpretation 4, Forming an Opinion and Reporting on Financial Statements: Auditing Interpretations of AU-C Section 700, to help auditors comply with GAAS following the PCAOB’s adoption of a standard that significantly revised the content and format of the auditor’s report. The standard requires that audit reports include the phrase “whether due to error or fraud” in describing the auditor’s responsibility to ensure that the financial statements are accurate, as well as a statement that the auditor is required to be independent. The standard is the most significant revision in decades to the regulatory requirements for audit reports. “Although Auditing Interpretation No. 4 has been determined to be consistent with GAAS, the interpretation should not be construed to be an interpretation of PCAOB standards,” the AICPA guidance notes. “Moreover, Auditing Interpretation No. 4 has not been approved or acted upon by the PCAOB.”
James Kaiser Sworn in as Newest Board Member
James Kaiser, a former partner with PricewaterhouseCoopers LLP, has been sworn in as the newest member of the PCAOB. Kaiser, who retired from PwC after 38 years, is one of the five new members named by the SEC in December 2017. “Jim Kaiser is a seasoned executive, known for his deep understanding of global business operations and the auditing profession,” PCAOB Chairman William Duhnke said in a statement.