Simplified Transition Method to New Lease Standard Still Requires Extensive Effort
As the 2019 public company effective date for FASB’s lease accounting standard looms, financial professionals have been warning about the massive data collection effort required. Speaking on an April 4 webcast, accounting executives from two companies said they were glad for FASB’s offers of relief, but they still had a lot of work to do. “They all sound good on the surface,” said Tracy Krause, vice president of accounting and external reporting for Verizon. “But we need to make sure, is it worth having two different processes going forward?” Companies are not sure how the simplified transition will affect the amount of data they need to collect, said Katie Lindsey, senior manager of accounting policy and procedure at Bridgestone. “They dictate how you extract data,” Lindsey said of the practical expedients. “If you extract based on the fact that you will take the practical expedient, you might have to go back to all of those contracts and re-extract all those data elements.”
Europe’s Regulators Plan to Monitor Compliance With Financial Instruments, Revenue Standards
The European Securities and Markets Authority (ESMA) said Europe’s financial regulators plan to focus on compliance with the disclosure requirements in the IASB’s financial instruments and revenue standards that came into effect this year. Among other things, the regulators plan to develop common approaches to monitoring the application of the standards and undertaking enforcement actions in response to failures to correctly apply the guidance. “The convergence of supervision of IFRS financial statements continues to be an important area of activity for ESMA and European enforcers, and the 2017 Activity Report shows their commitment to the harmonization of the application and enforcement of financial information in Europe,” said ESMA Chair Steven Maijoor in a statement. The ESMA and Europe’s financial regulators “are focusing now on the new standards that came into force this year, and which introduced significant changes to financial statements. It is of fundamental importance that issuers ensure high-quality implementation of IFRS 9 and IFRS 15 and provide relevant and comprehensive information on the expected impacts on the financial position and performance of the entity.”
Work Continues on Proposed Standards for Specialists, Accounting Estimates
The PCAOB is continuing to work on the standards setting projects for accounting estimates and the use of specialists. The proposals were released in June 2017 in Release 2017-002, Proposed Auditing Standard—Auditing Accounting Estimates, Including Fair Value Measurements and Proposed Amendments to PCAOB Auditing Standards, and Release 2017-003, Proposed Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists. The comment periods ended in August 2017, and the PCAOB staff is developing a recommendation for the board. The latest update to the agenda reflects the priorities of William Duhnke, who became PCAOB chairman in January 2018.