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White House’s 2019 budget proposal includes IRS reforms.
On February 12, the White House released its federal budget proposals for the 2019 fiscal year. The budget would provide the IRS with $11.1 billion in “base funding,” including $2.3 billion for “running key tax filing and compliance IT [information technology] applications” and $110 million for “IT modernization efforts.” The budget states that, by “investing in the modernization” of IRS systems, it “would help make implementation of tax reform [the Tax Cuts and Jobs Act] successful.” The budget also requests additional IRS funding for “new and continuing investments to expand and strengthen the enforcement of tax law to ensure that all Americans are paying the taxes they owe.” The budget states that these additional investments, over the next 10 years, would cost approximately $15 billion but would generate approximately $44 billion in additional revenue.
FASB addresses questions about hedge accounting.
At its February 14 meeting, FASB discussed technical questions that have arisen since the publication of an update to U.S. GAAP to simplify hedge accounting. The board issued Accounting Standards Update (ASU) 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, to make one of the most complex areas of U.S. GAAP easier to understand and more applicable to a wider range of risk management strategies. The amended guidance eases some of the requirements to qualify for hedge accounting, which allows companies to match the terms of a derivative to the risk it is meant to hedge and then recognize the gains or losses from both items in the same period. The board also discussed its project to improve the disclosures that businesses must provide about their employee benefit plans, as well as its plan to make it easier for not-for-profit organizations to determine how to record the proceeds from grants and donations that have conditions attached to them.
Proposal to allow capitalization of more cloud computing costs.
FASB is primed to release for public comment a plan to clarify the accounting for costs associated with setting up business software packages that are managed in the cloud. The proposal, developed by its Emerging Issues Task Force (EITF), will not define the term “implementation costs.” In past discussions, FASB and members of the EITF have said that the costs to set up cloud-based contracts include items such as employee training, customization, installation, and coding. The board voted 5–2 to issue the proposal, with FASB members Christine Botosan and Marc Siegel voting against.
Comments sought on plan to update guidance for revenues and expenses.
GASB is soliciting comments on an early-stage plan to develop more comprehensive guidance for a broader range of transactions. The board believes its plan will improve the ability of analysts, taxpayers, investors, and other interested parties to assess government financial statements and provide more useful information. GASB’s ultimate goal is to develop more comprehensive guidance for a broader range of transactions. “This invitation to comment lays out potential paths forward for establishing comprehensive guidance for revenue and expense transactions,” said David Vaudt, GASB chairman. Comments are due by April 27.
Budget boost sought for technology upgrades, new hires.
On February 12, the SEC rolled out a $1.658 billion budget request for the 2019 fiscal year, hoping to secure funding for a much-needed technology upgrade. The proposal could be a tough sell in Congress, which has not granted the market regulator authority to increase its annual spending for several years. The funding, if granted, would allow the SEC to restore 100 positions lost to attrition because of a recent hiring freeze. The positions would “address critical priority areas and enhance the agency’s expertise in key areas,” including in the Division of Enforcement and the Office of Compliance Inspections and Examinations (OCIE), according to the SEC’s budget justification document. The budget request comes as Congress is still hashing out the spending plan for the current fiscal year, which is more than four months old. Earlier in February, Congress passed a continuing resolution to keep the government open through March 23. Last year, SEC Chair Jay Clayton also requested that his agency receive no budget increase for fiscal year 2018.