AICPA and CUNA Seek Extension of Credit Loss Standard’s Effective Date

Some smaller financial institutions and private companies are worried that the transition to FASB’s new accounting standard, which requires an earlier recognition of losses on bad loans and securities, will be difficult to carry out unless they have more time. FASB staggered the effective dates for large banks, small banks, and nonpublic organizations and businesses, but the AICPA and the Credit Union National Association (CUNA) say the standard’s effective date is worded in such a way that many organizations will be left with less time to implement the standard than FASB intended. “We don’t think it was intentional, because FASB clearly indicated that they believe that a phased transition approach for different types of entities is appropriate,” said Luke Martone, CUNA’s senior director of advocacy and counsel. FASB, which typically does not respond publicly to individual comment letters, declined to comment on the AICPA and CUNA’s requests.


ASB Votes to Issue Proposed Changes to Attestation Standards

The AICPA’s Auditing Standards Board (ASB) has voted to issue a proposal to revise the board’s attestation standards and give accountants flexibility to perform certain limited procedures. The proposed revision would let an accountant report on the subject matter of the attestation engagement without obtaining a written assertion from the responsible party that the matter complies with an underlying criterion, such as a measurement or a particular law. “Some clients are unwilling or feel unable to appropriately measure or evaluate, and therefore they cannot provide an assertion,” the ASB explained in a background paper. “For example, when the engaging party and the responsible party are not the same, the responsible party may be unwilling to provide the assertion because they are not the engaging party, and the engaging party may be reluctant to provide the assertion because they did not perform the measurement of the subject matter.”


Plan to Amend Goodwill Impairment Guidance Delayed

The IASB is no closer to finding a way to improve its goodwill impairment test. After Chairman Hans Hoogervorst raised concerns about the so-called “headroom” approach the international board was considering, a majority of the board—9 of its 14 members—agreed to find other paths forward. The solution the IASB had been drafting would not address companies’ and investors’ main problems with the existing goodwill impairment test guidelines in IAS 36, Impairment of Assets, Hoogervorst said, neither reducing costs nor improving the information conveyed to analysts and investors. Hoogervorst went so far as to state that the proposal could undermine the IASB’s reputation if the global economy entered a recession and companies were forced to write down large amounts of goodwill with an accounting model that many financial professionals consider flawed. “We all know that the markets right now are very high; they are fueled by leverage across the system,” Hoogervorst said. “I am absolutely sure there’s going to be a massive correction of the market at a certain point, and a lot of companies will be caught with their pants down, with huge amounts of goodwill on their balance sheets, which they might then have to write off at once. And a lot of people will say, ‘Where was the IASB?’”