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IRS reminds taxpayers with foreign connections of pending deadlines.
In an information release and accompanying fact sheet, the IRS has prompted U.S. citizens and resident aliens, including those with dual citizenship, to check whether they have a U.S. tax liability and a filing requirement. The IRS also reminded taxpayers with a foreign bank or financial account of the upcoming foreign bank and financial accounts (FBAR) filing deadline and encouraged taxpayers with undisclosed foreign financial assets to take advantage of the offshore voluntary disclosure program before it closes in September.
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,” she 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.”
Comment letters back addition of benchmark interest rate for hedge accounting.
Comment letters from banks, audit firms, and professional organizations support FASB’s proposed addition of an interest rate benchmark for hedges of interest rate risk. The proposed benchmark rate, the Secured Overnight Financing Rate (SOFR), was developed by the Federal Reserve as an alternative for banks and other financial firms. It calls for adding the SOFR, which is based on the overnight financing rate (SOFR OIS), as a benchmark rate that can be used to designate hedges of interest rate risk. “The use of derivative instruments in managing various financial risks is critical to the operations of many banks and other entities, and it is important that in this time of industry transition away from the London Interbank Offered Rate (LIBOR) that the accounting standards are proactive and meet the needs of the developing markets,” the American Bankers Association wrote in its comment letter.
Updated conceptual framework includes measurement, performance.
The IASB’s updated version of its Conceptual Framework for Financial Reporting includes a new chapter on measurement and guidance on reporting financial performance. The updated framework also includes a revised definition for liability and a clarification of the concepts of stewardship, prudence, and uncertainty as they relate to financial reporting. The board described the updated framework as a comprehensive document that discusses the important topics it thinks about when writing standards. “The revised Conceptual Framework will greatly assist the board when developing IFRS,” IASB Chairman Hans Hoogervorst said in a statement. “It will also help other stakeholders to better understand the concepts that underpin the standards.” The update also emphasizes that the objective of financial reporting is to provide useful financial information to investors and other users of the information. It also clarifies the role of stewardship in meeting this objective.
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.
SEC approves FASB’s 2018 accounting support fee.
On April 5, the SEC approved FASB’s accounting support fee for 2018. FASB’s parent organization, the Financial Accounting Foundation (FAF), had approved FASB’s annual budget in November and submitted it to the SEC for review a few days afterward.