FASB News
Proposed Amendments for Collaborative Arrangements Leave Many Questions Unanswered
Some financial reporting professionals doubt that a recent FASB proposal will solve the accounting problems that arise when two companies collaborate to share costs or research plans. FASB’s proposed application of ASC Topic 808, Collaborative Arrangements, will help clear up some questions in terms of when to identify a payment as revenue, but it will not address all questions, one firm wrote to FASB. If an arrangement does not qualify as revenue, businesses will have to continue to decide whether it is within the scope of other areas of the accounting literature and, if not, develop a reasonable and consistently applied accounting policy. “However, the determination of the accounting treatment for the remaining components will remain as challenging as it was previously, given that these types of arrangements are often exceedingly difficult to dissect, and significant judgment is required to determine a reasonable accounting approach,” the firm wrote. Comment letters from other accounting firms, professional groups, and companies raised similar complaints.
IASB News
Minor Changes to Insurance Standard May Move Forward
At its June 21–22 meeting, the IASB plans to decide whether to make minor updates to its sweeping insurance standard ahead of the 2021 effective date. The potential changes are considered narrow enough not to warrant immediate action, and the board’s research staff is recommending that the changes be proposed as part of the IASB’s annual improvements cycle, a process that is limited to changes that either clarify the wording in a standard or correct relatively minor oversights or conflicts between existing requirements. The proposed changes “do not alter the principles or intended requirements of IFRS 17, and do not have a consequential impact on other parts of the standard,” the IASB staff wrote in a meeting memo. “They simply ensure that the wording of IFRS 17 is consistent and reflects the decisions the board made in its development.”
PCAOB News
More Auditors Looking at Cybersecurity
PCAOB inspectors are seeing an increasing number of audit engagement teams focused on matters related to cybersecurity risk, a board official said during a meeting of the board’s Standing Advisory Group on June 5 in Washington. “The engagement teams are out there trying to identify risk to be able to determine what audit procedures they need to follow,” said William Powers, deputy director for technology in the PCAOB’s Division of Registration and Inspections. “We are seeing more and more that those procedures are including the risk of cybersecurity or, on occasion, the risk that results from a cybersecurity incident having occurred during the audit year.” The PCAOB named cybersecurity as one of the areas of focus for inspection about three years ago, and Powers said the staff has instituted a program to speak with engagement teams of audit clients who have experienced a breach into their computer systems to find out what the auditors were doing and what firms were doing to support the audit teams.
