FASB News
EITF Effort to Clarify Business Combinations Guidance Delayed
FASB’s Emerging Issues Task Force (EITF) recently determined that it needs to further revise a proposed amendment to U.S. GAAP intended to clear up an aspect of the business combinations standard. The EITF is trying to resolve an apparent conflict between Table of ASC 805, Business Combinations, and ASC 606, Revenue From Contracts With Customers. The EITF plans to review the near-finished draft at its meeting in September 2018, FASB Technical Director Sue Cosper said at the end of the FASB’s July 25 weekly meeting. “Since we drafted the ASU [Accounting Standards Update], we have gotten a number of observations from EITF members on some unintended consequences that they’ve observed from the application of that ASU,” Cosper told the FASB. “As a result, we decided, upon consultation with EITF members, to defer issuance.” FASB members did not make any public remarks after Cosper’s announcement. A FASB spokesperson said the board had questions regarding how the proposed amendments would affect financial reporting.
Credit Unions, Community Banks Get More Time to Implement Credit Loss Standard
FASB agreed to clarify its new accounting standard requiring earlier recognition of credit losses to ensure that community banks and credit unions have extra time to comply with it compared to larger financial institutions. That was the board’s objective all along, FASB Chairman Russell Golden said, but the nuances of the language in Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, suggested that the smaller, less complex financial institutions did not have the lead time that the accounting board envisioned. “We intended to give these financial institutions longer,” Golden said. “There’s confusion out there, and we need to correct that confusion so that the board’s intent in the original document is appropriately reflected at the transition date for these financial institutions.” FASB plans to release the proposed wording change in August or September for a 30-day comment period.
AICPA News
Audit Risk Assessment Tool Published as Aid to Audit Planning
On July 25, the AICPA issued the Audit Risk Assessment Tool to supplement accounting firms’ modules for planning audits. The AICPA is recommending that the tool be used for somewhat smaller, less complex audits. The AICPA also said the tool can be used to establish a risk-based approach to focus on high-risk areas when planning an audit, but it is not intended as a substitute for authoritative standards or an accounting firm’s audit planning guidance. “In applying the auditing guidance included in this Audit Risk Assessment Tool, the auditor should, using professional judgment, assess the relevance and appropriateness of such guidance to the circumstances of the audit,” the AICPA said.
