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Minor technical corrections published for lease standard.
FASB has published an update to U.S. GAAP with 16 technical corrections for its much-watched lease accounting standard. The changes are considered editorial in nature and will not affect accounting outcomes, FASB noted. FASB “does not anticipate that entities will incur significant costs as a result of the amendments,” the board said. “The amendments do not create new accounting requirements.” FASB published the lease accounting standard in February 2016 in ASU No. 2016-02, Leases Table of Contents (Topic 842), after a decade of debate. It requires companies to report on their balance sheets their leased office space, store-fronts, vehicles, and equipment as assets, and the rent they owe for them as liabilities. The standard goes into effect in 2019 for public businesses and is expected to cause significant changes to company balance sheets.
Latest set of codification improvements released.
On July 16, FASB issued technical corrections to U.S. GAAP that it said will make its guidance easier to understand and apply. The changes address a number of topics, such as the reporting requirements for comprehensive income, the guidance for debt modifications, and the accounting requirements for distinguishing liabilities from equity. “The amendments in this Update represent changes to clarify, correct errors in, or make minor improvements to the codification,” the board said. “The amendments make the codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications.” The effective date varies based on the details of the individual amendments.
Final versions of standards for specialists, accounting estimates may be ready by year-end.
The PCAOB hopes to complete its planned standards for accounting estimates and the use of specialists by the fourth quarter, according to the most recent standard-setting agenda published on July 9. The audit regulator’s staff has analyzed the comments submitted in response to the proposed versions of each standard and is working on recommendations for the final amendments, the board said. 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. The staff is continuing to determine the next steps for a proposal that would strengthen the requirements for a lead audit firm that supervises other accounting firms that work on an audit.
ASB reviews comment letters on proposed changes to auditor reporting.
At its July 23–26 meeting in Nashville, the AICPA’s Auditing Standards Board (ASB) discussed comment letters received in response to three related proposals that were issued to align its standards more closely with the guidance from the PCAOB and the International Auditing and Assurance Standards Board (IAASB). Exposure Draft (ED): Proposed Statements on Auditing Standards: Auditor Reporting and Proposed Amendments—Addressing Disclosures in the Audit of Financial Statementswould add a new standard, “Communicating Key Audit Matters in the Independent Auditor’s Report,” to the ASB’s GAAS and provide investors with more information about the matters the auditor thought were the most significant while examining the financial statements. According to a discussion paper prepared for the meeting, 37 of the 38 comment letters supported moving forward with the changes to the auditor’s reporting model, but also asked the ASB to make some changes before finalizing the standards, such as to the timing of communication about certain audit matters with those charged with governance.
Proposed changes to attestation standards released for public comment.
The AICPA is proposing a revision to its attestation standards to give accountants flexibility when performing some limited assurance procedures engagements. Most significantly, the proposal would let an accountant report on the subject matter without obtaining a written assertion that the subject matter complies with an underlying criterion, such as a law or regulation, from the party that is responsible for the subject matter. The proposal said the attestation standard can be applied to many types of subject matter, such as a statement about greenhouse gas emissions or the effectiveness of the controls for the security of a system. The proposed effective date is May 1, 2020. Comments on the exposure draft are due by October 11.