FASB News
No New Guidance Planned for Financial Reporting Effects of Tax Reform
Between guidance from the Big Four accounting firms, technical inquiries to FASB’s accounting staff, and sorting through U.S. GAAP itself, U.S. companies have largely figured out how to handle some of the trickiest financial reporting questions stemming from the Tax Cuts and Jobs Act (TCJA), according to FASB research. But the board will still keep an eye on questions and see if it needs to take action in the future, particularly on a provision in the law calling for a minimum tax on certain foreign earnings, referred to as the global intangible low-taxed income (GILTI) regime. “The staff recommends continuing to monitor how entities that pay tax on GILTI are accounting for and disclosing its effects,” FASB fellow Jason Bond said in a November 14 statement. Signed into law on December 22, 2017, the TCJA ushered in some of the biggest changes to federal tax law in decades, reducing the corporate income tax rate from 35% to 21% and eliminating the corporate alternative minimum tax (AMT). It also introduced the GILTI regime, which imposes a tax on foreign income in excess of the deemed returns on the tangible assets of foreign corporations. In addition, it created a base erosion anti-abuse tax (BEAT), which companies must pay if it is greater than their expected tax liability.
Public Companies May Have to Disclose Assistance From Government Grants, Tax Programs
Three years after proposing to require companies to provide details about assistance they receive from governments, FASB is close to specifying the types of support that should be disclosed. The board is expected to include grants, tax assistance, low-interest-rate loans, and loan guarantees in the final amended guidance. The decision is a departure from the approach FASB pursued earlier this year, when the board was working on a principle for businesses to use when determining the kind of government support they had to disclose to investors and its value. The board originally said it wanted businesses to focus on legally enforceable agreements, where companies receive cash, other assets, or benefits that reduce or eliminate their expenditures. “While I’d like to say we have principles-based standards, the involvement of government—not just at the federal, but state, local, municipality level, outside the U.S, all of the forms—calls for a very clear scope,” FASB Vice Chairman James Kroeker said. Financial reporting professionals have asked for more guidance about the disclosure rules and also expressed frustration with the time and effort it would take to gather details, particularly for companies operating in multiple jurisdictions.
PCAOB News
2019 Budget to Increase 5.3% to $273.7 Million
On November 15, the PCAOB unanimously approved its 2019 budget of $273.7 million, an increase of $13.8 million from the 2018 total of $259.9 million. The “2019 budget reflects careful consideration of the resources we as an organization need to carry out statutory mission to protect the interest of investors and the public interest,” PCAOB member Jay Brown said. “The budget includes an investment in human capital in the form of increased training opportunities as well as an increased headcount.” The board also finalized its “Draft Strategic Plan: 2018-2022,” which outlines the PCAOB’s long-term goals, including efforts to improve audit quality and increase transparency about its audit firm oversight activities. “The Board’s adoption of the strategic plan and accompanying budget paves the way for fulfilling our shared vision for the PCAOB,” Chairman William Duhnke said in a statement. “I look forward to working with my fellow Board members and our talented staff to achieve the goals and objectives we’ve set forth.”
