FASB News
Income Tax Accounting Rules May Be Simplified
FASB may simplify income tax accounting rules—one of the more complex topics in financial reporting—in targeted areas, according to its latest agenda report. The standards setter will consider adding a project to its technical agenda to reduce complexity in narrow areas of Topic 740, “Income Taxes.” The project would maintain or improve the usefulness of financial information for financial statement users. Changes in tax law and nuances in tax accounting can require the use of significant judgement when reporting the effects of income taxes, which adds to the complexity of reporting. The discussions are not related to the Tax Cuts and Jobs Act, a FASB spokesperson said. “Rather, we had stakeholders who submitted several ideas on how we could simplify GAAP in various areas of Topic 740,”
SEC News
Lawmakers Claim FASB’s Credit Loss Standard Will Hurt Economy
On April 4, Congressmen Blaine Luetkemeyer (R-MO) and Patrick McHenry (R-NC) told the SEC that they are worried that FASB’s new accounting standard on credit losses will have an adverse impact on the economy and asked Chairman Jay Clayton whether the commission has done an economic analysis. FASB’s current expected credit loss (CECL) accounting has been unpopular among banks because it will require them to recognize losses on their financial statements earlier. Banks have recently been lobbying Congress and regulators that an economic assessment is needed before the standard goes into effect. In particular, banks believe CECL will have a procyclical effect, which means that they will have to raise loan loss allowances during economic downturns. “Financial institutions of all sizes have continued to express their concern over the accounting standard, and in recent months the insurance, credit card, and housing industries have warned of the negative effects CECL will have on American consumers and the U.S. economy,” Luetkemeyer, ranking member of the House Financial Services Subcommittee on Consumer Protection and Financial Institutions, and McHenry, ranking member of the full panel, wrote in the letter to Clayton. “Banks and credit unions could be forced to reduce services, making credit less accessible and affordable.”
PCAOB News
Webinars to Cover Expanded Auditor Reporting Requirements
As the effective date for the new AS 3101 draws near, the PCAOB said it will hold two webinars for auditors on the implementation of critical audit matters (CAM). The webinars are scheduled for April 25 and May 8, 2019; the PCAOB wants auditors to register for the webinars by April 23 and May 6, respectively. The PCAOB said the webinars will help auditors determine, communicate, and document CAMs. “Providing useful, timely, and accessible information is a key objective of the board’s five-year strategic plan,” PCAOB Chairman William Duhnke said in a statement. “We are committed to utilizing a variety of avenues, including these upcoming webinars, to assist auditors ahead of the CAM implementation dates.”
