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Proposal would offer narrow transition relief for credit losses standard.
On February 6, FASB issued a proposal intended to offer transition relief to businesses following the board’s new credit losses standard for the first time. The proposal would allow businesses electing the fair value measurement option for newly originated or purchased loans to also measure their existing loans at fair value at transition. “This would increase the comparability of financial statement information provided by institutions that otherwise would have reported similar financial instruments using different measurement methodologies, potentially decreasing costs for financial statement preparers while providing more useful information to investors and other users,” a FASB spokesperson said. Comments are due March 8.
Accounting distinction for costs to make TV, films to be eliminated.
FASB has agreed to publish an update to U.S. GAAP in the coming months that will align the accounting for costs to make films with the accounting for costs to make television shows and other so-called “episodic content.” Based on a well-received proposal FASB released in November 2018, the update will be effective for public companies in 2020. The update will allow creators of television programs to fully capitalize costs to make shows. It eliminates the accounting distinction between the two types of entertainment, as prescribed in Accounting Standards Codification (ASC) 926-20, “Entertainment—Films—Other Assets—Film Costs, formerly Statement of Position (SOP) No. 00-2.” “This is a perfect type of issue for the EITF [Emerging Issues Task Force] to address,” FASB Chairman Russell G. Golden said. “It was clearly an emerging issue, as business models were changing.”
ASB to align materiality definition with FASB, SEC, PCAOB.
The AICPA’s Auditing Standards Board (ASB) has approved a project to align its definition of materiality with that used by other regulators and standards setters in the United States. The ASB’s effort to eliminate inconsistencies in the definition of materiality dates back to its original definition, which had been in effect from 1980 until 2010. The primary difference in the definition is related to the notion of “would influence” versus “could influence.” The AICPA, the IASB, and the IAASB use “could influence” in their standards. In 2011, the AICPA’s ASB adopted almost verbatim the IAASB’s definition when it converged its standards with guidance published by the international standards setter, according to a discussion paper. “Now that FASB and everyone else in the U.S. uses ‘would,’ the ASB has agreed that it is more appropriate for us to be consistent with everyone else in the U.S. because that’s our national jurisdiction,” said Ahava Goldman, associate director of audit and attest standards at the AICPA.
ASB moves closer to proposing revisions to audit evidence standard.
The AICPA’s Auditing Standards Board (ASB) will consider issuing a proposed revision of the audit evidence standard during a telephone meeting scheduled for this month. The board wants to revise the standard to address emerging audit issues, such as the increased use of technology and data analytics. The board originally planned to consider approving an exposure draft during its regular quarterly meeting on January 14–17 in La Jolla, California. “We had hoped to get this voted [in January, but] the board said we want one more turnaround,” said Ahava Goldman, associate director for audit and attest standards with the Association of International Certified Professional Accountants, a joint venture between the AICPA and the Chartered Institute of Management Accountants. The ASB decided that the standard should provide a framework and application materials to assist auditors in evaluating whether high-quality audit evidence has been obtained by looking at several variables and factors, including relevance and sources of evidence, rather than continuing with the current model, which focuses on procedures.