Private Companies, Nonprofits to Get Update on Major New Accounting Rules
FASB will hold a webcast on June 17 for private companies and not-for-profit organizations to review the new rules for accounting for revenue, leases, and credit losses. Companies will also be updated on FASB’s current projects, including reference rate reform, distinguishing between liabilities and equity, financial performance reporting, and goodwill and intangible assets. Notably, Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), took effect in January 2019 for private companies. The standard replaces a large swath of industry-specific guidance with an overarching principles-based five-step model for recognizing revenue. The core principle of the new standard is that revenue recognition should depict the transfer of goods or services to customers in amounts that reflect the payment to which the company expects to be entitled. The new standard also will result in enhanced disclosures about revenue. Addressing the topics will be FASB Vice Chairman James Kroeker, FASB Member Christine Botosan, Private Company Council Member Yan Zhang, FASB Assistant Director–Nonpublic Entities Jeff Mechanick, FASB Supervising Project Manager Rick Cole, and FASB Postgraduate Technical Assistants Rebecca Harris and Emma Lazar.
Auditing Standards Board to Consider Proposal on Audit Evidence
At a meeting in Nashville on May 20–23, the AICPA’s Auditing Standards Board considered approving an exposure draft that would revise guidance for audits. The board wants to address audit issues that have come up in a fast-changing business environment, including the increased use of data analytics and artificial intelligence. “These issues include use of Emerging Technologies by both preparers and auditors, Audit Data Analytics, the application of Professional Skepticism, the expanding use of external information sources as audit evidence, and more broadly the accuracy, completeness, and reliability of audit evidence,” a discussion paper stated. If approved for publication, the ASB is planning on issuing the exposure draft in June, with comments due in September.
ASB to Vote on Final Standard on Auditor’s Responsibilities for ‘Other Information’
The AICPA’s Auditing Standards Board (ASB) is planning to approve the final version of a planned standard related to the auditor’s responsibilities on “other information” in annual reports at an upcoming meeting. The final standard will be based on a revision of “Exposure Draft (ED): Proposed Statement on Auditing Standards: The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports, to replace AU-C Section 720, ’Other Information in Documents Containing Audited Financial Statements’” which was originally issued in November 2017. It is intended to promote more consistency in auditor’s responsibilities related to information that accompanies the audited financial statements but is not in the financial statements. “A significant recommendation was to clarify the term misstatement of the other information, by stating that such misstatement may a) be an inconsistency; b) be a material misstatement of fact; or c) otherwise result in the other information being misleading,” an ASB task force wrote in a discussion paper prepared ahead of the meeting. “The concept of ‘omitted or obscured information’ would be captured by c.”