IFRS Taxonomy to become Mandatory, EC Says
Companies that use international financial reporting standards to prepare their financial statements need to tag them using the IFRS Taxonomy starting January 1, 2020, according to the European Commission, the body that helps shape the European Union’s (EU) overall strategy and policies. The mandate, which was posted to the IFRS Foundation’s website on June 4, represents another step for the digitalization of corporate reporting overseas. It is part of the European Commission’s move to the European Single Electronic Format, an electronic format for EU annual financial reports introduced to support accessibility and transparency of financial information and make companies’ financial records more readable and accessible. Under the new rules, from January 2020 all listed companies will need to finalize their annual reporting using up-to-date digitalized business reporting systems (XHTML and iXBRL) that improve accessibility and make the information more user friendly, according to a May 2019 press release from the European Commission. The move will also facilitate the availability of key financial information in all EU official languages, the release states.
GASB to Release Proposal for Deferred Compensation Plan Accounting
Accounting changes are coming that would require state and local governments to apply pension accounting rules to some Internal Revenue Code (IRC) section 457 plans. IRC section 457 plans are popular forms of retirement savings that allow employees to defer taxation of wages to a future year. They are offered by tax-exempt organizations and provide more flexibility than traditional benefit plans. Current rules state that governments should not report an IRC section 457 plan under existing pension plan standards even if the plan meets the definition of a pension plan. The GASB plans to issue a proposal in July that would revise this requirement, because some IRC section 457 plans have evolved to resemble defined contribution pension plans. Previously, “you didn’t see employer contributions in these plans; now, however, you are seeing employers making contributions in some cases,” a GASB spokesperson said on June 7.
ASB Poised to Issue Proposal on Audit Evidence
The AICPA’s Auditing Standards Board (ASB) has voted to approve publication of an exposure draft that would revise the guidance for audit evidence. The board, which sets standards for private company audits, plans to revise AU-C section 500, “Audit Evidence,” to address audit issues that have arisen in the modern business environment. “Rather than continuing the current model, the ASB is proposing expanding the focus of the standard, including its objective, to be primarily focused on understanding the attributes and factors to consider in assessing whether sufficient appropriate audit evidence has been obtained notwithstanding the audit procedures performed to obtain the audit evidence,” the exposure draft says. “This change in focus of the standard is proposed to be accomplished by establishing attributes and factors to consider in evaluating such audit evidence.” The ASB is expected to issue the proposal by mid-June, with a 90-day comment period.