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Financial performance reporting discussions focus on decision usefulness.

At its April 24 meeting, FASB continued discussions aimed at improving the decision usefulness of the income statement, part of its project to provide more transparency about how a company performed in a given period. FASB’s staff accountants have been conducting outreach with financial statement preparers and users to determine the operability and usefulness of alternatives the board plans to discuss. In addition, FASB’s staff has studied the location of that information within the financial statements.

FASB approves simpler option for reporting some intangible assets of nonprofit hospitals.

As mergers and acquisitions (M&A) surge in the healthcare sector, notfor-profit hospitals and healthcare facilities will get an easier, less expensive method to account for the acquired intangible assets known as goodwill. On April 10, FASB voted to finalize a proposal that will enable not-for-profit healthcare entities to write off goodwill over a 10-year period, thereby minimizing the cost and complexity involved with testing for impairment annually, according to FASB’s discussions. Not-for-profit goodwill arises less frequently than for-profit goodwill and stems from two general types of transactions, according to a FASB summary. The first type occurs when a not-for-profit acquires a for-profit entity; the second occurs when a not-for-profit acquires “an entity in a net deficit position and the combined entity is predominantly supported by fee-for-service revenues.” A nonprofit electing the options available to them for the first time will be allowed to do so without justifying that the accounting change is preferable to its existing method of accounting for goodwill or restating its financial statements, FASB said.

FASB votes to finalize proposal to ease transition for credit loss rules.

A proposal that could provide some lenders with an easier path to transition to new rules for reporting losses on loans will be finalized, FASB has unanimously decided. The changes will allow companies to elect the fair value option for eligible financial assets measured at amortized cost when they adopt the new credit loss accounting standard, ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The election, which is optional, would be “irrevocable,” meaning that once it has been made it cannot be called back. The change will address concerns raised by accountants that, without transition relief, they would have to maintain dual measurement methodologies. As a result, investors could receive more comparable financial statements across businesses.


Companies will have to disclose whether acquisitions “worked” under coming IFRS changes.

IASB Chairman Hans Hoogervorst said the board is seeking to improve disclosures about acquisitions companies make so that investors will receive a fuller understanding of whether they work as expected. The board, for example, will clarify the disclosure objectives for International Financial Reporting Standard (IFRS) 3, Business Combinations, and add new disclosure objectives on the subsequent performance of an acquired business. “We will add requirements for entities to disclose whether the key objectives of the business combinations have been achieved,” Hoogervorst said during an IASB podcast posted on April 17. The board will publish a discussion paper in the second half of 2019 on the topic.


Center for Audit Quality updates External Auditor Assessment Tool.

The Center for Audit Quality (CAQ), an affiliate of the AICPA, recently published an update to its External Auditor Assessment Tool. It includes considerations related to changes in FASB’s accounting standards and potential areas of risk. The guide is intended to help public company audit committees oversee the external auditor. The 43-page guide was last refreshed in 2017, and the most recent update, published in April 2019, also has new materials to help audit committees better understand how audit firms maintain and monitor their audit quality. The tool includes sample questions that audit committee members can ask to evaluate the auditor in four areas: the quality of the engagement team’s audit; the quality of the audit firm’s services; the communication and interaction with the auditor; and auditor independence, objectivity, and professional skepticism.