Tax & Accounting Update is provided by Thomson Reuters and based on material published on Checkpoint, its online news and research platform. The Update is a quick-reference guide to the most pressing issues coming down the regulatory and administrative pipeline. Visit https://tax.thomsonreuters.com/checkpoint-news/ for further information and daily updates.
FASB News
CPAs, companies pushing for accounting and disclosure rules for cryptocurrencies.
U.S. GAAP does not have specific guidance on how to account for and disclose cryptocurrencies, and as a result, CPAs and companies in technology and not-for-profit industries are pushing for new rules to be developed. “We believe the usage of cryptocurrencies will not diminish over time, and will continue to expand in both volume and new fields of application,” Nancy Rix, chair of the California Society of CPAs, told FASB. “We anticipate it will not be long before major public companies start using cryptocurrencies, as illustrated by J.P. Morgan’s decision to issue JPM Coin in February 2019.” Much of the accounting confusion regarding cryptocurrencies, also known as digital currencies, stems from differences in how they are viewed. Some use a “lower of cost or market” or a “fair value” approach, while others view them as intangible assets, valued at historical cost less impairment.
IASB News
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 (EC), 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 EC’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 EC. The move will also facilitate the availability of key financial information in all EU official languages, the release states.
GASB News
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.
PCAOB News
Dwyer named deputy director of Office of External Affairs.
On May 29, the PCAOB named Erin Dwyer as deputy director of the Office of External Affairs to serve as the board’s liaison to investors, audit committees, and preparers. The position was created by the board to better reach out to key stakeholders as outlined in its long-term strategic plan. Dwyer was previously managing director of stakeholder engagement and communications at the Center for Audit Quality (CAQ), an affiliate of the AICPA that represents the audit profession. “The Board is dedicated to enhancing transparency and accessibility through proactive engagement,” PCAOB Chairman William Duhnke said in a statement. “Erin brings more than 20 years of experience working with investors and, in the past several years, audit committees and preparers, which will be critical to the Board’s ability to cultivate a more dynamic dialogue with them. We encourage investors, audit committees, and preparers to reach out to Erin at any time with questions or feedback for the PCAOB.”
