FASB Votes to Finalize Proposal Simplifying Income Tax Accounting Rules
On September 4, FASB voted unanimously to finalize its proposed rules that would simplify income tax accounting requirements in approximately 12 unrelated areas that companies had said were costly and complex. The changes will be effective for public companies’ fiscal years beginning on or after December 15, 2020; for all other companies, they will be effective on or after December 15, 2021. Early adoption will be permitted. The decision means Proposed Accounting Standards Update (ASU) 2019-700, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which was issued in May, will be finalized with some narrow clarifications. The board said it received 24 comment letter responses on the proposed changes, 10 of which came from auditors. Respondents generally agreed the changes would simplify Topic 740 while maintaining or improving the usefulness of information provided to financial statement users, FASB staff accountants said. Most respondents said the changes would be operable and auditable and would not impose significant costs.
FASB to Host 2020 Meeting of International Accounting Standards Setters
For the first time, FASB plans to host a meeting of the International Forum of Accounting Standards Setters (IFASS), a group of national accounting bodies from around the world. The meeting, which will be held in Washington, D.C., in 2020, will enable the board to share U.S. perspectives on standards setting matters, FASB Chairman Russell Golden said during a September 5 board liaison meeting with the Financial Reporting Committee of the Institute of Management Accountants. “They’ll be able to meet members of the board, talk about U.S. perspectives, and I’m hopeful they’ll be able to talk to senior SEC officials and PCAOB officials,” Golden said. “Overall, I think that these international relationships are important that we’re able to share ideas, share our perspectives.”
FASB Meeting with Japanese Standards Setter Addresses Reference Rate Reform, Other Topics
Discussions by FASB and the Accounting Standards Board of Japan (ASBJ) included the work to prevent an accounting impediment to companies transitioning away from the London Interbank Offered Rate (LIBOR) to new reference rates, the boards have announced. FASB issued its reference rate reform proposal September 5 to remove the operational complexity around modifying contracts with LIBOR references. The board plans on issuing final rules by early 2020 in tandem with the International Swaps and Derivatives Association’s amendments to its definitions, expected near year-end. “We were pleased to welcome the ASBJ and Atsushi Kogasaka to Norwalk for Mr. Kogasaka’s first joint meeting in his new role as ASBJ chair,” FASB Chairman Russell Golden said in a statement. “We value our joint meetings with the ASBJ as important opportunities to learn from each other and collaboratively work toward the development of higher quality, more comparable standards across nations. We look forward to continuing these meetings for many years to come.”