FASB Issues New Rules to Simplify and Reduce Cost of Accounting for Income Taxes
U.S. accounting rulemakers have issued a new accounting standard that simplifies income tax accounting requirements in nine unrelated areas that companies find costly and complex. FASB issued the changes on December 18 to remove specific technical exceptions to general principles found in Accounting Standards Codification (ASC) Topic 740, “Income Taxes,” which items often produce information investors have a hard time understanding. The guidance, according to its main tenets, would curb accounting costs by removing the need for companies to analyze whether the following apply in a given period: the exception to the incremental approach for intra-period tax allocation, exceptions to accounting for basis differences when there are ownership changes in foreign investments, and the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. For public companies, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted.
Financial Accounting Foundation Appoints 11 New Members to FASAC
The Financial Accounting Foundation, FASB’s parent organization, has appointed 11 new members to the Financial Accounting Standards Advisory Council (FASAC), the board’s main advisory body, to replace those who will retire at year-end. The new members will serve a one-year term beginning January 1, 2020, and are eligible to be reappointed for three additional one-year terms, the FAF said on December 18, 2019.
The new appointees are—
- Lara Abrash, chairman and CEO, Deloitte & Touche LLP;
- Paul Beswick, partner, Assurance Services (National Office), EY;
- Ted Christensen, director and Terry Distinguished Chair of Business, J.M. Tull School of Accounting, University of Georgia;
- Robert Fox, national managing partner of professional standards, Grant Thornton LLP;
- Katherine Gill-Charest, senior vice president, Controller, Viacom Inc.;
- Howard Guild, chief accounting officer, Schlumberger Limited;
- Ginger Jones, board member—audit committee, Tronox Ltd. and Libbey’s Inc.;
- Lucas Klein, director of research, Fidelity Worldwide Investment;
- Lisa Koonce, Deloitte & Touche Endowed Chair in Accounting, University of Texas at Austin;
- Andrew Skatoff, senior member, investment team, Belfer Management LLC; and
- Greg Wachsman, vice president, equity research analyst, VOYA Investment Management.
“I am pleased to welcome our new FASAC members, and know they will play an important role in helping the FASB improve financial reporting for all our stakeholders,” Charles Noski, chairman of the FAF Board of Trustees, said in a statement. “I would also like to thank the departing members for their expertise, commitment, and input to the standard-setting process.”
PCAOB Finally Names Enforcement Director, General Counsel After Prolonged Delay
On December 17, the PCAOB said that it has named Patrick Bryan as its enforcement director and Kenneth Lench as its general counsel. The appointments come 19 months after their predecessors left. Bryan, who will start at the PCAOB in January 2020, comes from the Federal Reserve, where he is the assistant general counsel for enforcement. Previously, he served as a supervisory assistant chief litigation counsel in the Division of Enforcement at the SEC. Lench, who will join the board in February, is currently a partner with Kirkland & Ellis LLP. Before joining Kirkland in 2013, he served at the SEC for more than 23 years. His last SEC position was chief of the Structured and New Products Unit of the Division of Enforcement. “The Board is committed to prioritizing enforcement and investigative efforts to address issues that pose the greatest risk to investors and are most likely to deter improper conduct,” Chairman William Duhnke III said in a statement. “Ken brings deep experience in securities law and the capital markets, and will be an excellent addition to our leadership team.”