House Financial Services Subcommittee Schedules Oversight Hearing
The House Financial Services Committee’s Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets has scheduled a January 15 hearing on oversight of FASB and the PCAOB. The hearing could offer the panel’s new chairman, Representative Brad Sherman (D-CA), a bigger platform to criticize FASB’s controversial current expected credit loss (CECL) standard. Sherman, who was named chair of the subcommittee late last year, is a longtime foe of FASB’s CECL standard, which went into effect for larger public companies this year. The standard, published in mid-2016 in Accounting Standards Update (ASU) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is widely seen as FASB’s most significant and far-reaching response to the 2008 financial crisis, addressing criticisms that banks were too slow to recognize souring loans on their balance sheets. During a September committee hearing, Sherman called CECL “a terrible proposal,” saying “its only defense is that its adoption will cause banks to have higher reserves than the bank regulators think they want to impose.”
Insurance Sector Presses FASB for Another Narrow Reporting Date Change
The insurance sector wants FASB to grant special accommodations to large reinsurers that would give them the flexibility to adopt new insurance accounting rules at an effective date that works best for them. The American Council of Life Insurers (ACLI) said on January 6 that the differences in the effective dates uner the rules create costly hurdles for large reinsurers that do business with smaller reinsurance companies because those companies will not have the needed data in time for the earlier reporting cycle of large SEC filers. “This standard is an improvement, and it’s a major overhaul of how companies report their business, so these smaller reporting companies—reinsurers—are going to need that extra time to retool their resources,” Mike Monahan, ACLI’s senior director of accounting policy, said. “And so when you have a large SEC filer doing business with a smaller reporting company, that information is not yet available in the new format.” While this type of workaround might be tricky to develop, a FASB spokesperson stated, “As with all agenda requests, the FASB will review and consider it as part of our process.”
AICPA Proposes Changes to CPA Exams
The AICPA has published an exposure draft and invitation to comment that, if adopted, would update the Uniform CPA Examination. To develop the exposure draft, the association said it conducted a review of the exam, focusing on the effect of data analytics and technology on the role of newly licensed CPAs. The AICPA also reexamined the core knowledge and skills for CPAs entering the accounting profession and solicited feedback from 80 volunteer subject matter experts, as well as input from more than 130 CPAs who directly supervise new CPAs. The 16-hour, 4-section structure will remain the same. The exposure draft proposes 46 changes to the CPA Exam Blueprints. “The last practice analysis laid a solid foundation with the creation of the CPA Exam Blueprints and the existing exam structure,” Michael Decker, AICPA vice president of examinations, said in a statement. “During this year’s multiphased research, we used a targeted approach that included working with firms of all sizes, and their insights into technology, data analytics, and core competencies will help us ensure the exam remains current and relevant.” Comments are due on both documents by April 30, 2020. The organization said that it wants the updates to appear in the CPA Exam Blueprints no later than December 31, 2020.