Firms Ask FASB to Clarify Accounting Rules for Sale and Leaseback Transactions
Six accounting firms, including the Big Four, have asked FASB to clarify two aspects of new lease accounting rules for reporting sale and leaseback agreements, which typically are real estate transactions that function as a loan with payments taking the form of rent. The board was asked to clarify the dates at which leaseback classification should be determined for purposes of assessing whether the transaction qualifies or does not qualify as a sale. “We have identified multiple views to each of the questions and believe that each of the views may be supportable under ASC 842,” the joint letter from Deloitte & Touche, Ernst and Young, KPMG, PricewaterhouseCoopers, BDO, and Grant Thornton read. “We therefore believe that the board should consider clarifying the guidance in ASC 842 in order to reduce the diversity in practice that may result from varied interpretation of the existing guidance.” The lease accounting rules took effect in 2019 for public companies, and takes effect for private companies in 2021. FASB plans to hold a roundtable this year to determine common issues that may need revisions.
PCAOB Names Director of External Affairs as New Chief of Staff
The PCAOB has announced that board spokesperson Torrie Miller Matous will become chief of staff on March 1. Current chief of staff Francis “Abe” Dymond will leave in March after eight years of service at the board. Matous joined the board in November 2018 as director of its new Office of External Affairs, which combined the offices of public affairs, government relations, and outreach and small business liaison. It also includes new liaison staff for investors and businesses. Matous was previously a staffer on Capitol Hill. The chief of staff advises on all PCAOB matters, works closely with board members and staff, and assists the chairman in managing the board. “During her time at the PCAOB, Torrie has worked collaboratively across the organization to support the board in executing our key strategic goals,” PCAOB Chairman William Duhnke, said in a statement. “I have the utmost confidence in her abilities and judgment, and I know that her deep commitment to advancing the board’s vision will serve the organization well.”
IASB to Amend Rules on Provisions for Settling Lawsuits
The IASB’s rules for recording provisions for obligations, such as settling legal cases, will be further amended, though not broadly. On January 30, the IASB added a project to its standards-setting agenda to amend International Accounting Standard (IAS) 37, Provisions, Contingent Liabilities and Contingent Assets, in three areas: aligning the IAS 37 liability definition and requirements for identifying liabilities with the Conceptual Framework, clarifying which costs to include in the measure of a provision, and specifying whether the rate at which an entity discounts a provision for the time value of money should reflect the entity’s own credit risk. “I agree with the staff’s recommendation to keep the project narrower and more focused and not to extend it to covering this definition of [measurement] objective aspects,” IASB Vice Chair Sue Lloyd said during discussions. “I think we’re in a market at the moment where people are still recovering from the amount of change that we’ve introduced with [IFRSs] 15, 16, 9, 17, and so I think a more focused project that targets very specific issues that are concerns that people are raising is a better way to go with this project.”