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Tax News
IRS updates adequate disclosure rules for reducing or avoiding certain penalties.
The IRS has updated its adequate disclosure procedure. Released December 2, 2019, Revenue Procedure 2019-42 provides guidance on how to adequately disclose an item or position on a return for purposes of reducing accuracy-related penalties and avoiding preparer penalties. Generally, a taxpayer must furnish all required information in accordance with the applicable forms and instructions, and the amounts entered on these forms must be verifiable. The IRS has updated the tax years and tax forms to which the procedure applies, but has not made any substantive changes to the previously released guidance in Revenue Procedure 2019-9. The procedure applies to any income tax return filed on a 2019 tax form for a tax year beginning in 2019 and to any income tax return filed on a tax form in 2020 for a short tax year beginning in 2020.
FASB News
FASB to hold roundtable in early 2020 on implementation of lease accounting rules.
FASB plans to hold a roundtable during the first or second quarter of 2020 focused on the implementation issues experienced by public companies when they adopted lease accounting rules in 2019. This marks a shift from its past approach toward broad accounting changes. The board’s new proactive approach is so that it can determine whether more revisions need to be made to the leases standard to help curb costs and complexity for private companies when they adopt the changes in 2021, according to remarks by FASB Chairman Russell Golden at the December 5 meeting of the Financial Accounting Standards Advisory Council. “So far we are aware of some observations for determining the discount rate could be improved and perhaps [identifying] embedded leases,” he said. In 2016, FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), to require companies to bring onto the balance sheet the full magnitude of long-term lease obligations that had previously only been reported in note disclosures. In 2005, the SEC said that registrants had $1.25 trillion of off–balance sheet operating lease commitments combined. The rules also require disclosures to help investors better understand the amount, timing, and uncertainty of cash flows arising from leases.
PCAOB News
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 and investigations director, and Kenneth R. 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.”
IASB News
Development of international accounting rules for crypto assets stifled by lack of stability, readiness.
The IASB has said that because of insufficient use, stability, and regulation of crypto assets worldwide, the board will not pursue standards-setting work on the topic unless the marketplace changes. IASB Chairman Hans Hoogervorst suggested staff accountants keep an eye on Facebook’s Libra, the “stable-coin” it proposed in June 2019, stating that if it emerged successfully on the global stage, the board would need to have a standards-setting answer in place. “If Libra gets off the ground, it would be big, most likely, and there’ll have to be—it will be approved by regulators, so it moves out of the more shady areas, and then we would have to have an answer, I think,” Hoogervorst said during November 20 board discussions. “It remains to be seen whether it can get off the ground.” IASB members said the topic should continue to be monitored, and periodically, staff should continue to bring updates on the matter. In general, staff research identified more IFRS entities with crypto assets than when the board discussed it a year ago, but the situation had not changed sufficiently for the board to take on a project, board members said.
