FASB News
Staff Document to Ease Hurdles on Accounting for Lease Concessions
On April 10, FASB published a staff document that addresses four questions companies have raised about accounting for lease concessions related to the effects of the coronavirus (COVID-19) pandemic. The document was issued a week after companies in the retail sector said that accounting for rent concessions associated with store closures or reduced traffic would be difficult to apply in the sector. The staff guide provides a workaround for that complexity, which would create substantial costs for companies. It states that for concessions related to the effects of the COVID-19 pandemic, “an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 and Topic 840 to those contracts.”
IASB News
Second Proposal to Curb Accounting Fallout of Rate Reform
The IASB has published a proposal aimed at giving companies an easier way to work through accounting issues caused by the replacement of interest rate benchmarks such as the London Interbank Offered Rate (LIBOR). On April 9, the board issued Exposure Draft 2020-1, Interest Rate Benchmark Reform—Phase 2 Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16. The proposal addresses the effects of rate reform on a company’s financial statements when an interest rate benchmark used to calculate interest on a financial asset is replaced with an alternative benchmark rate. It would apply to changes to financial instruments and hedging relationships required by the reform. Comments are due by May 25.
IAASB News
Revised Standard on Agreed-Upon Procedures Published
The International Auditing and Assurance Standards Board (IAASB) has revised the standard that accountants use when performing agreed-upon procedures (AUP) engagements. ISRS 4400 (Revised) becomes effective for AUP engagements for which the terms of engagement are agreed on or after January 1, 2022. IAASB also released ISRS 4400 (Revised) Fact Sheet to provide implementation help. “Agreed-upon procedures engagements are widely used in many jurisdictions and the demand for such engagements continues to grow, particularly in relation to the need for increased accountability around funding and grants,” said IAASB Chair Tom Seidenstein in a statement. “This revised standard is responsive to such trends, relating to both financial and nonfinancial subject matters, and the enhancements in the requirements and application material will promote consistency in the interpretation and performance of agreed-upon procedures engagements by practitioners.”
