Private Companies Seeking Clarity around Coronavirus-Related Disclosure Requirements
Private companies are seeking FASB or AICPA interpretative guidelines on the appropriate level of disclosures to provide on issues related to the novel coronavirus (Covid-19), FASB’s private company advisers said during April 17 discussions. Companies are uncertain about the types of information lenders expect them to provide, members of the Private Company Council said during a discussion of trends facing private companies, the largest business demographic nationwide. “Take uncertainties or contingencies, for example. I think for public companies they have a little more leeway in disclosure of that outside of the footnotes. For private companies it’s always a struggle between the auditors and the preparers in terms of how much more information or detail and to what extent that needs to go into the footnote disclosure,” Yan Zhang, partner at EisnerAmper LLP in New York, said. “There are a lot of examples of public company disclosure out there, but their fact patterns may not be specific to private companies.”
Cities, States Receive New Rules for Partnership Arrangements
On April 20, GASB published a new accounting standard on reporting of public-private and public-public partnership arrangements (PPP) and availability payment arrangements (APA) agreements used by cities and states to augment budgets. GASB Statement (GASBS) 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, establishes definitions for PPPs and APAs and their reporting guidelines. The rules will result in more relevant and reliable information for financial statement users and create greater consistency in practice, the board said. Governmental entities have several years to adopt the changes, which take effect for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged.
PCAOB Asks for Input on Experience With Critical Audit Matters
The PCAOB has said it wants the public’s input on so-called critical audit matters (CAM) to help the board with its interim analysis of the requirements for auditors. “We are committed to fulfilling the expectation set out for us by the U.S. Securities and Exchange Commission to complete this interim analysis before the second phase of CAM implementation begins, and we are also mindful of the many challenges related to COVID-19 that our stakeholders are dealing with at this time,” the PCAOB said. “To provide additional time for interested parties to share feedback with us, we extended the comment period from 30 to 60 days.” The request for comment document said that the staff is doing the interim analysis to better understand how auditors have applied the CAM requirements. The staff also wants to know how investors are using CAMs disclosed in the auditor’s reports, as well as the experiences that audit committees and companies have had. Comments are due by June 15.