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Tax court announces coronavirus precautions.
In a notice posted to its website, the Tax Court has announced two precautions that it will be taking with respect to the novel coronavirus. Until further notice, out of an abundance of caution, the court is encouraging social distancing and, therefore, will limit the number of people in the courtroom at any one time. Anyone who is required to appear in court and is experiencing any flu-like symptoms, has a fever, or is coughing or sneezing, should contact the court before appearing. Reasonable accommodations, rescheduled appearances, hearings, and trials as needed have been promised. The court said that it would like to assure the public that it is following recommended guidelines provided by the Centers for Disease Control and Prevention.
Narrow fixes to financial instruments accounting rules published.
On March 9, FASB said it has amended seven areas of financial instruments accounting rules, narrow items it worked to quickly fix because they include matters relevant to credit loss provisions that large public companies adopted this year. The board published Accounting Standards Update (ASU) 2020-03, Codification Improvements to Financial Instruments, to eliminate accounting inconsistencies and to make the codification easier to apply. Specifically, the update clarifies that the contractual term of a net investment in a lease, determined in accordance with the leases standard, should be the contractual term used to measure expected credit losses under Accounting Standards Codification (ASC) Topic 326, “Financial Instruments—Credit Losses.” For large public companies that have already adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which took effect January 1, the rules are immediately effective. Smaller reporting companies (as defined by the SEC), private companies, and all other entities can adopt the changes when they adopt ASU 2016-13 in 2023. Early adoption is permitted.
FAF appoints new executive director.
John Auchincloss, the Financial Accounting Foundation’s acting president, has been appointed its executive director, effective immediately. “John has long impressed the FAF trustees with his intelligence, thoughtful strategic counsel, and commitment to the FASB and the GASB and their important mission,” FAF chair Kathleen Casey said in a statement. “I am very pleased that we will continue to benefit from his strong leadership.” In December 2019, Casey, a former SEC commissioner, was appointed chair, and five new trustees were named to the FAF; all started their terms in January. Auchincloss joined the FAF as vice president and general counsel in May 2016. Following the departure of former FAF president and CEO Teresa S. Polley, he was appointed acting president while a national search was conducted for the post, part of the organization’s standard due process.
IASB votes to issue proposal on second phase of rate reform work.
On February 26, the IASB voted to draw up a rough draft of a proposal that would facilitate the accounting effects of rate reform, the second phase of its effort to address the global regulatory shift away from the London Interbank Offered Rate (LIBOR). The board agreed to issue an exposure draft for a 45-day public comment period, a much shorter timeline than usual. The rules would take effect on or after January 1, 2021, with earlier application permitted. If the amendments are applied earlier, the company must disclose that fact. IASB staff members said the scope of exposure document would be narrow in the sense that the exceptions will apply only to those modifications to contractual cash flows that are 1) required as a direct consequence of interbank offered rate (IBOR) reform and 2) done on an economically equivalent basis and the consequential changes in hedge accounting. Furthermore, the proposed relief is temporary in nature (i.e., it no longer applies once a financial instrument has transitioned from IBOR to an alternative benchmark rate).
GASB votes to propose clarifications for component unit criteria.
As expected, GASB has voted to issue a proposal to amend rules for determining certain fiduciary component units so that they reflect benefit and cost considerations of reporting defined contribution pensions, other post-employee benefit plans, and similar plans in a government’s fund financial statements. The proposal would help entities determine the applicability of certain component unit guidance related to the appointment of a voting majority of a governing board and the financial burden to some types of arrangements, according to earlier board discussions. It will also address whether the component unit guidance on the appointment of a voting majority of a governing board presented in Implementation Guide 2019-2, Fiduciary Activities, should be included in level A literature in the GAAP hierarchy, and to which arrangements it should be applied. The board plans to publish the exposure draft with a 30-day public comment period; a final statement will be issued by June.