FAF Allocates $11.6 Million to Modernize Technology, Systems
The Financial Accounting Foundation (FAF) said its work to replace the obsolete technology used to produce and distribute FASB and GASB accounting rules should be completed by next year. The organization set a $11.6 million budget to establish new publishing and distribution systems for the FAF, FASB, and GASB, according to its recent annual report, published May 26. The work is being done under the FAF’s Content, Vision, and Enablement (CV&E) initiative, launched by the organization a year ago to restructure the standards-setting boards’ websites, restructure content, and upgrade their fulfilment and distribution system. “The new system will provide our standard setters with the tools they need [to] better serve all of our stakeholders. All aspects of our content publishing platform are undergoing this revitalization,” FAF Chief Operating Officer Mary Crotty said in an email. “We are moving forward with this project, though at this time, we have chosen to slow down the transition due to the current worldwide pandemic.”
Revisions to Management Commentary Would Provide More Focused Risk Disclosures
IASB Chairman Hans Hoogervost said the board’s revisions to its management commentary guide would require senior finance executives to better articulate the risks that can disrupt a company’s business model to its investors. The board decided to require companies to disclose the following in relation to risk: the risk that could disrupt its business model; management’s strategy for sustaining and developing that model; or its resources and relationships. In relation to the environment, a company would disclose: how the environment in which it operates affects its business model; management’s strategy for sustaining and developing that model; its resources and relationships; or the risks. That level of focused disclosure would better enable investors and creditors to assess the magnitude and likelihood of future disruption to the company’s ability to create value and generate cash flows, as well as zero in on how effectively the company’s management identifies and manages risks, the board said. The disclosures would also enable investors and creditors to assess how factors and trends in the external environment affect the company, and how effectively management monitors and responds to such factors and trends.
Auditors Should Put Greater Focus on Crypto Asset Transactions
Auditors of public companies should pay closer attention to the identification and assessment of the risks of material misstatement related to crypto assets, the PCAOB staff said in a summary of observations. Auditors should also put a greater focus on planning and performing an appropriate audit of the virtual assets, including Bitcoin. During inspections of some smaller company audits, the PCAOB staff has also found that some transactions that involve crypto assets were material to the financial statements, according to “Spotlight on Audits Involving Cryptoassets–Information for Auditors and Audit Committees,” published on May 26. The PCAOB said that the document highlights what auditors should consider when they scrutinize companies that hold or have transactions in crypto assets. The board emphasized that the “Spotlight” is not staff guidance. It highlights trends or other information that are relevant for auditors. The staff guide noted that some companies earn a fee or “reward” for validating new blocks on a blockchain, buy goods and services in exchange for virtual assets, exchange one crypto asset for another, or sell crypto assets for a fiat currency. Crypto asset transactions may also include providing trading services to third parties or acting as an intermediary.