Post Implementation Review Portal Launched Under New Process
FASB launched a Post-Implementation Review (PIR) web portal that showcases its efforts to evaluate whether an accounting standard provides investors with relevant information without companies incurring excessive costs. Three major accounting standards are being reviewed: Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, ASU 2016-02, Leases (Topic 842), and ASU 2014-09, Revenue from Contracts with Customers (Topic 606). “The PIR web portal helps stakeholders navigate this important part of the FASB’s standard-setting process, which ensures completed standards perform up to expectations,” FASB Chairman Richard Jones said in a statement. “It’s an especially timely resource that coincides with our review of the effectiveness of recent major standards on credit losses, leases, and revenue recognition.” The board said that, depending upon the outcome of the PIR, it might address one or more of the following: areas of the standard that are not understandable; unintended consequences that were not foreseen during development of the standard; and unexpected costs based on the actual results observed, as compared with the expectations documented in the board’s basis for conclusions.
ASB Votes to Finalize Standards for New, Flexible Examination Services
On August 12, the AICPA’s Auditing Standards Board (ASB) decided to finalize proposed revisions to the attestation standards so that accountants can provide new, flexible services. The standard would “enable practitioners to perform direct examination attestation engagements designed to provide flexibility and enable new services for practitioners as well as align certain aspects of traditional examination and review engagements conducted pursuant to the attestation standards with international standards,” stated Ahava Goldman, AICPA associate director for audit and attest standards. Examples of such services are the examination of daycare safety procedures or company investment transactions. One of the remaining issues discussed during the August 12 meeting was about a non-authoritative illustration that would be attached to the authoritative standards. There is an example of what an “Independent Accountant’s Report” would look like under this new direct engagement service. Some members were worried about the specific language to be used and whether users of the reports would fully understand the report. ASB Chair Tracy Harding, a principal with Berry, Dunn, McNeil & Parker, LLC, said the board will continue to work on examples. And because this is a new service in the marketplace, Harding said the board plans to issue additional implementation guidance before the effective date.
Materiality for Attestation Engagements Explained
The AICPA issued a discussion paper intended to help CPAs when they are engaged to attest to non-financial matters, such as environmental, social, and governance (ESG) information. The paper, “Materiality Considerations for Attestation Engagements Involving Aspects of Subject Matters that Cannot Be Quantitatively Measured,” focuses on materiality considerations in the current business environment. The guide is non-authoritative. “Materiality, often considered one of the most difficult exercises in auditing and financial reporting, can be even more daunting when auditing new and emerging subject matters (such as security controls and sustainability matters) that cannot be evaluated using quantitative measurements,” states the discussion paper. The paper does not tell a CPA how to determine which criteria to be used to evaluate the subject matter are suitable for the attestation engagement. Instead, it assumes that the CPA has already determined the criteria to be suitable to intended users of the examined report as required by AT-C Section 105, “Concepts Common to All Attestation Engagements.” In addition, the discussion paper includes a flowchart that demonstrates the flow of materiality from the planning phase to execution and reporting.