Proposed GAAP Codification Amendments Split Up
FASB will continue to split up a November 2019 proposal aimed at improving the Accounting Standards Codification so that it can finalize portions that accomplish what the changes were intended to do: better align and clarify wording in accounting rules. The board’s Proposed Accounting Standards Update (ASU) 2019-800, Codification Improvements, had sought to make a broad swath of fixes in disclosure rules, concepts statement references, and a variety of subtopics. This proved more complicated than the board expected, and some commenters cautioned that some of the changes could cause unintended consequences. FASB Vice Chairman James Kroeker observed that some comments the board received on aspects of the proposal could be an attempt to get the board to broaden the scope of the project to address uncertainty in existing practice. “If that’s the objective as we pursue this [that] seems to be a broader scoped project than a technical correction,” Kroeker said. “A technical correction to me is simply to get it linked back identically to what it was before.”
States, Local Governments Will Need to Meet Technology-Driven Reporting Age.
State and local governments can expect GASB to make more strides in the next seven years to advance electronic financial reporting to take advantage of the opportunities presented by technology. New GASB Chairman Joel Black told Thomson Reuters on August 31 that everyone involved in state and local government accounting and financial reporting will need to evolve, over time, to work in this information-age environment. “Technology will undoubtedly be the driving engine of this evolution,” Black said. “People today expect information to be available to them when and how they want it..” “At GASB, we will continue to have sessions, gather information, and work collaboratively with all our stakeholder groups on the topic of electronic financial reporting and how technology is being utilized to evolve how governments provide financial information so that we can ensure we can play our role in the evolving process.” The board will hold a closed educational session on September 10 on topics associated with electronic financial reporting, according to its latest meeting summary. Those discussions are part of ongoing efforts by the board to monitor the issue.
Guide Explains Lender’s Accounting for PPP Loan Forgiveness
The AICPA has updated a technical accounting guide to explain how a lender should account for a forgivable loan that a borrower received under the Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA). TQA 2130.45, “Accounting for Loan Repayment or Forgiveness by the SBA,” addresses how a bank should account for the portion of the loan that is eligible for forgiveness during the settlement process. It also explains the time period subsequent to the bank’s determination that the borrower is eligible for the forgiveness and through the receipt of payment from the SBA. “The loan should continue to be accounted for as an interest-bearing loan (including amortization of loan origination fees—see section 2130.44) through receipt of payment from the borrower or the SBA,” the technical guide stated. “Payments received from the borrower or the SBA prior to maturity of the loan (other than required payments of principal and interest) are considered prepayments of the loan.” The guide explains that the SBA is one of the counterparties to the agreement that will repay the principal and interest on the loan if the borrower meets the conditions for forgiveness.