Tax & Accounting Update

Multiple amendments to standards represent continuous improvement.

FASB does not find it frustrating to have to amend new accounting rules over and over, viewing it as part of the standards-setting process toward achieving the best accounting outcome, board members told an AICPA auditing task force. The board welcomes feedback—no matter how much—on complex standards as this helps improve practice, reduce cost and operations of a standard, according to October 6 discussions with the AICPA Auditing Standards Board’s Audit Issues Task Force. “It’s very hard to anticipate every issue and every industry and every type of transaction that’s out there,” FASB Chairman Richard Jones said. “We all believe standard setting is an effort and continuous improvement. So by its nature we’re going to get input on things we’ve done, and I think we’re very receptive to admit, ‘Hey, we might have spent a lot of time on this, but we’re not saying it’s perfect,’ if there’s something that we can do that could improve it I think we’re very willing to consider.”

Joint staff guidance published on specialists in COVID-19 environment.

The staff of three accounting organizations—the AICPA, the International Ethics Standards Board for Accountants (IESBA), and the International Auditing and Assurance Standards Board (IAASB)—jointly issued guidance on using specialists during the COVID-19 pandemic. The guide defines a specialist as an individual or organization that has expertise—skills, knowledge, and experience—in a field other than accounting or auditing. The staff publication said that companies and accountants have been faced with unprecedented challenges because of the pandemic. They have had to adapt ways of working and supervising the work of others. This may have resulted in requests for accountants in the private and public sectors alike to perform different types of activities and services than they are accustomed to and to work in ways that are different than before the crisis. “The publication provides guidance to [help] professional accountants in business and in public practice determine when there might be a need to use the services of a specialist to assist in performing specific tasks and other professional activities within their employing organizations, and in serving their clients in the COVID-19 environment,” the IESBA said. “The publication also highlights relevant ethical considerations for accountants when thinking about using a specialist, as well as circumstances that indicate a need for a specialist during an audit of financial statements.”

Updated guide addresses stablecoins.

The AICPA issued updated its nonauthoritative guidance related to digital assets. Digital assets are digital records, made using cryptography for verification and security purposes, on a distributed ledger. This virtual asset ecosystem is evolving rapidly, according to the working group. A “stablecoin,” according to a banking agency, is a type of cryptocurrency designed to have a stable value, whereas other types of cryptocurrencies frequently experience significant volatility. One type of stablecoin is backed by an asset such as a fiat currency. Stablecoins are used for a variety of applications, including enhanced payments on a broad scale, and demand for stablecoins has been increasing. “We considered many questions from leading practitioners and boiled it down to this document,” Diana Krupica, AICPA Lead Manager of Emerging Assurance Technologies, Assurance and Advisory Innovation, said in an October 8 statement. “We hope this new set of Q&As go a long way in providing support and guidance to financial statement preparers operating in the digital assets space.”

The guidance covers five key areas:

• Meeting the definition of an investment company when engaging in digital asset activities
• Accounting for digital assets held as an investment by an investment company
• Recognition, measurement, and presentation of digital assets specific to broker-dealers
• Considerations for cryptoassets that require fair-value measurement
• Accounting for stablecoin holdings

Consultation document to establish global sustainability standards board published.

The IFRS Foundation has published a consultation document to solicit public feedback on whether to establish a new global sustainability standards board under its governance structure. The board would be called the Sustainability Standards Board (SSB) and would initially focus on standardizing reporting rules on climate-related matters. “The SSB could prioritize climate-related risk because of its urgency but could also consult on other environmental priorities,” the document, “Consultation Paper on Sustainability Reporting,” states. “A set of comparable and consistent standards will allow businesses to build public trust through greater transparency of their sustainability initiatives, which will be helpful to investors and an even broader audience in a context in which society is demanding initiatives to combat climate change.” The consultation document comes amid heightened focus on environmental, social, and governance (ESG) matters, developments in sustainability reporting, and increased calls for standardization of such reporting. Companies, trade groups, and other organizations have until December 31 to submit comments.