Banking Sector Urges Expanded Proposal on Evaluating Goodwill Triggering Events
FASB’s December 2020 proposal to ease accounting for evaluating goodwill triggering events would exclude too many banks, many of which typically report goodwill on their balance sheets, from being able to benefit from the simplifications, the American Bankers Association (ABA), told the board. Regardless of size and ownership, all regulated banks in the United States are subject to quarterly regulatory reporting of financial and other information via the Call Report, said the ABA, representing the nation’s $21.2 trillion banking industry, in a January 20, 2021, letter to FASB. “This information includes the reporting of goodwill and therefore, we believe would disqualify banks from exercising the time-saving option detailed in this proposal,” Joshua Stein, ABA’s vice president–accounting and financial management, wrote. A primary purpose of the Call Report is to help banking supervisors monitor the safety and soundness of the banks they supervise. According to September 2020 Call Report data, over one thousand banks with less than $1 billion in assets reported goodwill on their balance sheet. Stein said banks should be able to avail themselves of the proposed simplifications and recommended that the board revise the scope of the proposal.
IFRS Interpretations Committee Mulling Inventories, Going Concern
Fashion retailers and consumer goods companies that have to write down products that are not selling might be struggling with inventory accounting rules, according to work by the IFRS Interpretations Committee. The committee, which works alongside the IASB to clarify the application of international financial reporting standards (IFRS), plans to meet on February 2 to discuss “how an entity determines the costs it includes as part of the estimated costs necessary to make the sale when determining the net realizable value of inventories.” The technical issue surrounds how certain paragraphs in international accounting standard (IAS) 2, Inventories, are being interpreted. Specifically, accounting differences have cropped up among companies when applying IAS 2, according to a staff paper, published January 20. Some accountants believe a company should include all costs needed to make the sale. For example, ordinary sales staff and advertising costs that are attributable to the inventory. Others believe a company should include only additional costs required by the particular conditions of the inventories to make the sale (e.g., special promotional campaigns).
Trustees Plan Overhaul of IFRS Online Platform
The IFRS Foundation’s website will change in April, combining three current online systems that access international financial reporting standards (IFRS) into a single platform for public use, the organization announced on January 25. Under the change, companies will be able to access http://www.ifrs.org, http://eifrs.ifrs.org, and http://archive.ifrs.org on the same platform, the foundation said. The move is part of the foundation’s efforts to transition its technology infrastructure to modern, cloud-based systems—a multi-year plan begun in 2019 to enhance the digital experience of companies that use the platform worldwide. The new website will look familiar but introduces “new innovations, such as a new Standards navigator, enhanced personalization options, and an improved search facility.” These innovations have required “a move to a new content management system, which will result in some actions for existing users,” the organization said. “Our new online platform presents one of the first tangible opportunities our stakeholders will have to benefit from the work that has been ongoing to modernize the Foundation’s digital infrastructure,” Lee White, executive director of the IFRS Foundation, said in a statement. “We have exciting plans for our digital future, but also recognize the need to help minimize the burden on stakeholders as we transition to these new platforms.”