Special Meeting on Board’s Five-Year Agenda
The Financial Accounting Standards Advisory Council (FASAC), the FASB’s main advisory body, held a special session on April 8 to drill down on accounting projects the board should consider during the next five years. The meeting will help shape an agenda consultation document the board plans to issue mid-year for public comment about financial reporting agenda topics, and how to prioritize them. The FASB consults on its agenda every five years to set up its long-term work program. The last document of this ilk was issued in 2016. The board has been reaching out to other groups and advisory bodies about potential accounting topics that could be floated in the forthcoming consultation document. During its March 11 meeting, the board’s Emerging Issues Task Force (EITF) suggested the board consider software development as a project because current accounting rules have not kept pace with innovation. The EITF also suggested that guidance was needed in the following areas: preferred stock; secondary stock sales; acquisition accounting and disclosures; cryptocurrencies; recognition rules for government assistance (excluding taxes) for when a government gives money or provides resources to a company; and taxes related to asset acquisitions.
Foundation Reports Drop in Income Amid Pandemic
The IFRS Foundation, the London-based trustee body with oversight of the IASB, saw a slight decline in income in 2020 from the prior year, due to a dip in contributions, according to its annual report published on April 1. Total income fell about 2.6% last year to £30.1 million ($41.6 million) from £30.9 million ($42.7 million) in 2019, the report says. The loss in income was buffered by a decrease in operating expenses, which fell to £27.4 million ($37.9 million) from £28.0 million ($38.7 million) year on year. The IASB develops international financial reporting standards (IFRS) for about 140 jurisdictions worldwide. Staff costs for technical and operational activities continue to be the most significant cost for the foundation and, at £19.7 million ($27.2 million), are around 72% of the foundation’s cost base, according to the report. Total headcount increased from 150 to 156 during the year. The foundation’s income comes from voluntary contributions and revenue from the sale of subscription services, publications, and licensing of intellectual property. Revenue is also generated from conferences and speaker events. Despite the multiple challenges of the COVID-19 pandemic, the organization said it has been able to operate effectively.
Audit Inspection Changes for 2021 Released
The PCAOB outlined some changes to its audit inspections for the 2021 cycle in a new Spotlight document published on April 6. “We developed our 2021 inspection plans with two primary objectives: (1) respond to the financial reporting and audit risks posed by the COVID-19 pandemic, and (2) reduce the predictability of our inspections,” according to “Spotlight: Staff Outlook for 2021 Inspections.” The focus on the pandemic comes as efforts to control COVID-19 have had a significant impact on companies, auditors, and audit committees. With this in mind, the PCAOB has designed its 2021 inspection cycle to focus on the effects of the pandemic on public company financial reporting. “We believe this approach will encourage firms to consistently strive for the performance of quality audits on all public companies, and discourage an approach that might only focus on those audits or areas that may be perceived as more likely to be selected for review as part of a PCAOB inspection,” the document stated.