IRS encourages E-filing for payroll tax returns.
In an information release, the IRS has reminded employers that the next quarterly payroll tax return is due November 1. The IRS urges employers to file the returns electronically. In addition, the IRS mentions that the credit for qualified sick and family leave wages has been extended and amended. The employer tax credits for qualified sick and family leave wages give businesses with fewer than 500 employees funds to provide their employees with paid leave, either for the employee’s own health needs or to care for family members. The American Rescue Plan of 2021 (ARPA) further amended and extended the tax credits (and the availability of advance payments of the tax credits) for paid sick and family leave. Notice 2021-24, 2021-18 IRB, has guidance on the ability to reduce deposits and request advances for the credits for periods of leave through September 30, 2021. The employee retention credit (ERC) has also been extended and amended. The ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees. The modified and extended credit is available for qualified wages paid before January 1, 2022. The rules for the ERC for the second quarter of 2021 and the third and fourth quarters of 2021 are substantially similar.
Same-segment expense disclosures to be required for single- and multiple-segment companies.
FASB continues to build a proposal for segment disclosures, as the board discussed follow-on issues related to a principle that addresses the expense details CEOs and other chief decision-makers typically see. The board decided to specify that all segment disclosure requirements within the standard should be applied consistently by single- and multiple-reportable segment entities, including the principle and the current segment disclosures. This is a change for some single-reportable segment entities that may have thought segment reporting rules do not have to be applied consistently by single- and multiple-reportable segment entities, according to the discussions. The proposal would provide implementation guidance about which profit measure should be applied—for example, an internal measure used by the chief operating decision-maker (CODM) to manage the business. Not having the requirements would indicate that multiple-segment entities would then provide more information by line of business than single-segment entities—which would not be useful, FASB Vice Chair James Kroeker noted. “It would also put tremendous pressure on entities that are close to the margin of ‘do I have one segment or two?’ if they’re not particularly interested in providing more disaggregated information to make conclusions that they are single-segment reporting entities, therefore not requiring them to apply the expense principles—and I think that’s an undesirable outcome,” he said.
New audit standards on risk assessment issued.
The AICPA’s Auditing Standards Board (ASB) issued revised audit standards that enhance the requirements and guidance on identifying and assessing risks of material misstatement. Specifically, the new guidance addresses a company’s system of internal control and information technology. Statement on Auditing Standards (SAS) 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, supersedes SAS 122 (as amended, AU-C Section 315) of the same title, and amends various AU-C sections in the AICPA Professional Standards. The new standard becomes effective for audits of financial statements for periods ending on or after December 15, 2023. “The auditor’s risk assessment drives almost every part of the audit. As a result, the evaluation of risks sits at the core of audit quality,” AICPA Chief Auditor Jennifer Burns said in a statement.
Europe suggests balance to IASB for new agenda.
The IASB should prioritize maintaining and improving existing IFRS standards, including their understandability, as well as tackle financial reporting issues that are rapidly evolving, according to the European Commission’s main accounting advisory body’s October 11 letter to the board. Specifically, the European Financial Reporting Advisory Group (EFRAG) suggested that the IASB prioritize finalizing the projects in its active work plan and conducting on a timely basis the post-implementation reviews (PIR) of IFRS 9, Financial Instruments, IFRS 15, Revenue from Contracts with Customers, IFRS 16, Leases, and, towards the end of the 2022–2026 period, IFRS 17, Insurance Contracts. A PIR is the board’s process to determine whether a major new accounting standard provided useful information to investors at low cost to companies, as intended. The letter was sent in response to the IASB’s Request for Information (RFI), “Third Agenda Consultation,” which was issued in March to solicit public feedback about its 2022–2026 agenda.