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IRS issues guidance on the retroactive termination of the ERC.
The IRS has issued guidance for employers on the retroactive termination of the Employee Retention Credit (ERC). Originally created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the American Rescue Plan Act extended the ERC for wages paid through December 31, 2021. When the Infrastructure Investment and Jobs Act was signed into law on November 15, 2021, however, it amended the ERC so that employers can only claim it for wages paid through September 30, 2021, unless the employer is a recovery startup business. The IRS will not waive failure to deposit penalties for all other employers if they reduce deposits after December 20, 2021, for wages paid after September 30, 2021. An employer that does not qualify for relief under Notice 2021-65 may reply to a penalty notice with an explanation, and the IRS will consider reasonable cause relief.
“What I’m looking for is a way forward to provide more decision-useful information to users—that’s what our mission statement is and that’s what our objective should be.”
Regulatory framework will determine steps on digital assets.
FASB will be able to comprehensively address the reporting of digital assets once there are more regulatory guardrails in place, board Vice Chair James Kroeker said at an advisory meeting. His remarks were in response to a question posed by a council member about the board’s take on the topic. “I think you’ve heard folks talk about maybe digital assets meet today’s definition of a security; if they do, we have very clear guidance on accounting for securities,” Kroeker said at a Financial Accounting Standards Advisory Council (FASAC) discussion on December 2. “As some of those regulatory regimes begin to take place, it certainly makes it easier to identify what the asset is for accounting proposes and how to put a framework around that,” he said. “It probably makes the determining of value a little bit easier as well if there’s some more centralization and controls around trading and who the counterparties are.”
FASB member cautions advisors to focus on investor demands.
On December 2, FASB member Gary Buesser cautioned board advisors to pin their input more closely to the information investors clamor about the financial performance of a company, stating too many objections were being raised by the panel on the issue. “I think when we get into a lot of the objections a lot of you are raising—‘competitive harm, income statement allocations, is this decision useful information, one size doesn’t fit all’—you know I’ve heard that over and over again,” he said at a Financial Accounting Standards Advisory Council (FASAC) discussion. “And what I’m looking for is a way forward to provide more decision-useful information to users—that’s what our mission statement is and that’s what our objective should be.” Buesser, one of two investor voices on the seven-member board, said he was frustrated by what he heard from the FASAC, FASB’s main advisory body. The council comprises 35 senior financial reporting professionals from some of the nation’s largest companies and organizations. “We can talk until we’re blue in the face about what we can’t do, but we all know we can do better than what’s available today, and it’s a matter of how we do that. And if we keep raising objections all the time, we get nowhere,” he said. ”And it’s time to move forward and actually do what investors are asking us to do in a measured way that balances benefits and costs.”
General ESG matters won’t be added to FASB’s core mission.
At a recent trustees’ meeting, FASB Chair Richard Jones signaled that the board does not plan to add sustainability matters to its core financial reporting mission, but will stay abreast of developments on that front. “As the trustees know, we have a very close working relationship with the IASB, focused on financial accounting reporting, and that’s our mission and that’s what we’re focused on,” Jones said at the November 16 Financial Accounting Foundation (FAF) quarterly meeting. “That being said, we certainly will watch the international developments carefully.” His remarks were in response to a question posed by FAF trustee Timothy Christen about how FASB viewed its role in terms of working with the new International Sustainability Standards Board (ISSB), the body established early November by IFRS Foundation trustees. The IFRS Foundation also holds oversight responsibility for the IASB, the board that develops IFRS standards.
Staff proposes taxonomy updates on troubled debt accounting rules, disclosures.
On November 23, FASB proposed to update the U.S. GAAP Financial Reporting Taxonomy so that it includes pending revisions to accounting for troubled debt restructuring (TDR) and vintage disclosure requirements. Specifically, the proposal would update the taxonomy to include Proposed Accounting Standards Update (ASU) 2021-006, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restr ucturings and Vintage Disclosures. ASU 2021-006 proposes to remove TDR accounting rules from the current expected credit loss (CECL) standard for lenders that have already adopted the provisions. The board also proposed to clarify vintage disclosure rules—the presentation of financing receivable information by year of origination. Those submitting comments on the proposed taxonomy updates should address whether they agree with the taxonomy changes, and—if not—the reason for the dissent, according to the notes to the release. Respondents should also address whether additional taxonomy improvements are needed and explain what should be added.
The proposal would require companies to disclose information that would enable investors to assess the effects of the company’s supplier finance arrangements on its liabilities and cash flows.
Feedback sought on technology updates for IFRS Taxonomy 2021.
Extensible Business Reporting Language (XBRL) software developers can now weigh in on proposed technology features for IFRS Taxonomy 2021, the IFRS Foundation announced on December 2. The taxonomy is a classifying system in XBRL that allows companies to precisely label the thousands of pieces of financial data that are included in typical long-form financial statements and related note disclosures. The tags allow computers to automatically search for and assemble data so that data can be readily accessed and analyzed by investors. The proposed technology changes would affect the way in which the taxonomy can be implemented by its users, according to the proposal. It would refine the IFRS Taxonomy’s “technology,” meaning taxonomy features including, “the syntax employed to publish and express the content of the IFRS Taxonomy, and the taxonomy architecture used.” The architecture relates to taxonomy characteristics such as, for example, how the IFRS Taxonomy content is organized into files and naming protocols. Specifically, the document is primarily intended to inform and seek feedback from developers and maintainers of XBRL software (such as XBRL processors, report creators or review and consumption tools) about changes that may affect such software.
Proposal aims to fill gaps in disclosures for supplier finance arrangements.
The IASB has issued a proposal to add teeth to disclosure rules for supplier finance arrangements, a popular collaborative funding method that investors say lacks transparency. The use of supply chain finance has increased as companies view it as a way to optimize working capital and recover from the effects of the coronavirus (COVID-19) pandemic. The proposal would require companies to disclose information that would enable investors to assess the effects of the company’s supplier finance arrangements on its liabilities and cash flows. Today, the disclosures companies provide have gaps that make it hard for analysts to understand the information, thereby rendering it less useful. With the growing use of such arrangements, some investors fear that a company’s financial health can deteriorate rapidly if these arrangements are withdrawn. “Investors require more detailed disclosures about companies’ supply chain finance arrangements, as these funding practices are becoming increasingly common,” IASB Chair Andreas Barckow said in a statement. “The proposed requirements are designed to give investors the information they need to assess the effects of such finance arrangements on a company’s liabilities and cash flows.”