FASB News
Project to Fix Acquisition Accounting Rules Dropped
FASB voted unanimously to drop its project aimed at improving the accounting for asset acquisitions and business combinations, stating the case for rule changes had not been made. The five-year-old project aimed to narrow differences between acquisition models. Staff’s latest research had been on potential alternatives for the initial and subsequent accounting for contingent consideration arrangements in a business combination, according to the discussions. “I think that one of the most important objectives was to be able to narrow the differences, and I don’t think that we’ve heard a resounding need to change acquisition accounting here for some of those items,” FASB board member Susan Cosper said. “And so, with that in mind, I think that some of the other areas that were posed as part of the [invitation-to-comment] feedback are clearly able to be subsumed into other projects. I don’t think the feedback in the [invitation-to-comment] process was overwhelming either in terms of continuing with this project and so as I think about the board’s priorities I would vote to drop this project.” The ITC received lukewarm responses on the topic, according to meeting papers. The project was added to the board’s technical agenda in August 2017 as Phase 3 of definition of a business, following the completion of Phase 1 and Phase 2.
GASB News
States, Cities Get New Accounting Rules for Reporting Employee Vacations, Other Paid Leave
State and local governments now have new accounting rules for reporting vacations, sick days, paid time off (PTO), and other compensated employee absences. GASB published the new model to more appropriately reflect a liability when a government incurs an obligation for compensated absences, which are benefits earned as part of the employer-employee exchange, according to a board webcast. In addition, this model can be applied consistently to any type of compensated absence and will improve comparability of reporting between governments that offer different types of leave. Under the guidance, a liability for leave that has not been used would be recognized if: a) it is attributable to services already rendered; b) it accumulates—meaning it is carried forward to a future reporting period; and c) it is more likely than not to be used for time off or otherwise paid or settled. Exceptions to the rule include parental leave, military leave, and jury duty—in which case a liability would not be recognized until the leave begins. The result of the model will be “a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences,” the board said.
PCAOB News
First Investor Advocate Appointed
The PCAOB has announced that Sabahat Qamar has been named the board’s first Investor Advocate. She was most recently a senior financial analyst in the Division of Complex Institution Supervision and Resolution at the Federal Deposit Insurance Corporation (FDIC). Qamar will be responsible for the PCAOB’s engagement with investors, the board said. She will also be the primary point of contact for the investor community, and will serve as the non-voting co-chair of the board’s reconstituted Investor Advisory Group (IAG). She will start her new role on July 11, 2022. “Because investor protection is so central to the PCAOB’s mission, we must engage continually with investors, investor advocates, and others who play a key role or have expertise in our capital markets,” PCAOB Chair Erica Williams said in a statement. “As our first-ever Investor Advocate, Saba will enhance our engagement and amplify investor voices thanks to her vast knowledge of investor protection issues and her outstanding experience both interacting directly with investors and advocating on their behalf.”
