Multinationals May Get Converged Standards on Rate Regulation, Government Grants
Multinational companies, many of which have routinely asked for converged solutions for U.S. and international accounting standards, could see the guidance on rate regulation and government grants aligned in the near term. Convergence discussions between FASB and the IASB are still regularly taking place behind the scenes on both topics, FASB Chair Richard Jones said on Aug. 23. “We have quarterly meetings, myself with my counterpart with the IASB, as well as our staff,” he told a Financial Accounting Foundation (FAF) virtual trustee meeting. Both boards will hold a joint public educational session in London late in September on current standards-setting projects. “And that’s all because of our joint missions—when you think about improving financial accounting and financial reporting,” Jones said. Jones also reiterated that FASB is seeking comments on Invitation-to-Comment (ITC) 2022-002, “Accounting for Government Grants by Business Entities: Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles,” which would be another convergence topic.
FASB Chair Says There is No Elected Body with the Right to Speak for Investors
FASB Chair Richard Jones said “there is no elected body that has the right to speak for investors” or “any of our other stakeholders” and so outreach is aimed at a “broad spectrum of investors because they don’t all have the same view.” The board recently issued a report about its investor outreach efforts to provide transparency “into what we do and who we speak with,” Jones told the Financial Accounting Foundation (FAF) on August 23. “We are here, we’re eager,” he said. “And I think what that report does a good job of highlighting is most of the investor input we get is through proactive outreach.” His remarks were in response to a query from FAF Chair Kathleen Casey, suggesting he “talk again about some of the key conclusions and whether or not you have any additional initiatives that you might be undertaking with regard to ensuring that you account for different types of investors and users of financial statements.” The 18-member FAF is a trustee organization that holds oversight responsibility for the FASB in its development of U.S. Generally Accepted Accounting Principles (GAAP) for public and private companies as well as not-for-profit organizations.
U.S. and China Sign Agreement on Audit Firm Supervision
On August 26, the PCAOB signed an agreement with Chinese authorities that will allow the board to inspect and investigate audit firms based in China and Hong Kong whose clients trade on American exchanges. The PCAOB and China have been in on-again, off-again negotiations to carry out audit inspections, to no avail, until Congress stepped in to help the PCAOB to get a deal with Chinese authorities. Among other legislative provisions, if the U.S. board cannot inspect an audit firm for three years in a row, then their clients will face a trading ban. “The U.S. Congress sent a strong message with the passage of the Holding Foreign Companies Accountable Act that access to the U.S. capital markets is a privilege, not a right,” PCAOB Chair Erica Williams said. The PCAOB inspection team is planning to begin audit inspections by mid-September.