Milestone Date Passed for Using LIBOR in Accounting Rules for Derivative Instruments

The GASB issued a reminder on July 17 that the cutoff date recently came and went for using the London Interbank Offered Rate (LIBOR) as a benchmark when applying derivatives accounting rules to hedge items like interest rate risk of taxable debt. As of July 1, 2023, the ICE Benchmark Administration (IBA) “ceased publishing any LIBOR setting using the methodology in place as of Dec. 31, 2021,” and as a result LIBOR cannot be used as a benchmark interest rate for a derivative instrument that hedges, for example, the interest rate risk of taxable debt for purposes of GASB Statement 53, Accounting and Financial Reporting for Derivative Instruments, the board said. GASB’s notice was issued to officially flag the date, which the board had alluded to last year to state and local governments. IBA is the authorized administrator of LIBOR and is regulated by the U.K.’s Financial Conduct Authority (FCA). In May, the FCA “reminded market participants of its March 2021 announcement that publication of the Overnight and 12-Month U.S. dollar LIBOR settings will cease immediately following publication on June 30, 2023.”


Seven Seats Opening Up on IFRS Advisory Council by Year-End

The IFRS Foundation is seeking seven new members to serve on the IFRS Advisory Council to succeed those whose term will end on December 31, 2023, the organization announced on July 12. New appointees will start next year on a three-year term, which may be renewed for an additional three years. In addition to the seven new appointments, eight members of the Advisory Council are also eligible to be considered for reappointment, but because of the broadened remit of the Advisory Council to include the International Sustainability Standards Board (ISSB), member organizations “whose individual representative is eligible to serve a second term will be considered alongside any new applications and/or nominations received,” the foundation said. The Advisory Council is the formal strategic advisory body to foundation trustees, the IASB body which develops IFRS Accounting Standards, and the ISSB, which develops sustainability disclosure rules. The Advisory Council seats 56 representatives, including investors and other users of corporate reports, financial statement preparers, academics, auditors, regulators, professional accounting bodies, standards-setters and multilateral organizations. Nominees should be submitted by September 29, the foundation said.


General Counsel and a Deputy Enforcement Director Depart

On July 14, the PCAOB said that General Counsel Kenneth Lench is leaving the board. Deputy General Counsel James Cappoli becomes acting general counsel upon Lench’s departure. In a separate announcement also on July 14, the PCAOB said that Raymond Hamm, a deputy in the Division of Enforcement and Investigations (DEI) will leave this month. Lench joined the audit board as general counsel in February 2020 when William Duhnke was PCAOB chairman. The general counsel advises the PCAOB about all its operations and leads the Office of the General Counsel (OGC). “During his tenure, OGC supported the key priorities of the Board designed to improve audit quality, including modernizing auditing standards, enhancing inspections, and strengthening enforcement,” the PCAOB stated. “As General Counsel, Mr. Lench reorganized and expanded the size of OGC so that it could better provide legal services to the organization.” In addition, the PCAOB said that the general counsel office represented the board in litigation and regulatory matters during Lench’s tenure. For example, the PCAOB was sued by a Colombian auditor in January related to the board’s disciplinary proceedings. During Lench’s tenure, the general counsel’s office also helped the board to reconstitute its advisory groups and led key board rulemakings, including a rule in response to legislation that would ultimately open Chinese firms up to PCAOB inspections. “We thank Ken for his distinguished service at the PCAOB, and we wish him well in his next chapter,” Chair Erica Williams said in a statement. “James Cappoli’s outstanding legal experience is a great asset for our organization, and we are grateful he will serve in an Acting capacity as we begin the search for a new permanent General Counsel.”