By Patrick Quinn, CPA and David Lewin, CPA
Private companies, not-for-profit organizations, and smaller reporting companies received welcome news recently when it comes to adopting complex accounting standards. The Financial Accounting Standards Board (FASB) issued two proposals that would delay the effective date for major accounting changes: one that affects lease accounting, current expected credit loss (CECL), and hedge accounting and a second that affects long-term insurance contracts.
The Supreme Court recently ruled that a physical presence in a state is not required for a state's sales and use tax requirements. In response to South Dakota v. Wayfair, Inc., states are rapidly updating their policies to collect state sales taxes from companies that conduct business remotely.
New revenue recognition standards for U.S. and international financial reporting will require careful planning and education to develop an implementation strategy. In addition, the standard affecting U.S. generally accepted accounting principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) may bring about substantial income tax consequences. Historically, many entities found that the financial reporting standards and tax rules regarding revenue recognition ran parallel and produced identical results; under the new standard this may no longer hold true.
The Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2016-09, Compensation (Topic 718): Improvements to Employee Share-Based Accounting in March 2016. The ASU, which is a result, in part, of the post-implementation review of FASB Statement No. 123(R) Share Based Payment, is also part of the FASB's continuing simplification project.
The Financial Accounting Standards Board (FASB) recently released an accounting standards update (ASU) for business combination accounting. ASU 2015-16 Business Combinations (Topic 805), Simplifying the Accounting for Measurement Period Adjustments will affect how entities report items when the accounting for the assets is incomplete at the end of the reporting period and the provisional amounts are subsequently finalized.
In January 2014, the FASB released Accounting Standard Update 2014-02 Intangibles – Goodwill and Other (Topic 350): Accounting for Goodwill (ASU 2014-02). ASU 2014-02 is the first standard issued by the Financial Standards Accounting Board (FASB) upon endorsement of a consensus of the Private Company Council (PCC) that is specifically designed to meet the needs of private companies by providing an alternative within US GAAP.
The FASB's latest proposal on going concern uncertainties introduces a new layer of accounting guidance that adds to the existing requirements set by auditing standards and SEC regulations. The proposed new guidance responds to a wave of unwelcome surprises, as scores of companies faced unexpected liquidity problems during an economic downturn that adversely affected businesses while the FASB's previous (2008) proposal was sidetracked by other priorities. The added guidance may not eliminate these kinds of surprises altogether, but it provides a more systematic approach that is designed to promote more consistency in the nature and timing of disclosures about an entity's ability to continue as a going concern.