In late October, the Financial Accounting Standards Board (FASB) released a narrow scope change to the accounting for business combinations. This Accounting Standards Update (ASU) 2021-08 is expected to reduce diversity in practice for the recognition of contract assets and liabilities, such as deferred revenue, in a business combination, and will in some circumstances reduce cost and complexity of existing US GAAP.
Topics: accounting, FASB, Revenue recognition, Business Combinations, Kevin Higgins
COVID-19 changed how most businesses operate day-to-day. Similarly, many financial statement audit teams were tasked with migrating to a fully remote environment in order to complete year-end financial statement audits and other attest functions. But while these changes to core auditing practices can raise questions around quality, these differences from standard customs are generally misunderstood. Below are some common misconceptions about the remote audit process.
Topics: accounting, financial statement audit, Kevin Higgins, COVID19, Coronavirus, remote work, remote audit
As we start a new year, it is important to look ahead to those upcoming accounting standards to plan for their application. Whether a company is a public company that must be prepared for first quarter interim reporting or a private company that needs to plan for its year-end financial statements, accounting standards take time to work through and implement, so it’s advisable to have a roadmap of what changes will affect financial reporting.
Topics: accounting, private company, Kevin Higgins, COVID19, Coronavirus
By nature of their business, service organizations may face challenges with their determination of when revenue from contracts should be recognized under ASC Topic 606, Revenue from Contracts with Customers. In addition to the obvious accounting issues associated with timing of revenue recognition, this determination will also impact their financial statement disclosure requirements as it relates to revenue recognition.
Topics: accounting, Joyce Masse Troy, Revenue Recognition Standard, Revenue recognition, Joyce Troy, hedging
For 2019, public and private companies alike are grappling with major accounting updates from the Financial Accounting Standards Board (FASB). Public companies tackled the changes to the leasing standard, which required so much time and energy that the FASB agreed to push back the effective date for private companies. Meanwhile, private companies worked through the updates to the long-awaited revenue recognition changes under ASC Topic 606.
Topics: accounting, Paul Languirand, audit, FASB, Financial Accounting Standards Board, Auditing Standards
The AICPA’s Auditing Standards Board (ASB) recently released SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, which updates the form and content of a financial statement auditor’s report. Although fairly simple, the changes may make it easier for financial statement users to understand the results of the audit, as well as the auditor’s and management’s responsibilities.
Topics: accounting, Paul Languirand, audit, FASB, Financial Accounting Standards Board, Auditing Standards
Changes to accounting for hedge activities are on the horizon, and for companies that engage in these activities, the simplifications in the new accounting standard couldn’t come soon enough. Hedge accounting errors have long been a trouble spot for financial reporting, in some cases leading to financial restatements.
Topics: accounting, Derivatives, hedge accounting, hedging
Cloud-based software has grown in prevalence, and many companies find it an effective way to reduce upfront capital investment in software and outsource the upkeep of those systems. As technology has advanced, systems available on the cloud have increased in their size and complexity. These more complex systems have begun to require significant implementation costs in their own right to configure and integrate.
Topics: accounting, goodwill, Paul Languirand, FASB, Financial Accounting Standards Board, Testing for Goodwill, Cloud-Based Software
By: Carl Giardino and Patrick Quinn
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.
Topics: accounting, tax, Revenue Recognition Standard, Carl Giardino, Patrick Quinn, Revenue recognition
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.
Topics: accounting, FASB, Patrick Quinn, Financial Accounting Standards Board, share-based payment accounting
