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October 2015  »  Tax & Accounting Update

Tax & Accounting Update

Tax & Accounting Update is provided by Thomson Reuters and based on material published on Checkpoint, its online news and research platform. The Update is a quickreference guide to the most pressing issues coming down the regulatory and administrative pipeline. Visit https://tax.thomsonreuters.com/daily-newsstand/ for further information and daily updates.

Tax News

IRS issues final regulations for employer contributions to pension plans.

The IRS has issued final regulations that provide guidance on the determination of minimum required contributions for single-employer defined benefit pension plans. Under IRC section 430, the minimum required contribution is determined by reference to the plan's funding target for the plan year (i.e., the present value of all benefits accrued, earned, or otherwise allocated to years of service before the first day of the plan year). Under IRC section 4971(a), an excise tax is imposed on the employer for a failure to meet applicable minimum funding requirements.

SEC News

Judge orders SEC to finish resource payments disclosure rule.

A federal judge ordered the SEC to resume work on a Dodd-Frank rule that is more than four years past a deadline set by Congress. Previously, a federal court had thrown out the rule that required oil and mining companies to publicly disclose the payments they make to governments to do business, but this latest ruling by Judge Denise Casper told the SEC that the previous setback in court did not justify such an extended delay for finishing the rule. “The SEC's delay in promulgating the final extraction payments disclosure rule can be considered unlawfully withheld as the duty to promulgate a final extraction payments disclosure rule remains unfilled more than four years past Congress's deadline,” said Judge Casper.

FASB News

Investors require better explanation of new credit losses standard.

FASB's Investor Advisory Committee (IAC) requested more information about how the FASB's planned standard to revamp loan-loss accounting will work once it is implemented. FASB aims to publish the much-anticipated final standard by the end of the year, but the panel's members say they do not have enough information to sufficiently judge the standard and advise the board on its requirements. “We need specificity in terms of what questions you specifically have and what additional examples you need to be provided with,” FASB member Lawrence Smith said. “Because right now, I participated in that session, and I don't quite understand what you're asking.”

A federal judge ordered the SEC to resume work on a Dodd-Frank rule that is more than four years past a deadline set by Congress.

Revenue disclosures lacking for long-term aerospace and defense contracts.

Aerospace and defense companies involved in long-term deals to build aircraft or space-craft do not disclose enough information about how they calculate the revenue they collect from these contracts, according to a study from the Georgia Tech Financial Analysis Lab. The problem, the study said, lies with the mechanics of percentage-of-completion (POC) revenue accounting, which calls for companies to recognize revenue by comparing incurred costs to the total costs the company estimates will be required to complete the contract. Unexpected cost overruns can occur because the method relies on estimates. These overruns can lead to significant losses later on in the contracts.

PCAOB News

Inspection plan is outlined for broker/dealer auditors.

On September 1, the PCAOB published a Staff Inspection Brief to summarize its plans for inspecting audit firms that serve broker/dealers regulated by the SEC. The PCAOB said it planned to follow up with additional briefs with more information about its inspection process. “We think auditors of broker/dealers should know that we are focused on areas where we previously found deficiencies as well as other areas, like engagement quality review and auditor independence,” said Robert Maday, the deputy director of the board's division of registration and inspections.

IASB News

European commission searches for new chief at advisory panel.

On August 31, the European Commission said that it is soliciting nominations for the vacant presidency of the European Financial Reporting Advisory Group (EFRAG). The opening appears at a time when some European officials are lobbying for a greater say in standards setting for the IASB. Wolf Klinz, a German who represented the Free Democrats in the European Parliament, had been selected earlier this year to fill the post, but ill health forced him to resign before he could be sworn in.

GASB News

Basic financial reporting model set for full review.

On September 1, GASB added a reexamination of its basic financial reporting model for state and local governments to its agenda. The board said it is looking for ways to make the model more useful to the investors, taxpayers, and regulators that use financial reports from government bodies. “It is an important part of effective standard-setting to routinely seek to improve existing standards that have been in effect for some time,” GASB Chair David Vaudt said in a statement.

 
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