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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 quick-reference guide to the most pressing issues coming down the regulatory and administrative pipeline. Visit https://tax.thomsonreuters.com/checkpoint-news/ for further information and daily updates.

Tax News

IRS gives FFIs more time to renew FATCA agreements.

The IRS has given an extension to entities that missed the July 31 deadline to renew their foreign financial institutions (FFI) agreement under the Foreign Account Tax Compliance Act (FATCA). FATCA requires agents to withhold and deduct 30% from certain payments made to an FFI unless the FFI has entered into an “FFI agreement” with the United States to, among other things, report certain information regarding U.S. accounts. Entities that missed the deadline and have otherwise complied with the terms of the FFI agreement now have until Oct. 24, 2017 to renew the agreement and continue to be treated as a participating FFI.

FASB News

Alignment sought for asset acquisition, business combinations guidance.

FASB is considering beginning a project to reduce the differences between business combinations and acquisition accounting. The board wants to focus on three areas in the asset acquisition guidance that differ significantly from business combinations accounting—transaction costs, in-process research and development (IPR&D), and contingent consideration. “I do think those are the three biggest areas that create the most significant differences and the most material differences,” FASB member Marc Siegel said. He cautioned, however, that delving into accounting for transaction costs may be a large undertaking. In addition, any changes to the business combinations guidance in U.S. GAAP could depart from the IASB's IFRS 3, Business Combinations. “There might be more practical answers that could lead to divergence with IFRS 3, which we worked hard to get to a mostly converged answer on,” Siegel said. “Those are the kind of things that are going to be in my head.”

Oil-and-gas companies may receive relief from lease standard.

FASB wants to give utilities and oil-and-gas companies some relief when they switch to the board's new lease standard. The board has unanimously agreed to float a proposal exempting companies with land easements from having to review their existing contracts to determine if they are covered by the requirements of Accounting Standards Update (ASU) 2016-02, Leases. “The type of easement that is going to fall into the bucket of a lease is a pretty narrow subset,” FASB member Christine Botosan said, “so I just can't see making these companies go through a haystack to find the needles.” The board plans to issue the proposal with a 30-day comment period and wrap up the issue as quickly as possible, because the lease standard becomes effective for public companies in 2019.

AICPA News

ASB moves toward converging audit reporting guidance with international standards.

The AICPA's Auditing Standards Board (ASB) voted to issue a proposed requirement for an expanded auditor report that converges with the guidance from the International Auditing and Assurance Standards Board (IAASB). The board intends to incorporate the project, which it believes will provide greater transparency about audit work and help investors understand the business or organization that was audited and the areas of significant management judgment in the audited financial statements, into the auditor reporting amendments and issue the exposure draft in the fall. The ASB plans to hold a teleconference meeting in September to vote on issuing the proposed amendments. If finalized, the amended standards would be effective for audits of financial statements for periods ending no earlier than June 15, 2019.

IASB News

Members sought for Capital Markets Advisory Committee.

The IASB is seeking members for its Capital Markets Advisory Committee (CMAC), a panel that meets with the accounting board three times a year to discuss standards setting. The members mostly work in investment banking and asset management and have a background using financial statements in investment decisions. Members are appointed to three-year terms on the CMAC and can be reap-pointed once. The panel is currently chaired by Peter Joos, who teaches at the Insead Business School in Singapore, and Marietta Miemitz, a financial analyst focused on pharmaceuticals and healthcare with Primavenue Advisory Services in London.

 
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