This Financial Reporting Update highlights key developments and issues that are relevant to finance and accounting personnel.
Financial Accounting Standards Board
The Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) to clarify fair value measurements of equity securities subject to contractual restrictions that prevent the sale of the securities. Previously, there was ambiguity as to the unit of account when making a fair value measurement of these securities, which resulted in varying practices among companies. This ASU clarifies that a contractual restriction is not considered part of the unit of account for the security and should not be a part of the fair value calculation. This clarification would help improve comparability in fair value measurements across the board. The FASB requests comments on this ASU by November 14, 2021.
The FASB published its annual Investor Outreach Report. This report discusses the FASB’s efforts in seeking information and input from investors to improve guidance. It also details the FASB’s future plans for engaging investors.
On September 14, the FASB Not-for-Profit Advisory Committee had its semiannual meeting. Topics discussed included the revenue rules at Topic 606, contribution rules at Topic 958, and gifts-in-kind rules at Topic 958. The committee found that not-for-profits have generally not had difficulties in implementing the new rules. Additionally, the committee discussed its upcoming plans related to accounting for goodwill, interim disclosures, and agenda consultation projects.
Securities and Exchange Commission
The Securities and Exchange Commission (SEC) charged eight firms with deficient cybersecurity procedures. The SEC charged these firms with failing to protect confidential customer information after a cyber incident where unauthorized third parties took over employee cloud-based email accounts at each of these firms. Additionally, one firm was charged with sending misleading breach notifications to their clients. The firms have agreed to pay penalties of between $200,000 to $300,000. During this investigation, the SEC noted that it is imperative that firms write strong cybersecurity policies and fully implement those policies in order to protect their customers.
Public Company Accounting and Oversight Board
The Public Company Accounting and Oversight Board (PCAOB) adopted a rule that defines the PCAOB’s role in carrying out the Holding Foreign Companies Accountable Act (HFCAA). The rule details the steps that the PCAOB will take if it is prevented from inspecting registered public accounting firms in foreign locales by the authorities of that region. The SEC is currently reviewing this rule; if approved, it will be immediately effective.
Save the Date
The SEC, the Municipal Securities Rulemaking Board (MSRB), and the Financial Industry Regulatory Authority (FINRA) announced its 2021 Compliance Outreach for Municipal Advisors. The program will discuss various issues impacting municipal advisors. The event will take place on October 7 from 10 A.M. to 5 P.M. ET. A link to register can be found here.
On October 12, 2021, the FASB will hold its semiannual IN FOCUS: CPE Provider Forum. This online training is for those who conduct continuing professional education (CPE). Participants will get the chance to learn about the newest FASB updates and submit questions to a FASB panel. The forum will take place from 1:00-3:00 P.M. EDT and requires advanced registration. The link to register can be found here.
The PCAOB will hold its 2021 Forum for Auditors of Small Businesses and Broker-Dealers on October 20, 2021. The forum will be pre-recorded and published on the PCAOB website on this date. The forum will not provide CPE credits, but viewers can submit questions in advance to forum@pcaobus.org. Registration is not necessary.