This Financial Reporting Update highlights key developments and issues that are relevant to Finance and Accounting Professionals.
Financial Accounting Standards Board
On June 8th, the Financial Accounting Standards Board (FASB) issued a new chapter of its Conceptual Framework that describes a reporting entity. This will now become Chapter 2 of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting.
The new chapter describes a reporting entity as “a circumscribed area of economic activities that can be represented by general purpose financial reports that are useful to existing and potential investors, lenders, and other resource providers in making decisions about providing resources to the entity.” It also describes the three features of a reporting entity:
- “Economic activities have been conducted
- Those economic activities can be distinguished from those of other entities
- Financial information in general purpose financial reporting faithfully represents the economic activities conducted within the circumscribed area and is useful in making decisions about providing resources to the reporting entity.”
Securities and Exchange Commission
On June 20th, the Securities and Exchange Commission (SEC) reopened the public comment period for its proposed rule regarding position reporting of large security-based swap positions that exceed certain thresholds. Additionally, the staff also released a memorandum that provides supporting analysis in regard to the proposed reporting thresholds.
The comment period will be open until August 21, 2023, or for 30 days after the publication date of the reopening release in the Federal Register, whichever date is later.
American Institute of Certified Public Accountants
On June 9th, the American Institute of Certified Public Accountants (AICPA) expressed support for legislation introduced in both the House and the Senate which would tweak the rules for postponing certain deadlines in the event of a disaster. The Filing Relief for Natural Disasters Act – H.R. 3861 & S. 1815 would extend the Internal Revenue Service’s authority to grant tax filing relief after a state-declared disaster and state of emergency. The bills would also increase the mandatory federal filing extension from 60 days to 120 days.
“Victims of natural disasters should not have to worry about tax filing deadlines during an already stressful time,” said Eileen Sherr, Director, AICPA Tax Policy and Advocacy. “AICPA is committed to advocating for expedited tax filing relief for taxpayers and we are grateful to the members of Congress who have chosen to lead on this important issue. We urge other members of Congress to support this legislation and provide some peace of mind to those impacted by natural disasters.”
Public Company Accounting Oversight Board
On June 6th, the Public Company Accounting Oversight Board (PCAOB) issued for public comment a new proposal intended to increase vigilance against fraud as well as other forms of noncompliance with laws and regulations.
The proposal seeks to enhance auditor accountability regarding a company’s noncompliance with laws and regulations in three key ways:
- Identify – The proposal would establish requirements for auditors to proactively determine specific laws and regulations that are relevant to the company and that could affect the company’s financial statements.
- Evaluate – The proposal would strengthen requirements pertaining to the auditor’s assessment of whether noncompliance with laws and regulations has occurred.
- Communicate – The proposal would clearly state that the auditor is required to disclose to the appropriate level of management and the audit committee as soon as they have become aware that noncompliance has occurred.
The deadline for public comment on the proposal is August 7, 2023.