Our 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 an Accounting Standards Update (ASU) to help insurance companies adversely impacted by COVID-19 by delaying the implementation of ASU No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The new ASU will allow more time for impacted insurance companies to apply the standard and will reduce the cost and complexity for insurance companies on track to transition to the new standard by the current effective date. Early adopters of the standard will have to restate only one previous period in accordance with ASU 944.
Securities and Exchange Commission
The Securities and Exchange Commission (SEC) adopted amendments that will modernize and simplify certain financial disclosure requirements in Regulation S-K. The goal of the amendments is to focus financial disclosures on material information for investors and simplify compliance for registrants.
The SEC named Mike Willis as an Associate Director in the Division of Economic and Risk Analysis (DERA). Mr. Willis will head DERA’s new Office of Data Science and Innovation, which will focus on data analytics, risk assessment, and structured disclosure.
American Institute of Certified Public Accountants
The American Institute of Certified Public Accountants (AICPA) sent a letter to the Small Business Administration (SBA) and the Office of Management and Budget (OMB) stating the new Paycheck Protection Program (PPP) “Loan Necessity Questionnaires” are burdensome and do not represent Congress’s intent. The letter advocates for borrowers to provide a narrative statement with data to show the PPP loan was taken in good faith instead of only data relating to the borrower’s operations after the loan application.
Public Company Accounting Oversight Board
The Public Company Accounting Oversight Board (PCAOB) adopted amendments to its independence standards. The new amendments will align the PCAOB’s independence standards with the SEC’s recent change to its auditor independence rules.
EY updated its Financial Reporting Developments on ASC 606, Revenue from Contracts with Customers. The update includes an expanded discussion of the variable consideration allocation exception with additional illustrations and a discussion of a recent technical correction to the Codification.
Save the Date
Over December 7 – 9, standard setters, regulators, and accounting and audit professionals will gather virtually for the annual AICPA Conference on Current SEC and PCAOB Developments. A list of all the conference sessions is available here.