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”) proposed an Accounting Standards Update (“ASU”) that would simplify how a franchisor would analyze certain activities to determine if the activities met the performance obligation standards for revenue recognition in a franchise agreement. The proposed ASU would allow certain pre-opening services to be accounted for as a separate performance obligation, if it is probable that the continuing fees in the franchise agreement would be sufficient to cover the franchisor’s continuing costs plus a reasonable profit. The complete proposed ASU is here.
The FASB issued an ASU to improve transparency in reporting contributed nonfinancial assets (gifts-in-kind) for not-for-profit organizations. Not-for-profit organizations will now have to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. The complete proposed ASU is here.
The FASB’s new chairman, Richard Jones, stated one of his top priorities is the post-implementation review of standards. The goal of the post-implementation is to identify and address issues arising from the new standard in real time.
Securities and Exchange Commission
The Securities and Exchange Commission (“SEC”) voted to adopt amendments to the rules governing its whistleblower program to increase efficiency, and to provide both clarity and transparency in award determinations. The amendments are effective 30 days after publication in the Federal Register. (Related content: you can read our blog post about whistleblower programs here.)
The SEC voted to adopt amendments to modernize the shareholder proposal rule. The amendments allow any shareholder to submit an initial proposal after owning $2,000 of company stock for at least three years, or higher amounts for shorter periods of time.
American Institute of Certified Public Accountants
The American Institute of Certified Public Accountants (“AICPA”) urged Congress to pass legislation to extend and expand the Paycheck Protection Program (“PPP”). “From the beginning, we have advocated for the support of small businesses, their survival and their ability to employ people,” said AICPA President and CEO Barry Melancon, CPA, CGMA. “It’s apparent that to increase the odds of many small businesses getting through this crisis, more governmental support is essential.”
The AICPA, its business and technology affiliate CPA.com, and the company Biz2Credit collaborated to launch CPALoanPortal.com. This new platform will streamline PPP loan forgiveness and additional small business financing options clients can utilize to fund growth.
EY released its annual report on audit committee reports to shareholders. The report found that voluntary disclosures have increased dramatically since 2012 and that the number of audit committees with two or more financial experts has increased from 70% in 2012 to 91% today.