This Financial Reporting Update highlights key developments and issues that are relevant to finance and accounting personnel.
Financial Accounting Standards Board
On October 17th, the Financial Accounting Standards Board (FASB) will host its semiannual online training forum for professionals and companies who offer accounting continuing professional education (CPE). During the live event, forum participants will be able to submit questions to a panel that includes FASB Vice Chairman Jim Kroeker, Deputy Technical Director Nellie Debbeler, Assistant Director Jeff Mechanick, Supervising Project Manager Liz Gagnon, and other FASB staff. Topics of discussion are expected to include implementation activities (including leases and credit losses), recent Accounting Standards Updates issued, recent changes to the FASB’s technical and research agendas in response to the 2021 Agenda Consultation Report and select ongoing projects. Participants must register here before the event.
Securities and Exchange Commission
On September 14th, the Securities and Exchange Commission (SEC) proposed new rules to improve risk management in clearance and settlement of securities and to facilitate additional central clearing for the U.S. Treasury market. The proposed rule changes would update the membership standards required of covered clearing agencies for the U.S. Treasury market with respect to a member’s clearance and settlement of specified secondary market transactions. Additionally, the rule changes are intended to reduce the risks faced by a clearing agency and incentivize and facilitate additional central clearing in the U.S. Treasury market. The SEC Fact Sheet regarding this new rule can be found here.
American Institute of Certified Public Accountants
On September 1st, the American Institute of Certified Public Accountants (AICPA) reported the results of the third quarter AICPA & CIMA Economic Outlook Survey. The survey polls chief executive officers, chief financial officers, controllers, and other certified public accountants in U.S. companies who hold executive and senior management roles. Respondents now expect zero profit growth over the next 12 months, which is down form 0.7% last quarter and 2.5% a year ago. Revenue projections fell, quarter over quarter, from an expected 3.4% growth rate over the next 12 months to 2.6%. Both key performance indicators are at their lowest since the second half of 2020. Only 41% of the survey takers expressed optimism about their organization’s outlook this quarter, down from 47%. Other findings include 34% of executives said their organizations are looking to fill roles immediately, while another 19% said they had too few employees but are hesitant to hire, and 5% said they had too many employees. The main causes for concern among executives are inflation, repercussions from the Russo-Ukrainian war, and an economic slowdown in China.
Public Company Accounting Oversight Board
On September 13th, the Public Company Accounting Oversight Board (PCAOB) released a statement regarding the Board’s sanctions for Hay & Watson for noncooperation with a board inspection. PCAOB announced a settled disciplinary order sanctioning Hay & Watson and its owner and managing partner, Essop Mia, for violations of PCAOB rules and standards in connection with a 2019 audit and their subsequent failure to cooperate with PCAOB inspection. The PCAOB found that Mia, who served as the engagement partner, failed to assemble a final set of audit documentation for the audit, in violation of applicable auditing standards. Instead, Mia, and others acting at his direction, improperly altered, added to, and backdated work papers months after the deadline for assembling a complete and final set of audit documentation and shortly before a Board inspection. The Board censured Hay & Watson and Mia, permanently barred Mia from associating with a PCAOB-registered accounting firm, permanently revoked Hay & Watson’s registration, and imposed a $50,000 civil money penalty jointly and severally on the firm and Mia. The entirety of the PCAOB press release can be read here.