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Articles for category Audits of Financial Statements

The effective date of the new lease accounting standard, Accounting Standard Update (ASU) No. 2016-02, Leases (Topic 842), is quickly approaching with an effective date for fiscal years ending after Dec. 15, 2018 and Dec. 15, 2019 for public and non-public companies respectively. ASU 2016-02 is the first major change in lease accounting in over 30 years following the issuance of Statement of Financial Accounting Standards (SFAS) No. 13 in 1976 . Working towards convergence with International Financial Reporting Standards (IFRS) and generally accepted accounting principles (GAAP), and greater transparency are a couple of the major driving forces behind the new standard.

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Recently, FASB issued ASU No. 2017-11, which changed the accounting for down round features and indefinite deferrals.

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The Financial Accounting Standards Board (FASB) issued a new Accounting Standard Update in early 2017 (ASU 2017-05) to clarify guidance on Accounting Standard Codification (ASC) Subtopic 610-20 - Gains and Losses from the Derecognition of Nonfinancial Assets. All public entities should apply the amendments in ASU 2017-05 to annual reporting periods beginning after Dec. 15, 2017.

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The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2017-08 to update the amortization period of certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. Entities generally amortize the premiums and discounts on callable debt securities over the contractual life of the instrument under current GAAP.

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The Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2017-01 in order to have more consistent application of accounting principles relating to business and asset acquisitions and disposals. The ASU aims to achieve this by clarifying the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

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With the release of Accounting Standards Update (ASU) 2016-09 by FASB, accounting for employee share-based payments will take a more simplified approach to both accounting and financial reporting. One change noted in the ASU is that any excess tax benefit that used to be recognized as additional paid-in capital is now to be recorded as income tax expense. Any tax deficiencies are now to be reported on the income statement and cannot be used to offset accumulated excess tax benefits.

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The Budget Act of 2015, which was signed into law in November 2015, made major changes to the rules governing federal tax audits of partnerships. The legislative change repealed the partnership audit procedures commonly known as TEFRA (Tax Equity and Fiscal Responsibility Act of 1982). Generally, a partnership with eleven or more partners at any one time during the partnership's tax year is a TEFRA partnership. TEFRA audits are subject to additional administrative procedures during an IRS audit.

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In November 2015, the FASB issued Accounting Standards Update (ASU) 2015-17, Income Taxes (Topic740): Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred income taxes. Under current GAAP when a classified balance sheet is presented, deferred tax liabilities and assets are separated into a current amount and a noncurrent amount generally on the basis of the classification of the related asset or liability for financial reporting. The Board determined that the current presentation under GAAP does not provide users of financial statements with useful information as the classification between current and noncurrent generally does not reflect when a temporary difference will reverse and become a taxable or deductible item.

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Retrospectively, reporting measurement period adjustments to amounts recognized in business combinations will soon be a thing of the past. Stakeholders shared that the cost outweighed the benefit and the Financial Accounting Standards Board (FASB) listened. On Friday, Sept. 28 the FASB issued Accounting Standards Update (ASU) No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustment, as part of its simplification initiative.

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Back in August 2014, Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern was issued by the Financial Accounting Standards Board (FASB).

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