Recap: AICPA Conference on Current SEC and PCAOB Developments
FINANCIAL REPORTING INSIGHTS |
The 2018 AICPA Conference on Current SEC and PCAOB Developments covered a multitude of significant financial reporting and auditing issues, including the following, among many others:
- Internal control over financial reporting (ICFR) – Chief Accountant Wesley Bricker encouraged “ongoing attention, including audit committee participation and training as needed, regarding the adequacy of and basis for a company’s effectiveness assessment.” Professional Accounting Fellow Emily Fitts provided questions to be considered when evaluating the operating effectiveness of controls, and noted that the sufficiency of the evaluation should be commensurate with the related risks. Professional Accounting Fellow Tom Collens offered observations on the depth of analysis needed in evaluating the severity of control deficiencies. When material weaknesses are identified, the disclosure should provide investors with meaningful information.
- Cybersecurity – Cybersecurity and related disclosures continue to be a priority for registrants and investors. See further information in our recent articles:
- Transition away from LIBOR – Professional Accounting Fellow Rahim Ismail discussed some of the potential accounting implications that may result as contracts based on LIBOR are transitioned to an acceptable alternative due to the anticipated phase out of LIBOR in the next few years.
- Leases – Implementation of the FASB’s new leasing standard is an area of increased focus. See further information in our Lease Accounting Resource Center.
- CAMS – The new requirement for auditors to communicate critical audit matters (CAMs) in their reports will have substantial ramifications for auditors and the companies they audit. More information is available in our white paper, Critical audit matters: Information for audit committees, and in the recent Center for Audit Quality publication, Critical Audit Matters: Lessons Learned, Questions to Consider, and an Illustrative Example.
- Rule 3-13 waivers – The SEC is focused on the ability of smaller reporting companies to access capital, and encouraged registrants to seek waivers for the omission of financial statements required by Rule 3-05 or 3-09. Where consistent with the protection of investors, the SEC may grant waivers in certain circumstances, such as when there are anomalies in operating results that result in an otherwise insignificant acquired business or equity method investment meeting one of the relevant tests of significance.