Worldwide Update May 2019

Periodic roundup of recent and upcoming actions and activities by audit and accounting organizations throughout the world.

International

IASB– International Accounting Standards Board (www.ifrs.org)

  1. IFRS for SMEs Modules, published March 5, 2019, is a series of 35 modules developed over the past couple years to assist those interested in “learning about, applying, or reading financial statements prepared using, the IFRS for SMEs Standard. Included with each module are sections covering requirements, significant estimates and other judgments, comparison with full IFRS Standards, test your knowledge and apply your knowledge.

 

IFAC– International Federation of Accountants (www.ifac.org)

  1. International Accounting Education Standards Board (IAESB)– Exposure Draft, Proposed Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised), issued March 27, 2019, proposes “changes in key terminology, including a revised definition of the term “assurance client”; enhanced and clarified independence requirements for attestation engagements; clarification of the types of assurance engagement addressed in Part 4B; simplified guidance on assurance engagements that refers to the definitive source of explanatory material on such engagements in IAASB literature.” The comment period ends June 26, 2019.

 

ACCA Association of Chartered Certified Accountants(www.accaglobal.com/)

  1. The capitalisation debate: R&D expenditure, disclosure content and quantity, and stakeholder views, research report jointly published by ACCA and Deloitte on March 19, 2019, “looks at the extent to which companies using IFRS recognize development costs as assets in different countries and in different sectors. It investigates the factors that may lie behind that asset recognition and makes some suggestions as to how reporting of R&D might be improved.”
  2. Machine learning: more science than fiction, research report published April 10, 2019, “focuses on machine learning, which is the ability of computers to ‘learn’ and make decisions or predictions based on analysis of large sets of data.” Along with the substantial opportunities from the technology, the report presents the ethical challenges that need to be considered as well.

 

CIMAChartered Institute of Management Accountants(www.cimaglobal.com)

No new developments.

 

IIRCInternational Integrated Reporting Council (www.theiirc.org)

  1. Frequently Asked Questions, published March 28, 2019, for assistance “as corporate reporting is being reformed worldwide to embrace the concept of integrated reporting.”
  2. The Sustainable Development Goals and the future of corporate reporting, position paper released February 28, 2019, by the Corporate Reporting Dialogue, a group of eight reporting framework organizations including IIRC and SASB, that address both financial and non-financial reporting. The paper identifies “how corporate reporting can illustrate which [Sustainable Development Goals] SDGs are relevant to a company’s business model, enabling both companies and investors to focus on those SDGs most likely to impact financial performance.

 

World Economic Forum(www.weforum.org)

  1. Platforms and Ecosystems: Enabling the Digital Economy, briefing paper issued March 25, 2019, “examines how digital platforms and ecosystems are created, nurtured, managed and governed, and the intelligence gathered is as critical to the private sector as it is to the public sphere.”

 

Africa, Europe, India, and the Middle East (AEIME)

FRCFinancial Reporting Council of the UK(www.frc.org.uk)

  1. Independent review of the Financial Reporting Council: initial consultation on recommendations, issued March 11, 2019. See article in this issue of the Audit & Accounting Alert for discussion. Consultation period ends June 11, 2019.

 

 ICAEW– Institute of Chartered Accountants in England and Wales(https://www.icaew.com/)

  1. Assurance Review Engagements on Historical Financial Statements – Revised (TECH 09/13), Technical Release issued March 29, 2019, provides “guidance for chartered accountants on assurance review engagements over historical financial statements in accordance with the International Standard on Review Engagements (ISRE) 2400 (Revised). Updated in September 2018 and March 2019, it includes a new appendix on application to the micro-entities regime.

EFRAGEuropean Financial Reporting Advisory Group(www.efrag.org)

No new developments.

Americas, Asia, Australia and New Zealand (AAANZ)

AICPA American Institute of Certified Public Accountants(www.aicpa.org)

  1. Center for Audit Quality – External Auditor Assessment Tool, update issued April 2, 2019, “designed to assist audit committees, or their counterparts, in how to evaluate the external auditor and select or recommend the retention of the audit firm. This Tool includes sample questions to inform the evaluation of the quality of services and sufficiency of resources provided by the auditor; the communication and interaction with the auditor; and auditor independence, objectivity, and professional skepticism.”
  2. Audit Data Analytics to Traditional Procedures Mapping Document (Excel), issued March 12, 2019, “to illustrate what tools and applications are available today that can help to facilitate the automation of certain traditional audit procedures. The mapping document also aligns general, traditional audit procedures to the (1) industry they cover (if applicable), (2) relevant audit assertions, (3) type of procedure being performed, (4) phase of the audit, (5) applicable auditing standard, (6) significant account being tested, (7) relevant audit data standard document, and (8) example tool or application that could help to perform that particular procedure. The mapping document also links to examples found in the AICPA’s Guide to Audit Data Analytics.”
  3. Audit Data Standard and Audit Data Analytics Working Group – Upgrade the Financial Statement Audit using Audit Data Analytics, Whitepaper issued March 8, 2019, illustrates how open-source programming language, Python, can be used to apply data analytics to financial statement audit procedures.

 

FASB Financial Accounting Standards Board (www.fasb.org)

  1. Exposure Draft (Revised) – Income Taxes (Topic 740) Disclosure Framework—Changes to the Disclosure Requirements for Income Taxes, issued March 25, 2019, revises the original exposure draft issued July 26, 2019, to reflect the impact of the Federal Tax Cuts and Jobs Act of December 2017.The comment period ends May 31, 2019.
  2. Not-for-Profit Entities (Topic 958): Updating the Definition of Collections – ASU 2019-03, issued March 21, 2019, modifies “the definition of the term collections and require that a collection-holding entity disclose its policy for the use of proceeds from when collection items are deaccessioned (that is, removed from a collection). Effective generally in 2020, with early adoption permitted.
  3. Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350) – Improvements to Accounting for Costs of Films and License Agreements for Program Materials – ASU 2019-02, issued March 6, 2019, “helps organizations align their accounting for production costs for films and episodic content produced for television and streaming services.” Effective generally in 2020 for public business entities and 2021 for all other entities, with early adoption permitted.
  4. Leases (Topic 842): March 2019 Codification Improvements – ASU 2019-01, issued March 5, 2019, “aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842, with that of existing guidance.  As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value(in Topic 820, Fair Value Measurement) should be applied. The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities. Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard.” Effective generally in 2020, with early adoption permitted.
  5. Exposure Draft – Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements—Share-Based Consideration Payable to a Customer, issued March 4, 2019, provides guidance on measuring share-based payments to a customer by applying Topic 718. ASU 2018-07 required accounting under Topic 606, but did not include this clarifying guidance. The comment period ends April 18, 2019.

GASBGovernmental Accounting Standards Board(www.gasb.org)

  1. Exposure Draft – Leases – Proposed Implementation Guide, issued February 19, 2019, proposes to “contains questions and answers about the GASB’s new standards on accounting and financial reporting for leases.” The comment period ends April 30, 2019.

 

COSOThe Committee of Sponsoring Organizations of the Treadway Commission(www.coso.org)

No new developments.

PCAOBPublic Company Accounting Oversight Board(www.pcaob.org)

  1. Staff Guidance Documents for CAM Reporting Standard – published March 18, 2019, to assist with complying with new standard for reporting on critical audit matters. See related article in this issue of the Audit & Accounting Alert.
    1. Implementation of Critical Audit Matters: The Basics.
    2. Implementation of Critical Audit Matters: Staff Observations from Review of Audit Methodologies
    3. Implementation of Critical Audit Matters: A Deeper Dive on the Determination of CAMs

SASBSustainability Accounting Standards Board(www.sasb.org)

No new developments.

 

Audit & Accounting Alert is a publication of Integra International intended to highlight emerging issues in the profession.  The goal is to give Integra members an awareness of developments impacting the practice of Audit & Accounting enabling them to stay on the forefront of industry trends.This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice.  Please refer to your advisors forspecific advice.

Editor Gerald E. Herter ~ HMWC CPAs & Business Advisors, 17501 E. 17th Street, Suite 100, Tustin CA
email:  gerry.herter@integra-international.net