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Accounting & Auditing Update

The "Accounting & Auditing Update" is written by Tammy Whitehouse, a veteran business writer who has been a regular contributor to Compliance Week since 2005. Her work has also appeared in industry journals and periodicals including Journal of Business Strategy, Strategy & Leadership, Compensation & Benefits Review, Inc, Buyside, and myriad others. Whitehouse welcomes questions and comments from readers; she can be reached via e-mail at twhitehouse@complianceweek.com.
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Accounting & Auditing Update Blog
FASB Adopts New Rule to Clarify Stock-Based Compensation
Tammy Whitehouse | July 1, 2014
FASB has completed new accounting requirements around stock compensation intended to resolve differences in how companies treat awards that have specific performance targets attached. The amendment says a performance target that affects vesting and that can be achieved after employment ends should be treated as a performance condition. It is the latest example of FASB adopting U.S. rules that differ from global accounting standards.
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Accounting & Auditing Update Blog
PCAOB Advises Auditors to Stay Alert on Going Concern
Tammy Whitehouse | September 23, 2014
Auditors will be expected to follow existing standard with respect to the going concern determination, even after companies adopt a new accounting standard requiring management to take the first step in assessing a company’s ability to remain viable.
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Accounting & Auditing Update Blog
Deloitte Alerts Companies to Prep for Consolidation Rules
Tammy Whitehouse | October 9, 2014
Although aimed primarily at the investment management industry, new guidance expected by year-end on consolidations could be significant for companies in other industries too. According to Deloitte, firms should get familiar with the upcoming Financial Accounting Standards Board guidance, which will focus on an entity’s evaluation of whether limited partnerships and similar entities should be consolidated. Details inside.
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Accounting & Auditing Update Blog
FASB Proposes Fixes for Debt Costs, Defined-Benefit Plans
Tammy Whitehouse | October 17, 2014
The Financial Accounting Standards Board is proposing to simplify accounting for debt issuance costs and defined-benefit plan measurement dates. FASB hopes to remove a source of confusion for users of financial statements over different presentation requirements for debt issuance costs compared with debt discounts or premiums. Details inside.
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Accounting & Auditing Update Blog
Goodwill Impairment Drops to Five-Year Low
Tammy Whitehouse | October 29, 2014
Public companies reported the lowest levels of goodwill impairment last year since the financial crisis touched off a downward spiral in corporate values beginning in 2008. According to Duff & Phelps’ annual study, public companies recorded writedowns totaling $21 billion in 2013, down nearly 60 percent from the $51 billion reported in 2012. More inside.
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Accounting & Auditing Update Blog
FASB Finalizes Rules on Shares With Embedded Derivatives
Tammy Whitehouse | November 5, 2014
The Financial Accounting Standards Board has finished its hedge accounting guidance meant to eliminate the use of different accounting methods when companies raise capital by offering shares that include embedded derivative features. The new guidance will help sort out whether the host contract of a hybrid instrument issued as a share should be treated like debt or equity. More inside.
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Accounting & Auditing Update Blog
FASB Studies Possible Deferral for Revenue Recognition
Tammy Whitehouse | November 6, 2014
Kroeker
FASB plans to consider in early 2015 whether to give companies more time to adopt the new revenue recognition standard. Although the board has received numerous requests for more time, at a recent meeting FASB Vice Chairman Jim Kroeker indicated little sympathy for delayed action. “To those who haven’t begun a process of adopting and you’re asking, get started so we can actually have data to understand what the application challenges are,” Kroeker said.
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Accounting & Auditing Update Blog
FASB to Delay Consolidation Standard Until 2015
Tammy Whitehouse | November 13, 2014
Golden
Companies will not have a final new accounting standard on consolidation by the end of 2014, despite earlier indications from the Financial Accounting Standards Board that the standard would be completed by year’s end. According to FASB, numerous issues remain to be analyzed, a handful of which could require more discussion on technical issues. FASB member Russ Golden said there’s no scenario given the review outcome for the board to finish the standard in 2014. “In the end, we want a quality product that can be consistently applied,” he said.
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Accounting & Auditing Update Blog
FASB, SEC Give New Options on Pushdown Accounting
Tammy Whitehouse | November 20, 2014
FASB has issued a new Accounting Standards Update to provide an option for the application of “pushdown accounting,” which occurs when an acquired business adopts the new parent company’s basis of accounting to prepare its financial statements. The update gives acquired companies some choices on the timing and extent of adopting the basis of accounting of the purchasing company. Details inside.
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Accounting & Auditing Update Blog
Survey: Companies Still Sorting Through Rev-Rec Rule
Tammy Whitehouse | November 21, 2014
PwC and the Financial Executives Research Foundation are offering fresh evidence that companies are behind on FASB’s new revenue recognition standard. In their joint survey of 174 companies, 54 percent said they are familiar with the standard, but only 29 percent said they would be prepared to adopt it under the full retrospective method by the effective date of 2017. FASB Vice Chairman James Kroeker said the board has begun to assess if a delay is warranted. More study details inside.
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Accounting & Auditing Update Blog
FASB Responds to Political Pressure on Revenue Recognition
Tammy Whitehouse | November 25, 2014
To answer early political pressure over the new accounting standard on revenue recognition, the Financial Accounting Standards Board is pledging its readiness to work through implementation issues as they are identified and brought to the board for action.
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Accounting & Auditing Update Blog
CAQ Reminds Auditors of Hot-Button Audit Issues
Tammy Whitehouse | December 4, 2014
A new Center for Audit Quality alert highlights issues that auditors will need to pay special attention to in the year-end review, such as revenue recognition, related-party transactions, and more. “This alert summarizes potential areas of risk and can be a useful resource for our auditing firm members as they head into the 2014 audit cycle,” CAQ Executive Director Cindy Fornelli said.
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Accounting & Auditing Update Blog
FASB Studies Three Revenue Issues for Possible Guidance
Tammy Whitehouse | December 9, 2014
Financial Accounting Standards Board Chairman Russ Golden has authorized FASB staff to conduct research on (1) how to apply the new revenue recognition standard to licensing agreements; (2) when revenue should be recognized on a gross versus net basis; and (3) how to determine performance obligations. The research should help determine whether the standard should be revised or delayed. More inside.
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Accounting & Auditing Update Blog
SEC Cautions Companies on Consolidation Analyses
Tammy Whitehouse | December 17, 2014
The Securities and Exchange Commission is looking closely at who consolidates a variable interest entity, noticing variations in how companies apply existing guidance. Professional Accounting Fellow Christopher Rogers said at a recent conference that staff is looking into issues surrounding the application of shared power, determining when a decision maker is acting in an agency capacity, and more.
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Accounting & Auditing Update Blog
SEC Staffers Try to Untangle Business Unit Accounting Issues
Tammy Whitehouse | December 30, 2014
Rogers
At a recent national accounting conference on regulatory issues, staff members at the Securities and Exchange Commission, including professional accounting fellow Chris Rogers (left), offered lots of advice on how companies can better explain to investors the intricacies of joint ventures, spinoffs, pushdown accounting, and segment reporting in financial statements.
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Accounting & Auditing Update Blog
Public Companies Could Win Exception on Intangible Assets
Tammy Whitehouse | January 9, 2015
FASB is taking a fresh look at a method to account for intangible assets it just permitted for private companies, to see whether the rule should be granted to public companies as well. The new method allows private companies to bypass the current GAAP requirement to recognize separately from goodwill any customer-related intangible assets that cannot be sold or licensed independently from other assets or non-competition agreements.
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Accounting & Auditing Update Blog
FASB Jettisons Extraordinary Items From Financial Statements
Tammy Whitehouse | January 13, 2015
In its quest to simplify accounting standards, the Financial Accounting Standards Board has adopted a new provision in Generally Accepted Accounting Principles that spares companies the requirement to display extraordinary and unusual items in financial statements. FASB said stakeholders had expressed concerns that companies often faced uncertainty over when to consider an item unusual.
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Accounting & Auditing Update Blog
Poll Finds Uncertainty on COSO, Revenue Recognition
Tammy Whitehouse | January 21, 2015
Up to one-third of companies may not be implementing the new COSO framework for their 2014 financial reporting, and one-fourth don’t know when they will implement the framework.
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Accounting & Auditing Update Blog
FASB Wants Comment on Financial Instruments
Tammy Whitehouse | January 22, 2015
FASB wants public comment on one final aspect of its standard for financial instrument classification and measurement, focused on how entities should disclose hybrid financial instruments containing embedded derivatives that are separately recognized. FASB plans to get a proposal out soon so the comment period can be wrapped up by April 20.
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Accounting & Auditing Update Blog
FASB Proposes Simplifications to Income Tax Accounting
Tammy Whitehouse | January 27, 2015
The Financial Accounting Standards Board has issued two proposed accounting standard updates to simplify the accounting for income taxes. One would simplify accounting for the tax effects of intra-entity asset transfers, while the other focuses on the classification of deferred tax assets and liabilities that are carried on the balance sheet. FASB says the updates would align U.S. Generally Accepted Accounting Principles with International Financial Reporting Standards. More inside.
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Accounting & Auditing Update Blog
FASB May Offer Deferral, Early Adoption on Revenue Rule
Tammy Whitehouse | February 2, 2015
The Financial Accounting Standards Board is considering both a deferral of its sweeping new revenue recognition rule and early adoption for companies ready to proceed, a FASB spokesman said Monday. FASB will decide later this spring on those ideas, after hearing more input from companies preparing for the current 2017 implementation date.
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Accounting & Auditing Update Blog
SEC Chief Accountant Retreats From IFRS Filing Idea
Tammy Whitehouse | May 8, 2015
SEC chief accountant James Schnurr is distancing himself from an idea he floated last year that the Commission might allow U.S. companies an option to report under International Financial Reporting Standards. Schnurr says staff outreach revealed “little support” for that idea, essentially leaving convergence to standard setters. Details inside.
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Accounting & Auditing Update Blog
FASB Unveils Plan to Simplify Inventory, Extraordinary Items
Tammy Whitehouse | July 21, 2014
In its quest to simplify accounting standards, the Financial Accounting Standards Board has issued two new proposals—one to make it easier to measure inventory, another to eliminate requirements around extraordinary items. The motivation behind FASB’s simplification initiative is to look for ways to revise accounting standards so that the cost and complexity is reduced, but the usefulness of information to investors is maintained or improved. Details inside.
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Accounting & Auditing Update Blog
Companies Increase Use of ‘Step Zero’ Test on Impairment
Tammy Whitehouse | September 16, 2014
Companies are making increased use of the “step zero” method for determining whether goodwill on the balance sheet should be marked down, according to an analysis from Duff & Phelps. In 2013, 41 percent were able to take that initial test without having to perform the usual two-step test for assessing goodwill, up from 33 percent in 2012. More findings inside.
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Accounting & Auditing Update Blog
SEC Approves XBRL Updates for 2015 GAAP
Tammy Whitehouse | March 10, 2015
The SEC has approved FASB’s XBRL taxonomy for 2015 U.S. Generally Accepted Accounting Principles, clearing the way for companies to rely on it as early 2015 filers approach their financial statement filing dates and XBRL submissions. According to FASB, the 2015 Taxonomy contains far fewer changes than prior years. More inside.
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