Diversity in practice led the FASB to revisit the GAAP guidance for the Statement of Cash Flows that has been around since 1987 with the issuance FASB No. 95. Many people thought aspects of these rules were confusing (and contradictory, at times), or even missing entirely. In fact, restatements of public company financial statements often relate to issues with the Statement of Cash Flows (as noted in an earlier post).
Originally planned as a comprehensive project, the FASB altered course to focus efforts on just the most confusing areas, resulting in new guidance covering nine specific issues. The good news is that most of these issues rarely apply to nonpublic tech companies in the Silicon Valley. Eight issues are covered in ASU No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments” issued in August 2016. Several of the issues that might be encountered include handling proceeds from insurance claims, distributions from equity method investees, and contingent consideration payments made after a business combination. Mid-sized companies outside of specific industries would rarely run into the remaining issues. (more…)
My first post about the FASB GAAP Simplification Initiative was in April 2015, and I have posted since then about specific GAAP changes under this umbrella that seemed to bestow the most widespread consequences for companies in Silicon Valley. Now seems like a good time to look back over the past year and a half for other GAAP simplification subjects you might not know about, but are not exactly esoteric topics. (more…)
By Josh Cross, Senior Audit Manager
ASL Nonprofit Group
Recently the men and women at the Financial Accounting Standards Board (FASB) have been busy providing accountants with no shortage of nighttime reading. In the middle of putting the accounting world on its head with the release of the new Revenue Recognition (Topic 606) and Lease (Topic 842) Accounting Standards, the Not-For-Profit Advisory Committee has been hard at work re-tooling the way nonprofits will have to present their financial statements. (more…)
Historically originating through the lens of the independent auditor, whose auditing standards require the auditor to consider “going concern” matters and potentially include cautionary language in the auditor’s report, all companies that issue GAAP-based financial statements are now required to perform their own evaluation and provide explanatory footnote disclosures in defined circumstances. (more…)
By Kay Filler, Principal
More specifically, FASB issued the final guidance on February 25, 2016, but it’s not required for private companies until 2020 for calendar year companies (although earlier adoption-starting now-is permitted). Sounds like a long way off, but not really when considering potential impacts of the dramatically different accounting model for everyday lease agreements.
New Lease Accounting Rules
But first, here’s a summary of key accounting and disclosure components of the new rules: (more…)
FASB Simplifies Reporting for Share Based Payments
Yet another simplification initiative from the Financial Accounting Standards Board (FASB), especially for nonpublic companies, arrives in the form of ASU 2016-09 Improvements to Employee Share-Based Payment Accounting and quite likely offers welcome relief for technology companies around the Silicon Valley. Some of the key simplification measures under this guidance that is effective for annual periods beginning after December 15, 2017 for nonpublic companies and annual periods beginning after December 15, 2016 for public companies are: (more…)
Continuing along on its accounting and reporting simplification efforts (see April 15, 2015 post), on March 30, 2016, the FASB issued ASU No. 2016-09 (ASU) Improvements to Employee Share-Based Payment Accounting. This ASU changes certain accounting requirements, as well as simplifies some of the underlying assumptions and calculations for the accounting measures. Certain provisions apply to all companies, with additional reliefs available only to nonpublic companies. (more…)
Being an auditor for so long has instilled in me the importance of looking at issues, even the non-work related ones and then asking myself, “is this material relevant to the issues that I care about?” And I find that this approach helps me tremendously in deciding where to expend my energies. Along similar lines, not too long ago, FASB issued two proposals on the concept of materiality to help organizations decide the appropriateness of financial statement disclosures. (more…)
The updated guidance, issued in April 2015, covers fees paid by a customer in a cloud computing arrangement. Guidance for cloud computingvendors (or providers) already existed before this “Simplification Initiative” clarification. For more on the “Simplification Initiative”, see my previous post. This guidance for customers is applicable to private companies beginning with calendar year 2016, although earlier application is allowed. (more…)