June 2020: Latest SEC, FASB & Tax Updates & COVID-19 Related Updates from the SEC, IRS, Etc.

We are pleased to release MaloneBailey's June 2020 issue of The Crunch, our newsletter highlighting recent accounting, regulatory and tax updates. Please note that the updates provided in this newsletter are not a comprehensive list.

We encourage you to visit the SEC , FASB and IRS websites for more information as well as a complete list of updated rules, regulations and proposals. We invite you to contact us should you have any questions about the information provided in this issue. Please visit our website to review archived versions of this newsletter containing past accounting, regulatory and tax updates.

The MaloneBailey Team

www.malonebailey.com

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COVID-19 Related Updates

Leases – FASB Issues Staff Q&A on Accounting for Leases During Covid-19
COVID-19 – SEC Staff Provides Guidance on Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns
Leases – IASB Publishes Guidance on IFRS 16 and COVID-19 Rent Concessions
Hedge Accounting – FASB Issues Staff Q&A on Hedge Accounting During COVID-19 Pandemic
COVID-19 – Corp Fin Provides Guidance for Certain Paper Documents in Light of COVID-19 Concerns
COVID-19 – CAQ Publishes Resource on Managing Fraud Risk, Culture, and Skepticism During COVID-19
Going Concern – CAQ Publishes Resource on Management and Auditor Responsibility for Going Concern During COVID-19
Interim Financial Statements – CAQ Publishes Resource on Interim Financial Statements During COVID-19
Auditor and Audit Committee Considerations – CAQ Publishes Resource on Key Auditor and Audit Committee Considerations During COVID-19
COVID-19 – Corp Fin Publishes COVID-19 Related FAQs
Crowdfunding – SEC Provides Temporary, Conditional Relief to Allow Expedited Crowdfunding Offerings
Liabilities – IASB Proposes Deferring IAS 1 Amendments’ Effective Date Due to COVID-19
SEC Enforcement – SEC Co-Director Discusses SEC Enforcement During COVID-19
GASB Standards – GASB Postpones Effective Dates of Upcoming Pronouncements

Recent Accounting & Regulatory Updates

Recent FASB & AICPA Updates

Exposure Draft - Proposed Accounting Standards Update 2020-300 —Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities
Interest Rates – IASB Proposes Further Amendments to IFRS Standards in Response to Interest Rate Benchmark Reform
Public-Private Arrangements – GASB Issues Statement No. 94 on P3s
GASB Standards – GASB Issues Implementation Guide 2020-1

Recent SEC & PCAOB Updates

Release No. IC-33845: Good Faith Determinations of Fair Value
Critical Audit Matters – PCAOB Issues Request for Comment on Critical Audit Matters
Fund Valuations – SEC Proposes to Modernize Framework for Fund Valuation Practices
Emerging Market Investments – SEC Chairman and Others Caution of Risks Associated with Emerging Market Investments
Mining Property Disclosures – SEC Staff Provides Guidance on Mining Property Disclosures

Auditing Updates

Data and Technology – PCAOB Posts Spotlight Updating Its Data and Technology Research Project

Tax Updates

What People Really Want to Know About Economic Impact Payments

Extra Crunch

AICPA Coronavirus (COVID-19) Resource Center

About MaloneBailey, LLP

Featured Podcast

Best Practices for Working Remotely: A MaloneBailey Case Study

Summary - Working remotely has become the new normal during the COVID-19 pandemic and likely beyond. It's a transition that requires a careful, well-planned approach. In this podcast Caroline Rosen, Marketing and Communications Manager, and Shelby Stevens, who over sees Human Resources, share MaloneBailey's experience with transitioning to working from home. Simply click on the image below to listen to the podcast.

For this podcast and many more, please visit the Resources section of the MaloneBailey website.

COVID-19 Related Updates

Leases – FASB Issues Staff Q&A on Accounting for Leases During Covid-19

Summary - The FASB issued a question-and-answer document to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of the COVID-19 pandemic.

Many lessors are, or will be, providing lease concessions to tenants impacted by the economic disruptions caused by the pandemic. As part of the FASB’s continuing commitment to educate stakeholders and to provide interpretive guidance on accounting for lease concessions, the FASB staff has developed this Q&A to respond to some frequently asked questions and to help stakeholders navigate the guidance in this area. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 Leases (or Topic 840 Leases) to those contracts.

The FASB staff will continue to monitor this area to determine whether to provide additional clarification in the future.

For more information, click here .

COVID-19 – SEC Staff Provides Guidance on Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns

Summary - The staff of the SEC’s Division of Corporation Finance (Corp Fin) has indicated that it “is aware of logistical difficulties of submitting Forms 144 in paper given the spread of coronavirus disease 2019 (COVID-19). In light of ongoing health and safety concerns related to COVID-19, the staff is providing the following statement to those affected by COVID-19 regarding Forms 144. This staff statement is temporary and covers those who submit Forms 144 for the period from and including April 10, 2020 to June 30, 2020.”

Corp Fin indicates that it will not recommend enforcement action to the SEC if Forms 144 filed in paper under Rules 101(b)(4) or 101(c)(6) of Regulation S-T are submitted via email in lieu of mailing or delivering the paper form to the SEC if the filer or submitter attaches a complete Form 144 as a PDF attachment to an email sent to PaperForms144@SEC.gov .

If the filer or submitter is unable to provide a manual signature on the Form 144 submitted by email, Corp Fin will not recommend enforcement action to the SEC if the filer or submitter provides a typed form of signature in lieu of the manual signature and:

The signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic submission and provides such document, as promptly as practicable, upon request by Corp Fin;
Such document indicates the date and time when the signature was executed; and
The filer or submitter (with the exception of natural persons) establishes and maintains policies and procedures governing this process.

Filers and submitters may continue to submit Forms 144 to the SEC mailroom. There may, however, be delays in the processing of such documents

For more information, click here .

Leases – IASB Publishes Guidance on IFRS 16 and COVID-19 Rent Concessions

Summary - The IASB issued the document, IFRS 16 and COVID-19—Accounting for COVID-19-Related Rent Concessions Applying IFRS 16 Leases. The document responds to questions on application of IFRS 16 to rent concessions granted as a result of the COVID-19 pandemic.

The IASB prepared the document for educational purposes. It highlights the requirements within IFRS 16 and other IFRSs that are relevant for companies considering how to account for rent concessions granted as a result of the COVID-19 pandemic.

The guidance does not change, remove, nor add to, the requirements in IFRS 16 or other IFRSs. It is intended to support the consistent and robust application of IFRS 16.

For more information, click here .

Hedge Accounting – FASB Issues Staff Q&A on Hedge Accounting During COVID-19 Pandemic

Summary - The FASB has issued a question-and-answer document (Q&A) that responds to frequently asked questions about the disruptive effects of COVID-19 on cash flow hedge accounting.

FASB Accounting Standards Codification® Topic 815, Derivatives and Hedging, provides guidance on when to discontinue cash flow hedge accounting and when and how to reclassify amounts deferred in accumulated other comprehensive income to earnings.

In recent weeks, stakeholders have asked how the postponement or cancellation of forecasted transactions related to the effects of the COVID-19 pandemic should be considered when applying cash flow hedge accounting under Topic 815. The FASB staff developed this Q&A to provide guidance on this unique and evolving situation, based on the information and feedback they’ve received to date.

The FASB staff will continue to monitor questions and communicate with stakeholders through additional statements, technical inquiries, and other means, as appropriate.

For more information, click here .

COVID-19 – Corp Fin Provides Guidance for Certain Paper Documents in Light of COVID-19 Concerns

Summary - The staff of the Division of Corporation Finance (Corp Fin) has published guidance for certain paper documents in light of COVID-19. Corp Fin indicates that it is aware of logistical difficulties submitting certain forms (other than Forms 144) in paper given the spread of COVID-19. Corp Fin has previously issued guidance on Forms 144.

This staff statement is temporary and covers those who submit the following forms for the period from and including April 23, 2020 to June 30, 2020:

Annual reports to security holders furnished by foreign private issuers on Form 6-K pursuant to Rule 101(b)(1) of Regulation S-T;
Forms 11-K pursuant to Rule 101(b)(3) of Regulation S-T;
Periodic reports and distribution reports filed by certain international development banks pursuant to Rule 101(b)(5) of Regulation S-T;
Reports or other documents furnished by foreign private issuers on Form 6–K pursuant to Rule 101(b)(6) of Regulation S-T; and
Unabridged foreign language documents and English translations of a foreign government’s or its political subdivision’s latest annual budget pursuant to Rules 306(b) and (c) of Regulation S-T.

Corp Fin will not recommend enforcement action to the SEC “if the above documents are submitted via email in lieu of mailing or delivering the paper document to the SEC if the filer attaches a complete document, including any required exhibits, as PDF attachments to an email sent to CorporationFinancePaperForms@SEC.gov.”

If the filer is unable to provide a manual signature on a document submitted by email, the staff will not recommend enforcement action to the SEC if the filer provides a typed form of signature in lieu of the manual signature and:

The signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the email submission and provides such document, as promptly as practicable, upon request by the Division or other SEC staff;
Such document indicates the date and time when the signature was executed; and
The filer establishes and maintains policies and procedures governing this process.

Filers may continue to submit these documents to the SEC mailroom. There may, however, be delays in the processing of such documents.

For more information, click here .

COVID-19 – CAQ Publishes Resource on Managing Fraud Risk, Culture, and Skepticism During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Managing Fraud Risk, Culture, and Skepticism During COVID-19. This resource is intended to heighten awareness of the risk for fraud and misconduct that might occur inside an organization during, or as a result of, this crisis. Even if most people behave ethically, members of the financial reporting supply chain should review the controls, processes, and procedures that they have in their arsenals: a robust crisis and fraud risk management plan, a healthy dose of skepticism, and a strong culture of integrity.

For more information, click here .

Going Concern – CAQ Publishes Resource on Management and Auditor Responsibility for Going Concern During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Management and Auditor Responsibility for Going Concern During COVID-19. The COVID-19 pandemic and the related market conditions create many new uncertainties for auditors, audit committees, investors and management of public companies. As SEC Chair Jay Clayton recently recognized, the continuing operation of the US capital markets is an essential component of our national response to, and recovery from, COVID-19. Under US GAAP, financial statements are generally prepared under the assumption that a company will continue as a going concern for a reasonable period of time. This resource is intended to provide a high-level overview of management’s accounting requirements under US GAAP and a public company auditor’s requirements under PCAOB auditing standards related to going concern.

For more information, click here .

Interim Financial Statements – CAQ Publishes Resource on Interim Financial Statements During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Interim Financial Statements Included in Form 10-Q COVID-19 Considerations. This resource is intended to provide a high-level overview of the auditor’s responsibilities related to the interim financial statements included in Form 10-Q.

For more information, click here .

Auditor and Audit Committee Considerations – CAQ Publishes Resource on Key Auditor and Audit Committee Considerations During COVID-19

Summary - The Center for Audit Quality (CAQ) has published Key Auditor and Audit Committee Considerations. This resource is intended to provide high-level financial reporting considerations for auditors and audit committees as certain audits near completion, quarterly reviews are occurring, and during planning for 2020 audits.

For more information, click here .

COVID-19 – Corp Fin Publishes COVID-19 Related FAQs

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published COVID-19 Related FAQs. These FAQs provide guidance specific to financial reporting guidance related to the COVID-19 pandemic. The FAQ provides guidance on: (1) implementing the SEC’s guidance with the COVID-19 Order modifying exemptions from the reporting and proxy delivery requirements for public companies; and (2) questions related to registration statements on Form S-3.

For more information, click here .

Crowdfunding – SEC Provides Temporary, Conditional Relief to Allow Expedited Crowdfunding Offerings

Summary - The SEC announced that it is providing temporary, conditional relief for established smaller companies affected by COVID-19 that may look to meet their urgent funding needs through a Regulation Crowdfunding offering. According to the SEC, these actions will expedite the offering process for eligible companies by providing relief from certain rules with respect to the timing of a company's offering and the financial statements required. To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief.

The temporary rules are intended to expedite the offering process for smaller, previously established companies directly or indirectly affected by COVID-19 that are seeking to meet their funding needs through the offer and sale of securities pursuant to Regulation Crowdfunding.The temporary rules provide flexibility for issuers that meet certain eligibility criteria to assess interest in a Regulation Crowdfunding offering prior to preparation of full offering materials, and then once launched, to close such an offering and have access to funds sooner than would be possible in the absence of the temporary relief.

The temporary rules also provide an exemption from certain financial statement review requirements for issuers offering more than $107,000 but not more than $250,000 in securities in reliance on Regulation Crowdfunding within a 12-month period.The relief will apply to offerings launched between the effective date of the temporary rules (publication in the Federal Register) and August 31, 2020.

For more information, click here .

Liabilities – IASB Proposes Deferring IAS 1 Amendments’ Effective Date Due to COVID-19

Summary - The IASB has proposed to defer by one year the effective date of Classification of Liabilities as Current or Non-current, which amends International Accounting Standard (IAS) 1, Presentation of Financial StatementsThe IAS 1 amendments were issued in January 2020, effective for annual reporting periods beginning on or after January 1, 2022. However, in response to the COVID-19 pandemic, the IASB is proposing to provide companies with more time to implement any classification changes resulting from the amendments by deferring the effective date by one year to annual reporting periods beginning on or after January 1, 2023.

The IASB is not proposing any changes to the original amendments other than the deferral of the effective date.The IASB has responded quickly to provide support to stakeholders at this difficult time. Accordingly, the comment period on the proposal is short, only 30 days. The comment deadline is June 3, 2020.

For more information, click here .

SEC Enforcement – SEC Co-Director Discusses SEC Enforcement During COVID-19

Summary - Steven Peikin, Co-Director of the SEC’s Division of Enforcement, recently discussed the SEC’s enforcement during COVID-19. Peikin indicates that the Division of Enforcement “have focused significant time and resources on responding to COVID-related matters. In organizing our response, we have looked to the experiences had, and the lessons learned, by our predecessors in other periods of emergency and serious market disruption, including the September 11 attacks and the 2007-08 global financial crisis.”

Topics discussed by Peikin included: (a) COVID-19 enforcement matters; and (b) ongoing non-COVID-19 work. Peikin expects there to be more trading suspensions related to COVID-19 and more fraud cases related to potential COVID-19 investment scams.

For more information, click here .

GASB Standards – GASB Postpones Effective Dates of Upcoming Pronouncements

Summary - The Governmental Accounting Standards Board (GASB) has issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance, as agreed to at the GASB’s meeting this week. The GASB intends Statement 95 to provide relief to governments and other stakeholders in light of the COVID-19 pandemic.

The effective dates of the following GASB Statements and Guidance are postponed by one year:

Statement No. 83, Certain Asset Retirement Obligations;
Statement No. 84, Fiduciary Activities;
Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements;
Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period;
Statement No. 90, Majority Equity Interests;
Statement No. 91, Conduit Debt Obligations;
Statement No. 92, Omnibus 2020;
Statement No. 93, Replacement of Interbank Offered Rates;
Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting);
Implementation Guide No. 2018-1, Implementation Guidance Update—2018;
Implementation Guide No. 2019-1, Implementation Guidance Update—2019; and
Implementation Guide No. 2019-2, Fiduciary Activities.
Further, Statement 95 postpones the effective dates of the following pronouncements by 18 months:
Statement No. 87, Leases; and
Implementation Guide No. 2019-3, Leases.

The provisions of Statement 95 are effective immediately. Statement 95 does not postpone the effective date of Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, because the pandemic was factored into Statement 94’s effective date.

For more information, click here .

Recent FASB & AICPA Updates

Exposure Draft - Proposed Accounting Standards Update 2020-300 —Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities

Summary - The FASB issued a proposed Accounting Standards Update (ASU) that would grant a one-year effective date delay for certain stakeholders applying leases and revenue recognition guidance. Stakeholders are encouraged to review and provide comment on the proposed ASU by May 6, 2020.

The leases effective date deferral would be limited to private companies, private not-for-profit organizations, and public not-for-profit organizations that have not yet issued their financial statements. It would provide near-term relief for certain entities for whom the leases standard is currently effective who have rapidly approaching year-end dates and for entities for whom the leases effective date is imminent.

Under the proposed ASU, private companies and private not-for-profit organizations would have the option to apply the new leases standard for fiscal years beginning after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022. Public not-for-profit organizations that have not yet issued financial statements would have the option to apply the standard for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The proposed effective date deferral for revenue recognition would be limited to private company franchisors. Those stakeholders would have the option to apply the new standard for annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020.

For more information, click here .

Interest Rates – IASB Proposes Further Amendments to IFRS Standards in Response to Interest Rate Benchmark Reform

Summary - The IASB has proposed amendments to IFRS Standards to assist companies in providing useful information to investors about the effects of interest rate benchmark reform on financial statements.

The IASB has been considering the effects of interest rate benchmark reform on financial reporting since 2018, splitting its work into two phases. The first phase culminated in amendments to some IFRS Standards in September 2019, providing temporary exceptions to specific hedge accounting requirements and requiring related disclosures in the period during which there is uncertainty about contractual cash flows arising from interest rate benchmark reform.

The IASB has now published further proposed amendments as part of the second phase of its project. These proposed amendments aim to address issues affecting financial statements when changes are made to contractual cash flows and hedging relationships as a result of the reform.

The main proposed amendments relate to:

Modifications—a company would not derecognize or adjust the carrying amount of financial instruments for modifications required by interest rate benchmark reform, but would instead update the effective interest rate to reflect the change in the interest rate benchmark;
Hedge accounting—a company would not discontinue its hedge accounting solely because of replacing the interest rate benchmark if the hedge meets other hedge accounting criteria; and
Disclosures—a company would disclose information about new risks arising from the interest rate benchmark reform and how it manages the transition to alternative benchmark rates.

The consultation document proposes amendments to the following Standards:

IFRS 9, Financial Instruments;
IAS 39, Financial Instruments: Recognition and Measurement;
IFRS 7, Financial Instruments: Disclosures;
IFRS 4, Insurance Contracts; and
IFRS 16, Leases.

The comment deadline is May 25, 2020.

For more information, click here .

Public-Private Arrangements – GASB Issues Statement No. 94 on P3s

Summary - The Governmental Accounting Standards Board (GASB) has issued new Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. Statement No. 94 includes guidance to improve accounting and financial reporting for public-private and public-public partnership arrangements (commonly referred to as P3s) and availability payment arrangements (APAs).

Statement 94 includes guidance for P3 arrangements, including those that are outside of the scope of the GASB’s existing literature for those transactions, namely Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, and Statement No. 87, Leases. The Statement also makes certain improvements to the guidance previously included in Statement 60 and provides accounting and financial reporting guidance for APAs.

P3s

Statement 94 defines a P3 as an arrangement in which a government transferor contracts with a governmental or nongovernmental operator to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset, the underlying P3 asset, for a period of time in an exchange or exchange-like transaction.

Some P3s meet the definition of a service concession arrangement (SCA). The Statement carries forward the financial reporting requirements for SCAs that were included in Statement 60, with modifications to apply the more extensive requirements related to recognition and measurement of leases to SCAs.

P3s that meet the definition of a lease should apply the guidance in Statement 87, if existing assets of the transferor that are not required to be improved by the operator as part of the P3 arrangement are the only underlying P3 assets and the P3s do not meet the definition of an SCA.

This Statement provides specific guidance for all other P3s from the perspective of both a government that transfers rights to another party and governmental operators that receive those rights.

APAs

Statement 94 defines an APA as an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying infrastructure or other nonfinancial asset for a period of time in an exchange or exchange-like transaction.

The Statement requires governments to account for APAs related to those activities and in which ownership of the asset transfers by the end of the contract as a financed purchase of the underlying infrastructure or other nonfinancial asset. It also requires a government to report an APA that is related to operating or maintaining a nonfinancial asset as an outflow of resources (for example, expense) in the period to which payments relate.

Effective Date

The Statement is effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged. In light of the ongoing COVID-19 pandemic and the GASB’s newly added project to consider postponing the effective dates of certain pronouncements, the GASB extended the effective date for Statement 94 by one year from the date proposed in the Exposure Draft.

For more information, click here .

GASB Standards – GASB Issues Implementation Guide 2020-1

Summary - The Governmental Accounting Standards Board (GASB) issued Implementation Guide 2020-1, Implementation Guidance Update—2020. Implementation Guide 2020-1 includes questions and answers intended to clarify, explain, or elaborate on the implementation and application of certain GASB pronouncements.

Questions Addressed by Implementation Guide 2020-1

Implementation Guide 2020-1 addresses new questions about application of the GASB’s standards on multiple topics, including but not limited to:

The financial reporting entity;
Fiduciary activities;
Leases;
Conduit debt obligations;
Asset retirement obligations; and
External investment pools.

Implementation Guide 2020-1 also includes amendments to previously issued implementation guidance. In addition, it delays the effective date of certain questions and answers that were originally published in Implementation Guide No. 2019-2, Fiduciary Activities, pending the completion of the GASB’s project on Certain Component Unit Criteria and Accounting and Financial Reporting for Section 457 Plans.

Effective Dates

The requirements of Implementation Guide 2020-1 are primarily effective for reporting periods beginning after either June 15, 2021 or December 15, 2021. Those effective dates are one year later than is typical for an Implementation Guidance Update, consistent with the GASB’s proposed Statement, Postponement of the Effective Dates of Certain Authoritative Guidance. Early application is encouraged for guidance related to standards that already have been implemented. Please see the guide’s Effective Date and Transition section for additional details.

For more information, click here .

Recent SEC & PCAOB Updates

Release No. IC-33845: Good Faith Determinations of Fair Value

Summary - The SEC has published for public comment a new rule that would establish a framework for fund valuation practices. The rule is designed to “clarify how fund boards can satisfy their valuation obligations in light of market developments, including an increase in the variety of asset classes held by funds and an increase in both the volume and type of data used in valuation determinations.”

The SEC indicates that it last addressed valuation practices under the Investment Company Act of 1940 in a comprehensive manner in a pair of releases issued in 1969 and 1970. Since then, markets and fund investment practices have evolved considerably. Many funds now engage third-party pricing services to provide pricing information, particularly for thinly traded or more complex assets. In addition, significant regulatory developments have altered how boards, investment advisers, independent auditors, and other market participants address valuation under the federal securities laws. The proposal recognizes and reflects these changes, including the important role that funds’ investment advisers may play and the expertise they may provide.

The proposed rule would establish requirements for satisfying a fund board’s obligation to determine fair value in good faith for purposes of the Investment Company Act of 1940.

The rule would require a fund board to:

Assess and manage material risks associated with fair value determinations;
Select, apply and test fair value methodologies;
Oversee and evaluate any pricing services used;
Adopt and implement policies and procedures; and
Maintain certain records.

The comment period on the proposal will be open until July 21, 2020.

For more information, click here .

Critical Audit Matters – PCAOB Issues Request for Comment on Critical Audit Matters

Summary - The PCAOB has published the Request for Comment from the Office of Economic and Risk Analysis, Interim Analysis of Critical Audit Matter Requirements. This request for Comment seeks input from audit firms, preparers, audit committees, investors, and other financial statement users to inform the PCAOB’s interim analysis of the Critical Audit Matter (CAM) requirements.

The Request for Comment notes that the PCAOB is committed to fulfilling the expectation set out by the SEC to complete this interim analysis before the second phase of CAM implementation begins. The PCAOB is also mindful of the many challenges related to COVID-19 that stakeholders are dealing with at this time. To provide additional time for interested parties to share feedback with us, the PCAOB has extended the comment period from 30 to 60 days.

The Request for Comment includes question regarding:

Whether the stakeholder has read any auditors’ reports that contain CAMs and other information regarding such reports;
The effects, if any, have investors, analysts, or other financial statement users experienced from the communication of CAMs in the auditor’s report;
Questions for preparers, audit committee members and auditors;
Costs that prepares may incur; and
Costs audit firms may incur.

The comments are due no later than June 15, 2020.

For more information, click here .

Fund Valuations – SEC Proposes to Modernize Framework for Fund Valuation Practices

The proposed rule would establish requirements for satisfying a fund board’s obligation to determine fair value in good faith for purposes of the Investment Company Act of 1940.

The rule would require a fund board to:

Assess and manage material risks associated with fair value determinations;
Select, apply and test fair value methodologies;
Oversee and evaluate any pricing services used;
Adopt and implement policies and procedures; and
Maintain certain records.

The comment period on the proposal will be open until July 21, 2020.

For more information, click here .

Emerging Market Investments – SEC Chairman and Others Caution of Risks Associated with Emerging Market Investments

Summary - SEC Chairman Jay Clayton issued a statement along with the head of the PCAOB and other SEC staff members discussing the regulatory risks associated with emerging market investments. Clayton and the others cautioned that their “ability to promote and enforce these standards in emerging markets is limited and is significantly dependent on the actions of local authorities which, in turn, are constrained by national policy considerations in those countries. As a result, in many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to U.S. domestic companies.”

For more information, click here .

Mining Property Disclosures – SEC Staff Provides Guidance on Mining Property Disclosures

Summary - The staff in the Division of Corporation Finance (Corp Fin) has updated its Compliance and Disclosure Interpretation (C&DI), Regulation S-K (Questions 155.01-155.03). Corp Fin has updated this C&DI to reflect guidance on compliance with the new mining property disclosure rules set forth in Subpart 1300 of Regulation S-K.

The new questions provide guidance on the following questions:

For purposes of filing an Exchange Act annual report, when must a registrant engaged in mining operations comply with the new mining property disclosure rules set forth in Subpart 1300 of Regulation S-K?
For purposes of filing a Securities Act registration statement, may the registrant satisfy its obligation to include mining property disclosure pursuant to Subpart 1300 of Regulation S-K by incorporating such disclosure by reference to its Exchange Act annual report for the appropriate period, even if such annual report was not required to comply with the new mining property disclosure rules in Subpart 1300 of Regulation S-K?
For purposes of filing an Exchange Act or Securities Act registration statement that does not incorporate by reference mining property disclosure from a registrant’s Exchange Act annual report, when must a registrant engaged in mining operations comply with the new mining property disclosure rules set forth in Subpart 1300 of Regulation S-K?

For more information, click here .

Auditing Updates

Data and Technology – PCAOB Posts Spotlight Updating Its Data and Technology Research Project

Summary - The PCAOB has published the Data and Technology Research Project Spotlight. The Spotlight shares observations from the PCAOB’s research project and outreach activities on data and technology.

The Spotlight notes that technological advancements are affecting how firms are using financial information and that firms are making significant investments in technology, including in technology-based audit tools to plan and perform audits. These tools include software to perform data analytics.

The PCAOB’s strategic plan includes the requirement that the PCAOB anticipate and respond to both opportunities and risks of technological innovations. The Office of the Chief Auditor established a research project to assess the “need for guidance, changes to PCAOB standards, or other regulatory actions.” In making the assessment on whether regulatory action is needed in response to the evolving audit landscape, the PCAOB obtained information from its oversight activities, review of changes to firms’ methodologies and study of academic research.

The Spotlight discusses the observations on the use of data and technology, which fall into four categories, including:

General observations on PCAOB standards;
Observations on identifying and assessing risks of material misstatement;
Observations on audit evidence; and
Observations on firm policies and procedures.

Information included in the Spotlight is not staff guidance. A sidebar in the Spotlight notes that instead, it “highlights timely and relevant observations for auditors and other key stakeholders.”

For more information, click here .

Tax Updates

What People Really Want to Know About Economic Impact Payments

Cli ck here to read the complete article on the IRS website.

Summary - IRS.gov has answers to many questions people may have about their Economic Impact Payment. Here are answers to some of the top questions people are asking about these payments.

Is this payment considered taxable income?

No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 tax return next year. A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.

Can people who receive a Form SSA-1099 or RRB-1099 use Get My Payment to check their payment status?

Yes, they will be able to use Get My Payment to check the status of their payment after verifying their identity by answering the required security questions.

If someone's bank account information has changed since they filed their last tax return, can they update it using Get My Payment?

To help protect against potential fraud, the tool also does not allow people to change direct deposit bank account information already on file with the IRS.

If the IRS issues a direct deposit based on the account information that the taxpayer provided on their tax return and the bank information is now invalid or the account has been closed, the bank will reject the deposit. The agency will then mail payment as soon as possible to the address they have on file. Get My Payment will be updated to reflect the date a payment will be mailed. It will take up to 14 days to receive the payment, standard mailing time.

Where can people get more information?

Taxpayers who are required to file a tax return, can go to IRS Free File to file electronically. If they aren't required to file, they should go to the Non-Filers: Enter Payment Info Here tool and submit their information to receive an Economic Impact Payment.

For the complete lists of FAQs, visit the Economic Impact Payment and the Get My Payment tool pages on IRS.gov. The IRS updates these FAQs regularly.

The IRS encourages people to share this information with family and friends.

For more information about Economic Impact Payments, please feel free to contact our Senior Tax Manager, Nicole Zhao .

Click here for more information.

Extra Crunch

AICPA Coronavirus (COVID-19) Resource Center

Summary - The AICPA is taking the coronavirus (COVID-19) very seriously. They are continually monitoring the virus’ impact on members, staff, exam candidates, students and the profession.

The institute is working around the clock to get information into the hands of their members as quickly as possible. Understandably, in doing so, their first priority is to provide high level overviews, and then to create tools and resources to support the new information. As these tools may be ready slightly after their initial overview, please be sure to check this website on a regular basis.

For more information, please click here .

About MaloneBailey, LLP

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