We are pleased to release MaloneBailey's March 2022 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
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What's the Crunch?
Featured Podcast
- Navigating the Uplisting Process to the New York Stock Exchange
Recent Accounting & Regulatory Updates
Recent FASB & AICPA Updates
- 2021 FASB Investor Outreach Report
- Intangible Assets –FASB Discusses Identifiable Intangible Assets
- General Ethics –AICPA Publishes FAQs on General Ethics
- Auditing Standards Board –Summary of January 25-27, 2022 Meeting Published
- Government Professional Standards –GAO Issues Professional Standards Update No. 83
- Compliance Audits Standards –AICPA’s ASB Proposes Amendments to Compliance Audits Standard
- Digital Assets –New Edition of AICPA’s Practice Aid: Accounting for and Auditing of Digital Assets Published
- Health Care Entities –AICPA Issues New TQA for Health Care Entities on Accounting for Earmarked Free Items
Recent SEC & PCAOB Updates
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SEC Staff Views: Announcement Regarding Staff Responses to Rule 14a - 8 No -- Action Requests
Extra Crunch
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DTCC Systemic Risk Barometer: 2022 Forecast
About MaloneBailey, LLP
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Navigating the Uplisting Process to the New York Stock Exchange
Summary - In this episode of Everybody Counts, Caroline Rosen, Marketing and Communications Manager, speaks with Paul Dorfman from the New York Stock Exchange (NYSE) who shares his insightful perspectives on the uplisting process, criteria and how to navigate common challenges. This podcast is one of a three-part series with podcasts that also cover uplisting to Nasdaq and ungrading to OTC Markets.
For these podcasts and many more, please visit the Resources section of the MaloneBailey website.
Simply click on the image below to listen to the podcast.
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Recent FASB & AICPA Updates |
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2021 FASB Investor Outreach Report
Summary - The FASB has issued its 2021 Investor Outreach Report (Report), which highlights the investor outreach completed by the FASB staff over the last year.
The outreach included engagement in more than 430 investor interactions. Substantially all the interactions were the result of outreach aimed at soliciting investor perspectives, including buy-side portfolio managers and analysts, sell-side analysts, accounting analysts (both buy-side and sell-side), credit rating agency analysts and managers, individual investors, and private company lenders and other capital providers (e.g., venture capital/private equity).
According to FASB Chair Richard J. Jones, “[i]nvestor perspectives are critical to the Board’s ability to develop effective standards, so we undertake a number of initiatives to proactively engage this stakeholder group in our standard-setting process. The report explains our investor outreach program, activities over the last year, how we’ll continue to build on those initiatives to enhance our investor outreach efforts, and, perhaps most importantly, how investors can share their views with us.”
In addition to the issuance of the Report, the FASB launched an investor web portal to provides information on projects of interest to investors, investor-focused educational videos on specific standards, and how investors can share their views on all FASB activities.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Intangible Assets – FASB Discusses Identifiable Intangible Assets
Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on January 26, 2022, and discussed the level (reporting unit, operating segment) at which the goodwill impairment test should be conducted in the context of a potential impairment-with-amortization model. While no decisions were made, and FASB members’ views were mixed, overall the FASB provided a leaning to retain goodwill impairment testing at the reporting unit level.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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General Ethics – AICPA Publishes FAQs on General Ethics
Summary - The AICPA has published Frequently Asked Questions (FAQs), General Ethics. The answers to these FAQs are based on guidance the AICPA Professional Ethics Division staff provided in response to members’ inquiries. The FAQs are not rules, regulations, or statements of the Professional Ethics Executive Committee and, therefore, are not authoritative guidance.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Auditing Standards Board – Summary of January 25-27, 2022 Meeting Published
Summary - The AICPA has published a summary of the Auditing Standards Board’s (ASB’s) January 25-27 meeting. The ASB discussed a draft of a proposed SAS, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors). While the proposed SAS is based on the draft of International Standard on Auditing (ISA) 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work ofComponent Auditors) that was discussed and approved at the December 2021 International Auditing and Assurance Standards Board’s meeting, the proposed SAS would continue to allow the group auditor to choose to make reference to the report of another auditor.
The ASB agreed with the approach taken in the proposed SAS, which defines such auditors as “referred to auditors”. Referred-to auditors are not component auditors and are not members of the engagement team. A revised draft will be brought to the ASB at its meeting on March 9, 2022, for a vote to issue an exposure draft of the proposed SAS.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Government Professional Standards – GAO Issues Professional Standards Update No. 83
Summary - The Government Accountability Office (GAO) has published Professional Standards Update (PSU) No. 83 covering standards published from through December 2021. This PSU has two sections:
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Section I identifies select standards and guidance with their respective effective dates. Section I contains standards effective for: (1) audits of financial statements for periods ending after September 30, 2021; (2) attestation reports dated after September 30, 2021; and (3) accounting for reporting periods beginning after July 15, 2020.
- Section II identifies select standards and guidance that were issued from October 2021 through December 2021.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Compliance Audits Standards – AICPA’s ASB Proposes Amendments to Compliance Audits Standard
Summary - The Auditing Standards Board (ASB) of the AICPA has issued the Exposure Draft, Proposed Statement on Auditing Standards (SAS) Amendment to AU-C Section 935, to amend SAS No. 935, Compliance Audits. The comment deadline is May 16, 2022. As noted in the Background memorandum to the Exposure Draft, “AU-C sections 200-900 address audits of financial statements as well as other kinds of engagements” and “can be adapted to the objectives of a compliance audit.”
On the other hand, “certain AU-C sections, or portions thereof, are not applicable to a compliance audit because (a) they are not relevant to a compliance audit environment, (b) the procedures and guidance would not contribute to meeting the objectives of a compliance audit, or (c) the subject matter is specifically covered in AU-C section 935.” The Appendix to AU-C section 935 identifies the AU-C sections that are generally not applicable to compliance audits.
The new SAS, if adopted as proposed, would amend AU-C section 935 to update the Appendix and conform the Compliance Audit standard with SAS 142, Audit Evidence, and SAS 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement. If adopted as proposed, the proposed amendments in this Exposure Draft relating to AU-C section 501, Audit Evidence — Specific Considerations for Selected Items, would align with the effective date for SAS 142 and would be effective for compliance audits for fiscal periods ending on or after December 15, 2022.
All other proposed amendments would be effective for compliance audits for fiscal periods ending on or after December 15, 2023. Early implementation would be permitted.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Digital Assets – New Edition of AICPA’s Practice Aid: Accounting for and Auditing of Digital Assets Published
Summary - The AICPA has published a new edition of its Practice Aid, Accounting for and Auditing of Digital Assets Published. The objective of this practice aid is to develop nonauthoritative guidance on how to account for and audit digital assets under U.S. generally accepted accounting principles (GAAP) for nongovernmental entities and generally accepted auditing standards, respectively. This guidance is intended for financial statement preparers and auditors with a fundamental knowledge of blockchain technology.
Digital assets and the associated underlying technology are an evolving area, and the expectations and experiences of stakeholders such as preparers, auditors, and regulators may change accordingly. Therefore, questions, examples, challenges, risks, considerations, and potential procedures listed in this practice aid should not be considered exhaustive. Preparers, auditors, and those charged with governance need to stay abreast of developments and consider the implications of those developments.
The guidance in this practice aid is based on existing professional literature and the experience of members of the Digital Assets Working Group. This nonauthoritative guidance represents the views of the Digital Assets Working Group and AICPA staff. This publication is not approved, disapproved, or otherwise acted on by the Auditing Standards Board, the membership, or the governing body of the AICPA, and is not an official pronouncement of the AICPA.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Health Care Entities – AICPA Issues New TQA for Health Care Entities on Accounting for Earmarked Free Items
Summary - The AICPA has issued an additional Technical Questions and Answer (TQA) under Section 6400, Health Care Entities, .71, “Accounting by a Recipient Entity for Vaccines or Other Pharmaceuticals, Medical Supplies, or Equipment Received for Distribution to Specified Patients.”
TQA Section 6400, Health Care Entities, includes guidance in the form of questions and answers for practitioners in application of FASB standards by hospitals, physician’s offices, and other health care providers and entities.
New TQA section 6400.71 “pertains to the accounting used by health care entities for the receipt of vaccines or other pharmaceuticals, medical supplies, or equipment in such circumstances.” It does not, however, address the accounting related to conditional contributions or to the dispensing of the vaccines or other pharmaceuticals, medical supplies, or equipment.
The TQA asks whether a health care entity that receives items free of charge to dispense to specified patients should recognize the fair value of the items within their financial statements. As noted in the Background discussion, health care entities may receive pharmaceuticals or other items from resource providers to distribute to patients participating in right-to-try programs, clinical trials, prescription assistance programs, or other programs designed to distribute pharmaceuticals to a specified patient or patients free of charge. Under these arrangements, the health care entity is not permitted to dispense the items to other than the specified patients. These arrangements also typically require return of the items to the resource provider if they cannot be dispensed to the specified patients.
The appropriate accounting for the items depends on a number of factors, including whether the recipient health care entity is a for-profit or not-for-profit entity, the relationship between the health care entity and the specified beneficiary, and whether the entity has the unilateral power to redirect the use of the transferred assets to another beneficiary.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Recent SEC & Regulatory Updates |
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SEC Staff Views: Announcement Regarding Staff Responses to Rule 14a - 8 No -- Action Requests
Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published an Announcement Regarding Staff Responses to Rule 14a-8 No-Action Requests. This announcement reconsiders Corp Fin’s previous guidance on responding to each shareholder proposal no-action requests.
The announcement indicates that during “the last two proxy seasons, the staff instead responded with a written letter only in limited instances and communicated the vast majority of responses via notations to a chart maintained on the Division’s website. We have reconsidered this approach, and after review of the practice we believe that written responses will provide greater transparency and certainty to shareholder proponents and companies alike. Beginning with the publication of this announcement, we will return to our prior practice and the staff will once again respond to each shareholder proposal no-action request with a written letter, similar to those issued in prior years. Our response letters will be posted publicly on the Division’s website in a timely manner. We will no longer communicate our responses via a chart, but we expect to publish a chart upon completion of the proxy season.”
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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2022 Forecast
According to the DTCC website, the DTCC Systemic Risk Barometer Survey was launched in 2013 and it serves as an annual pulse check to monitor existing and emerging risks that may impact the safety, resiliency and stability of the global financial system. The website goes on to state that "it is designed to help identify trends and foster industry-wide dialogue on potential threats to financial stability."
This year's survey indicates that cyber risk, infectious disease/pandemic (COVID-19) and geopolitical tensions continue as the top three spots in terms of the greatest threat to the global financial markets. This year, climate change and inflation both advanced significantly and grabbed the fourth and fifth spot in the rankings.
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