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.

Summary - Post pandemic life in the office is shaping up to look and feel different for many organizations worldwide. After having worked from home for more than a year, many organizations have announced their decision to implement a hybrid approach moving forward, that is combining workdays at the office and at home. Rethinking where and how we work is a hot topic today and one that many organizations are grappling with.

Shelby Stevens from the HR Department at MaloneBailey and Caroline Rosen from the Marketing Department at MaloneBailey discuss the blended approach, its benefits and challenges, considerations for putting a long term plan in place, how to address the 'culture' concern, employee burnout and mental wellness and the policies, tools, and training offerings to consider when weighing this approach.

Simply click on the image below to listen to the podcast. For this podcast and many more, please visit the Resources section of our website.

Summary - The FASB has issued an Accounting Standards Update (ASU) that provides an accounting alternative expected to reduce the complexity for private companies and not-for-profit organizations when performing the goodwill triggering event evaluation.

To address this, FASB Accounting Standards Update (ASU) No. 2021-03, Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events, provides an accounting alternative that allows private companies and not-for-profit organizations to perform a goodwill triggering event assessment, and any resulting test for goodwill impairment, as of the end of the reporting period, whether the reporting period is an interim or annual period. It eliminates the requirement for companies and organizations that elect this alternative to perform this assessment during the reporting period, limiting it to the reporting date only.

The scope of the alternative is limited to goodwill that is tested for impairment in accordance with Subtopic 350-20, Intangibles—Goodwill and Other—Goodwill. The amendments in the ASU are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. An entity should not retroactively adopt the amendments in this Update for interim financial statements already issued in the year of adoption.

For more information, click here.

Summary - The FASB has published ASU 2021-02, Revenue Recognition: Optional Rules for Franchisors. ASU 2021-02 provides industry-specific optional accounting guidance for revenue recognition that is limited to nonpublic franchisors. Analogies to this guidance are not permitted.

For more information, click here.

Summary - The FASB has published ASU 2021-01, Reference Rate Reform. ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that re affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition

For more information, click here.

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on March 10, 2021 and continued its deliberations of a principle-based disclosure requirement to report the significant segment expenses that are both: (1) regularly provided to the chief operating decision maker (CODM); and (2) included in the reported measure of segment profit or loss. Among other things, the FASB decided:

For more information, click here.

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on March 24, 2021, and ratified EITF Issue No. 19-B, “Revenue Recognition: Contract Modifications of Licenses of Intellectual Property.” The FASB discussed the project direction based on the recommendation of the EITF at its March 11, 2021 meeting. The FASB removed the project from its technical agenda and will consider the issue as part of the Post-Implementation Review process of Topic 606, Revenue from Contracts with Customers. 

For more information, click here.

Summary - The IASB is seeking public comments on a new approach to developing disclosure requirements in IFRS Standards and new disclosure requirements for the Standards on fair value measurement and employee benefits. These proposals would enable companies to enhance their judgment and reduce ‘boilerplate’ information, giving investors more useful information.

The IASB has tested this new approach using two IFRS Standards—IFRS 13, Fair Value Measurement and IAS 19, Employee Benefits—and has proposed amendments to the disclosure requirements in those Standards in the Exposure Draft.

For more information, click here.

Summary - The AICPA’s Center for Plain English Accounting has published Accounting for PPP. This publication provides guidance on accounting for PPP loans. 

For more information, click here.

Summary - As reported in its “Summary of Decisions” publication, the FASB met on March 31, 2021, and discussed external review comments on a draft of a proposed Accounting Standards Update (ASU), sweep issues, and whether to issue a proposed ASU. Regarding the Portfolio Layer Method (multiple layer model), the FASB decided the following related to the attributes of assets included in the closed portfolio:

For more information, click here.

SEC Staff Views: Staff Statement on Select Issues Pertaining to Special Purpose Acquisition Companies

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published guidance on certain accounting, financial reporting and governance issues that should be carefully considered before a private operating company undertakes a business combination with a special purpose acquisition company (SPAC). Corp Fin cautions that SPACs are subject to certain limitations that should be considered by the SPAC and the private companies engaging in business combinations with SPACs before undertaking in such a transaction. These include:

Other topics discussed in this guidance include: (a) books and records and internal control requirements; and (b) initial listing standards of National Securities Exchanges.

In connection with Corp Fin’s guidance, SEC Acting Chief Accountant Paul Munter has issued a statement, Financial Reporting and Auditing Considerations of Companies Merging with SPACs. Munter indicates that in just the first two months of 2021, both the number of new SPACs and amount of capital raised by those SPACs have been reported to already match approximately three-fourths of all such activity last year.

For more information, click here.

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has provided guidance on filing Form C related to offerings that rely on Regulation Crowdfunding. Effective March 15, 2021, a company issuing securities in reliance on Regulation Crowdfunding is permitted under Rule 100(a)(1) to raise a maximum aggregate amount of $5 million in a 12-month period. Before the amendments, the limit was $1.07 million. This document provides guidance on:

For more information, click here.

Summary - SEC Acting Char Allison Herren Lee issued a statement requesting input on climate change disclosures from investors, registrants, and other market participants. Lee indicates that since 2010, investor demand for, and company disclosure of information about, climate change risks, impacts, and opportunities has grown dramatically. As a result, questions arise about whether climate change disclosures adequately inform investors about known material risks, uncertainties, impacts, and opportunities, and whether greater consistency could be achieved.

For more information, click here.

Written by the IRS and available at: https://www.irs.gov/newsroom/treasury-irs-provide-guidance-on-tax-relief-for-deductions-for-food-or-beverages-from-restaurants

WASHINGTON — The Treasury Department and the Internal Revenue Service today issued Notice 2021-25 providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020. The Act added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100% deduction for food or beverages from restaurants.

Beginning January 1, 2021, through December 31, 2022, businesses can claim 100% of their food or beverage expenses paid to restaurants as long as the business owner (or an employee of the business) is present when food or beverages are provided and the expense is not lavish or extravagant under the circumstances.

Where can businesses get food and beverages and claim 100%?

Under the temporary provision, restaurants include businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption. However, restaurants do not include businesses that primarily sell pre-packaged goods not for immediate consumption, such as grocery stores and convenience stores.

Additionally, an employer may not treat certain employer-operated eating facilities as restaurants, even if these facilities are operated by a third party under contract with the employer.

More information for businesses seeking coronavirus related tax relief can be found at IRS.gov.

If you would like additional information, please click here or please feel free to contact our Senior Tax Manager, Nicole Zhao.

Summary - The PCAOB has published new resources relating to the 2021 Inspections Program, including a new Spotlight Publication, Staff Outlook for 2021 Inspections. In addition, the PCAOB has released a companion document for audit committees, Audit Committee Resource: 2021 Inspections Outlook.

For more information, click here.

Should you be interested in a complimentary estimate for audit, consulting and tax services, please contact Caroline Rosen at crosen@malonebailey.com or 713.343.4286.