This week’s GAAP Flash includes articles about the NYSE supporting the elimination of an important SOX rule, 10 lessons that have been learned when implementing ASC 606, House Democrats calling for changes on multinational tax reporting, and how XBRL has made steady advances.

NYSE backs rollback of Enron-era rule meant to boost accounting quality (July 18, 2017) – Wall Street Journal (@WSJ)

Tom Farley, the president of the NYSE, recently supported eliminating the requirement of public companies having an auditor issue an opinion on internal controls over financial reporting. Mr. Farley believes that scrapping, or even narrowing, the rule would convince more startups to go public. His comments also show how Wall Street is leveraging Washington’s renewed interest in the deregulation of Sarbanes-Oxley Act (SOX) regulations.

How It’s Relevant: SOX significantly changed the landscape of the accounting world by enhancing corporate responsibility and disclosures along with combating fraud while taking the self-regulation away from accounting firms and placing more of the regulation responsibility onto the PCAOB. But the current administration in Washington, including the new SEC Chair, has been vocal about deregulating. So will we see changes to reflect the rules before the SOX days? The Big 4 sure hopes so! Check out this article on how global audit firms are diluting Sarbanes-Oxley reforms.

10 lessons learned in implementing new revenue recognition guidance (July 19, 2017) – Accounting Today (@AccountingToday)

The rules governing revenue recognition (ASC 606) for public and private companies are changing dramatically starting January 1, 2018 and several recent surveys show that most companies are unprepared. 10 lessons that have been learned while helping companies transition to the new rules are summarized within the article to help you complete your implementation!

How It’s Relevant: I know I keep talking about ASC 606 in my posts, but it will be effective for public companies in less than 6 months! And implementing the standard is going to take TIME. Make sure you are considering resources, time, processes, data, and technology (to name a few). One lesson the article forgot to mention is to call GAAP Dynamics! Take a look at our free, 1-hour eLearning module or browse some of our micro-learning videos here. We also offer customized revenue recognition workshops, so contact us today!

House Democrats prod FASB to require country-by-country reporting (July 19, 2017) – Accounting Today (@AccountingToday)

A group of 16 House Democrats recently sent a letter to the FASB asking it to require multinational companies to disclose more country-by-country reporting information about where they pay taxes and book profits due to the tax advantages of having foreign subsidiaries located in advantageous tax havens. The lawmakers believe the additional disclosures will add safeguards and mitigate risks for investors and will not add any additional compliance burdens as companies already use this information internally and report it to the IRS.

How It’s Relevant: The FASB is currently working on a Disclosure Framework project for income taxes to improve the effectiveness of disclosures, which makes this issue extremely relevant to the FASB’s project due to the limited availability of overseas subsidiary information. Having subsidiaries located in foreign tax haven locations is definitely advantageous to the U.S. parent but there are also important issues that need to be considered. Check out our blog post from 2015 about this very same issue, which is all still relevant to today!

XBRL makes steady advances (July 14, 2017) – Accounting Today (@AccountingToday)

Extensible Business Reporting Language (XBRL) is starting to become more widely used, thanks to the SEC’s rules requiring the use of XBRL in financial filings in recent years and a new rule requiring XBRL for foreign issuers. In March 2017, the SEC mandated that foreign private issuers that prepare financials in accordance with IFRS must submit the financials in XBRL format for financial periods ending on or after December 15, 2017. Additionally, EU-listed companies complying with IFRS must also use XBRL starting in 2020.

How It’s Relevant: XBRL is gaining momentum and fast! XBRL uses technology to data-tag financial information to make it easier for investors to compare information across companies and industries. Because XBRL is technology based, it will only see enhancements and improvements to its technology. The SEC recently proposed a new rule that requires companies to use a more useable version of the XBRL technology. And who knows what will be next – maybe auditors having to audit the XBRL tags? Are you up to speed on the most recent SEC rules and regulations? Check out our U.S. GAAP Training Agenda for a sneak-peek at what we can offer!

Disclaimer 

This post is published to spread the love of GAAP and provided for informational purposes only. Although we are CPAs and have made every effort to ensure the factual accuracy of the post as of the date it was published, we are not responsible for your ultimate compliance with accounting or auditing standards and you agree not to hold us responsible for such. In addition, we take no responsibility for updating old posts, but may do so from time to time.