This week’s GAAP Flash includes articles about financial intuitions preparing to implement CECL (ASC 236), the spike in mobile app transactions of foreign currency, the inevitable regulation of cryptocurrencies, and the SEC’s investigation of GE as it relates to revenue recognition (ASC 606).

Banks brace for CECL standard

(January 18, 2018) – Accounting Today (@AccountingToday)

This article serves as a reminder to all financial institutions that even though the adoption of ASU 2016-13, Financial Instruments – Credit Losses (ASC 236), otherwise known as CECL (current expected credit losses) is not until 2020, your company needs to start preparing! While the adoption of ASC 606 and ASC 842 might be top priority, there are various factors to start planning for. Whether it’s a small or large bank, there will be various challenges, which are summarized within this article.

How It’s Relevant: Are you hoping the FASB will step in and delay the effective date of CECL? Well, keep hoping, but it is likely going to prove unproductive at this point. Every financial institution will be affected by this new guidance, and each organization will have its own special set of challenges during the implementation process. The best rule of thumb is to accelerate your planning and implementation efforts! We do offer a 1-day Banking Update Course, where we cover all of the latest developments, including CECL.

FX traders do $100 million deals on mobile phones

(January 21, 2018) – Bloomberg (@Bloomberg)

JP Morgan Chase recently conducted its annual E-Trading Trends survey. They surveyed over 400 institutional FX, rates and commodities traders, and 61% of those surveyed said they are “extremely” or “somewhat” likely to use a mobile trading app this year, which is up from 31% in last year’s survey. The world’s biggest financial market ($5.1 trillion a day!) is embracing the digital era but are company policies keeping up?

How It’s Relevant: We live in a society where we are constantly connected (hold on, I need to order my groceries online, then order an Uber to go pick them up). It’s only a natural progression that businesses and financial markets would find their way outside the walls of Wall Street. Security features are improving but how will all the online transactions impact audit documentation and internal controls? It might be helpful to brush up on your foreign currency matters (ASC 830), so take a look at our foreign currency training slides before you download that FX app!

Could the SEC kill cryptocurrency funds?

(January 21, 2018) – Forbes (@Forbes)

The SEC has ramped up its focus on cryptocurrencies as well as initial coin offerings (ICOs) within the last month. In December, it released a public statement that challenged the investor community to think twice and ask questions before investing in the rapidly rising cryptocurrency world. Additionally, the SEC also sent a letter in January to two investment companies that discussed additional considerations such as valuation and liquidity.

How It’s Relevant: Did you know there are almost 1,500 different cryptocurrencies listed on Coinmarketcap.com? This rapidly expanding market has people’s heads spinning (including mine!) but the SEC is asking all the right questions. The rise of cryptocurrencies makes we wonder about the stability of these investments, the security of information, how regulators will protect the public, and the ultimate impact on financial reporting. If you are thinking of investing in cryptocurrencies, hold on tight because I have a feeling there is a lot more to come!

GE woes deepen as SEC accounting investigation throws wrench in turnaround

(January 24, 2018) – Accounting Today (@AccountingToday)

The SEC is currently investigating General Electric Co. (GE) due to a $6.8 billion charge recognized during its fourth quarter. The investigation relates to the accounting practices of its insurance business as well as its revenue recognition and controls for long-term service agreements.

How It’s Relevant: While GE has had a tumultuous year between management turnover and cash flow concerns, this article reminds us of how important it is for a company to evaluate, analyze, and determine the appropriate accounting treatment when it comes to contracts with customers now that ASC 606 is effective (for public companies). Do you still have questions about adopting ASC 606? If so, don’t fear! We’ve compiled this step-by-step guide, which will walk you through each step of the new revenue recognition model.

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.