Highlights of the 2020 AICPA Conference
Highlights of the 2020 AICPA Conference

Highlights of the 2020 AICPA Conference

Last week, I had the pleasure of attending the 2020 AICPA Conference on Current SEC and PCAOB Developments in the comfort of my own home, while not having to wear any “business attire” (and maybe not wearing any makeup) because as you might have guessed, the entire 3-day conference, which was held December 7-9, was entirely virtual. The conference is typically held in-person, in Washington D.C., and can be thought of as the Coachella (or the Super Bowl, or the Oscars) of accounting conferences, because all the heavy hitters (i.e., the SEC, PCAOB, FASB, IASB, etc.) from the accounting world come together to discuss events from the past year and the focus for the upcoming year.

I will admit, I was a little apprehensive at the thought of three long days in front of my computer screen, but I thought the AICPA did a great job hosting an interactive and productive conference with minimal technology disruptions. It also provided us attendees with a personal look into many home offices, which I thoroughly enjoyed. And the winner of the best background (this is purely based on my own personal opinion) went to Paul Munter, SEC Deputy Chief Accountant for International Activities, who had the most books on a bookshelf that I’ve ever seen! Here are some of my other highlights from the conference:

If I had to pick the theme of this year’s conference, it would be “Collaboration amidst a year of change.” We’ve all been impacted by COVID-19 in some sort of way throughout 2020, and the presenters at the conference were no different. The PCAOB actually did all of their 2020 inspections virtually; there were many presenters that haven’t even had the chance to see their new office space in the SEC; and during one session, somebody asked if anybody on the panel was wearing slippers. I found it refreshing to hear from some of the VIPs in the accounting world how they’ve had to respond and adjust as a result of this pandemic and it was a great reminder that we’re all in this together.

I think one of the best sessions from this year’s conference (and last year’s too!) was from Marci Rossell, who is a former CNBC Chief Economist. Marci discussed the current economy and the ripple effects from COVID-19. She referred to the 2021 economy as “the fireworks economy" because she’s predicting that so many sectors will experience explosive growth. She made an interesting point in that this downturn is different than what we've ever seen before because this time it didn't start with an economic shock, it came outside the economy. She pointed out that we have different savings rate behavior (the percentage of income people don’t spend) as compared to other recessions. The savings rate prior to the pandemic was 8% and it went all the way up to 33.6% in March/April. Currently (in December) it is around 13%. Why are people saving so much? Well, they can't spend like they used to (restaurant and travel are restricted and overall people are feeling unsafe). There is also more precautionary savings as well, meaning people are learning that income is more vulnerable, and many are being cautious for the future.

Another session I enjoyed was the FASB Chair update, which was given by Richard Jones, who began his term as the eighth FASB chair July 1, 2020 (what a time to become the new chair!). He reiterated that the FASB wants to better understand what stakeholders are looking for and aims to be more transparent. He also noted that the biggest standards are rarely one-and-done, which is why the FASB is performing post-implementation reviews (PIRs) on these standards and looking for ways to improve. Richard warned that the FASB can’t have a knee jerk reaction to today’s issues because what’s happening today may not be needed in the future (long-term) and noted three primary reasons for changing a standard: 1) to provide investors with decision-useful information; 2) to remove unnecessary and complexity; and 3) to maintain and improve the codification.

Richard also discussed the FASB’s view on goodwill, which seemed to be a hot topic at the conference this year. He noted that the FASB is considering some type of a hybrid model for goodwill (a period for amortization and then a period for impairment). It appears that there may be some sort of “un-convergence” happening between the FASB and the IASB as the IASB noted in their presentation that it is in favor (by a slim margin) of keeping an impairment-based model (with no amortization of goodwill). Leslie Seidman, former FASB Chair, was on a separate panel the same day as Richard’s presentation and she stated she was not in favor of amortizing goodwill. We actually wrote a blog on this very subject last year and are curious as to what your thoughts are on amortizing goodwill?

There were so many other topics discussed at this year’s conference (I may be saving those for my future blog posts) but I’d like to highlight a few:

  • Comment letter trends: the SEC discussed the impacts on MD&A, non-GAAP measures, and even segment footnotes that they are seeing as a result of COVID-19 and stated that disclosures made to address COVID-19 related impacts were “pretty good.” But reiterated that if pandemic-adjustments are being made, they need to be directly attributable to the pandemic; incremental to normal operations; and must be based on actual (not hypothetical) amounts (i.e., cannot present “lost revenue as a result of COVID-19" because that is completely arbitrary).
  • Consultations: While the SEC dealt with many COVID-19 related consultations, they also addressed many issues relating to revenue recognition (performance obligations, principal vs. agent, payments to vendors); cash flow presentations; identifying the primary beneficiary within the VIE model; and leases (ROU assets and related abandonment issues). Please refer to the various SEC speeches that discuss these areas in more detail.
  • Rulemaking: The SEC reminded participants they had a busy year when it came to rulemaking and various amendments are now effective, including Regulation S-K Items 101, 103, and 105; MD&A (including selected financial data and supplementary information), business acquisition disclosures and financial disclosures of financial guarantors. Deloitte's summary of the conference includes a great write-up of all the recent SEC amendments.

Here are other helpful resources that provide additional detail on the 2020 AICPA conference:

EY Summary

PwC Podcast

(Note that KPMG’s write-up was not yet available at the time of writing this blog).

In closing, I just want to take the time to thank each and every one of you for all the support that you’ve given for GAAP Dynamics throughout 2020. It definitely has been a year of change (both good and bad) but we appreciate all that you do for us and we hope to have made your year a bit brighter!

From all of us at GAAP Dynamics, we wish you a happy holiday season and a healthy and safe 2021!

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