We are pleased to release MaloneBailey's December 2024 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
www.malonebailey.com
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What's the Crunch?
Featured Podcast
- Cybersecurity in the CPA Firm Environment
Recent Accounting & Regulatory Updates
Recent FASB & AICPA Updates
- Revenue Recognition – FASB Discusses Post Implementation Review of Topic 606
- Construction Contractors – FASB Discusses PCC’s Project on Presentation of Contract Assets and Liabilities
- Brokers and Dealers – AICPA Publishes New Edition of Audit and Accounting Guide
- State and Local Governments – AICPA Publishes New Edition of Audit and Accounting Guide
- Preparation, Compilation, and Review Engagements – AICPA Publishes New Edition of Audit and Accounting Guide
Recent SEC & PCAOB Updates
- Covered Clearing Agencies – SEC Adopts Rule Amendments and New Rule to Improve Risk Management and Resilience of Covered Clearing Agencies
- Crypto and Digital Assets – SEC Commissioner Uyeda Discusses Crypto and Digital Assets
Extra Crunch
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PCAOB Spotlight: 2023 Conversations with Audit Committee Chairs
News from MaloneBailey, LLP
- MaloneBailey, LLP Welcomes Munetaka Shiratori, Audit Director, To Lead Tokyo Office
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Cybersecurity in the CPA Firm Environment
Summary - Technology has evolved to where we can store everything we need in one convenient place at just the click of a button, however, this convenience comes at a cost as it’s now easier than ever for someone to get into your system and take your sensitive information. It’s important to familiarize yourself and stay a few steps ahead of these looming cyber threats to prepare and train yourself in case there are any attempts of a breach.
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.
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Recent FASB & AICPA Updates | |
Revenue Recognition – FASB Discusses Post Implementation Review of Topic 606
Summary - As reported in its “Summary of Decisions” publication, the FASB met on October 2, 2024, and discussed the post-implementation review (PIR) activities completed on Topic 606 and the status of the Revenue PIR process. The FASB continued redeliberations on the proposed Accounting Standards Update, Financial Instruments—Credit Losses (Topic 326): Purchased Financial Assets.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Construction Contractors – FASB Discusses PCC’s Project on Presentation of Contract Assets and Liabilities
Summary - As reported in its “Summary of Decisions” publication, the FASB met on October 16, 2024, and discussed the Private Company Council’s (PCC’s) project on the presentation of contract assets and contract liabilities for construction contractors.
The FASB endorsed the PCC’s decision that the scope of the presentation alternative would be private construction companies within the scope of Topic 910, Contractors—Construction. The FASB also endorsed the PCC’s decision to provide an alternative for private companies to present contract assets and contract liabilities on a gross basis on the statement of financial position. The presentation alternative would be applied at the entity level. The FASB endorsed the PCC’s decision to require that a private company disclose when it has elected the presentation alternative.
In addition, the FASB endorsed the PCC’s decision to require a full retrospective transition approach and related transition disclosures. The Board also decided that when a private company initially applies the presentation alternative for contract assets and contract liabilities, it need not justify that the use of the accounting alternative is preferable as described in paragraph 250-10-45-2.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Brokers and Dealers – AICPA Publishes New Edition of Audit and Accounting Guide
Summary - The AICPA has published a new edition of its Audit and Accounting Guide, Brokers and Dealers in Securities. This guide delivers the support you need to comply with numerous broker-dealer requirements.
The 2024 edition includes updated discussion of several topics, including the following:
- Digital assets, including accounting for the safeguarding of crypto assets;
- Shortened securities transaction settlement cycles under new SEC rules;
- Recently effective electronic recordkeeping and financial responsibility requirements under SEC rules;
- Other recent SEC releases and FINRA rule amendments;
- Fractional shares and fully paid securities lending; and
- Controls and monitoring activities, including broker-dealer information systems and application controls.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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State and Local Governments – AICPA Publishes New Edition of Audit and Accounting Guide
Summary - The AICPA has published a new edition of its Audit and Accounting Guide, State and Local Governments. This guide helps both new and experienced auditors to understand the GAAP applicable to the financial statements of state and local governments and audit and report on those financial statements in accordance with generally accepted auditing standards.
This guide is based on pronouncements issued or cleared by GASB, contains a small amount of category B accounting guidance, and has been updated for the following guidance:
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GASB Statement No. 99, Omnibus 2022;
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GASB Statement No. 100, Accounting Changes and Error Corrections — an amendment of GASB Statement No. 62;
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GASB Statement No. 101, Compensated Absences;
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GASB Statement No. 102, Certain Risk Disclosures;
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GASB Implementation Guide No. 2023-01, Implementation Guidance Update — 2023;
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Statement on Auditing Standards (SAS) No. 143, Auditing Accounting Estimates and Related Disclosures (AU-C sec. 540);
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SAS No. 144, Amendments to AU-C Sections 501, 540, and 620 Related to the Use of
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Specialists and the Use of Pricing Information Obtained From External Information Sources;
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SAS No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Page 3 of 4 Misstatement (AU-C sec. 315)
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SAS No. 147, Inquiries of the Predecessor Auditor Regarding Fraud and Noncompliance With Laws and Regulations (NOCLAR).
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Preparation, Compilation, and Review Engagements – AICPA Publishes New Edition of Audit and Accounting Guide
Summary - The AICPA has published a new edition of its Audit and Accounting Guide, Preparation, Compilation, and Review Engagements. This guide provides current guidance on the requirements for SSARS engagements involving financial statements, pro forma financial information, and personal financial statements. The 2024 edition is an essential resource for both new and seasoned accountants providing these types of services.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Recent SEC & PCAOB Updates | |
Auditor Independence – SEC Adopts Rule Amendments and New Rule to Improve Risk Management and Resilience of Covered Clearing Agencies
Summary - The SEC adopted rule amendments and a new rule to “improve the resilience and recovery and wind-down planning of covered clearing agencies. The rule amendments establish new requirements regarding a covered clearing agency’s collection of intraday margin as well as a covered clearing agency’s reliance on substantive inputs to its risk-based margin model. The new rule prescribes requirements for the contents of a covered clearing agency’s recovery and wind-down plan.”
Regarding intraday margin collection, the rule amendments require that a covered clearing agency that provides central counterparty services has policies and procedures to establish a risk-based margin system that monitors intraday exposures on an ongoing basis, includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant (including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility), and documents when the covered clearing agency determines not to make an intraday call pursuant to its written policies and procedures.
The rule amendments regarding substantive inputs require that a covered clearing agency that provides central counterparty services has policies and procedures to establish a risk-based margin system that uses reliable sources of substantive inputs, uses procedures to address circumstances in which substantive inputs are not readily available or reliable (to ensure that the covered clearing agency can continue to meet its credit exposures to its participants), and that such procedures must include either the use of price data or substantive inputs from an alternate source or a risk-based margin system that does not rely on substantive inputs that are unavailable or unreliable.
Existing rules require a covered clearing agency to have a recovery and wind-down plan, and the new rule requires such an entity to specify nine elements for its plan. The new rule’s required elements address: planning (e.g., the identification and use of scenarios, triggers, tools, staffing, and service providers); timing and implementation of the plans; and testing and board approval of the plans.
The SEC is adopting two compliance dates:
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150 days after publication in the Federal Register for a covered clearing agency to file any required proposed rule changes or advance notices with the agency; and
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390 days after publication in the Federal Register for such proposed rule changes and advance notices to be effective.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Registration Statements – SEC Commissioner Uyeda Discusses Crypto and Digital Assets
Summary - SEC Commissioner Mark T. Uyeda recently discussed developments in crypto and digital asset innovation. Commissioner Uyeda indicated that in his view “the SEC could do much more in addressing the key gating question of whether a crypto asset is a security. Market participants have been forced to struggle with this analysis and decipher SEC views from various settled enforcement actions and litigation in the courts.” Highlights of Commissioner Uyeda’s comments on crypto and digital assets included that the SEC:
- Does not have a specific form for crypto and thus issuers would seek to register their crypto offerings on Form S-1. Form S-1 is a form of general applicability. As such, it may require information that is not relevant or applicable to crypto, while at the same time, it may not require information that would be material to crypto investors. This approach neither protects investors nor facilitates capital formation.
- Should engage with participants in a more transparent way. Commissioner Uyeda understands that many other securities regulators around the world have taken this approach, such as hosting regular fintech events, providing regulatory sandboxes, or otherwise publicly engaging with the industry and investors. There can be benefits from this approach and Uyeda thinks the SEC should learn from its fellow regulators’ experiences.
Commissioner Uyeda cautioned that the SEC “cannot bury our heads in the sand about the growing benefits and risks of crypto and financial technology. Other regulators around the world are leading on these issues. I hope the United States takes note of this leadership and uses this experience to jumpstart our own regulatory framework as we work to facilitate innovation, capital formation, and investor protection.”
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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PCAOB: 2023 Conversations with Audit Committee Chairs
Summary - The Public Company Accounting Oversight Board (PCAOB) spoke with 230 audit committee chairs. According to the report, "the conversations provide an opportunity for the PCAOB to hear the perspectives and observations of audit committee chairs and for the PCAOB to share information and resources with audit committees to help them improve audit quality." The report goes on to state that "following these conversations, PCAOB staff prepared this publication to present high-level observations and takeaways from those conversations. As noted in the disclaimer on the cover of this publication, this document should not be viewed as formal guidance or an endorsement by the PCAOB of the views summarized."
To access the report, please click here.
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News from MaloneBailey, LLP | |
MaloneBailey, LLP Welcomes Munetaka Shiratori, Audit Director, to Lead Tokyo Office
We are pleased to announce that Munetaka Shiratori has joined the firm’s Tokyo office as an Audit Director.
As Audit Director, Mr. Shiratori will be responsible for acting as the liaison between the audit engagement teams and the clients to conduct audits of financial statements and other services for Japanese companies that either plan to go public via an initial public offering (IPO) or already trade on stock exchanges in the United States.
Prior to joining MaloneBailey, Mr. Shiratori was at a Big Four firm in Tokyo where he was for 15 years and where he served as Audit Partner. Shiratori started his career at Arthur Andersen in Silicon Valley, California in the United States in the mid-1990s. He is a native Japanese speaker, and he also is fluent in English due to his prior working experience in the United States.
MaloneBailey’s Tokyo office serves its growing client base of Japan-based companies that are planning to IPO or already listed on the various stock exchanges (Nasdaq and NYSE) in the United States. MaloneBailey’s team of auditors in its Tokyo, Beijing and Shenzhen offices focus on the delivery of audit services to these Japanese companies. The firm’s practice in Japan serves clients in a variety of industries including, software, medical, gaming and more.
"Mr. Shiratori is a strong addition to our audit practice and we are proud to have him lead our Tokyo team. As a former audit partner of a Big Four firm in Tokyo and as a former audit professional in Silicon Valley, California, his unique experience in both Japan and the United States and in both Japanese GAAP, U.S. GAAP and IFRS is an asset in our Japanese audit practice. We look forward to all that he will contribute to our growing firm. Our expansion into Tokyo in 2023 is part of our plan to strengthen our position as a market leader in Japan and other Asian areas serving publicly traded companies listed or to be listed on Nasdaq and other U.S. stock exchanges," said George Qin, Managing Partner at MaloneBailey. "Our Tokyo office establishes a significant presence for MaloneBailey in Japan, allowing us to better serve our clients and providing a platform to expand our reach deeper into the practice area taking Japanese companies public in the U.S. through IPO and De-SPAC transactions,” Qin added.
For more information, please visit www.malonebailey.com.
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