We are pleased to release MaloneBailey's September 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


What's the Crunch?



Featured Podcast


  • Starting Your Accounting Career: Tips for Your First Year as an Accounting Professional


Recent Accounting & Regulatory Updates



Recent FASB & AICPA Updates


  • Proposed Accounting Standards Update ASU: Income Taxes (Topic 740)-Improvements to Income Tax Disclosures
  • Climate-Related Disclosures – IASB Proposes Illustrative Examples on Climate-Related and Other Uncertainties in Financial Statements
  • Subsidiary Disclosures – IASB Proposes Amendments to IFRS 19
  • Hyperinflationary Currencies – IASB Proposes Amendments for Translating Financial Information into Hyperinflationary Currencies
  • FASB Conceptual Framework – SEC Chief Accountant Comments on FASB’s Updated Conceptual Framework
  • New Edition of AICPA Audit and Accounting Guide Published


Recent SEC & PCAOB Updates


  • Release No. 33-11295: Financial Data Transparency Act Joint Data Standards
  • Release No. 34-100155: Regulation S-P - Privacy of Consumer Financial Information and Safeguarding Customer Information 
  • IASB Issues Annual Improvements to IFRS Accounting Standards
  • SEC and FinCEN Propose Anti-Money Laundering and Customer Identification Programs for Investment Advisers
  • FASB Conceptual Framework – SEC Chief Accountant Comments on FASB’s Updated Conceptual Framework


Extra Crunch


  • Off the Charts! - OTC Market Podcast


About MaloneBailey, LLP


Featured Podcast

Starting Your Accounting Career: Tips for Your First Year as an Accounting Professional


Summary - In the following edition of Everybody Counts, MaloneBailey's podcast, "Starting Your Accounting Career: Tips for Your First Year as an Accounting Professional," hosted by Matt Setzekorn, offers invaluable insights for aspiring accountants. Guests Carolina Uzcategui, Sarah Burns, and Joey Yang discuss everything from navigating career fairs to acing interviews, providing practical advice to help new professionals excel in their first year in the accounting field.



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.

Recent FASB & AICPA Updates

Proposed Accounting Standards Update (ASU): Income Taxes (Topic 740)-Improvements to Income Tax Disclosures


Summary - The FASB has released for public comment the proposed Accounting Standards Update (ASU), Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The proposed ASU addresses requests for improved income tax disclosures from investors, lenders, creditors, and other allocators of capital (collectively, "investors") that use the financial statements to make capital allocation decisions. The comment deadline is May 30, 2023.


Improving Understandability of the Tax Provision


During the FASB’s 2021 agenda consultation process and other stakeholder outreach, investors expressed concerns that existing income tax disclosures do not provide sufficient information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. While investors told FASB that they generally find these disclosures helpful, they suggested possible enhancements to better (a) understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (b) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (c) identify potential opportunities to increase future cash flows.


The proposed amendments would address investor requests for more transparency about income tax information, including jurisdictional information, by requiring:



  • Consistent categories and greater disaggregation of information in the rate reconciliation; and
  • Income taxes paid disaggregated by jurisdiction.


Effective Dates


The FASB will determine the effective date and whether early adoption of the amendments is permitted after it considers stakeholder feedback on the proposed amendments. The proposed amendments would be applied retrospectively.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Climate-Related Disclosures – IASB Proposes Illustrative Examples on Climate-Related and Other Uncertainties in Financial Statements


Summary - The IASB has published a consultation document, proposing eight examples to illustrate how companies apply IFRS Accounting Standards when reporting the effects of climate-related and other uncertainties in their financial statements.


The eight illustrative examples focus on areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information. The principles and requirements illustrated in these examples apply equally to other types of uncertainties beyond climate-related uncertainties.


The illustrative examples do not add to or change the requirements in IFRS Accounting Standards. Instead, they provide guidance on how the requirements in the Standards should be applied to provide investors with better information about climate-related risks and other uncertainties.


The IASB invites all stakeholders to provide feedback on the proposed illustrative examples. The comment period is open until November 28, 2024.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Subsidiary Disclosures – IASB Proposes Amendments to IFRS 19


Summary - The IASB published an Exposure Draft proposing amendments to IFRS 19, Subsidiaries without Public Accountability: Disclosures, which was issued in May 2024. The proposals would reduce disclosure requirements from new IFRS Accounting Standards and amendments issued between February 2021 and May 2024.


IFRS 19 simplifies financial reporting for eligible subsidiaries, enabling them to apply IFRS Accounting Standards with reduced disclosure requirements. As IFRS Accounting Standards are developed and amended, IFRS 19 will be amended alongside them—always with a view to reducing disclosure requirements for eligible subsidiaries.


The proposals would reduce or simplify the disclosure requirements related to:


  • Lack of exchangeability (amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates);
  • International tax reform—Pillar Two Model Rules (amendments to IAS 12, Income Taxes);
  • Supplier finance arrangements (amendments to IAS 7, Statement of Cash Flows, and IFRS 7, Financial Instruments: Disclosures);
  • Primary financial statements (IFRS 18, Presentation and Disclosure in Financial Statements); and
  • Non-current liabilities with covenants (amendments to IAS 1, Presentation of Financial Statements).


The Exposure Draft also includes indicative disclosure requirements from the prospective Accounting Standard Regulatory Assets and Regulatory Liabilities and asks for feedback on whether these requirements would be practical for eligible subsidiaries.


The IASB is inviting feedback on these proposals until November 27, 2024.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Hyperinflationary Currencies – IASB Proposes Amendments for Translating Financial Information into Hyperinflationary Currencies


Summary - The IASB published a proposal to address accounting issues that affect companies that translate financial information from a non-hyperinflationary currency to a hyperinflationary currency. The proposal contains narrow-scope amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates, and introduces translation requirements for these companies. The IASB expects the proposed translation requirements to improve information for users of financial statements while being simple and cost-effective for companies to apply.


In a hyperinflationary economy, financial information is useful only if it reflects a measure of current purchasing power of the currency. Applying IAS 21 today does not always result in that outcome and in some cases has led to diversity in accounting practice.


Benefits of the proposed amendments include:


  • More consistent and useful information in financial statements presented in hyperinflationary currencies;
  • Removal of diversity in accounting practices related to translation into a hyperinflationary currency;
  • Improved comparability of financial statements among companies and jurisdictions; and
  • Simpler and low-cost accounting requirements for affected companies.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

New Edition of AICPA Audit and Accounting Guide Published

 

Summary - The AICPA has published a new edition of its Audit and Accounting Guide, Cybersecurity Risk Management. This new edition has been developed by the AICPA’s Assurance Services Executive Committee (ASEC) Cybersecurity Working Group, in conjunction with the Auditing Standards Board (ASB), to assist practitioners engaged to examine and report on an entity’s cybersecurity risk management program. This edition has been updated through April 1, 2024.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Recent SEC & PCAOB Updates

Release No. 33-11295: Financial Data Transparency Act Joint Data Standards

 

Summary - The SEC proposed joint data standards under the Financial Data Transparency Act of 2022 that would establish technical standards for data submitted to certain financial regulatory agencies. Eight additional agencies have proposed or are expected to propose the joint standards.


The SEC indicates that the proposed joint standards would promote interoperability of financial regulatory data across the agencies by establishing common identifiers for entities, geographic locations, dates, and certain products and currencies.


In addition, the proposal would establish a principles-based joint standard with respect to data transmission and schema and taxonomy formats, which would enable financial institutions to submit high-quality, machine-readable data to the agencies.



The agencies are in various stages of approving the proposed joint standards, with some agencies scheduled to vote in the coming weeks. The public comment period for the proposed joint standards will remain open for 60 days following publication in the Federal Register.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-100155: Regulation S-P - Privacy of Consumer Financial Information and Safeguarding Customer Information

 

Summary - The IASB has issued IFRS 19, Subsidiaries without Public Accountability: Disclosures. The new IFRS permits eligible subsidiaries to use IFRS Accounting Standards with reduced disclosures. The IASB expects that companies that apply IFRS 19 will have reduced costs of preparing subsidiaries’ financial statements while maintaining the usefulness of the information for users of their financial statements


When a parent company prepares consolidated financial statements that comply with IFRS Accounting Standards, its subsidiaries are required to report to the parent using IFRS Accounting Standards. However, for their own financial statements, subsidiaries are permitted to use IFRS Accounting Standards, the IFRS for SMEs Accounting Standard, or national accounting standards.


Subsidiaries using the IFRS for SMEs Accounting Standard or national accounting standards for their own financial statements often keep two sets of accounting records because the requirements in these Standards differ from those in IFRS Accounting Standards.


The IASB believes that IFRS 19 will resolve these challenges by:


  • Enabling subsidiaries to keep only one set of accounting records, meeting the needs of both their parent company and the users of their financial statements; and
  • Reducing disclosure requirements by permitting reduced disclosures better suited to the needs of the users of their financial statements.


Subsidiaries are eligible to apply IFRS 19 if they do not have public accountability and their parent company applies IFRS Accounting Standards in their consolidated financial statements. A subsidiary does not have public accountability if it does not have equities or debt listed on a stock exchange and does not hold assets in a fiduciary capacity for a broad group of outsiders



IFRS 19 is effective for reporting periods beginning on or after January 1, 2027. Early application is permitted.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC and FinCEN Propose Anti-Money Laundering and Customer Identification Programs for Investment Advisers

 

Summary - The SEC and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) jointly proposed a new rule that would require SEC-registered investment advisers (RIAs) and exempt reporting advisers (ERAs) to establish, document, and maintain written customer identification programs (CIPs). The proposal is designed to “prevent illicit finance activity involving the customers of investment advisers by strengthening the anti-money laundering and countering the financing of terrorism (AML/CFT) framework for the investment adviser sector.”


Under this proposal, RIAs and ERAs would be required to implement reasonable procedures to identify and verify the identity of their customers, among other requirements, in order to form a reasonable belief that RIAs and ERAs know the true identity of their customers. The proposed rule would make it more difficult for criminal, corrupt, or illicit actors to establish customer relationships, including by using false identities, with investment advisers for the purposes of laundering money, financing terrorism, or engaging in other illicit finance activity.


The rule, if adopted, would require RIAs and ERAs to, among other things, implement a CIP that includes procedures for verifying the identity of each customer to the extent reasonable and practicable and maintaining records of the information used to verify a customer’s identity, among other requirements. The proposal is generally consistent with the CIP requirements for other financial institutions, such as brokers or dealers in securities and mutual funds.


Written comments on this notice of joint proposed rulemaking must be submitted on or before July 22, 2024.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Conceptual Framework – SEC Chief Accountant Comments on FASB’s Updated Conceptual Framework


Summary - Paul Munter, Chief Accountant of the SEC, issued a statement, Addressing Investor Needs through Application of the Updated Conceptual Framework in FASB Standard Setting. Munter indicates that the “strength of our capital markets relies upon a commitment by all stakeholders, including standard setters, to quality in every aspect of financial reporting, to be able to provide investors with timely and accurate information. With the Conceptual Framework complete, the FASB’s focus on the guiding principles described in the Conceptual Framework can help it continue to develop high-quality accounting standards coupled with robust disclosures to best serve the needs of investors and protect the public interest.”



The FASB recently issued a new chapter of its Conceptual Framework related to the measurement of items recognized in financial statements. The Conceptual Framework is a body of interrelated objectives and fundamentals that provides the FASB with a useful tool as it sets standards. A Statement of Financial Accounting Concepts is nonauthoritative and does not establish or change Generally Accepted Accounting Principles. The publication of this recently issued chapter completes the FASB’s Conceptual Framework.


For more information, click here.


© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Extra Crunch

Off the Charts! - OTC Market Podcast


Summary - Tune in to 'Off the Charts,' the newest podcast from Phil Carroll & Kevin Hornsby, the minds behind the Sunday Roast, alongside analyst and investor Charles Archer. Join them for a blend of British humor, in-depth company analysis, and insights into investment opportunities on the OTC Market. Don't miss the latest episodes spotlighting companies traded on the OTCQX and OTCQB.


To access the article, please click here.


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