Accountants follow standards and procedures that various governing bodies keep track of and maintain. These organizations include the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). Government agencies such as the Internal Revenue Service, also have some part in the formulation of these rules.
From time to time, these organizations update these standards to conform to the ever-changing business environment in the US. Without these updates, we will be unable to realize the real value and performance of our businesses in today’s context.
Here are some accounting and auditing standards updates this August 2020 that we believe you should know:
Proposed Updates On The Accounting For Long-Duration Contracts
The FASB released the Accounting Standards Update No. 2018-12 last August 2018. However, we still included this update on our list as the AICPA Financial Reporting Executive Committee (FinREC) only recently released a working draft on the implementation of the said standard.
ASU No. 2018-12 is a result of the FASB addressing some issues stockholders in the insurance industries have raised. According to the original ASU No. 2018-12 publication, users complained that current accounting standards do “not provide sufficient decision-useful information in a timely or transparent manner.” (FASB, 2018)
You can read more on this update through the article Nekose Wills on the Journal of Accountancy. Will published the report last 12 August 2020 under the title “AICPA encourages COVID-19 tax relief and issues new auditing standards.”
Aicpa Encourages Covid-19 Tax Relief And Issues New Auditing Standards
Reporting Executive Committee (FinREC) has issued a working draft related to the implementation of FASB Accounting Standards Update (ASU) No. 2018-12, Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.
The draft discusses considerations for application of ASU No. 2018-12, which is designed to make targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance company. Click here to read more…
Accounting For Convertible Instruments, And Contracts In Own Equity
The FASB’s Accounting Standards Update No. 2020-06 is with regards to the accounting for convertible and equity instruments. The main objective of the update is to simplify the accounting of these transactions and to reduce the number of financial statement restatements that result from the complexity of previous accounting models.
You can read further on this topic through the article FASB simplifies accounting for convertible instruments, contracts in own equity by Ken Tysiac on the Journal of Accountancy.
FASB simplifies accounting for convertible instruments, contracts in own equity
FASB issued a new standard Wednesday that is designed to simplify financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity.
The board reduced the number of accounting models for convertible debt instruments and convertible preferred stock. This will result in fewer embedded conversion features being separately recognized from the host contract compared with current GAAP.
If you want to learn more about how these accounting standards can affect you and your business, feel free to contact our topnotch team of accountants here at AldarisCPA. We offer several accounting services, such as bookkeeping services, tax preparation, accounting consultation, and more. Click here to set an appointment now.