News Articles

EITF Reaches Consensus on Accounting for Cloud Computing Costs

Published on July 10, 2018

The Financial Accounting Standards Board's Emerging Issues Task Force has reached a consensus on how to account for implementation costs in a cloud computing arrangement that's considered a service contract.

In March, FASB issued a proposed accounting standards update to clarify the accounting for such implementation costs. It asked for feedback to be submitted by the end of April. At a meeting of FASB's Emerging Issues Task Force last week, the EITF reached a consensus that a customer in a cloud computing arrangement that is a service contract should apply guidance on internal-use software to determine which implementation costs to recognize as an asset. The EITF also reached some decisions on other items, including scope, subsequent measurement, presentation and disclosure, and effective date.

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COSO Supplements ERM Framework with Industry Examples

Published on July 10, 2018

The Committee of Sponsoring Organizations of the Treadway Commission, also known as COSO, has added a supplement to its widely used Enterprise Risk Management Framework, including detailed examples of how to use the ERM Framework, written by PwC under the direction of COSO's board.

The Compendium of Examples links together the concepts and applications of ERM, illustrating various scenarios based on research, interviews and case studies.

COSO released an updated version of the ERM Framework last September. It’s one of the most widely used risk management frameworks in the world, employed by many organizations that also rely on COSO's Internal Control Integrated Framework, which the group updated in 2013.

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7 Lessons From Adopting Rev Rec

Published on July 10, 2018

Public companies with a December 31 year-end have recently completed months-long (if not years-long) efforts on the adoption of ASC Topic 606, "Revenue from Contracts with Customers" (Topic 606). The adoption of Topic 606 has been one of the most time-consuming accounting projects taken on by most companies since Sarbanes-Oxley Act Section 404 over a decade ago. As Topic 606 effectively replaces all legacy GAAP rules around revenue recognition, it has far-reaching implications for all companies in all industry types.

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Expense Fraud Estimated to Cost $1.9B Annually

Published on July 10, 2018

Business travel expense fraud is estimated to cost U.S. organizations $1.9 billion per year, based on a new survey.

The survey, of more than 1,000 business travelers in the U.S., U.K. and Australia by Chrome River Technologies, a provider of expense and supplier invoice processing software, found that travel expense fraud is typically perpetrated by younger employees, with 82.9 percent committed by workers under the age of 44. Managers and white-collar, non-managerial staff are more likely to commit expense fraud. Among the survey respondents, 58.1 percent of those who said they cheated were mid-level employees, while vice presidents and senior vice presidents had the lowest fraud rate at a combined 6.2 percent.

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IRS Provides Info on Tax Reform Changes to Moving, Mileage and Travel Expenses

Published on July 10, 2018

The Internal Revenue Service offered information about changes from the Tax Cuts and Jobs Act on the rules for moving expenses, vehicle expenses and unreimbursed employee expenses, along with higher depreciation limits for some vehicles.

The TCJA, the tax overhaul that Congress passed last December, suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, until Jan. 1, 2026. During that suspension period, the IRS won’t allow deductions for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03. However, the suspension doesn’t apply to members of the armed forces on active duty who move because of a military order related to a permanent change of station.

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Leases: A portfolio approach

Published on May 21, 2018

Shifting application from an individual lease to a portfolio level offers practicality and cost minimization for companies adopting FASB’s new lease accounting standard. Here are tips for applying a portfolio approach: 

Assess the lease population. Materiality and volume are key characteristics of a lease population. Material individual leases are often specifically identifiable and have established data collection and governance processes. Examples are offices, stores, airplanes, or data centers. Depending on how a contract is executed, a single lease agreement may contain multiple identified leased assets, such as floors in a building or capacity in a data center. These types of leasing agreements benefit from existing processes and are favorably positioned to apply the guidance at a lease, or contract level. However, immaterial individual lease agreements, such as copiers, vehicles, and laptops, may not have robust processes because of the historic, off-balance-sheet accounting treatment. These types of lease agreements may have high volumes, which introduces additional operational complexity. Low-dollar, high-volume leasing agreements could benefit from the option to group leases into portfolios. 

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IRS Issues HSA Contribution Limits for 2019

Published on May 21, 2018

The IRS issued the calendar year 2019 inflation-adjusted figures for the annual contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans (Rev. Proc. 2018-30). 

Under Sec. 223, individuals who participate in a high-deductible health plan (HDHP) are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. The contribution deduction limit is subject to an annual inflation adjustment. 

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IRS Offers Automatic Method to Change Accounting for New Revenue Recognition Standard

Published on May 21, 2018

The Internal Revenue Service has released a new revenue procedure that provides a new automatic way that companies can use when changing their accounting method to conform to the Financial Accounting Standards Board’s new revenue recognition standard. 

In Revenue Procedure 2018-29, the IRS noted that under the new FASB standard, an entity must recognize revenue, for financial statement purposes, for goods and services promised to customers in an amount that reflects what the entity expects to receive in exchange for those goods and services. 

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Companies Foresee Major Impact from Lease Accounting Standard

Published on May 21, 2018

More than three-quarters of the top 100 U.S. companies with the biggest lease obligations expect to see a material impact on their balance sheet from the new lease accounting standard, according to a new report. 

The report, from the technology company LeaseAccelerator, analyzed a recent set of Securities and Exchange Commission filings related to the adoption of the leasing standard, also known as ASC 842, which takes effect for public companies at the end of this year. The SEC Staff Accounting Bulletin 74 requires public companies to disclose the effects of accounting standards such as the leasing standard and the recent revenue recognition standard that have been announced but not yet adopted. 

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Understanding the New Sec. 199A Business Income Deduction

Published on May 21, 2018

Understanding the New Sec. 199A Business Income Deduction 

Sec. 199A allows taxpayers other than corporations a deduction of 20% of qualified business income earned in a qualified trade or business, subject to certain limitations. 

(Source: AICPA - CPA Letter Daily - The Tax Adviser - May 2, 2018)

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