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Auditing & Accounting Update

Auditing & Accounting Update

In this section, we provide brief updates on regulatory developments in auditing and accounting that may impact Japanese companies in the United States. Further discussion of the issues can be found in KPMG's Department of Professional Practice's Defining Issues.


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SEC proposes amendments to auditor independence rules

Defining Issues 18-5 reports on the SEC's proposed changes to auditor independence rules related to certain loans or debtor-creditor relationships. The SEC’s proposal includes four amendments to the loan provision that it believes would effectively identify relationships that could impair an auditor’s objectivity and impartiality.

Go to Defining Issue 18-5 (PDF) >

EITF reaches a final consensus on implementation costs for cloud computing and a consensus-for-exposure

Defining Issues 18-6 reports on the EITF actions related to three issues, including a final consensus on customers' accounting for implementation costs in cloud computing arrangements. The EITF also reached a consensus-for-exposure on the recognition of revenue performance obligations in a business combination, and discussed the accounting for development costs of episodic television series.

Go to Defining Issue 18-6 (PDF) >

FASB Transition Resource Group discusses potential changes to the credit losses standard

Defining Issues 18-7 reports on the TRG discussion about estimating credit losses, including accrued interest and the timing of recognition of recoveries. The TRG discussed five issues that were raised. The FASB Staff summarized responses to technical inquires and indicated additional issues that will be discussed by the Board in a future meeting.

Go to Defining Issue 18-7 (PDF) >

FASB simplifies the accounting for share-based payments to nonemployees

Defining Issues 18-8 reports on ASU 2018-07, which more closely aligns the accounting for employee and nonemployee share-based payments. However, differences remain in the accounting for attribution and a contractual term election for valuing nonemployee equity share options.

Go to Defining Issue 18-8 (PDF) >

FASB clarifies how not-for-profits and others account for grants and similar transactions

Defining Issues 18-9 reports on the FASB’s ASU that clarifies how not-for-profits and others account for grants and similar transactions. The ASU addresses practice issues by helping an entity evaluate whether it should account for a grant or similar contract as a contribution or as an exchange transaction.

Go to Defining Issue 18-9 (PDF) >

SEC staff comments on accounting for tax reform and implementation efforts for new standards

Defining Issues 18-10 reports on the SEC staff's observations about the progress on accounting for tax reform and implementation of the revenue, leases and credit losses standards. SEC Deputy Chief Accountant Sagar Teotia reminded registrants to consider the staff observations and thoughtfully evaluate their own progress on implementation.

Go to Defining Issue 18-10 (PDF) >

Financial reporting considerations for companies with operations in Argentina

Defining Issues 18-11 reports on Argentina's classification as having a highly inflationary economy and explains what actions companies need to take. KPMG expects calendar year-end companies to conclude that Argentina's economy is highly inflationary no later than June 30, 2018.

Go to Defining Issue 18-11 (PDF) >

Supreme Court overturns 'physical presence' standard in Wayfair decision

Defining Issues 18-12 reports on the effect on the financial reporting effects of states potentially requiring companies to collect sales and use taxes, even if they lack physical presence in the state. We believe companies will need to consider whether the Supreme Court's decision means that they will need to recognize financial statement liabilities and provide additional disclosures.

Go to Defining Issue 18-12 (PDF) >

Blockchain and digital currencies challenge traditional accounting and reporting models

Defining Issues 18-13 reports on blockchain technologies, including digital assets such as cryptocurrencies, and discusses their effect on internal controls and business processes. The accounting for digital assets is an emerging area, and so far neither the FASB nor the IASB have provided specific accounting guidance.

Go to Defining Issue 18-13 (PDF) >

SEC updates smaller reporting company definition

Defining Issues 18-14 reports on the SEC's amended definition of 'smaller reporting company'. The new definition allows more registrants to take advantage of scaled disclosures.

Go to Defining Issue 18-14 (PDF) >

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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