Income Statement Expenses – New Edition of GAAP Update Service Published

We have published a new edition of GAAP Update Service, Income Statement Expenses: New Disclosure Rules. This new edition discusses FASB Accounting Standards Update (ASU) No. 2024-03, Income Statement – Reporting Comprehensive Income – (Subtopic 220-40) – Disaggregation of Income Statement Expenses. This ASU requires public companies to provide footnote disclosures detailing the components of certain expense captions in the income statement. Private companies are exempt.

Audit Committees – PCAOB Staff Publishes Audit Focus Publication

The PCAOB Staff has published Audit Focus, Audit Focus - Audit Committee Communications. This publication:

Highlights key reminders for auditors from the PCAOB standards and PCAOB staff guidance related to audit committee communications.

Provides the PCAOB staff’s perspectives on common deficiencies in auditors’ work.

Shares good practices that the PCAOB staff has observed.

AICPA Conference – New Overview of Conference Highlights Published

On December 9-11, 2024, representatives of the SEC, FASB, PCAOB, IASB, and AICPA spoke at the 2024 AICPA & CIMA Conference on Current SEC and PCAOB Developments. Topics discussed during the 2024 conference covered a number of important financial reporting and auditing issues. Principal themes of the conference included:

• The importance of transparency and integrity of financial reporting, including investor protections and the role of the auditor in providing assurance and trust in the financial reports of entities.
• How the accounting profession can navigate the changing and challenging business environment to protect the public interest.
• The importance of internal control over financial reporting (ICFR), including the designing and implementation of controls, and the important role of auditors have in testing the effectiveness of ICFR.
• The growing use of Artificial Intelligence and evolving technologies in the accounting and audit professions.
• PCAOB standard-setting, inspection, and enforcement.
• Accounting standard-setting.

An overview of the conference has been added to SEC Practice, including the various speeches from staff members of the SEC. A new edition of A Closer Look providing a summary and analyses of the key accounting, disclosure, and reporting issues addressed at the conference will be released in the near future.

Segment Reporting – New Edition of Interpretation Published

We have published a new edition of our Interpretation, Segment Reporting. This edition has been updated for Accounting Standard Updates issued through November 30, 2024.

Electricity Contracts – IASB Issues Guidance for Nature-Dependent Electricity Contracts

The IASB issued targeted amendments to help companies better report the financial effects of nature dependent electricity contracts, which are often structured as power purchase agreements (PPAs).

The IASB indicates that “nature-dependent electricity contracts help companies to secure their electricity supply from sources such as wind and solar power. The amount of electricity generated under these contracts can vary based on uncontrollable factors such as weather conditions. Current accounting requirements may not adequately capture how these contracts affect a company’s performance.”

To allow companies to better reflect these contracts in the financial statements, the IASB has made targeted amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures. The amendments:

• Clarify the application of the ‘own-use’ requirements;
• Permit hedge accounting if these contracts are used as hedging instruments; and
• Add new disclosure requirements to enable investors to understand the effect of these contracts on a company’s financial performance and cash flows.

These amendments are required to be applied for annual reporting periods beginning on or after January 1, 2026. Companies can apply the amendments earlier.                                                                                                                                                       

=========================================

AUDITING AND INTERNAL CONTROLS HEADLINES

=========================================

Agreed-Upon Procedures Engagements – New Edition of GAAS Update Service Published

We have published a new edition of GAAS Update Service, Practice Issues and Questions & Answers Relating to AT-C Section 215, “Agreed-Upon Procedures Engagements.” This new edition reviews AT-C Section 215 which addresses the practitioner’s performance and reporting obligations when conducting an agreed-upon procedures engagement in accordance with the attestation standards.

Audit Committees – PCAOB Staff Publishes Audit Focus Publication

The PCAOB Staff has published Audit Focus, Audit Focus - Audit Committee Communications. This publication:

• Highlights key reminders for auditors from the PCAOB standards and PCAOB staff guidance related to audit committee communications.
• Provides the PCAOB staff’s perspectives on common deficiencies in auditors’ work.
• Shares good practices that the PCAOB staff has observed.

Construction Contractors – 2024-2025 Edition of Knowledge-Based Preparation, Compilation, and Review Engagements of Construction Contractors and Related Entities Published

We have published the 2024-2025 Edition of Knowledge-Based Preparation, Compilation, and Review Engagements of Construction Contractors and Related Entities. This publication examines the AICPA’s review, compilation, and preparation engagement standards and shows you how to conduct engagements in an efficient and effective manner.

This publication incorporates the provisions of SSARS-26, Quality Management for an Engagement Conducted in Accordance with Statements on Standards for Accounting and Review Services. SSARS 26 is effective for engagements performed in accordance with SSARSs for periods ending on or after December 15, 2025. Early implementation is recommended.

Common Interest Realty Associations – 2024-2025 Edition of Knowledge-Based Audits, Preparations, Compilations, and Reviews of Common Interest Realty Associations Published

We have published the 2024-2025 Edition of Knowledge-Based Audits, Preparations, Compilations, and Reviews of Common Interest Realty Associations. This publication is designed to help practitioners efficiently and effectively perform audit, preparation, compilation, or review engagements of common interest realty associations (CIRAs) entities using the KBA or KBPCR methodology.

The audit tools in this new edition have been updated to help auditors conduct efficient and effective audit engagements in accordance with U.S. GAAS and incorporate current authoritative guidance, including:

• SAS No. 146, Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards (effective for periods beginning on or after December 15, 2025);
• SQMS No. 1, A Firm's System of Quality Management (effective December 15, 2025);
• SQMS No. 2, Engagement Quality Reviews (effective December 15, 2025);
• SQMS No. 3, Amendments to QM Sections 10, A Firm’s System of Quality Management, and 20, Engagement Quality Reviews (effective December 15, 2025); and
• SAS No. 149, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors)) (effective for periods ending on or after December 15, 2026).

=======================

GOVERNMENT HEADLINES:

=======================

2024 Review – New Edition of Governmental GAAP Update Service Published

We have published a new edition of Governmental GAAP Update Service, Was 2024 the Year that Was for GASB? This new edition reviews 2024 governmental GAAP activity and considers where we are going in 2025.