On The Horizon: EITF provides recap of Sept. 27 meeting

Contents EITF provides recap of Sept. 27 meeting OMB issues bulletin on audits of federal financial statements IASB       TRG for IFRS 17 holds September meetings

International Federation of Accountants       IAASB revises standard on auditing accounting estimates

EITF provides recap of Sept. 27 meeting The FASB’s Emerging Issues Task Force (EITF) released a recap of its Sept. 27 meeting, which included discussions related to recognizing a contract liability for a revenue contract of an acquiree in a business combination, and improving accounting for episodic television series.

Refer to the Oct. 4 On the Horizon for additional information on the issues discussed.

OMB issues bulletin on audits of federal financial statements The Office and Management and Budget (OMB) has issued OMB Bulletin 19-01, Audit Requirements for Federal Financial Statements. The bulletin implements the audit provisions of the Chief Financial Officers Act of 1990, as amended; the Government Management Report Act of 1994; and the Federal Financial Management Improvement Act of 1996.

Some significant changes include:

  • Section 5, “Communication,” clarifies the requirements for restatements and also stresses the importance of communication in the timely issuance of financial statements.
  • Section 7, “Reporting,” clarifies that contract testing includes treaties and international agreements.
  • Section 13, “Audit of the Closing Package Financial Statements,” is updated to reflect the requirements for intra-entity and intragovernmental activity and to clarify the requirement regarding adjusting journal entries made for intragovernmental activity.
  • Appendices E and F add and clarify several representations.

The provisions of OMB Bulletin 19-01 are effective immediately for audits of financial statements, unless stipulated otherwise.

IASB TRG for IFRS 17 holds September meetings The Transition Resource Group (TRG) for IFRS 17, Insurance Contracts, met in September to discuss implementation questions submitted by stakeholders. These discussions are based on agenda papers prepared by the IASB staff that provide an accounting analysis of issues related to implementing IFRS 17.

The objective of the TRG is to provide a public forum for stakeholders to share implementation questions with the IASB and to follow a discussion of those questions. The TRG does not issue any authoritative guidance, but the IFRS Foundation publishes summaries and recordings from these meetings on its website.

A link to the TRG’s webpage is included on the IFRS Foundation’s website.

The next meeting of the TRG for IFRS 17 will be held on Dec. 4.

International Federation of Accountants IAASB revises standard on auditing accounting estimates The International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) has released the revised International Standard on Auditing (ISA) 540 (Revised), Auditing Accounting Estimates and Related Disclosures.

The IAASB updated ISA 540 to reflect changes in accounting practices seen by banks, insurers and other financial services firms, such as new accounting standards addressing loan provisions and insurance contracts. Some significant revisions include:

  • Enhanced risk assessments requiring auditors to consider complexity, subjectivity and other inherent risk factors in addition to estimation uncertainty
  • Closer links between the enhanced risk assessment and the methods, data and assumptions used in making accounting estimates, including the use of complex models
  • Specific material addressing scalability for all types of accounting estimates
  • Emphasis on the importance of applying appropriate professional skepticism when auditing accounting estimates

ISA 540 (Revised) is effective for financial statement audits for periods beginning on or after Dec. 15, 2019.

© 2018 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.