The BGA Perspective
October 2011 – The PCAOB's New Oversight Proposals: Using Restrictions to Restructure Relationships
With the recent comments from the PCAOB regarding audit quality and auditor independence, there's widespread concern about how increased oversight will affect both public and private companies. A careful analysis reveals that the PCAOB's proposed changes can lead to streamlined processes, reduced risks, fewer surprises and improved relationships – if approached properly. The key is taking the right steps at the outset for mutual advantage.
I've been getting an earful from many of you about the recent comments by James Doty, Chairman of The Public Company Accounting Oversight Board (PCAOB), regarding that organization's assertion that the existing audit structure is not independent or transparent enough.
To remedy the situation, the PCAOB is proposing to expand their oversight of the audit process and to ensure auditor objectivity through a variety of regulations including mandatory rotation of audit firms. The stated goals are to improve the overall quality of audits and to insulate auditors from client pressures so they can focus on protecting investors.
In this newsletter, I'll give you my thoughts on the impact of these potential changes and how to manage them for everyone's advantage. (Full disclosure: There is a role for consulting firms like Blythe Global Advisors in my recommendations.) But, first, let me share what I've been hearing. View/Download the Entire Newsletter (PDF) »June 2011 – Delays, Reversals and Additional Research: An Update on the Planned Convergence of U.S. GAAP and IFRS Standards.
With the joint FASB/IASB boards reversing recent decisions, companies are understandably reluctant to invest in new processes until final rules are issued. One overarching issue, however, remains clear: The new converged U.S. GAAP and IFRS standards will have a significant impact on how all companies report financial results. Wise companies will find the balance between doing nothing and taking measured steps today to minimize surprises.
In my newsletters to you, I've discussed the Security and Exchange Commission's (SEC) active support for a single set of global accounting standards with International Financial Reporting Standards (IFRS) taking prominence. I've also discussed the challenges these changes will present to all companies – both public and private – in the areas of lease accounting and revenue recognition.
On April 21, 2011, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) released a joint report on their efforts to converge U.S. generally accepted accounting principles (GAAP) and IFRS. From this report, it appeared the boards would dilute some changes – a direct response to considerable feedback concerning the scope of the anticipated changes and the subsequent burden on companies to comply. View/Download the Entire Newsletter (PDF) »
March 2011 – Automate Processes To Upgrade Your Accounting And Finance Staff's Competency
Accounting and finance staff are under increased pressure to keep pace with an escalating rate of complicated changes.
But the buck still stops at the CFO. Blythe Global Advisors has the tools and experts to help CFOs upgrade the ability of their accounting and finance functions to perform complex and time-consuming operations – better, faster and cheaper.
Accounting and finance staff have a lot to deal with. And it's not going to get easier any time soon.
Over the past year, I've discussed in my newsletters some of the profound ways that the convergence of U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) will affect how all companies report financial results. At the same time, the normally-occurring, countless changes to rules and regulations are continuing at their usual rapid rate. Accounting and finance functions are frequently challenged to understand and comply with these new requirements to deliver accurate, reliable reports to their CFOs who, in turn, are facing increasing demands from internal and external reviewers. The potential for a gap between reporting requirements and a company's ability to comply accurately and efficiently has never been greater. View/Download the Entire Newsletter (PDF) »
October 2010 – Five Ways to Maximize the Client/Auditor Relationship.
As the convergence of U.S. GAAP and IFRS standards continues, the new rules will have a significant effect on how all companies report financial results and how firms audit those results. Forward-thinking companies and audit firms will act now to maximize their relationships.
It's an old scenario in the world of accounting and financial reporting. The client thinks the firm's requests for information are too onerous, the firm's partners are not sufficiently involved, and the fees are too high. The audit firm thinks the company's accounting issues are not satisfactorily documented, the corporate management team is not sufficiently aware of the issues, and the firm is spending too much time on out-of-scope services. Can these conflicts be resolved?
The good news is a resounding yes. The not-so-good news is that the comprehensive changes due to start taking effect in 2011 under the converged U.S. and international rules and regulations make it more urgent that clients and audit firms set about optimizing their relationships now – for the mutual benefit of both parties.
At Blythe Global Advisors, we've been observing this situation for a long time from both sides of the discussion. Here, in our estimation, are five ways to maximize the client/auditor relationship. View/Download the Entire Newsletter (PDF) »
June 2010 – How The Convergence of U.S. GAAP and IFRS Standards Will Affect Lease Accounting.
As the convergence of U.S. GAAP and IFRS standards makes progress, interim changes confirm that the new rules will have a significant effect on how all companies report financial results. Regarding lease accounting, proposed rules issued thus far will affect balance sheets substantially – enough in some cases to make companies reconsider their leasing strategies. With final standards expected mid-2011, wise companies will start reviewing their approach to lease accounting now.
Under the Security and Exchange Commission's (SEC) support for a single set of global accounting standards, the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) continue to make progress on numerous convergence projects. Once completed, the new rules will apply to all U.S. companies – public and private, large and small – and will have a significant impact on financial reporting.
Although no specific date has been announced for mandating full implementation of IFRS, the FASB and the IASB plan to issue final rules in key areas by mid-2011, with mandated implementation to follow. Last year, U.S. and international accounting bodies published planned changes to lessee accounting. With the groups now expanding their scope to include lessor accounting and an Exposure Draft due later this year, it's expected that there will be substantial debate before rules are finalized.
In this newsletter, I'll focus on the changes to-date on lease accounting. As currently issued, the changes apply to all long-term leases and most short-term leases and include everything from heavy industrial equipment to investment property to non-core assets. I'll discuss the effect these changes will have on lessees' and lessors' balance sheets and processes, and I'll suggest steps companies can take now to be ready when full implementation is mandated. View/Download the Entire Newsletter (PDF) »
April 2010 – How The Convergence of U.S. GAAP and IFRS Standards Will Affect Revenue Recognition.
The convergence of U.S. GAAP and IFRS standards will have a significant impact on how all companies report financial results. With interim changes to the accounting for certain revenue recognition transactions effective for most companies in 2011, the time to get ready is now.
You have probably read about the Security and Exchange Commission's (SEC) active support for a single set of global accounting standards, with International Financial Reporting Standards (IFRS) taking prominence. Before the full move to a single standard takes place, U.S. and international accounting bodies must complete almost a dozen convergence projects – among them projects on revenue recognition and lease accounting. Once completed, the new rules will apply to all U.S. companies – private and public, large and small.
Although no specific date has been announced for mandating full implementation of IFRS, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) plan to issue final rules in key areas (including a new global standard for revenue recognition) by mid-2011. That said, many required changes are taking place in the interim. For instance, last year, the FASB's Emerging Issues Task Force (EITF) issued changes to revenue recognition rules affecting multiple element arrangements that are mandatory by 2011. At Blythe Global, we're finding that many companies are opting for early implementation.
In this advisory, I'll focus on the impact of these interim changes on revenue recognition accounting and reporting. In my next advisory, I'll discuss the anticipated changes to lease accounting – which are expected to have a significant effect on all companies holding leases of any kind. For both issues, I'll also discuss some steps companies can take now to ensure a smooth transition. View/Download the Entire Newsletter (PDF) »